<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[X] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
</TABLE>
MAPICS, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials:
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE> 2
MAPICS, INC.
NOTICE OF
1998 ANNUAL MEETING
AND
PROXY STATEMENT
<PAGE> 3
[MAPICS, INC. LETTERHEAD]
December 16, 1997
Dear Stockholder:
On behalf of the Board of Directors and management of MAPICS, Inc., I
cordially invite you to the Annual Meeting of Stockholders to be held on
Tuesday, February 3, 1998 at : .m. at the , ,
, Georgia.
At the Annual Meeting, stockholders will be asked to (a) approve a change
in domicile of the Company from Massachusetts to Georgia (including approval of
a related agreement and plan of merger and new Georgia articles of
incorporation), (b) elect two directors for a three year term, (c) approve an
amendment to an existing stock option plan for non-employee directors, (d)
approve a new stock option plan for non-employee directors, (e) approve a new
long-term incentive plan, (f) approve an amendment to an existing employee stock
purchase plan and (g) ratify the appointment of independent public accountants.
All these matters are fully described in the accompanying Notice of Annual
Meeting and Proxy Statement.
It is important that your stock be represented at the meeting regardless of
the number of shares you hold. You are encouraged to specify your voting
preferences by so marking the enclosed proxy card. Please then sign and date the
proxy card and return it in the enclosed envelope whether or not you plan to
attend the meeting. If you do attend and wish to vote in person, you may revoke
your proxy at the meeting.
If you plan to attend the meeting, please check the card in the space
provided. This will assist us with meeting preparations and will enable us to
expedite your admittance. If your shares are not registered in your own name and
you would like to attend the meeting, please ask the broker, trust, bank or
other nominee which holds the shares to provide you with evidence of your share
ownership, which will enable you to gain admission to the meeting.
Sincerely,
Richard C. Cook
President and Chief Executive Officer
<PAGE> 4
MAPICS, INC.
5775-D GLENRIDGE DRIVE
ATLANTA, GEORGIA 30328
---------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD FEBRUARY 3, 1998
---------------------
NOTICE HEREBY IS GIVEN that the 1998 Annual Meeting of Stockholders of
MAPICS, Inc. ("the Company") will be held at the , ,
, Georgia on Tuesday, February 3, 1998 at : .m., local time for
the purposes of:
1. Approving a change in domicile of the Company from Massachusetts to
Georgia, including approving a related agreement and plan of merger and new
Georgia articles of incorporation;
2. Electing two directors to serve until the 2001 Annual Meeting of
Stockholders;
3. Approving the amendment and restatement of the Company's 1991
Non-Employee Director Stock Option Plan;
4. Approving the Company's 1998 Non-Employee Directors Stock Incentive
Plan;
5. Approving the Company's 1998 Long-Term Incentive Plan;
6. Approving the amendment and restatement of the Company's 1990
Employee Stock Purchase Plan;
7. Ratifying the appointment of Coopers & Lybrand L.L.P. as
independent accountants of the Company for the fiscal year ending September
30, 1998; and
8. Transacting such other business as properly may come before the
Annual Meeting or any adjournments thereof.
Information relating to the foregoing matters is set forth in the attached
Proxy Statement. Stockholders of record at the close of business on December 12,
1997 are entitled to receive notice of and to vote at the Annual Meeting and any
adjournments thereof.
By Order of the Board of Directors.
Martin D. Avallone
Clerk
Atlanta, Georgia
December 16, 1997
PLEASE READ THE ATTACHED PROXY STATEMENT AND PROMPTLY COMPLETE, EXECUTE AND
RETURN THE ENCLOSED PROXY CARD IN THE ACCOMPANYING POSTAGE-PAID ENVELOPE. YOU
CAN SPARE YOUR COMPANY THE EXPENSE OF FURTHER PROXY SOLICITATION BY RETURNING
YOUR PROXY CARD PROMPTLY. IF YOU ATTEND THE ANNUAL MEETING, YOU MAY REVOKE THE
PROXY AND VOTE IN PERSON IF YOU SO DESIRE.
<PAGE> 5
MAPICS, INC.
---------------------
PROXY STATEMENT
FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD FEBRUARY 3, 1998
MAPICS, Inc. ("MAPICS" or the "Company") is a Massachusetts corporation
formerly known as Marcam Corporation ("Marcam"). Through its PRISM(R),
Protean(TM), Avantis(TM) and MAPICS(R) software product lines, the Company
offered comprehensive business planning and control solutions to the production,
logistics, asset management and financial requirements of manufacturing
companies worldwide. On July 25, 1997, the Company transferred substantially all
of the business, assets and liabilities relating to its PRISM(R), Protean(TM)
and Avantis(TM) product lines (which are designed for, and marketed to,
continuous process manufacturing companies) and $39.0 million in cash to a newly
formed, wholly owned subsidiary, Marcam Solutions, Inc. ("Marcam Solutions"). On
July 29, 1997, the Company distributed to its stockholders, in a tax-free
distribution (the "Distribution"), all of the stock of Marcam Solutions, and the
Company thereafter continued the operations related to the MAPICS product line,
which is designed for, and marketed to, discrete and batch process manufacturing
companies. In connection with the Distribution, the Company changed its name
from Marcam Corporation to MAPICS, Inc. The separation into two independent
publicly traded companies was designed to enable each company to better focus on
its core markets, to better serve existing customers and to finance its
business.
This Proxy Statement is furnished to the stockholders of the Company in
connection with the solicitation of proxies by the Board of Directors of the
Company for use at the Annual Meeting of Stockholders of the Company and at any
adjournments thereof (the "Annual Meeting"). The Annual Meeting will be held on
Tuesday, February 3, 1998 at : .m., local time, at ,
, , Georgia.
The approximate date on which this Proxy Statement and the accompanying
proxy card are first being sent or given to stockholders is December 16, 1997.
VOTING
GENERAL
The securities that can be voted at the Annual Meeting consist of (a)
Common Stock of the Company, $.01 par value per share ("Common Stock"), (b)
Series D Convertible Preferred Stock, $1.00 par value per share ("Series D
Preferred Stock"), and (c) Series E Convertible Preferred Stock, $1.00 par value
per share ("Series E Preferred Stock"). Holders of Common Stock are entitled to
cast one vote for each share held on the record date on each matter submitted to
the stockholders at the Annual Meeting. Holders of the Series D Preferred Stock
and the Series E Preferred Stock are entitled to vote on an as converted basis
with the holders of the Common Stock as a single class and are entitled to cast
10 votes for each share of preferred stock held on the record date on each
matter submitted to the stockholders at the Annual Meeting.
The record date for the determination of stockholders who are entitled to
receive notice of and to vote at the Annual Meeting has been fixed by the Board
of Directors as the close of business on December 12, 1997. On the record date,
shares (on an as converted basis) of Common Stock were outstanding and
eligible to be voted at the Annual Meeting.
QUORUM AND VOTE REQUIRED
The presence, in person or by proxy, of a majority of the outstanding
shares of all classes and series of the Company's outstanding capital stock,
voting together as a single class, is necessary to constitute a quorum at the
Annual Meeting. Votes withheld from any nominee, abstentions and broker
"non-votes" are counted as present or represented for purposes of determining
the presence or absence of a quorum at the Annual Meeting. A "non-vote" occurs
when a nominee holding shares for a beneficial owner votes on a proposal but
<PAGE> 6
does not vote on another proposal because the nominee does not have
discretionary voting power and has not received instructions from the beneficial
owner with regard to such other proposal.
In accordance with Massachusetts law and the Company's Restated Articles of
Organization, directors are elected by a plurality of the votes cast for such
directors (Proposal 2), provided a quorum is present. As a result, shares that
are withheld from voting on the proposal and any broker non-votes will have no
effect. With regard to the proposal to change the domicile of the Company from
Massachusetts to Georgia (Proposal 1), the affirmative vote of the holders of
two-thirds of the shares of all classes and series of the Company's outstanding
capital stock, voting together as a single class, is required for approval.
Accordingly, abstentions and broker non-votes will have the same effect as a
vote against the proposal. With regard to all of the other proposals to be
submitted to stockholders at the Annual Meeting, provided a quorum is present,
the affirmative vote of the holders of a majority of the shares of all classes
and series of the Company's capital stock which are represented in person or by
proxy at the Annual Meeting, voting together as a single class, is required for
approval. Abstentions are included in the number of shares present or
represented and voting on each proposal, but broker non-votes are not so
included. As a result, shares that are abstained from voting on Proposals 3, 4,
5, 6 and 7 will have the same effect as a vote against the proposal, but broker
non-votes will have no effect.
PROXIES
The accompanying proxy card is for use at the Annual Meeting if a
stockholder is unable to attend in person or is able to attend but does not wish
to vote in person. Stockholders should specify their choices with regard to each
proposal on the enclosed proxy card. All properly executed and dated proxy cards
delivered by stockholders to the Company in time to be voted at the Annual
Meeting and not revoked will be voted at the Annual Meeting in accordance with
the instructions given. If no specific instructions are given, the shares
represented by a signed and dated proxy card will be voted "FOR" the election of
the two director nominees named in Proposal 2 and "FOR" each of Proposals 1, 3,
4, 5, 6 and 7. If any other matters properly come before the Annual Meeting, the
persons named as proxies will vote upon such matters according to their
judgment. The Board of Directors is not aware of any other business to be
presented to a vote of the stockholders at the Annual Meeting.
The giving of a proxy does not affect the right to vote in person should
the stockholder attend the Annual Meeting. Any stockholder who has given a proxy
has the power to revoke it at any time before it is voted by giving written
notice of revocation to Martin D. Avallone, the Clerk of the Company, at 5775-D
Glenridge Drive, Atlanta, Georgia 30328, by executing and delivering a proxy
card bearing a later date to Mr. Avallone, or by voting in person at the Annual
Meeting. If a stockholder is not attending the Annual Meeting, any proxy or
notice should be returned in time for receipt no later than the close of
business on the day preceding the Annual Meeting.
In addition to soliciting proxies directly, the Company has requested
brokerage firms, nominees, custodians and fiduciaries to forward proxy materials
to the beneficial owners of shares held of record by them. The Company also may
solicit proxies through its directors, officers and employees in person and by
telephone and facsimile, without payment of additional compensation to such
persons. All expenses incurred in connection with the solicitation of proxies
will be borne by the Company.
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<PAGE> 7
STOCK OWNERSHIP
The following table sets forth certain information regarding the beneficial
ownership of the Company's voting stock by (a) each person who is known by the
Company to own more than 5% of any class of the Company's voting securities, (b)
each director and nominee for director, (c) each executive officer named in the
Summary Compensation Table herein and (d) all directors and officers as a group.
<TABLE>
<CAPTION>
SHARES PERCENT
BENEFICIALLY OF CLASS
NAME AND ADDRESS OF BENEFICIAL OWNER OWNED(1) OWNED(1)
- ------------------------------------ ------------ --------
<S> <C> <C>
General Atlantic Partners, LLC and William E. Ford(2)....... 4,005,000 18.4%
Clover Capital Management, Inc.(3).......................... 2,628,625 12.1
Fidelity Management and Research Corporation(4)............. 1,215,000 5.6
Pioneer Management Corporation(5)........................... 1,140,000 5.2
George A. Chamberlain 3d(6)................................. 72,000 *
Richard C. Cook(7).......................................... 42,600 *
Edward J. Kfoury(8)......................................... 21,600 *
Thomas F. Aery(9)........................................... 13,989 *
H. Mitchell Watson, Jr.(10)................................. 5,000 *
William J. Gilmour(11)...................................... 3,543 *
Roger Heinen, Jr............................................ 500 *
Terry Osborne(12)........................................... 1,000 *
All executive officers and directors as a group (9
persons)(13).............................................. 4,165,232 19.1%
</TABLE>
- ---------------
* Less than one percent (1%).
(1) The persons and entities named in the table have sole voting and investment
power with regard to all shares shown as beneficially owned by them, except
as noted below. Information is as of November 1, 1997 unless otherwise
indicated. Pursuant to the rules of the Securities and Exchange Commission,
the number of shares of Common Stock deemed outstanding for a specified
person or group includes shares issuable pursuant to convertible
securities, warrants and options held by such person or group which may be
converted or exercised within 60 days after November 1, 1997. Such shares
are deemed to be outstanding for the purpose of computing the percentage of
the class beneficially owned by such person or group but are not deemed to
be outstanding for the purpose of computing the percentage of the class
owned by any other person or group.
(2) Consists of 176,058 shares of Series D Preferred Stock held by General
Atlantic Partners 21, L.P. ("GAP 21"), 23,942 shares of Series D Preferred
Stock and 13,681 shares of Series E Preferred Stock held by GAP
Coinvestment Partners, L.P. ("GAP Coinvestment") and 86,319 shares of
Series E Preferred Stock held by General Atlantic Partners 32, L.P. ("GAP
32"). Each share of Series D Preferred Stock and Series E Preferred Stock
currently is convertible at any time into 10 shares of Common Stock. Also
includes warrants to purchase 863,190 and 136,810 shares of Common Stock
held by GAP 32 and GAP Coinvestment, respectively. GAP Coinvestment, GAP
21, GAP 32 and General Atlantic Partners, LLC ("GAPLLC"), the sole general
partner of GAP 21 and GAP 32 (collectively, the "GA Entities"), own
beneficially 4,000,000 shares of Common Stock. The GA Entities own
beneficially 88.9% of the outstanding Series D Preferred Stock and 100% of
the outstanding Series E Preferred Stock. Mr. Ford (who is a director of
the Company), William O. Grabe, Steven A. Denning, David C. Hodgson,
Stephen P. Reynolds and J. Michael Cline (the "GA Members") are the
managing members of GAPLLC and are the same persons who have voting and
investment control over securities held by GAP Coinvestment. The GA Members
disclaim beneficial ownership of such shares, except to the extent of each
member's proportionate pecuniary interest therein. In addition, includes
5,000 shares of Common Stock held of record by Mr. Ford.
(3) According to Amendment No. 3 to Schedule 13G dated February 11, 1997.
Clover Capital Management, Inc., a registered investment adviser for
various accounts, has shared voting and investment power with respect to
2,628,625 shares.
(4) Based solely on the Company's stock records.
(5) According to Amendment No. 1 to Schedule 13G dated January 21, 1997. Of the
1,140,000 shares beneficially owned by Pioneer Management Corporation
("Pioneer"), it has sole voting power with respect to 1,132,000 shares and
sole investment power with respect to 8,000 shares.
(6) Consists of 72,000 shares issuable upon the exercise of outstanding stock
options exercisable currently or within 60 days.
(7) Consists of 200 shares held by Mr. Cook's wife and 42,400 shares issuable
upon the exercise of outstanding stock options exercisable currently or
within 60 days.
(8) Includes 6,600 shares issuable upon the exercise of outstanding stock
options exercisable currently or within 60 days.
(9) Consists of 13,989 shares issuable upon the exercise of outstanding stock
options exercisable currently or within 60 days.
(10) Includes 2,500 shares held by Mr. Watson's wife.
(11) Includes 3,370 shares issuable upon the exercise of outstanding stock
options exercisable currently or within 60 days.
(12) Anticipated to be elected to the Board of Directors effective January 1,
1998.
(13) Includes 138,359 shares which the directors and executive officers as a
group have the right to acquire upon the exercise of outstanding stock
options exercisable currently or within 60 days granted under the Company's
stock plans.
3
<PAGE> 8
PROPOSAL 1
CHANGE IN DOMICILE OF THE COMPANY
GENERAL
The Board of Directors has unanimously approved, and unanimously recommends
for stockholder approval, the change of the Company's state of incorporation
from Massachusetts to Georgia. The Company is now headquartered in Georgia and
has no operations remaining in Massachusetts. Reincorporation in Georgia will
allow the Company to reduce certain administrative burdens resulting from being
incorporated under Massachusetts law but having no operations in Massachusetts.
Reincorporation will also enable the Company to avail itself of Georgia's modern
and flexible corporate code which, like the corporate codes of a majority of the
states, is based on the Model Business Corporation Act promulgated by the
Committee on Corporate Laws of the Business Law Section of the American Bar
Association (the "ABA"). The transaction will not result in any change in the
business, management, assets, liabilities or net worth of the Company. The
purposes and effects of the proposed transaction are summarized below.
To effect the Company's reincorporation in Georgia, the Company will be
merged with and into a newly formed, wholly-owned subsidiary incorporated in
Georgia. The Georgia subsidiary, named MAPICS, Inc., a Georgia corporation
("MAPICS-Georgia"), has not engaged in any activities except in connection with
the proposed transaction. Following the merger, MAPICS-Georgia will conduct the
business of the Company as a Georgia corporation under the name "MAPICS, Inc."
The mailing address of its principal executive offices and its telephone number
are the same as those of the Company.
As part of its approval and recommendation of the Company's reincorporation
in Georgia, the Board of Directors has approved, and recommends to the
stockholders for their adoption and approval, (a) an Agreement and Plan of
Merger (the "Reincorporation Agreement") pursuant to which the Company will be
merged with and into MAPICS-Georgia and (b) Articles of Incorporation of
MAPICS-Georgia. Approval by the stockholders of the change in domicile of the
Company will also constitute stockholder approval of the Reincorporation
Agreement and the proposed Articles of Incorporation of MAPICS-Georgia. The full
texts of the Reincorporation Agreement and the proposed Articles of
Incorporation of MAPICS-Georgia, together with the proposed Bylaws of
MAPICS-Georgia, are attached hereto as Exhibit A, Exhibit B and Exhibit C,
respectively. The discussion contained in this Proxy Statement is qualified in
its entirety by reference to such Exhibits.
The reincorporation of the Company in Georgia through the above-described
merger (hereafter referred to as the "Reincorporation") requires approval of the
Company's stockholders by the affirmative vote of at least two-thirds of the
shares of all classes and series of the Company's outstanding capital stock,
voting together as a single class. Stockholders who do not vote for the proposal
and who dissent by complying with the procedures required by the Massachusetts
Business Corporation Law ("MBCL") will have the right, if the Reincorporation is
consummated, to receive payment for the fair value of their shares. See
"-- Right to Dissent and Appraisal."
In the following discussion of the proposed Reincorporation, the term
"MAPICS-Mass." refers to the Company as currently organized under the laws of
the Commonwealth of Massachusetts; the term "MAPICS-Georgia" refers to the newly
formed, wholly-owned Georgia subsidiary of MAPICS-Mass. that will be the
surviving corporation after the completion of the Reincorporation transaction;
and the term "Company" includes either or both, as the context requires, without
regard to the state of incorporation.
Upon stockholder approval of the Reincorporation, and upon approval of
appropriate articles of merger by the Secretary of State of the Commonwealth of
Massachusetts and the Secretary of State of the State of Georgia, MAPICS-Mass.
will be merged with and into MAPICS-Georgia pursuant to the Reincorporation
Agreement, resulting in a change in the Company's state of incorporation. The
Company will then be subject to the Georgia Business Corporation Code and the
Articles of Incorporation and Bylaws of MAPICS-Georgia attached hereto as
Exhibit B and Exhibit C, respectively. Upon consummation of the Reincorporation,
each outstanding share of common stock and preferred stock of MAPICS-Mass., and
each share of MAPICS-
4
<PAGE> 9
Mass. common stock held in treasury, will automatically be converted into a
share of outstanding common stock or preferred stock of MAPICS-Georgia, or share
of MAPICS-Georgia common stock held in treasury, respectively. Outstanding
warrants and options to purchase or otherwise acquire shares of common stock of
MAPICS-Mass. will be converted into warrants and options, respectively, to
purchase or otherwise acquire the same number of shares of common stock of
MAPICS-Georgia. Each employee stock plan and any other employee benefit plan to
which MAPICS-Mass. is a party, whether or not such plan relates to the common
stock of MAPICS-Mass., will be assumed by MAPICS-Georgia and, to the extent any
such plan provides for the issuance or purchase of shares of common stock of
MAPICS-Mass., will be deemed to provide for the issuance or purchase of shares
of common stock of MAPICS-Georgia.
IT WILL NOT BE NECESSARY FOR STOCKHOLDERS OF MAPICS-MASS. TO EXCHANGE THEIR
EXISTING STOCK CERTIFICATES FOR CERTIFICATES OF MAPICS-GEORGIA. OUTSTANDING
STOCK CERTIFICATES OF MAPICS-MASS. SHOULD NOT BE DESTROYED OR SENT TO THE
COMPANY.
The Common Stock will continue to be traded on the Nasdaq National Market
under the symbol "MAPX," and the Nasdaq National Market will consider delivery
of the stock certificates of MAPICS-Mass. which are outstanding on the
Reincorporation date to constitute "good delivery" of MAPICS-Georgia stock
certificates in transactions subsequent to the Reincorporation.
THE BOARD OF DIRECTORS HAS UNANIMOUSLY APPROVED AND, FOR THE REASONS
DESCRIBED BELOW UNDER "PRINCIPAL REASONS FOR THE REINCORPORATION," UNANIMOUSLY
RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" THE APPROVAL OF THE REINCORPORATION
PROPOSAL.
PRINCIPAL REASONS FOR THE REINCORPORATION
As a result of the Distribution and the transactions contemplated thereby,
the Company is now headquartered and maintains its principal operations in
Georgia rather than Massachusetts, and has no operations remaining in
Massachusetts. The Company's Board of Directors believes that a change in the
Company's state of incorporation from Massachusetts to Georgia will provide
flexibility for both the management and business of the Company, as well as
reduce certain administrative burdens resulting from being incorporated under
Massachusetts law but having no significant operations located in Massachusetts.
Georgia is a favorable legal and regulatory environment in which to operate,
with a modern and flexible corporate code which the Company believes will
provide greater guidance and certainty in corporate legal affairs than the MBCL.
Georgia's corporate code is identical in most respects to the Model Business
Corporation Act which was drafted by the Committee on Corporate Laws of the
Business Law Section of the ABA to serve as a model state corporate code. More
than half of the states have now adopted corporate codes that are based
substantially on the Model Business Corporation Act. However, the MBCL is not
based on the Model Business Corporation Act. In addition, the Company has not
sought to reincorporate under Delaware law because, among other reasons, of the
annual franchise tax assessed against Delaware corporations, which is higher
than similar taxes imposed by most other states, including Georgia.
In addition, the MBCL requires that either original or certified copies of
a Massachusetts corporation's articles of organization, bylaws, records of
stockholder and incorporator meetings and stock and transfer records be
available for inspection by stockholders in Massachusetts. Because the Company
no longer maintains an office in Massachusetts, it would be required to
establish such an office or to retain a third party to maintain such records in
Massachusetts on its behalf. If the Reincorporation is consummated, the Company
will no longer be subject to this provision of the MBCL and will not be required
to maintain such records in Massachusetts.
CERTAIN DIFFERENCES BETWEEN THE CORPORATION LAWS OF GEORGIA AND MASSACHUSETTS
AND CERTAIN DIFFERENCES BETWEEN THE ORGANIZATIONAL DOCUMENTS OF MAPICS-GEORGIA
AND MAPICS-MASS.
Georgia law and Massachusetts law differ in many respects and,
consequently, it is not practical to summarize all of the differences. However,
the following is a summary of certain significant differences in such laws which
may affect the rights and interests of the Company's stockholders as a result of
the Reincorpora-
5
<PAGE> 10
tion. In addition, the following summary describes certain significant
differences between the proposed Articles of Incorporation and Bylaws of
MAPICS-Georgia (which are attached as Exhibit B and Exhibit C hereto,
respectively) and the Restated Articles of Organization and Bylaws of
MAPICS-Mass.
VOTE REQUIRED FOR CERTAIN MERGERS AND CONSOLIDATIONS
Georgia and Massachusetts law both require stockholder approval for most
mergers, consolidations and dispositions of all or substantially all of a
corporation's property. Unless otherwise provided in a Georgia corporation's
articles of incorporation or bylaws, or by its board of directors, Georgia law
generally requires shareholder approval of any merger or share exchange
involving such a corporation, or any sale, lease, exchange or other disposition
of all or substantially all of such a corporation's property, by a majority of
all votes entitled to be cast on the transaction voting as a single voting group
and, in the case of mergers, consolidations and share exchanges, by a majority
of all votes entitled to be cast by holders of the shares of each voting group
entitled to vote separately on the transaction by the articles of incorporation.
Massachusetts law generally requires that any merger or consolidation involving
a Massachusetts corporation, or the sale, lease or exchange of all or
substantially all of such a corporation's property, be approved by the
affirmative vote of two-thirds of the shares of each class of such corporation's
stock entitled to vote on the transaction, voting together as a single class or,
if the articles of organization so provide, the vote of a lesser proportion, but
not less than a majority of each class of stock. In addition, in the case of a
merger or consolidation of a Massachusetts corporation, any class of stock that
is adversely affected must separately approve the transaction by the affirmative
vote of two-thirds of the shares of each such class of stock.
Georgia law provides that shareholder approval of a consolidation or merger
is not required where (a) the subject corporation's articles of incorporation
will not differ from those of the surviving corporation, (b) each shareholder of
the surviving corporation will hold the same number of shares, with identical
designations, preferences and relative rights, immediately before and after the
merger and (c) the number and kind of shares outstanding immediately after the
merger plus the number and kind of shares issuable as a result of the merger and
by the conversion of securities issued pursuant to the merger will not exceed
the total number and kind of shares of the surviving corporation authorized by
its articles of incorporation immediately before the merger. Stockholder
approval of a merger of a Massachusetts corporation is not required where (a)
such corporation's articles of organization will not differ from those of the
surviving corporation, (b) the surviving corporation's authorized unissued
shares held in treasury of any class of stock of such corporation to be issued
or delivered pursuant to the relevant agreement of merger do not exceed fifteen
percent of the shares of such corporation of the same class outstanding
immediately prior to the effective date of the merger and (c) the issue by vote
of the directors of any unissued stock to be issued pursuant to the relevant
agreement of merger has been authorized in accordance with such corporation's
regular practice of issuing authorized stock.
In addition, a Georgia corporation may also sell, lease or exchange all or
substantially all of its property without a shareholder vote if such corporation
is insolvent and a sale for cash or its equivalent is deemed advisable by the
corporation's board of directors to meet the liabilities of the corporation.
Under Massachusetts law any sale, lease or exchange of all or substantially all
of a corporation's property requires the stockholder approval discussed above.
STOCKHOLDERS' MEETINGS AND STOCKHOLDER ACTIONS WITHOUT A MEETING
Annual and Special Stockholders' Meetings. Georgia law requires a
shareholders' meeting to be held annually at a time stated in or fixed in
accordance with the bylaws. In addition, special meetings of shareholders may be
called (a) by the board of directors or by any person authorized to do so under
the articles of incorporation or bylaws; (b) by the written demand of the
holders of at least 25% (or such greater or lesser percentage as may be
specified in the articles of incorporation or bylaws) of all votes entitled to
be cast on any issue proposed to be considered at the special meeting; or (c) in
the case of a corporation having 100 or fewer shareholders of record, by written
demand of the holders of at least 25% (or such lesser percentage as may be
specified in the articles of incorporation or bylaws) of all the votes entitled
to be cast on any issue proposed to be considered at the special meeting.
Because MAPICS-Georgia will have more than 100 shareholders of record, its
proposed Articles of Incorporation or Bylaws may require that the percentage of
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shareholders required to call a special meeting be greater than 25%.
Accordingly, the proposed Bylaws of MAPICS-Georgia provide that a special
meeting of shareholders may be called by its Board of Directors, Chairman of the
Board or President, or by the written application of the holders of at least 40%
of the votes entitled to be cast on any issue proposed to be considered at such
special meeting.
Under Massachusetts law, an annual meeting of stockholders must be held
within six months of the end of the corporation's fiscal year. Special
stockholders' meetings of a corporation having a class of voting stock
registered under the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), may be called by the president or by the board of directors, and must be
called upon written application of one or more stockholders who own at least 40%
of the capital stock entitled to vote at the meeting, unless otherwise provided
in the articles of incorporation or bylaws. Special meetings of the stockholders
of a corporation that does not have stock registered under the Exchange Act may
be called by the corporation's president or board of directors and must be
called upon written application of the holders of at least 10% of the stock
entitled to vote at the meeting. Because MAPICS-Mass. has a class of voting
stock registered under the Exchange Act, the requirements for calling a special
stockholders' meeting under its Bylaws are substantially similar to the
requirements for calling such a meeting under the proposed MAPICS-Georgia
Bylaws.
Stockholder Actions Without a Meeting. Under both Georgia and
Massachusetts law, stockholders may take any action required or permitted to be
taken at a stockholders' meeting without such a meeting if the action is taken
by written consent filed with the corporation for inclusion in the corporate
records. Georgia law requires the unanimous written consent of all shareholders
entitled to vote on the proposed action or, if the articles of incorporation so
provide, the written consent of the percentage that would be needed if a
shareholders' meeting were held and all shareholders entitled to vote were
present and voted. The proposed Articles of Incorporation of MAPICS-Georgia
require that any action taken by shareholders without a meeting must be by
unanimous written consent. Similarly, Massachusetts law requires that any action
taken without a meeting be by unanimous consent of all stockholders entitled to
vote on the matter.
RIGHT TO DISSENT AND APPRAISAL
Both Georgia and Massachusetts law provide appraisal rights for dissenting
stockholders in the event of specified corporate actions. However, the events
which permit a stockholder to assert such rights and the procedures a dissenting
stockholder must follow to assert such rights differ for Georgia and
Massachusetts corporations.
Under Georgia law, no right of dissent is available for a shareholder of
any class or series of stock which are either listed on a national securities
exchange or held of record by more than 2,000 shareholders, unless (a) in the
transaction giving rise to such shareholder's right to dissent, such shareholder
is to receive any consideration other than shares listed on a national
securities exchange or shares held of record by at least 2,000 shareholders or
(b) the articles of incorporation or a resolution of the board of directors
approving the transaction provide otherwise. In all other cases, a properly
dissenting shareholder of a Georgia corporation may assert appraisal rights if
the corporation consummates certain mergers, share exchanges or sales or
exchanges of all or substantially all of its property (unless, for each of the
foregoing transactions, shareholder approval was not required to approve such
transaction), or if the corporation effects certain amendments to its articles
of incorporation. After the Reincorporation, it is expected that the common
stock of MAPICS-Georgia will continue to be traded on the Nasdaq National Market
(which is considered a "national securities exchange" under Georgia law).
Accordingly, under Georgia law, except as described above, shareholders of
MAPICS-Georgia will not have the right to dissent and obtain an appraisal. If
such shareholders oppose a proposed corporate action which requires shareholder
approval, such shareholders will be able to (a) remain shareholders of
MAPICS-Georgia and vote to oppose such action or abstain from voting on such
action or (b) attempt to sell their shares in the open market. However, no
assurance can be given by the Company that prevailing market conditions at the
time of any such attempted sale will permit a selling shareholder to obtain the
same sale price as such shareholder would have received had state law appraisal
rights been available.
Under Massachusetts law, a properly dissenting stockholder may assert
appraisal rights if the corporation votes to (a) sell, lease or exchange all or
substantially all of its property and assets, (b) amend its articles of
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organization in a manner which adversely affects the rights of the dissenting
stockholder or (c) merge or consolidate with another entity, unless a vote of
the stockholders was not required to approve such a merger or consolidation.
CORPORATE RECORDS AND STOCKHOLDER LISTS
Under Georgia law, a shareholder of a corporation is entitled to inspect
and copy, during regular business hours at either the corporation's principal
office or a reasonable location specified by the corporation (the location to
depend upon the nature of the records requested to be inspected and copied), any
of the records of the corporation, provided that such shareholder gives to the
corporation written notice of demand at least five days in advance of the date
such shareholder wishes to inspect and copy such records. Through a provision of
its bylaws, a Georgia corporation may limit such inspection rights to
shareholders owning in excess of 2% of the outstanding shares. As permitted by
Georgia law, the proposed Bylaws of MAPICS-Georgia provide that the right of
inspection shall not be available to any shareholder owning 0.25% or less of the
outstanding shares without the prior approval of the Board of Directors of
MAPICS-Georgia, in its discretion. In addition, Georgia law requires that after
fixing a record date for a shareholders' meeting, a corporation must prepare an
alphabetical list of the names of all its shareholders who are entitled to
notice of a shareholders' meeting. The list must be available for inspection by
any shareholder, his agent or his attorney at the time and place of the meeting.
Massachusetts law requires that every domestic corporation maintain in
Massachusetts, and make available for inspection by its stockholders, the
original, or attested copies, of the corporation's articles of organization,
bylaws, records of all meetings of incorporators and stockholders, and the stock
and transfer records listing the names of all stockholders and their record
addresses and the amount of stock held by each. In addition, if any officer or
agent of a corporation having charge of such corporate records (or copies
thereof) refuses or neglects to exhibit them in legible form or to produce for
examination a list of stockholder names, record addresses and amount of stock
held by each, such officer or agent or the corporation will be liable to any
stockholder for actual damages sustained by reason of such refusal or neglect.
In an action for damages or a proceeding in equity under the foregoing
provision, however, it is a defense to such action that the actual purpose and
reason for the inspection being sought is to secure a list of stockholders or
other information for the purpose of selling the list or other information or of
using them for purposes other than in the interest of the person seeking them,
as a stockholder, relative to the affairs of the corporation. The foregoing
rights relating to inspection are deemed to include the right to copy materials
and to be represented by agent or counsel in exercising these rights. In
addition to the rights of inspection provided by Massachusetts law, a
stockholder of a Massachusetts corporation has a common law right to inspect
additional documents which, if such request is refused by the corporation, may
be obtained by petitioning a court for the appropriate order. In petitioning a
court for such an order, the granting of which is discretionary, the stockholder
has the burden of demonstrating (a) that such holder is acting in good faith and
for the purposes of advancing the interests of the corporation and protecting
such holder's own interest as a stockholder and (b) that the requested documents
are relevant to those purposes.
DISTRIBUTIONS TO STOCKHOLDERS
Georgia law prohibits distributions to shareholders if, after giving effect
to any such distribution, (a) the corporation would be unable to pay its debts
as they become due in the usual course of business or (b) the corporation's
total assets would be less than the sum of its total liabilities plus (unless
the articles of incorporation permit otherwise) the amount that would be needed,
if the corporation were to be dissolved at the time of distribution, to satisfy
the preferential rights of shareholders whose rights are superior to those
receiving the distribution. "Distribution" is defined broadly under Georgia law
to include dividends, distributions of indebtedness, the purchase, redemption or
other acquisition of shares, and other direct and indirect transfers of money or
property to shareholders. A director who votes for or assents to a prohibited
distribution is personally liable to the corporation for the amount by which the
distribution exceeds that which could have been lawfully distributed if it is
established that such director did not satisfy his duty of care under Georgia
law in voting for or assenting to the distribution. A director found liable in
accordance with the preceding sentence is entitled to contribution from each
shareholder for the amount such shareholder accepted
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knowing that such distribution was made in violation of Georgia law and every
other director who could have been found similarly liable.
Under Massachusetts law, the directors of a corporation will be jointly and
severally liable if a payment of a distribution, whether by way of dividend,
repurchase or redemption of stock or otherwise, which is made when the
corporation is insolvent, renders the corporation insolvent or violates the
corporation's articles of organization. Stockholders to whom a corporation makes
any such distribution (except a distribution of stock of the corporation), if
the corporation is or is thereby rendered insolvent, are liable to the
corporation for the amount of such distribution made, or for the amount of such
distribution which exceeds that which could have been made without rendering the
corporation insolvent, but in either event only to the extent of the amount paid
or distributed to them, respectively. In such event, a stockholder who pays more
than such holder's proportionate share of such distribution or excess shall have
a claim for contribution against the other stockholders.
THE BOARD OF DIRECTORS
Classification of the Board of Directors; Number of Directors; Vote
Required to Elect Directors. Georgia law permits (but does not require)
classification of a corporation's board of directors into two or three groups,
with the groups containing as nearly equal a number of directors as can be
achieved. A corporation may so classify its board of directors through a
provision of its articles of incorporation or bylaws. If a board of directors
consists of two classes, directors will generally be elected for terms of two
years, while directors of a three class board of directors will generally be
elected for terms of three years. The number of directors on the board must be
specified in the articles of incorporation or bylaws and must consist of one or
more individuals. The articles of incorporation or bylaws may authorize the
shareholders or the board to fix or change the number of directors or may
establish a variable range for the size of the board. If a variable range is
established, the number of directors may be fixed or changed within the range by
the shareholders or, if a corporation's articles of incorporation or bylaws so
provide, by the board of directors. The proposed Articles of Incorporation and
Bylaws of MAPICS-Georgia provide for a classified Board of Directors, consisting
of three classes of directors being as nearly equal in number as possible. As a
result, each director will generally serve for a term of three years. The
proposed Articles of Incorporation and Bylaws also specify that the number of
directors may range from three to eleven, with the precise number to be fixed by
a resolution of the shareholders or the Board of Directors from time to time. In
addition, the proposed Articles of Incorporation and Bylaws state that each
director standing for election at a meeting of shareholders must be elected by
the affirmative vote of a plurality of the shares represented and entitled to
vote at the meeting in the election of such director. The Restated Articles of
Organization of MAPICS-Mass. provide for a classified Board of Directors
substantially similar to the MAPICS-Georgia Board and provide substantially
similar vote requirements for the election of directors.
Removal of Directors by Stockholders. The proposed Articles of
Incorporation and Bylaws of MAPICS-Georgia, which create a classified Board of
Directors, provide that a director may be removed from office only for cause and
upon the affirmative vote of at least 80% of all classes of stock entitled to
vote in the election of such director, considered as one class. "Cause" is
defined to mean the conviction of a felony, the declaration of unsound mind by
order of a court, the gross dereliction of duty, the commission of any action
involving moral turpitude, or the commission of an action which constitutes
intentional misconduct or a knowing violation of law if such action in either
event results both in an improper substantial personal benefit and a material
injury to MAPICS-Georgia. However, any director elected by holders of preferred
stock may be removed only by such holders in accordance with the terms of such
preferred stock. Both Massachusetts law and the Restated Articles of
Organization of MAPICS-Mass. contain substantially similar provisions.
Vacancies. MAPICS-Georgia's Articles of Incorporation and Bylaws provide
that any Board vacancy may be filled only by the Board of Directors upon the
affirmative vote of a majority of the total number of remaining directors, even
though they constitute less than a quorum. However, (a) any vacant office
formerly held by a director elected by the holders of a series of preferred
stock may only be filled by the remaining directors elected by such holders or,
in the absence of any such directors, by such holders in accordance with the
terms of such preferred stock and (b) any vacant office resulting from the
removal of a director by other
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shareholder action may be filled by the shareholders at an annual or special
meeting thereof. Taken together, the Restated Articles of Organization and
Bylaws of MAPICS-Mass. contain substantially similar provisions.
CONSTITUENCY CONSIDERATIONS
Georgia law permits a corporation's articles of incorporation to provide
that, in discharging the duties of their respective positions and in determining
what is believed to be in the best interests of the corporation, the board of
directors, any committee thereof and any individual director, in addition to
considering the effects of any action on the corporation or its shareholders,
may consider the interests of its employees, customers and suppliers, the
creditors of the corporation and its subsidiaries, the communities in which
offices or other establishments of the corporation and its subsidiaries are
located, and all other factors such directors consider pertinent. Neither the
MBCL nor the Restated Articles of Organization of MAPICS-Mass. contain such a
provision. However, as permitted by Georgia law, the proposed Articles of
Incorporation of MAPICS-Georgia adopt such a provision.
DIRECTOR LIABILITY
Georgia law permits a corporation's articles of incorporation to include a
provision eliminating or limiting the liability of a director to the corporation
or its shareholders for monetary damages for breach of duty of care or other
duty as a director, except that such a provision may not eliminate liability for
(a) any appropriation, in violation of such director's duties, of any business
opportunity of the corporation, (b) any acts or omissions that involve
intentional misconduct or a knowing violation of law, (c) authorizing an
unlawful distribution or (d) any transaction from which the director received an
improper personal benefit.
Under Massachusetts law, a corporation's articles of organization may
include a provision eliminating or limiting the personal liability of a director
to the corporation or its stockholders for monetary damages for breach of
fiduciary duty as a director, except that such a provision may not eliminate or
limit the liability of a director for (a) any breach of the director's duty of
loyalty to the corporation or its stockholders, (b) acts or omissions not in
good faith or which involve intentional misconduct or a knowing violation of
law, (c) authorizing an unlawful distribution or improper loan of corporate
assets or (d) any transaction from which the director derived an improper
personal benefit.
Both the proposed Articles of Incorporation of MAPICS-Georgia and the
Restated Articles of Organization of MAPICS-Mass. include such provisions.
INDEMNIFICATION
Under its proposed Bylaws, MAPICS-Georgia will indemnify an individual who
is a party to a proceeding because he is or was a director or officer against
liability incurred in the proceeding if such individual (a) conducted himself in
good faith, (b) reasonably believed (i) in the case of conduct in his official
capacity, that such conduct was in the best interests of the corporation and
(ii) in all other cases, that such conduct was at least not opposed to the best
interests of the corporation and (c) in the case of any criminal proceeding, had
no reasonable cause to believe such conduct was unlawful. The corporation may
not so indemnify a director or officer in connection with (x) a proceeding by or
in the right of the corporation, except for reasonable expenses incurred in
connection with the proceeding if it is determined that the director or officer
has met the standard of conduct described in the preceding sentence or (y) any
proceeding with respect to conduct for which he was adjudged liable on the basis
that personal benefit was improperly received by him, whether or not involving
action in his official capacity. However, if authorized by the articles of
incorporation or a bylaw, contract or resolution approved or ratified by
shareholders of MAPICS-Georgia by a majority of the votes entitled to be cast,
MAPICS-Georgia may indemnify a director or officer made a party to a proceeding,
including a proceeding brought by or in the right of MAPICS-Georgia, without
regard to the foregoing limitations, but shares owned or voted under the control
of a director or officer who at the time of such authorization does not qualify
as a disinterested director or disinterested officer with respect to any
existing or threatened proceeding that would be covered by the authorization may
not be voted on the authorization. Notwithstanding the preceding sentence,
Georgia law and the proposed Bylaws of MAPICS-Georgia provide that MAPICS-
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Georgia may not indemnify a director or officer if he is adjudged liable to the
corporation or is subjected to injunctive relief in favor of the corporation for
(a) any appropriation, in violation of his duties, of any business opportunity
of the corporation, (b) acts or omissions which involve intentional misconduct
or a knowing violation of law, (c) authorizing an unlawful distribution or (d)
any transaction from which he received an improper personal benefit.
The proposed Bylaws of MAPICS-Georgia further provide that it will, before
final disposition of a proceeding, advance funds to pay for or reimburse the
reasonable expenses incurred by a director or officer who is a party to a
proceeding because such person is a director or officer if such person delivers
to the corporation (a) a written affirmation of such person's good faith belief
that such person has met the relevant standard of conduct required for
indemnification under Georgia law or that the proceeding involves conduct for
which such person's liability has been eliminated under MAPICS-Georgia's
Articles of Incorporation and (b) such person's written undertaking to repay any
funds advanced if it is ultimately determined that such person is not entitled
to indemnification under the proposed Bylaws or Georgia law. In addition, the
proposed Bylaws provide that, in a manner consistent with public policy,
MAPICS-Georgia may indemnify and advance expenses to an employee or agent to the
same extent that directors and officers are provided with indemnification and
advances for expenses.
The Restated Articles of Organization of MAPICS-Mass. provide for
indemnification of its directors, officers, employees and other agents, and of
persons who serve at its request in such a capacity for another corporation,
partnership, joint venture, trust or other enterprise, to the full extent
permitted by Massachusetts law. Under Massachusetts law, a corporation may
indemnify current or former directors, officers, employees and other agents of
the corporation and persons who serve at its request in such capacities for
another organization to the extent specified in the corporation's articles of
organization, a bylaw adopted by the corporation's stockholders or by a vote of
the holders of a majority of the stock entitled to vote in the election of
directors. Such indemnification may include payment by the corporation of
expenses incurred in defending a civil or criminal action or proceeding in
advance of the final disposition of such action or proceeding, upon an
undertaking by the indemnified person to return such amounts if he shall be
adjudicated to be not entitled thereto. No indemnification may be provided for
any person with respect to any matter as to which he shall have been adjudicated
in any proceeding not to have acted in good faith in the reasonable belief that
his action was in the best interest of the corporation. Although neither
Massachusetts law nor the Restated Articles of Organization of MAPICS-Mass.
prohibit or limit the right of directors, officers, employees and other agents
to indemnification in proceedings by or in the right of the corporation, it is
not clear that a Massachusetts court would permit indemnification in such
circumstances.
AMENDMENTS OF ARTICLES AND BYLAWS
Articles. In general, to amend the articles of incorporation of a Georgia
corporation, (a) the board of directors must recommend the amendment to the
shareholders (unless the board elects, due to a conflict of interest, to make no
recommendation and communicates the basis for its election to the shareholders)
and (b) the shareholders must approve the amendment by a majority of the votes
entitled to be cast on the amendment, unless the articles of incorporation or
board of directors requires a greater vote or a vote by voting groups. If
shareholder group voting is required, a proposed amendment must be approved by
the shareholders generally and by each affected shareholder voting group, voting
separately. If the holders of two or more series of shares within a class would
be affected in the same or a substantially similar way by the proposed
amendment, all such holders must vote together as a single voting group on the
proposed amendment. Notwithstanding the foregoing, any amendment of Article IV
of MAPICS-Georgia's proposed Articles of Incorporation, addressing the size and
classification of the Board, the filling of vacancies thereon and the removal of
directors, requires the affirmative vote of the holders of at least 80% of all
classes of stock ordinarily entitled to vote in the election of directors,
considered as one class. In accordance with Georgia law, certain other
amendments to the articles of incorporation of a Georgia corporation may be
adopted by such corporation's board of directors without shareholder approval.
A majority vote of each class of stock outstanding and entitled to vote
thereon is required to authorize an amendment of a Massachusetts corporation's
articles of organization effecting one or more of the follow-
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ing: (a) an increase or reduction of the capital stock of any authorized class;
(b) a change in the par value of authorized shares with par value or any class
thereof; (c) a change of authorized shares with par value (or any class thereof)
into any number of shares without par value, or the exchange thereof pro rata
for a greater or lesser number of shares without par value; (d) certain changes
in the number of authorized shares (or any class thereof); or (e) a corporate
name change. Subject to certain conditions, a two-thirds vote of each class of
stock outstanding and entitled to vote thereon is required to authorize any
other amendment of the articles of organization, or (if the articles of
organization so provide) for a vote of a lesser proportion, but not less than a
majority of each class of stock outstanding and entitled to vote thereon. If any
amendment requiring a two-thirds vote would adversely affect the rights of any
class or series of stock a two-thirds vote of such class voting separately, or a
two-thirds vote of such series, voting together with any other series of the
same class adversely affected in the same manner, is also necessary to authorize
such amendment. As with the proposed Articles of Incorporation of
MAPICS-Georgia, any amendment to the provisions of MAPICS-Mass.'s Articles of
Organization which addresses the size and classification of the Board, the
filling of vacancies thereon and the removal of directors requires the
affirmative vote of the holders of at least 80% of the combined voting power of
the shares of capital stock entitled to vote in the election of directors.
Bylaws. The proposed Articles of Incorporation of MAPICS-Georgia provide
that its Bylaws may be altered, amended or repealed, and new Bylaws may be
adopted, by (a) the affirmative vote of the holders of a majority of the voting
power of all the shares of capital stock then entitled to vote generally in the
election of directors, voting together as a single class, or (b) its Board of
Directors, but that any bylaw adopted by the Board may be altered, amended or
repealed by the affirmative vote of the holders of a majority of the voting
power of all the shares of capital stock then entitled to vote generally in the
election of directors, voting together as a single class. The shareholders may
also prescribe, in the action taken to amend or adopt the Bylaws or bylaw, that
the provisions so amended or adopted may not be altered, amended or repealed by
the Board of Directors. The Restated Articles of Organization and Bylaws of
MAPICS-Mass. contain substantially similar provisions.
ANTI-TAKEOVER LAWS
Business Combination Statutes. The Georgia business combinations statute
(the "Georgia Business Combinations Statute") generally prohibits certain
"resident domestic Georgia corporations" from entering into certain business
combination transactions with any "interested shareholder" (generally defined as
any person other than the corporation or its subsidiaries beneficially owning at
least 10% of the outstanding voting stock of the corporation) for a period of
five years from the date that person became an interested shareholder, unless:
(a) prior to becoming an interested shareholder, the board of directors of the
corporation approved either the business combination or the transaction by which
the shareholder became an interested shareholder; (b) in the transaction in
which the shareholder became an interested shareholder, the interested
shareholder became the beneficial owner of at least 90% of the voting stock
outstanding (excluding, for purposes of determining the number of shares
outstanding, "Insider Shares," as defined below) at the time the transaction
commenced; or (c) subsequent to becoming an interested shareholder, such
shareholder acquired additional shares resulting in the interested shareholder
being the beneficial owner of at least 90% of the outstanding voting shares
(excluding, for purposes of determining the number of shares outstanding,
Insider Shares) and the transaction was approved at an annual or special meeting
of shareholders by the holders of a majority of the voting stock entitled to
vote thereon (excluding from such vote Insider Shares and voting stock
beneficially owned by the interested shareholder). For purposes of the Georgia
Business Combinations Statute, "Insider Shares" refers generally to shares owned
by: (a) persons who are directors or officers of the corporation, their
affiliates, or associates; (b) subsidiaries of the corporation; and (c) any
employee stock plan under which participants do not have the right (as
determined exclusively by reference to the terms of such plan and any trust
which is part of such plan) to determine confidentially the extent to which
shares held under such plan will be tendered in a tender or exchange offer. A
Georgia corporation's bylaws must specify that all requirements of the Georgia
Business Combinations Statute apply to the corporation in order for the Georgia
Business Combinations Statute to apply. The proposed Bylaws of MAPICS-Georgia
contain a provision stating that all requirements of the Georgia Business
Combinations Statute (and any successor provisions thereto) apply to any
"business combination" involving MAPICS-Georgia.
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MAPICS-Mass. is subject to the Massachusetts business combinations statute
(the "Massachusetts Business Combinations Statute"). This statute generally
prohibits a publicly held Massachusetts corporation, such as MAPICS-Mass., from
engaging in a "business combination" with an "interested stockholder" for a
period of three years after the date of the transaction in which the person
becomes an interested stockholder, unless (a) the interested stockholder obtains
the approval of the board of directors prior to becoming an interested
stockholder, (b) the interested stockholder acquires 90% of the outstanding
voting stock of the corporation (excluding shares held by certain affiliates of
the corporation) at the time it becomes an interested stockholder or (c) the
business combination is approved by both the board of directors and the holders
of two-thirds of the outstanding voting stock of the corporation (excluding
shares held by the interested stockholder). Generally, an "interested
stockholder" is a person who, together with affiliates and associates, owns (or
at any time within the prior three years did own) 5% or more of the outstanding
voting stock of the corporation. Although MAPICS-Mass. is currently subject to
the Massachusetts Business Combinations Statute, the Board of Directors may
amend its Bylaws at any time to remove MAPICS-Mass. from the statute's
application.
Fair Price Statute. Georgia's fair price statute (the "Fair Price
Provision") imposes certain additional requirements on "business combinations"
between a Georgia corporation and any person who is an "interested shareholder"
of that corporation. In addition to any vote otherwise required by law or the
corporation's articles of incorporation, under the Fair Price Provision,
business combinations with an interested shareholder must meet one of the three
following criteria designed to protect a corporation's shareholders: (a) the
transaction must be unanimously approved by the "continuing directors" of the
corporation (generally directors who served prior to the time an interested
shareholder acquired 10% or greater ownership and who are unaffiliated with such
interested shareholder), provided that the continuing directors constitute at
least three members of the board of directors at the time of such approval; (b)
the transaction must be recommended by at least two-thirds of the continuing
directors and approved by a majority of the votes entitled to be cast by holders
of voting shares, other than voting shares beneficially owned by the interested
shareholder who is, or whose affiliate is, a party to the business combination;
or (c) the terms of the transaction must meet specified fair pricing criteria
and certain other tests. A Georgia corporation's bylaws must specify that all
requirements of the Fair Price Provision apply to the corporation in order for
the Fair Price Provision to apply. The proposed Bylaws of MAPICS-Georgia contain
a provision stating that all requirements of the Fair Price Provision (and any
successor provisions thereto) apply to any "business combinations" involving
MAPICS-Georgia. Massachusetts law does not contain a provision similar to the
Fair Price Provision.
Control Share Acquisition Statute. Under the Massachusetts control share
acquisition statute (the "Control Share Acquisition Statute"), a person who
acquires beneficial ownership of shares of stock of a subject Massachusetts
corporation in a threshold amount equal to or greater than one-fifth, one-third
or a majority of the voting stock of the corporation (a "control share
acquisition") must obtain the approval of a majority of shares entitled to vote
generally in the election of directors (excluding (a) any shares owned by such
person acquiring or proposing to acquire beneficial ownership of shares in a
control share acquisition, (b) any shares owned by any officer of the
corporation and (c) any shares owned by any employee of the corporation who is
also a director of the corporation) in order to vote the shares that such person
acquires. The statute does not require that such person consummate the purchase
before the stockholder vote is taken. The Control Share Acquisition Statute
permits, to the extent authorized by a corporation's articles of organization or
bylaws, redemption of all shares acquired by an acquiring person in a control
share acquisition for fair value (which is to be determined in accordance with
procedures adopted by the corporation) if (a) no control acquisition statement
is delivered by the acquiring person or (b) a control share acquisition
statement has been delivered and voting rights were not authorized for such
shares by the stockholders in accordance with applicable law. The Control Share
Acquisition Statute permits a Massachusetts corporation to elect not to be
governed by the statute by including a provision to such effect in the
corporation's articles of organization or bylaws. As permitted by Massachusetts
law, MAPICS-Mass. has elected by a provision in its Bylaws not to be governed by
the Control Share Acquisition Statute. The Board of Directors of MAPICS-Mass.
may, however, amend the Bylaws of MAPICS-Mass. at any time to subject
MAPICS-Mass. to this statute prospectively. Georgia law does not contain a
provision similar to the Control Share Acquisition Statute.
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The Reincorporation proposal is not being recommended in response to any
specific effort of which the Company is aware to accumulate the Company's shares
or to obtain control of the Company.
AMENDED AND RESTATED RIGHTS AGREEMENT
The Company has established a stockholder rights plan pursuant to the
Rights Agreement dated as of December 3, 1996 (the "Rights Agreement") between
the Company and The First National Bank of Boston. In connection with the
Reincorporation, the Company intends to amend and restate the Rights Agreement
(as so amended and restated, the "Amended and Restated Rights Agreement") to
provide, among other things, that the Amended and Restated Rights Agreement will
be governed by Georgia law and that MAPICS-Georgia (rather that MAPICS-Mass.)
will be a party thereto. In all other material respects, the Amended and
Restated Rights Agreement will be the same as the Rights Agreement.
FEDERAL INCOME TAX CONSEQUENCES
In the opinion of Alston & Bird LLP, counsel to the Company, the
Reincorporation will constitute a tax-free reorganization under section
368(a)(1)(F) of the Internal Revenue Code of 1986, as amended (the "Code"). In
rendering its opinion, such counsel has relied upon representations contained in
certificates of the Company, including the representation that Company assets
used to pay expenses incurred in connection with the transaction, Company assets
used to pay shareholders who exercise and perfect their appraisal rights, and
Company assets used to make redemptions and distributions (except normal,
regular dividends and except for the Distribution) immediately preceding the
transaction will not, in the aggregate, constitute 1% of the value of the net
assets of the Company. If any such representations are inaccurate or incomplete
in any material respect, such opinion cannot be relied upon. No ruling has been
or is expected to be requested from the Internal Revenue Service ("IRS") as to
the tax consequences of the Reincorporation and, accordingly, no assurance can
be given by the Company that the IRS will agree with the conclusions of counsel.
Assuming that the Reincorporation constitutes such a tax-free
reorganization, it will not adversely affect the federal income tax consequences
to the Company and its stockholders with respect to the Distribution. In
addition, the federal income tax consequences to the Company and its
stockholders resulting from the Reincorporation will be as follows: (a) no gain
or loss will be recognized by MAPICS-Mass. or MAPICS-Georgia as a result of the
transaction; and (b) no gain or loss will be recognized by stockholders who
exchange their MAPICS-Mass. shares solely for MAPICS-Georgia shares.
Stockholders will have the same tax basis in the shares of MAPICS-Georgia
received in the Reincorporation that they had in the shares of MAPICS-Mass.
exchanged therefor, and the holding period of the shares of MAPICS-Georgia will
include the period during which the shares of MAPICS-Mass. were held, provided
such shares of MAPICS-Mass. were held as capital assets on the effective date of
the Reincorporation. A dissenting stockholder who receives payment for shares
upon exercise of the right of appraisal will recognize gain or loss for federal
income tax purposes measured by the difference between such stockholder's basis
for the shares and the amount of payment received. Such gain or loss will be
capital gain or loss if the shares were held as capital assets on the effective
date of the Reincorporation, subject to the provisions and limitations of
Sections 302 and 306 of the Code. Under recently enacted legislation, capital
gain recognized will be subject to a maximum federal income tax rate of 20% if
the shares have been held by such dissenter for more than 18 months, and to a
maximum federal income tax rate of 28% if such shares have been held for more
than one year but not more than 18 months. See "-- Right to Dissent and
Appraisal."
The foregoing summary of federal income tax consequences is included for
general information only and does not address the federal income tax
consequences to all holders of the Company's capital stock (including those who
do not hold their shares as a capital asset). In view of the individual nature
of tax consequences, holders are urged to consult their own tax advisors as to
the specific tax consequences of the transaction, including the application and
effect of state, local and foreign income and other tax laws.
RIGHT TO DISSENT AND APPRAISAL
If the Reincorporation proposal is approved by the required vote of the
Company's stockholders and is not abandoned or terminated, holders of the
Company's capital stock who did not vote for the Reincorporation
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<PAGE> 19
proposal may, by complying with Sections 85 through 98 of Chapter 156B of the
MBCL, be entitled to appraisal rights as described therein ("Appraisal Rights").
The record holders of the Company's capital stock who are eligible to, and do,
exercise their Appraisal Rights with respect to the Reincorporation are referred
to herein as "Dissenting Stockholders," and the shares of stock with respect to
which they exercise Appraisal Rights are referred to herein as "Dissenting
Shares." If a stockholder of the Company has a beneficial interest in shares of
the Company's capital stock that are held of record in the name of another
person, and such stockholder desires to perfect whatever Appraisal Rights such
beneficial stockholder may have, such beneficial stockholder must act promptly
to cause the holder of record timely and properly to follow the steps summarized
below.
Pursuant to Massachusetts law, a stockholder of the Company may dissent
from the proposed corporate action to approve the Reincorporation and receive
the right to an appraisal of such stockholder's shares. As required by
Massachusetts law, a copy of Sections 85 through 98 of the MBCL is attached
hereto as Exhibit D.
If the Reincorporation is consummated, the Dissenting Stockholders will be
entitled, if they strictly comply with the provisions of the MBCL, to have the
fair value of their shares judicially determined and paid to them. The following
discussion is not a complete statement of Massachusetts law relating the
Appraisal Rights, and is qualified in its entirety by reference to Sections 85
through 98 of the MBCL attached to this Proxy Statement as Exhibit D and
incorporated herein by reference. This discussion and Sections 85 through 98 of
the MBCL should be reviewed carefully by any holder who wishes to exercise
statutory Appraisal Rights or wishes to preserve the right to do so, because
failure to comply with the required procedure will result in the loss of such
rights. A stockholder of the Company who votes for the adoption and approval of
the Reincorporation proposal will be deemed to have waived such stockholder's
right to exercise Appraisal Rights with respect to all shares of the Company's
capital stock held by such stockholder. Any holder who is considering dissenting
should consult his or her legal advisor.
1. To exercise Appraisal Rights, a stockholder must (a) file with the
Company, before the taking of the stockholders' vote on the approval of the
Reincorporation proposal at the Annual Meeting, a written objection to the
Reincorporation proposal stating that the intention of such stockholder is to
demand payment for shares owned by such stockholder if the Reincorporation
proposal is approved and (b) the stockholder must not vote in favor of the
Reincorporation proposal. A vote in favor of the Reincorporation proposal will
waive such holder's Appraisal Rights. However, a stockholder's failure to vote
on the Reincorporation proposal will not in itself be a waiver of such holder's
Appraisal Rights. A vote against the Reincorporation proposal does not, alone,
constitute a written objection. A stockholder who dissents and demands Appraisal
Rights must do so as to all shares of the Company's capital stock held by such
stockholder. A stockholder may not assert Appraisal Rights with respect to less
than all of such stockholder's shares.
2. If the Reincorporation proposal is approved and adopted by the Company's
stockholders, within 10 days after the effective date of the Reincorporation
proposal, the Company must give written notice that the Reincorporation proposal
has become effective to each stockholder who gave notice before the Annual
Meeting of such stockholder's objection to the Reincorporation proposal and who
did not vote in favor of the Reincorporation proposal.
3. If the stockholder did not vote in favor of the Reincorporation
proposal, such Dissenting Stockholder may, within 20 days after the mailing of
the notice that the Reincorporation proposal is effective, make written demand
on the Company for the payment of the fair value of such holder's Dissenting
Shares. Any stockholder failing to make demand for payment within the 20-day
period shall be bound by the Reincorporation proposal.
4. Within 30 days after the expiration of the Dissenting Stockholders'
20-day notice period, the Company must deliver to any Dissenting Stockholder
payment of the fair value of such holder's Dissenting Shares.
5. If, during the 30-day period after the expiration of the period during
which the demand may be made, the Dissenting Stockholder and the Company do not
agree as to the fair value of the Dissenting Shares, then either of them may
file a bill in equity in the Superior Court in Middlesex County, Massachusetts
(the
15
<PAGE> 20
"Court") requesting a determination of the fair value of such holder's
Dissenting Shares. The bill in equity must be filed within four months after the
date of expiration of the foregoing 30-day period.
6. If the bill in equity is timely filed, the Court or an appointed special
master will hold a hearing. After the hearing on the petition, the Court shall
enter a decree determining the fair value of the Dissenting Shares and shall
order the Company to make payment of such value, together with interest, from
the date of the vote approving the Reincorporation proposal to the Dissenting
Stockholders entitled to said payment, subject to receipt of duly endorsed
certificates for the Dissenting Shares. Pursuant to the MBCL, the fair value of
the Dissenting Shares is the value thereof as of the day immediately preceding
the Annual Meeting, excluding any element of value arising from the expectation
or accomplishment of the Reincorporation. All court costs, including appraisers'
fees, shall be allocated by the Court in a manner it determines to be fair and
equitable.
7. Upon consummation of the Reincorporation, each Dissenting Stockholder
will cease to have any rights of a stockholder except the right to be paid the
fair value of the Dissenting Shares and the right to receive other
distributions, if any, payable to stockholders of record prior to the effective
date of the Reincorporation proposal and any other rights under applicable
Massachusetts law.
CONDITION TO THE REINCORPORATION RELATED TO DISSENTING SHARES
It is a condition to the consummation of the Reincorporation that the
aggregate amounts paid or to be paid to Dissenting Stockholders constitute less
than 1% of the value of the net assets of the Company as of the date of the
Reincorporation. However, such condition may be waived by the Boards of
Directors of MAPICS-Mass. and MAPICS-Georgia, acting in their sole discretion.
In addition, any determination regarding the satisfaction of such condition will
be made by the Boards of Directors of MAPICS-Mass. and MAPICS-Georgia, acting in
their sole discretion. See "-- Federal Income Tax Consequences."
AMENDMENT AND WAIVER OF THE REINCORPORATION AGREEMENT
MAPICS-Georgia and MAPICS-Mass. may, by resolution of their respective
Boards of Directors, amend, modify or supplement the Reincorporation Agreement,
or waive the application of any provision thereof, provided that any such
amendment, modification, supplement or waiver is in writing and signed by
MAPICS-Georgia and MAPICS-Mass.
TERMINATION OF THE REINCORPORATION AGREEMENT
The Reincorporation Agreement provides that the Boards of Directors of
MAPICS-Mass. and MAPICS-Georgia may terminate the Reincorporation Agreement and
abandon the merger contemplated thereby at any time prior to its effective time
for any reason, whether before or after approval by the stockholders of
MAPICS-Mass.
STOCKHOLDER VOTE REQUIRED TO APPROVE THE REINCORPORATION PROPOSAL
Approval of the Reincorporation proposal will require the affirmative vote
of the holders of at least two-thirds of the shares of all classes and series of
the Company's outstanding capital stock, voting together as a single class, as
well as the affirmative vote of MAPICS-Mass. as the sole shareholder of
MAPICS-Georgia.
PROPOSAL 2
ELECTION OF DIRECTORS
NOMINEES
Pursuant to the Company's Restated Articles of Organization and Bylaws, the
authorized number of Directors of the Company is seven, and the Board is divided
into three classes, which are as nearly equal in number as possible. The
directors in each class are elected by the stockholders for a term of three
years and until their successors are elected and qualified. The term of office
of one of the classes of directors expires each year at the Annual Meeting of
Stockholders, and a new class of directors is elected by the stockholders each
year at that time.
16
<PAGE> 21
In connection with the Distribution, all of the directors of Marcam other
than William E. Ford and Edward J. Kfoury resigned. The vacancies so created
have been filled by the remaining directors with the other individuals
identified as Class I, Class II and Class III directors below.
At the Annual Meeting, the terms of the two Class I directors, Roger
Heinen, Jr. and Edward J. Kfoury, will expire, and the Board of Directors has
nominated each of these individuals to stand for re-election as directors at the
Annual Meeting. If elected by the stockholders, each of the nominees will serve
a three-year term which will expire at the 2001 Annual Meeting of Stockholders.
If either of the nominees should be unavailable to serve for any reason (which
is not anticipated), the Board of Directors may designate a substitute nominee
or nominees (in which case the persons named as proxies on the enclosed proxy
card will vote the shares represented by all valid proxy cards for the election
of such substitute nominee or nominees), allow the vacancy or vacancies to
remain open until a suitable candidate or candidates are located and nominated
by resolution of the Board of Directors, or by resolution thereof provide for a
lesser number of directors.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE "FOR"
THE PROPOSAL TO RE-ELECT ROGER HEINEN, JR. AND EDWARD J. KFOURY AS DIRECTORS OF
THE COMPANY FOR A THREE-YEAR TERM EXPIRING AT THE 2001 ANNUAL MEETING OF
STOCKHOLDERS AND UNTIL THEIR SUCCESSORS HAVE BEEN DULY ELECTED AND QUALIFIED.
INFORMATION REGARDING NOMINEES AND CONTINUING DIRECTORS
The following table sets forth certain information regarding the two
nominees for director, the four incumbent directors whose terms as directors
will continue following the Annual Meeting and one additional person who has
been appointed by the Board as a director for a term commencing on January 1,
1998 and expiring at the 2000 Annual Meeting of Stockholders.
CLASS I DIRECTORS NOMINATED TO SERVE UNTIL THE 2001 ANNUAL MEETING OF
STOCKHOLDERS
Roger Heinen, Jr.............. Mr. Heinen, age 46, was elected a director of
the Company in September 1997. From January
1993 until March 1996, he served as a Senior
Vice President of Microsoft Corporation.
Prior thereto, he was a Senior Vice President
of Apple Computer, Inc. from January 1990
until January 1993. Mr. Heinen is also a
director of ANSYS, Inc. and The Computer
Museum.
Edward J. Kfoury.............. Mr. Kfoury, age 59, has been a director of the
Company since May 1993. He was initially
appointed to the Board of Directors of Marcam
as a designee of International Business
Machines Corporation ("IBM"). Mr. Kfoury is
no longer a designee of IBM. Mr. Kfoury
served as a division President and as a Vice
President of IBM until June 1, 1993, the
effective date of his retirement. Mr. Kfoury
is also a director of Dendrite, Inc.
CLASS II DIRECTORS TO SERVE UNTIL THE 1999 ANNUAL MEETING OF STOCKHOLDERS
George A. Chamberlain 3d...... Mr. Chamberlain, age 62, was elected a director
of the Company in August 1997. Mr.
Chamberlain has served as the Chief Financial
Officer of Radnet, Inc., a computer software
company, since September 1997. From September
1994 until the date of the Distribution in
July 1997, he served as Marcam's Chief
Financial Officer. Prior to joining Marcam,
Mr. Chamberlain was an Executive Vice
President with Capital Technologies, Inc., a
consulting and venture capital company,
during 1993 and 1994. Mr. Chamberlain retired
from Digital Equipment Corpo-
17
<PAGE> 22
ration in 1992, where he had most recently
been Vice President of Finance.
Richard C. Cook............... Mr. Cook, age 50, was elected as the Company's
President and Chief Executive Officer and was
appointed as a director of the Company in
August 1997. From July 1996 to August 1997,
Mr. Cook served as Marcam's Senior Vice
President and General Manager, MAPICS
Business Group. From October 1994 to July
1996, he served as Marcam's Vice President
and General Manager, MAPICS Business Group.
Mr. Cook served as the President, Chief
Executive Officer and Chairman of the Board
of Mapics, Inc. from February 1993 to
September 1994. Mr. Cook was employed by IBM
as Director of its Atlanta Software
Development Laboratory from March 1990 to
February 1993 and as Director of its
Corporate CIM (Computer Integrated
Manufacturing) Project Office from March 1988
to April 1990.
CLASS III DIRECTORS TO SERVE UNTIL THE 2000 ANNUAL MEETING OF STOCKHOLDERS
William E. Ford............... Mr. Ford, age 36, has been a director of the
Company since October 1995. He was appointed
to the Board of Directors as a designee of
GAP 21, a stockholder of the Company,
pursuant to a Convertible Preferred Stock
Purchase Agreement dated as of September 20,
1995 by and among Marcam, GAP 21, GAP
Coinvestment and The Northwestern Mutual Life
Insurance Company. Mr. Ford has been a
managing member of General Atlantic Partners,
LLC since 1991. Prior to 1991, Mr. Ford was a
Senior Associate with Morgan Stanley & Co.
Incorporated. Mr. Ford is also a director of
GT Interactive Software Corp., Envoy
Corporation, LHS Group Inc., SS&C
Technologies, Inc. and E*Trade Group, Inc.
Terry Osborne................. It is anticipated that Mr. Osborne, age 59,
will be elected by the Board as a director of
the Company effective as of January 1, 1998.
Mr. Osborne served as President and Chief
Operating Officer of System Software
Associates ("SSA"), a computer software
company, from November 1994 until October
1996, the date of his retirement. From
October 1987 until October 1994, he served as
SSA's General Manager and Vice President for
Europe. Prior to joining SSA, he was employed
by IBM in various capacities since 1961,
including vice president level positions in
both the United States and Europe. Mr.
Osborne is also Chairman of Dr. Solomon's
Group PLC and Chairman of Cimax
International.
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<PAGE> 23
H. Michell Watson, Jr......... Mr. Watson, age 60, was elected a director of
the Company and Chairman of the Board of
Directors in September 1997. Mr. Watson has
served as the President of Sigma Group of
America, a consulting company, since June
1992. From January 1989 until June 1992, he
was President and Chief Executive Officer of
Rolm Co., a joint venture of IBM and Siemen's
AG. In addition, he is a retired Vice
President of IBM. Mr. Watson is also a
director of Praxair Inc., Caliber Systems,
Inc. and Plasti-Line, Inc., and is President
of Helen Keller International.
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors of the Company conducts its business through
meetings of the full Board and through committees of the Board, including the
standing Audit Committee (the "Audit Committee") and Compensation Committee (the
"Compensation Committee"). From October 1, 1996 through the date of the
Distribution on July 29, 1997, the Board of Directors of Marcam held nine
meetings, the Compensation Committee held five meetings and the Audit Committee
held four meetings. Each director of Marcam attended at least 75% of all
meetings of the full Board of Directors and of each committee of the Board of
which he is a member, except Mr. Grabe, who attended 64% of such meetings. Mr.
Grabe resigned from the Board of Directors in connection with the Distribution.
From the date of the Distribution through September 30, 1997, the Board of
Directors of MAPICS held one meeting and the Compensation Committee and the
Audit Committee held no meetings. Each director of MAPICS attended at least 75%
of all meetings of the full Board of Directors.
The Audit Committee is responsible for reviewing with the Company's
independent accountants their audit plan, the scope and results of their audit
engagement and the accompanying management letter, if any, reviewing the scope
and results of the Company's internal auditing procedures, consulting with the
independent accountants and management with regard to the Company's accounting
methods and the adequacy of its internal accounting controls, approving
professional services provided by the independent accountants, reviewing the
independence of the independent accountants, and reviewing the range of the
independent accountants' audit and non-audit fees. The Audit Committee is
comprised of George A. Chamberlain 3d, William E. Ford, Roger Heinen, Jr. and H.
Mitchell Watson, Jr.
The Compensation Committee is responsible for making relevant compensation
decisions of the Company and for administering and interpreting the Company's
employee benefit plans, which includes, among other things, determining which
directors, officers and employees will receive awards under the plans, when the
awards will be granted, the type of awards to be granted, the number of shares
or cash involved in each award, the time or times when any options granted will
become exercisable and, subject to certain conditions, the price and duration of
such options. The Compensation Committee is comprised of William E. Ford, Edward
J. Kfoury and H. Mitchell Watson, Jr.
The Board of Directors as a whole functions as a nominating committee to
select management's nominees for election to the Board. The Board of Directors
will also consider nominees recommended by stockholders. For a description of
requirements regarding stockholder nominations and other proposals, see
"Stockholders' Proposals for 1999 Annual Meeting."
DIRECTOR COMPENSATION
As compensation for services as a director, the Company grants to each
member of the Company's Board of Directors who is not then an employee of the
Company (a "Non-Employee Director"), upon the commencement of service as a
director, a one-time grant under the 1991 Non-Employee Director Stock Option
Plan (the "Current DSOP") of an option to purchase 20,000 shares of the Common
Stock and thereafter an annual grant under the Current DSOP of an option to
purchase 3,000 shares of the Common Stock. These options vest 25% on each
anniversary of the grant date, so that on the fourth anniversary they are fully
vested. In addition, during the fiscal year ended September 30, 1997, Board
members who were not
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<PAGE> 24
employees received $1,000 for each Board meeting attended and for each committee
meeting attended on a day other than one on which the Board of Directors met.
Effective as of January 1, 1998, Non-Employee Directors will receive, in lieu of
such cash compensation, (a) an annual cash retainer of $3,000 and (b) $1,000 for
each Board meeting or committee meeting attended (or $500 if such meeting is
attended by telephone). Directors who are employees of the Company receive no
directors' fees. For information regarding proposed new stock-based incentive
compensation plans for the directors of the Company, see Proposals 3 and 4
herein.
On February 11, 1997, Mr. Ford was granted options to purchase 20,000
shares of Common Stock under the Company's 1994 Stock Plan. However, pursuant to
an agreement with the Company, Mr. Ford has waived any and all rights to receive
all other cash compensation, stock options and stock grants given to other
members of the Board of Directors.
Under the Company's current Directors as Consultants policy, the Board of
Directors may, upon the request of the Company's President and Chief Executive
Officer, retain its directors as consultants from time to time. The Company will
pay such a consultant $3,000 per day for each day that he provides services to
the Company in his capacity as a consultant or, if such services are provided
for less than a full day, the Company will pay the consultant $375 for each hour
that such services are provided. However, the aggregate amount of such
compensation paid to any single consultant may not exceed $45,000 per year. In
addition, the Company will reimburse each consultant's reasonable travel and
living expenses incurred in connection with the provision of such services. The
Company has retained Mr. Chamberlain as a consultant in accordance with its
Directors as Consultants policy and, pursuant thereto, has agreed to pay him
$4,500 for services rendered in fiscal 1997.
Under the Company's Deferred Compensation Plan for Non-Employee Directors
(the "Deferred Compensation Plan"), Non-Employee Directors may elect to defer
all or any part of their fees for services as a director. Pursuant to the
Deferred Compensation Plan, eligible directors of the Company may elect to defer
receipt of all or a specified portion of their compensation in the form of cash
with an interest rate tied to United States treasury bills. The Deferred
Compensation Plan provides that any director's compensation which is deferred
thereunder will be paid in cash after the termination of such director's service
as a director. Participating directors may elect to have such deferred
compensation paid in a lump sum or in up to ten annual installments. Payment of
compensation which has been deferred under the Deferred Compensation Plan
commences in January of the year following the year in which service as a
director terminates, except that earlier or accelerated distributions may be
made in certain events of unforeseeable emergency. No directors currently have
elected to participate in the Deferred Compensation Plan, and it is anticipated
that the Company will terminate the Deferred Compensation Plan in fiscal 1998.
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<PAGE> 25
EXECUTIVE COMPENSATION
The following table sets forth the compensation earned by (a) each person
who served as the Chief Executive Officer of the Company during any part of the
fiscal year ended September 30, 1997, (b) each other executive officer of the
Company who served as such at September 30, 1997 and whose annual compensation
and bonus was $100,000 or more and (c) any person for whom disclosure would have
been provided pursuant to clause (b) but for the fact that the person did not
serve as an executive officer at September 30, 1997 (collectively, the "Named
Executive Officers").
SUMMARY OF COMPENSATION
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
AWARDS
ANNUAL ------------
COMPENSATION(1) SECURITIES ALL OTHER
FISCAL ----------------------- UNDERLYING COMPENSATION
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($)(2) OPTIONS(#) ($)(3)
- --------------------------- ------ --------- ----------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Richard C. Cook(4)........................ 1997 $167,649 $156,734 176,600 $4,611
President and Chief Executive........... 1996 $162,437 $189,801 -- $3,018
Officer of MAPICS; Senior Vice.......... 1995 $149,856 $ 45,128 -- $1,504
President and General Manager, MAPICS
Business Group of Marcam
Michael J. Quinlan(5)..................... 1997 $204,117 -- -- --
President and Chief Executive........... 1996 $175,385 $ 40,000 250,000 $ 84
Officer of Marcam....................... 1995 -- -- -- --
George A. Chamberlain 3d(6)............... 1997 $204,117 -- 20,000(7) $4,750
Chief Financial Officer of.............. 1996 $240,000 $ 20,000 -- $2,459
Marcam.................................. 1995 $240,000 $ 25,000 -- $2,376
Robert A. Cramer(8)....................... 1997 $123,077 -- -- $3,692
Vice President and General.............. 1996 $113,088 $ 52,860 100,000 $2,034
Manager, Process ERP.................... 1995 -- -- -- --
Business Group of Marcam
Thomas F. Aery(9)......................... 1997 $110,418 $ 62,577 72,192 $4,534
Vice President of Worldwide............. 1996 $ 99,875 $ 41,054 5,000 $4,424
Customer Support of MAPICS; Vice........ 1995 $ 97,500 $ 12,716 5,000 $3,379
President of Customer Support, MAPICS
Business Group of Marcam
William J. Gilmour(10).................... 1997 $ 96,538 $ 44,427 99,160 $5,547
Chief Financial Officer and Vice........ 1996 $ 78,678 $ 23,954 1,000 $1,665
President of Finance of MAPICS;......... 1995 $ 75,000 $ 26,074 975 $ 66
Controller, MAPICS Business Group of
Marcam
</TABLE>
- ---------------
(1) The annual compensation data exclude perquisites, the aggregate annual
amount of which for each officer was less than 10% of his total reported
salary and bonus.
(2) The data reflect bonuses earned in a fiscal year, even if payment occurred
in the subsequent fiscal year.
(3) Consists of amounts contributed on behalf of the Named Executive Officers
under the Company's group life insurance policy and matching contributions
made by the Company to the Company's 401(k) Plan based on a percentage of
the individual's contributions to the 401(k) Plan.
(4) Mr. Cook served as Senior Vice President and General Manager, MAPICS
Business Group of Marcam from October 1994 until the Distribution in July
1997, when he was elected as President and Chief Executive Officer of
MAPICS.
(5) Mr. Quinlan served as the President and Chief Executive Officer of Marcam
from January 1996 until the Distribution in July 1997. The table reflects
compensation earned by Mr. Quinlan until the Distribution date.
(6) Mr. Chamberlain served as Chief Financial Officer of Marcam from September
1994 until the Distribution in July 1997. The table reflects compensation
earned by Mr. Chamberlain until the Distribution date.
21
<PAGE> 26
(7) The table reflects options granted to Mr. Chamberlain pursuant to the
Company's 1991 Non-Employee Director Stock Option Plan upon his election as
a director.
(8) Mr. Cramer served as the Vice President and General Manager, Protean
Business Group of Marcam from February to September 1996, and as the Vice
President and General Manager, Process ERP Business Group of Marcam from
September 1996 until the Distribution in July 1997. The table reflects
compensation earned by Mr. Cramer until the Distribution date.
(9) Mr. Aery served as Vice President of Customer Support, MAPICS Business
Group of Marcam from May 1995 until the Distribution in July 1997, when he
was elected as Vice President of Worldwide Customer Support of MAPICS.
(10) Mr. Gilmour served as Controller, MAPICS Business Group of Marcam from
October 1994 until the Distribution in July 1997, when he was elected as
Chief Financial Officer and Vice President of Finance of MAPICS.
EMPLOYMENT AGREEMENTS
The Company was party to an employment agreement dated June 10, 1997 (the
"Quinlan Agreement") with Mr. Quinlan, the Company's President and Chief
Executive Officer from January 1996 until July 29, 1997, the date of the
Distribution. Pursuant to its terms, the Quinlan Agreement was assigned by the
Company to Marcam Solutions effective as of the completion of the Distribution.
When the Company was a party thereto, the Quinlan Agreement provided that
if Mr. Quinlan's employment with the Company or any of its subsidiaries or
affiliates was either terminated by the Company for any reason (other than gross
dereliction of duty or a criminal or civil judgment which, in the good faith
judgment of the Company or its successor, rendered Mr. Quinlan unsuitable for
such employment) or terminated by Mr. Quinlan for Good Reason (as defined
below), then: (a) the Company would pay him an amount equal to the sum of (i)
one year's then current base salary, (ii) an amount, determined at his then
current salary, for all earned but untaken vacation days and (iii) any award
previously made to him under his then current bonus plan which had not yet been
paid; (b) the Company would make payments on his behalf under the Consolidated
Omnibus Budget Reconciliation Act of 1985 for one year; (c) any options granted
to him under the Company's 1987 or 1994 Stock Plans would become immediately
vested and exercisable; and (d) the Company would otherwise pay Mr. Quinlan's
ordinary post-termination benefits in accordance with its retirement, insurance
and other benefit plans and arrangements.
"Good Reason" is defined in the Quinlan Agreement as (v) a reduction in his
compensation or benefits without providing an adequate substitute therefor; (w)
a substantial adverse change in the nature of his duties or authority, or in his
title, position or status; (x) the relocation by the Company of his office
outside the thirty mile radius of the place where it was located on the date of
the Quinlan Agreement; (y) a material breach by the Company of any employment,
compensation or similar agreement with Mr. Quinlan; and (z) the failure by the
Company to give him, within ten days after his request therefor, written
assurance of its intent to honor the Quinlan Agreement.
22
<PAGE> 27
OPTION GRANTS IN THE LAST FISCAL YEAR
The following table provides information with regard to stock option grants
to the Named Executive Officers pursuant to the Company's 1987 and 1994 Stock
Plans, as amended, during the fiscal year ended September 30, 1997.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
PERCENT OF POTENTIAL REALIZABLE VALUE
TOTAL AT ASSUMED ANNUAL RATES
NUMBER OF OPTIONS OF STOCK PRICE
SECURITIES GRANTED TO EXERCISE APPRECIATION
UNDERLYING EMPLOYEES OR BASE FOR OPTION TERM(3)
OPTIONS IN FISCAL PRICE EXPIRATION ---------------------------
NAME GRANTED(#) YEAR(1) ($/SH)(2) DATE 5%($) 10%($)
- ---- ---------- ---------- --------- ---------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Richard C. Cook............ 19,000(4) 1.12% $ 8.73 9/30/2006 $193,912 $ 407,023
157,600(5) 9.29% $ 9.9375 7/29/2007 $984,943 $2,496,040
Michael J. Quinlan......... -- -- -- -- -- --
George A. Chamberlain 3d... 20,000(5)(6) 1.18% $10.50 8/3/2007 $132,068 $ 334,686
Robert A. Cramer........... -- -- -- -- -- --
Thomas F. Aery............. 11,492(4) .68% $ 8.73 9/30/2006 $117,286 $ 246,185
1,550(4) .09% $ 9.57 1/8/2007 $ 17,358 $ 36,425
59,150(5) 3.49% $ 9.9375 7/29/2007 $369,667 $ 936,807
William J. Gilmour......... 1,500(4) .09% $ 8.73 9/30/2006 $ 15,309 $ 32,133
97,660(5) 5.76% $ 9.9375 7/29/2007 $610,340 $1,546,721
</TABLE>
- ---------------
(1) Options to purchase a total of 1,696,294 shares of Common Stock were granted
to employees in fiscal 1997 under the Company's 1987 and 1994 Stock Plans,
the purpose of which is to provide incentive to, and to retain, key
employees who are in a position to make significant contributions to the
Company.
(2) The exercise price per share in the table reflects adjustments made by the
Compensation Committee in July 1997 to preserve the benefit to participants
in connection with, and to give effect to, the Distribution.
(3) Amounts reported in these columns represent hypothetical amounts that may be
realized upon exercise of options immediately prior to the expiration of
their term assuming the specified compounded rates of appreciation of the
Common Stock over the term of the options. These numbers are calculated
based on rules promulgated by the Securities and Exchange Commission and do
not reflect the Company's estimate of future stock price growth. Actual
gains, if any, on stock option exercises and Common Stock holdings are
dependent on the timing of such exercises and the future performance of the
Common Stock. There can be no assurances that the rates of appreciation
assumed in this table can be achieved or that the amounts reflected will be
received by the individuals. This table does not take into account any
appreciation of the price of the Common Stock from the date of grant to the
current date.
(4) The indicated options expire ten years from the date of grant and became
exercisable as to 20% on the date of grant and at the rate of 20% per annum
thereafter.
(5) The indicated options expire ten years from the date of grant and become
exercisable at the rate of 25% per annum, beginning on the first anniversary
of the grant date.
(6) The table reflects options granted to Mr. Chamberlain pursuant to the
Company's 1991 Non-Employee Director Stock Option Plan upon his election as
a director.
23
<PAGE> 28
OPTION EXERCISES AND FISCAL YEAR-END VALUES
The following table sets forth information regarding (a) the number of
shares of Common Stock received upon exercise of options by the Named Executive
Officers in the fiscal year ended September 30, 1997, (b) the net value realized
upon such exercise, (c) the number of unexercised options held as September 30,
1997 and (d) the aggregate dollar value of unexercised options held at September
30, 1997.
AGGREGATED OPTION EXERCISES IN THE LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES
<TABLE>
<CAPTION>
VALUE OF
NUMBER OF SECURITIES UNEXERCISED
UNDERLYING IN-THE-MONEY
UNEXERCISED OPTIONS OPTIONS AT
SHARES AT SEPTEMBER 30, 1997(#) SEPTEMBER 30, 1997($)(1)
ACQUIRED VALUE -------------------------- --------------------------
NAME ON EXERCISE(#) REALIZED($) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
- ---- -------------- ----------- -------------------------- --------------------------
<S> <C> <C> <C> <C>
Richard C. Cook........... -- -- 38,600/194,000 $ 185,546/660,434
Michael J. Quinlan........ -- -- 50,000/200,000 77,500/310,000
George A. Chamberlain 3d.. -- -- 72,000/68,000 347,760/281,840
Robert A. Cramer.......... 12,500 $44,750 27,500/-- 91,575/--
Thomas F. Aery............ -- -- 8,275/75,000 32,790/243,739
William J. Gilmour........ -- -- 2,525/100,000 $ 7,763/308,219
</TABLE>
- ---------------
(1) Value is based on the difference between the option exercise price and the
fair market value of $13.00 per share at September 30, 1997, multiplied by
the number of shares underlying the option.
REPORT OF THE COMPENSATION COMMITTEE
OF THE BOARD OF DIRECTORS
INTRODUCTION
The Compensation Committee is responsible for developing the Company's
executive compensation policies and advising the Board of Directors with respect
to such policies. At the beginning of fiscal 1997, the members of the
Compensation Committee were Dean R. McKay and William O. Grabe. Mr. McKay
resigned from the Compensation Committee in April 1997 and was replaced by
Richard S. Hickok. In connection with the Distribution, on August 4, 1997,
Messrs. Hickok and Grabe resigned as directors of the Company and members of the
Compensation Committee, and Edward J. Kfoury and William E. Ford were elected to
the Compensation Committee. Upon his appointment to the Board in September 1997,
H. Mitchell Watson, Jr. joined the Compensation Committee. The Compensation
Committee's goal is to implement a competitive compensation program which will
attract and retain talented executives and provide incentives to management to
enhance Company performance and stockholder value.
EXECUTIVE COMPENSATION PROGRAM
1997 COMPENSATION PROGRAM
The Company's executive compensation program in place for fiscal 1997
consisted of three elements: salary (base pay); annual incentive pay (cash
bonus); and long-term incentive pay (stock options). This program applied to the
Company's key management positions, including the position of Chief Executive
Officer. All of the Company's executives also were eligible for employee
benefits offered to all Company employees, including life, health, disability
and dental insurance, and the Company's savings plan and employee stock purchase
plan.
Salary. Base salary of top management for fiscal 1997 was set by the
Compensation Committee after review of salary levels in the software industry
for various executive positions. The Compensation Committee reviewed salary
information presented in several independent surveys, ranging from broad-based
overviews of the entire software industry to information regarding entities more
similar to the Company: software
24
<PAGE> 29
companies with over $50 million in revenue. "Median" levels were used as a guide
for setting salaries for the Company's top management positions, based on such
comparative information.
Annual Incentive Pay. Annual incentive pay in the form of cash bonuses for
executive officers of the Company in fiscal 1997 was based either (a) 100% on
the Company's financial performance, or (b) on a combination of the Company's
financial performance and the achievement of other individual or group
performance factors. During fiscal 1997, incentive pay was payable only if
performance exceeded 75% of targeted levels. Form 75% to 100% of targeted
performance, the executive received 4% of the budgeted amount for each 1% of
performance achieved. For performance exceeding 100%, the executive received an
amount ranging form .5% to 4% of the budgeted amount for each 1% increase in
performance. Incentive pay received by all executives for fiscal 1997 ranged
form $0 to $156,734.
Stock Options. During fiscal 1997, certain executives, including Mr. Cook,
received awards of stock options in connection with the Distribution. Such
awards were determined on the basis of the number of unvested stock options held
by such executives prior to the grant. In connection with his promotion, Mr.
Cook was granted 156,700 options, bringing his total number of unvested options
to 200,000, a level the Compensation Committee deemed to represent an
appropriate mix of retention value and performance incentive for the chief
executive officer. Other executives received stock option awards as necessary to
bring their levels of unvested options to a lesser total, generally ranging from
25,000 to 100,000. All options granted in fiscal 1997 in connection with the
Distribution vest 25% per year over four years.
1998 COMPENSATION PROGRAM
The Compensation Committee is currently developing certain changes to the
Company's executive compensation program for 1998 and beyond. As in prior years,
the new program will be designed to (i) attract and retain a highly qualified
and motivated management team, (ii) reward individual performance, and (iii)
link the interests of the senior executives directly with those of stockholders
through the use of Company stock as a compensation vehicle. It is expected that
the executive compensation program will continue to consist of three elements:
base salary, annual variable incentive pay, and long-term incentive pay. The
long-term incentive component will most likely consist of a combination of stock
options and performance stock equivalents. The goal of the Compensation
Committee is to devise a competitive program whereby target long-term incentive
pay will represent approximately 20% to 40% of the executive's total
compensation. The Compensation Committee will take into account relevant
comparative data of peer companies in developing the total compensation program
for the Company's executives.
CHIEF EXECUTIVE OFFICER'S COMPENSATION
Richard C. Cook. During fiscal 1997, Mr. Cook served as Chief Executive
Officer and President of the Company from August 4, 1997 through September 30,
1997, having served during the first part of the year as Senior Vice President
and General Manager, MAPICS Business Group. Mr. Cook's fiscal 1997 base salary
was set at $160,000, based upon the comparative information reviewed by the
Compensation Committee as described above and was increased to an annual amount
of $200,000 at the time of appointment as Chief Executive Officer and President
of the Company. Based on the achievements of MAPICS and the Company's exceeding
target net income in 1997, Mr. Cook earned an annual incentive bonus of $156,734
(which represented 131% of his target annual incentive pay) and was also granted
an option to purchase 157,600 shares of the Company's Common Stock (which were
in addition to the 19,000 options granted on October 1, 1997 with respect to his
performance in 1996). Mr. Cook's total compensation for fiscal 1997 is set out
in detail in the Summary Compensation Table.
Michael J. Quinlan. During fiscal 1997, Mr. Quinlan served as Chief
Executive Officer and President of the Company from October 1, 1996 through
August 4, 1997. Mr. Quinlan's fiscal 1997 base salary was $240,000. Mr. Quinlan
received no other short-term or long-term compensation in fiscal 1997 from the
Company. His total compensation for fiscal 1997 is set out in detail in the
Summary Compensation Table.
25
<PAGE> 30
POLICY WITH RESPECT TO DEDUCTIBILITY OF COMPENSATION EXPENSE
Section 162(m) of the Code limits the tax deduction that the Company may
take with respect to the compensation of certain executive officers, unless the
compensation is "performance based" as defined in the Code. Both the Marcam
Corporation 1994 Stock Plan and the proposed MAPICS, Inc. 1998 Long-Term
Incentive Plan, as described under Proposal 5, are designed to comply with the
IRS requirements for deductibility of performance-based compensation.
CONCLUSION
The Company's compensation program described above is designed to closely
link pay with performance and the creation of stockholder value. The
Compensation Committee believes that the program has been and will continue to
be successful in supporting the Company's financial, growth and other business
objectives.
CURRENT COMMITTEE MEMBERS:
Edward J. Kfoury
H. Mitchell Watson, Jr.
William E. Ford
FORMER COMMITTEE MEMBERS SERVING IN 1997:
William O. Grabe
Dean R. McKay
Richard S. Hickok
COMPENSATION COMMITTEE INTERLOCKS
AND INSIDER PARTICIPATION
During the fiscal year ended September 30, 1997, William E. Ford, William
O. Grabe, Edward J. Kfoury, Dean R. McKay and Richard S. Hickok, all
Non-Employee Directors, served at various times on the Compensation Committee.
Messrs. Grabe, McKay and Hickok served on the Compensation Committee at various
times prior to the Distribution. Messrs. Ford and Kfoury were elected to the
Compensation Committee effective as of August 4, 1997, replacing the former
members who resigned in connection with the Distribution.
Messrs. Ford and Grabe are managing members of GAPLLC, which is the sole
general partner of GAP 21 and GAP 32, and have shared voting and investment
control with the other managing members of GAPLLC over securities held by GAP
Coinvestment. GAP 21 and GAP Coinvestment together own 200,000 shares of the
Company's Series D Preferred Stock, which represents 88.9% of the outstanding
shares of Series D Preferred Stock. The Northwestern Mutual Life Insurance
Company owns 25,000 additional outstanding shares of Series D Preferred Stock.
Additionally, GAP 32 and GAP Coinvestment together own 100,000 shares of Series
E Preferred Stock and purchased warrants (the "Warrants") for an aggregate price
of $500,000 which entitle GAP 32 and GAP Coinvestment to acquire 1,000,000
shares of Common Stock. Each share of Series D Preferred Stock and each share of
Series E Preferred Stock currently is convertible at any time into 10 shares of
Common Stock, subject to adjustment in the event of a subdivision or combination
of the Common Stock or certain reorganizations or reclassifications of the
capital stock of the Company. The Warrants are exercisable at any time during
the period commencing on July 23, 1996 and ending on July 23, 2003 at an
exercise price of $11.53 per share of Common Stock.
As long as the GA Entities (together with their affiliates) own in the
aggregate shares of Common Stock, Series D Preferred Stock, Series E Preferred
Stock or other securities of the Company convertible into or exchangeable for
shares of voting capital stock of the Company that represent at least 10% of the
total number of shares of Common Stock outstanding on an as converted basis, the
GA Entities will be entitled to elect, or designate one person for election as,
a director of the Company. Pursuant to the Company's Restated Articles of
Organization, the holders of the Series D Preferred Stock, voting as a separate
series, are entitled to elect
26
<PAGE> 31
one director if, in addition to meeting the 10% voting stock ownership
requirement specified above, GAP 21 and GAP Coinvestment (together with their
affiliates, including GAP 32) own in the aggregate at least a majority of the
outstanding shares of Series D Preferred Stock. Further, if GAP 32 and GAP
Coinvestment (together with their affiliates, including GAP 21) own (a) less
than a majority of the outstanding shares of Series D Preferred Stock, (b) at
least a majority of the outstanding shares of Series E Preferred Stock and (c)
in the aggregate shares of Common Stock, Series D Preferred Stock, Series E
Preferred Stock or other securities of the Company convertible into or
exchangeable for shares of voting capital stock of the Company that represent at
least 10% of the total number of shares of Common Stock outstanding on an as
converted basis, the holders of the Series E Preferred Stock, voting as a
separate series, are entitled to elect one director of the Company. Finally, if
GAP 21 and GAP Coinvestment (together with their affiliates, including GAP 32)
own (a) less than a majority of the outstanding shares of Series D Preferred
Stock and (b) in the aggregate shares of Common Stock, Series D Preferred Stock,
Series E Preferred Stock or other securities of the Company convertible into or
exchangeable for shares of voting capital stock of the Company that represent at
least 10% of the total number of shares of Common Stock outstanding on an as
converted basis, GAP 21 will be entitled to designate one person for election as
a director of the Company.
Because GAP 21 and GAP Coinvestment currently own an aggregate of 200,000
shares of Series D Preferred Stock representing 88.9% of the outstanding shares
of Series D Preferred Stock, the holders of the Series D Preferred Stock, voting
as a separate series, currently have the right to elect one director, and the
holders of the Series E Preferred Stock, voting as a separate series, do not
currently have the right to elect a director. At Marcam's 1997 Annual Meeting of
Stockholders, the holders of the Series D Preferred Stock, voting as a separate
series, elected Mr. Ford, a managing member of GAPLLC, as GAP 21's designee and
a Class III director. Holders of the Series D Preferred Stock and the Series E
Preferred Stock also are entitled to vote together with all other classes of
stock of the Company, voting together as a single class, with respect to the
election of all the other directors of the Company. GAP 21's designee is
required to waive any rights to compensation and relinquish any compensation
received in connection with the designee's Board membership.
For a description of the compensation which the Company paid to Mr. Ford in
fiscal 1997, see "Proposal 2 -- Election of Directors -- Director Compensation."
27
<PAGE> 32
STOCK PERFORMANCE GRAPHS
Graph I set forth below compares the stockholders' cumulative return on the
Common Stock from September 30, 1992 to September 30, 1997 with the cumulative
total return of the Nasdaq Stock Market Index (U.S.) (the "NSMI") and the Nasdaq
Computer and Data Processing Index (the "NCDPI") over the same period. The
comparative data assumes $100.00 was invested on September 30, 1992 in the
Common Stock and in each of the indices referred to above and assumes that
dividends, if any, were reinvested. However, Graph I does not reflect the
dividend of one share of common stock of Marcam Solutions for every two shares
of Marcam common stock which was paid in the Distribution on July 29, 1997.
GRAPH I
THE COMPANY
NASDAQ STOCK MARKET INDEX
NASDAQ COMPUTER AND DATA PROCESSING INDEX(U.S.)(1)(2)
<TABLE>
<CAPTION>
NASDAQ STOCK NASDAQ COMPUTER
MEASUREMENT PERIOD MARKET INDEX AND DATA
(FISCAL YEAR COVERED) THE COMPANY (U.S.) PROCESSING INDEX
<S> <C> <C> <C>
1992 100.00 100.00 100.00
1993 53 131 119
1994 42 132 133
1995 65 182 212
1996 52 217 263
1997 87 297 356
</TABLE>
28
<PAGE> 33
Graph II set forth below compares the stockholders' cumulative return on
the Common Stock from July 29, 1997, the date of the Distribution, to September
30, 1997 with the cumulative total return of the NSMI and the NCDPI over the
same period. The comparative data assumes $100.00 was invested on July 29, 1997
in the Common Stock and in each of the indices referred to above and assumes
that dividends, if any, were reinvested.
GRAPH II
THE COMPANY
NASDAQ STOCK MARKET INDEX (U.S.)
NASDAQ COMPUTER AND DATA PROCESSING INDEX (1)(2)
<TABLE>
<CAPTION>
NASDAQ STOCK NASDAQ COMPUTER
MEASUREMENT PERIOD MARKET INDEX AND DATA
(FISCAL YEAR COVERED) THE COMPANY (U.S.) PROCESSING INDEX
<S> <C> <C> <C>
JULY 29, 1997 100 100 100
SEPTEMBER 30, 1997 130.00 106.00 99.00
</TABLE>
- ---------------
(1) Graph I and Graph II are not "soliciting material," are not deemed filed
with the Securities and Exchange Commission and are not to be incorporated
by reference in any filing of the Company under the Securities Act of 1933,
as amended, or the Securities Exchange Act of 1934, as amended, whether made
before or after the date hereof and irrespective of any general
incorporation language in any such filing.
(2) The stock price performance shown on Graph I and Graph II are not
necessarily indicative of future price performance. Information used on the
graph was obtained from the Nasdaq Stock Market, a source believed to be
reliable, but the Company is not responsible for any errors or omissions in
such information.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange of 1934, as amended, and
regulations of the Securities and Exchange Commission thereunder require the
Company's directors and executive officers and any persons who beneficially own
more than 10% of the Common Stock, as well as certain affiliates of such
persons, to file initial reports of their ownership of the Common Stock and
subsequent reports of changes in such ownership with the Securities and Exchange
Commission and the National Association of Securities Dealers, Inc. Directors,
executive officers and persons beneficially owning more than 10% of the Common
Stock are
29
<PAGE> 34
required by applicable regulations to furnish the Company with copies of all
Section 16(a) reports they file. Based solely on its review of the copies of
such reports received by it and written representations that no other reports
were required of those persons, the Company believes that during the fiscal year
ended September 30, 1997, all of its directors, executive officers and
beneficial owners of more than 10% of the Common Stock complied with applicable
Section 16(a) filing requirements, except that (a) one such report by Mr. Kfoury
relating to a single transaction was not timely filed and (b) one such report by
Mr. McKay relating to a single transaction was not timely filed.
PROPOSAL 3
AMENDMENT AND RESTATEMENT OF THE
1991 NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN
GENERAL
The Board of Directors has adopted, subject to approval thereof by the
stockholders at the Annual Meeting, an amendment and restatement of the Current
DSOP, as described below (the "Restated DSOP," together with the Current DSOP,
the "Director Option Plan"). If approved by the stockholders at the Annual
Meeting, the Restated DSOP will be effective as of as of its adoption by the
stockholders.
A summary of the Restated DSOP is set forth below. The summary is qualified
in its entirety by the full text of the restated DSOP. The Company will provide,
upon request and without charge, a copy of the full text of the Restated DSOP to
each person to whom a copy of this Proxy Statement is delivered. Requests should
be directed to: Clerk, MAPICS, Inc., 5775-D Glenridge Drive, Atlanta, Georgia
30328.
The purpose of the Director Option Plan is to encourage ownership of the
Company's Common Stock on the part of its Non-Employee Directors and to thereby
provide them with an increased incentive to oversee and manage the affairs of
the Company in a way that will create value for the Company's stockholders.
Awards are granted under the Director Option Plan in addition to cash fees to
Non-Employee Directors.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE "FOR"
THE PROPOSAL TO APPROVE THE RESTATED DSOP.
SUMMARY OF PROPOSED AMENDMENTS
The Current DSOP is proposed to be amended by (a) changing the name of the
Director Option Plan to the MAPICS, Inc. 1998 Non-Employee Director Stock Option
Plan, (b) extending the date through which options may be granted under the
Director Option Plan from April 29, 2001 to March 30, 2007, (c) increasing the
number of shares available for the grant of options under the Director Option
Plan from 210,000 to 310,000, (d) correcting the existing plan to show that all
options granted under the plan after January 1, 1997 (including the initial
grant of options to a director and each annual grant thereafter) will vest as to
25% per year beginning on the first anniversary of the grant date, (e) providing
for a pro rata grant of options to the extent that the shares remaining
available under the plan are not sufficient to make a full grant of options on a
given grant date, (f) permitting the transfer of options granted under the
Director Option Plan to certain permitted transferees, (g) changing the
definition of "Change in Control" used therein to correspond to the definition
of such term under the Company's proposed 1998 Long-Term Incentive Plan, (h)
confirming that for purposes of options outstanding on the date of the
Distribution, the service by the holder of such an option as a director of any
of the Company, Marcam Solutions or their respective subsidiaries or successors
will be treated as the service by such holder as a member of the Board of
Directors of the Company, (i) providing greater flexibility as to the method of
paying the exercise price of an option and (j) amending the amendment provisions
of the Current DSOP to eliminate certain obsolete requirements stemming from
former versions of Rule 16b-3 under the Exchange Act.
30
<PAGE> 35
ELIGIBILITY
Each member of the Company's Board of Directors who is a Non-Employee
Director is and will be a participant in the Director Option Plan, other than a
director who is prohibited from participation by agreement between the Company
and such director or his affiliates.
ADMINISTRATION
Grants of awards under the Director Option Plan are automatic. The plan is
intended to be a "formula plan" for purposes of Section 16(b) of the Exchange
Act. However, the Compensation Committee or the Board of Directors of the
Company has authority to interpret the Director Option Plan and otherwise
administer the plan in accordance with its terms.
SHARES SUBJECT TO PLAN
Shares subject to the Director Option Plan may be authorized but unissued
shares or shares that were once issued and subsequently reacquired by the
Company. As of December 1, 1997, the total remaining number of shares of Common
Stock for which options may be granted under the Current DSOP was 52,000 shares,
out of the 210,000 shares currently authorized. Under the Restated DSOP, that
number would be increased so that the total number of shares of Common Stock for
which options may be granted under the Director Option Plan (including options
previously granted under the Current DSOP) will be 310,000 shares (an increase
of 100,000 shares), subject to adjustment in accordance with the plan. In the
event that any outstanding option for any reason expires or is terminated prior
to the end of the period during which options may be granted under the Director
Option Plan, the shares of Common Stock allocable to the unexercised portion of
such option may again be subject in whole or in part to an award of options
under the Restated DSOP.
TERMS AND CONDITIONS OF AWARDS
Awards granted pursuant to the Restated DSOP will be subject to the
following terms and conditions:
Initial Grant. Each of the current Non-Employee Directors other than
Mr. Ford has previously received under the Current DSOP an award of 20,000
options upon his election to the Board. Pursuant to an agreement with the
Company, Mr. Ford has waived any and all rights to receive cash
compensation, stock options and stock grants given to other members of the
Board of Directors. Subject to the availability of shares under the
Restated DSOP, on the date that each subsequent Non-Employee Director is
initially elected or appointed to the Board or, while a director continues
to serve on the Board but ceases to serve as an employee or officer of the
Company, such director will receive an option to purchase 20,000 shares of
Common Stock, subject to adjustment as provided in the Director Option
Plan; provided, however, that no such option will be granted if prohibited
pursuant to the terms of any agreement between the Company and such
director or his affiliates. Such initial options will vest as to 5,000
shares on each of the first, second, third and fourth anniversaries of the
date of grant.
Annual Grants. Under the Director Option Plan, on January 1 of each
year, each Non-Employee Director then serving in such capacity and
participating in the plan will receive an additional option to purchase
3,000 shares of Common Stock, subject to adjustment as provided in the
plan; provided, however, that no such option will be granted if prohibited
pursuant to the terms of any agreement between the Company and such
director or his affiliates. Such annual options will vest as to 750 shares
on each of the first, second, third and fourth anniversaries of the date of
grant.
Exercise Price. As under the Current DSOP, the exercise price for
each option granted under the Restated DSOP will be the fair market value
of the shares of Common Stock subject to the option on the date of grant.
Payment. An option may be exercised by giving written notice to the
Company stating the number of shares with respect to which the option is
being exercised (no fewer than 100 shares or such lesser number as is then
exercisable). The exercise price shall be payable in cash or in shares of
Common Stock
31
<PAGE> 36
having a total fair market value on the date of exercise equal to the
exercise price of all options being exercised. The Compensation Committee
shall determine the methods by which the exercise price of an option may be
paid, the form of payment, including cash, shares of Common Stock, or other
property (including "cashless exercise" arrangements).
Term. As under the Current DSOP, each option granted under the
Restated DSOP will, to the extent not previously exercised, terminate and
expire on the date ten years after the date of grant of the option, unless
earlier terminated as provided in the Restated DSOP.
Assignment of Options. If the Restated DSOP is approved by the
stockholders, then any option granted pursuant to the Director Option Plan
(including options outstanding under the Current DSOP) will be transferable
by the optionee to any of the following permitted transferees, upon such
reasonable terms and conditions as the Compensation Committee may
establish: (a) one or more of the following family members of the optionee:
spouse, former spouse, child (whether natural or adopted), stepchild, any
other lineal descendent of the optionee; (b) a trust, partnership or other
entity established and existing for the sole benefit of, or under the sole
control of, one or more of the above family members of the optionee or (c)
any other transferee specifically approved by the Compensation Committee
after taking into account any state or federal tax, securities or other
laws applicable to transferable options. Transferred options may not be
further transferred by the transferee.
Effect of Termination of Directorship or Death. In the event an
optionee ceases to be a member of the Board of Directors for any reason
other than death, permanent disability or retirement, any unvested portion
of options granted to him will immediately terminate, and any vested but
unexercised portion of an option may be exercised within 90 days of the
date the optionee ceased to be a member of the Board, whereafter such
options will terminate. In the event an optionee ceases to be a member of
the Board of Directors by reason of retirement, all vested installments of
his options will terminate on their respective expiration dates as
described above, and all unvested installments will continue to vest in
accordance with the above-described schedule and will terminate on their
respective expiration dates. In the event that an optionee ceases to be a
member of the Board of Directors by reason of death or permanent
disability, his options will immediately become fully vested and remain
exercisable until the scheduled expiration date of the option. For purposes
of options outstanding on the date of the Distribution, the service by the
holder of such an option as a director of any of the Company, Marcam
Solutions or their respective subsidiaries or successors will be treated as
the service by such holder as a member of the Board of Directors of the
Company.
Adjustments. If the shares of Common Stock are subdivided or combined
into a greater or smaller number of shares or if the Company issues any
shares of Common Stock as a stock dividend on its outstanding Common Stock,
the number of shares of Common Stock deliverable upon the exercise of
options will be increased or decreased proportionately, and appropriate
adjustments will be made in the exercise price per share to reflect such
subdivision, combination or stock dividend. In the event of a Change in
Control (as defined in the Restated DSOP) of the Company, each
then-outstanding option under the Director Option Plan will become
immediately exercisable, and the Compensation Committee will make
appropriate provision in order to preserve but not exceed the value of
outstanding options, for the continuation of all outstanding options by
substituting on an equitable basis for the shares then subject to such
options the consideration payable with respect to the outstanding shares of
Common Stock in connection with the Change in Control. The definition of
Change in Control is proposed to be amended to conform with the definition
of such term in the proposed 1998 Long-Term Incentive Plan discussed in
Proposal 5 below. In the event of the occurrence of certain circumstances,
transactions or events not constituting a Change in Control but which the
Board of Directors deems to be, or to be reasonably likely to lead to, an
effective change in control of the Company, a holder of an option upon
exercising the option will be entitled to receive upon exercise of the
option the securities, cash or other property he would have received if he
had exercised the option prior to such event. Upon the happening of any of
the foregoing events, the class and aggregate number of shares that are
subject to options which previously have been or subsequently may be
granted under the Director Option Plan will also be
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<PAGE> 37
appropriately adjusted to reflect such events. The Board of Directors will
determine the specific adjustments to be made and its determination will be
conclusive.
TERMINATION AND AMENDMENT
Options may no longer be granted under the Restated DSOP after March 30,
2007, and the Director Option Plan will terminate when all options granted or to
be granted thereunder are no longer outstanding. The Board of Directors may at
any time terminate the Director Option Plan or make such modification or
amendment thereof as it deems advisable; provided, however, that the Board may
not, without approval by stockholders (a) increase the maximum number of shares
for which options may be granted under the Director Option Plan or the number of
shares for which an option may be granted to any participating director, (b)
change the provisions of the Director Option Plan regarding the termination of
the options or the times when they may be exercised, (c) change the period
during which any options may be granted or remain outstanding or the date on
which the Director Option Plan will terminate or (d) change the designation of
the class of persons eligible to receive options. Termination or any
modification or amendment of the Director Option Plan will not, without consent
of a participant, affect his rights under an option previously granted.
NO RIGHTS AS STOCKHOLDER
The holder of an option will not have any rights of a stockholder with
respect to the shares covered by the option, except to the extent that one or
more certificates for such shares is delivered to such holder upon the due
exercise of the option.
NO IMPLIED RIGHTS OF CONTINUED BOARD SERVICE
The grant of any award pursuant to the Director Option Plan will not confer
upon any recipient thereof any rights of continued service on the Board of
Directors of the Company or affect the right of the Company to terminate the
directorship of the holder at any time.
FEDERAL INCOME TAX EFFECTS
The options granted under the Director Option Plan are and will be
non-qualified stock options. Under present federal income tax laws, there will
be no federal income tax consequences to either the Company or the grantee upon
the grant of options under the Director Option Plan. However, the grantee will
realize ordinary income on the exercise of an option in an amount equal to the
excess of the fair market value of the Common Stock acquired upon the exercise
of such option over the exercise price, and the Company will receive a
corresponding deduction. The grantee will have a tax basis in such shares equal
to the fair market value of the Common Stock on the date of grant, and any
subsequent gain or loss realized upon the subsequent disposition by the grantee
of the Common Stock will constitute short- or long-term capital gain or loss,
depending on the grantee's holding period. If payment of the exercise price of
an option is made other than by cash or check, special rules may apply. Special
rules also apply in the case of transferred options: the original optionee,
rather than the transferee, will recognize taxable compensation income at the
time of exercise by the transferee, and the transferee's basis in the shares
upon exercise will be the fair market value at exercise, even though the tax at
exercise is paid by the original optionee or his or her estate.
BENEFITS TO NON-EMPLOYEE DIRECTORS
As of December 1, 1997, there were four current Non-Employee Directors
participating in the Director Option Plan, four former Non-Employee Directors
holding options previously granted under the Director Option Plan, and a total
of 158,000 options outstanding under the Director Option Plan. As of December 1,
1997, the aggregate market value of shares of Common Stock issuable upon
exercise of outstanding options under the Director Option Plan was $
based on the last sale price for shares of Common Stock as reported on the
Nasdaq National Market on November 28, 1997.
STOCKHOLDER VOTE REQUIRED TO APPROVE THE RESTATED DSOP
Approval of the Restated DSOP will require the affirmative vote of the
holders of a majority of all classes and series of the Company's capital stock
which are represented in person or by proxy at the Annual Meeting, voting
together as a single class.
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<PAGE> 38
PROPOSAL 4
APPROVAL OF THE 1998 NON-EMPLOYEE DIRECTORS STOCK INCENTIVE PLAN
GENERAL
On November 13, 1997, the Board of Directors adopted the MAPICS, Inc. 1998
Non-Employee Directors Stock Incentive Plan (the "DSIP"), subject to approval
thereof by the stockholders at the Annual Meeting. The Company has reserved
60,000 shares of Common Stock for issuance in connection with the DSIP, which
may be authorized and unissued shares or treasury shares. If approved by the
stockholders at the Annual Meeting, the DSIP will be effective as of its
adoption by the stockholders.
A summary of the DSIP is set forth below. The summary is qualified in its
entirety by the full text of the DSIP. The Company will provide, upon request
and without charge, a copy of the full text of the DSIP to each person to whom a
copy of this Proxy Statement is delivered. Requests should be directed to:
Clerk, MAPICS, Inc., 5775-D Glenridge Drive, Atlanta, Georgia 30328.
The purpose of the DSIP is to attract, retain and compensate
highly-qualified individuals who are not employees of the Company or any of its
subsidiaries or affiliates for service as members of the Board by providing them
with an ownership interest in the Common Stock. The Company intends that the
DSIP will benefit the Company and its stockholders by allowing Non-Employee
Directors to have a personal financial stake in the Company through an ownership
interest in the Common Stock and will closely associate the interests of
Non-Employee Directors with that of the Company's stockholders. As of December
1, 1997, there were four directors eligible to participate in the DSIP.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE "FOR"
THE PROPOSAL TO APPROVE THE DSIP.
ADMINISTRATION
The DSIP will be administered by the Compensation Committee. Subject to the
provisions of the DSIP, the Compensation Committee will be authorized to
interpret the DSIP, to establish, amend and rescind any rules and regulations
relating to the DSIP, and to make all other determinations necessary or
advisable for administering the DSIP; provided, however, that the Compensation
Committee will have no discretion with respect to the eligibility or selection
of Non-Employee Directors to receive awards under the DSIP, the number of shares
subject to any such awards or the time at which any such awards are to be
granted, and provided further, that the Compensation Committee will not have the
authority to take any action or make any determination that would materially
increase the benefits accruing to participants under the DSIP.
SUMMARY OF PLAN TERMS
Pursuant to the DSIP, Non-Employee Directors will be required to take 50%
of their annual retainer and meeting fees ("Stock Equivalent Fees"), and may
elect to take the remaining 50% of their annual retainer and meeting fees
("Discretionary Fees"), in the form of (a) shares of Common Stock, (b) deferred
rights to receive Common Stock or (c) options to acquire Common Stock.
STOCK AWARDS
Automatic Grants. Unless a Non-Employee Director has elected to receive
stock options or deferred stock as payment of his Stock Equivalent Fees for a
plan year, shares of Common Stock will be automatically granted on October 1,
January 1, April 1 and July 1 of each plan year (each, a "Stock Grant Date") to
each eligible Non-Employee Director, commencing with the April 1, 1998 Stock
Grant Date. The number of shares of Common Stock included in each such quarterly
grant will be determined by the director's Stock Equivalent Fees earned during
the three-month period immediately preceding the Stock Grant Date (the
"Quarterly Service Period") by the fair market value per share of Common Stock
on the Stock Grant Date. Fractions will be rounded to the next highest share.
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<PAGE> 39
Elective Grants. Commencing with the April 1, 1998 Stock Grant Date,
shares of Common Stock will be automatically granted on each Stock Grant Date to
each eligible Non-Employee Director who timely elects to receive Common Stock as
payment of his Discretionary Fees. Such election must be made in writing prior
to the commencement of the first Quarterly Service Period to which such election
applies (or by March 1, 1998 with respect to the April 1, 1998 Stock Grant Date)
and such election will remain in effect with respect to all future Quarterly
Service Periods until a subsequent election form is filed with the Compensation
Committee indicating a different election. The number of shares included in each
such quarterly grant will be determined by dividing the director's Discretionary
Fees earned during the Quarterly Service Period by the fair market value per
share of Common Stock on the Stock Grant Date. Fractions will be rounded to the
next highest share.
DEFERRED STOCK AWARDS
Election to Defer. Each participant in the DSIP will have the right to
elect, prior to the commencement of each plan year (October 1 through September
30), to defer until after the participant's termination of service the grant of
the shares of Common Stock that would otherwise be granted to the participant
under the DSIP during the next ensuing plan year. The participant will elect
whether the deferred grant of shares will be (a) granted in lump sum within 30
days after termination of service or (b) granted in approximately equal annual
installments over a period of two to ten years (as the participant shall elect)
after the termination of service. The deferral election will be irrevocable
except in case of hardship as determined in good faith by the Board. No shares
will be issued until the grant date(s) so indicated (the "Deferred Grant Date").
The participant will have no rights as a stockholder with respect to the
deferred rights to shares, and the rights to such shares will be unsecured.
Deferred Dividend Account. If any dividends or other rights or
distributions of any kind are distributed to holders of Common Stock during the
period from the applicable Stock Grant Date until the Deferred Grant Date (the
"Deferral Period") but prior to the participant's termination of service, an
amount equal to the cash value of such distributions will be credited to a
deferred dividend account for the participant as follows: the account will be
credited with the right to receive shares of Common Stock having a fair market
value as of the date of the distribution equal to the cash value of the
distribution. The Company will issue shares of Common Stock equal to the
cumulative total of rights to shares in such account within 30 days after the
participant's termination of service.
STOCK OPTIONS
Election to Receive Options. A Non-Employee Director may elect to defer
(a) all of his Stock Equivalent Fees, (b) all of his Discretionary Fees or (c)
all of his director fees by conversion to stock options. A Non-Employee Director
who wishes to receive compensation for a plan year in the form of options must
irrevocably elect to do so prior to the beginning of the plan year. Elections to
receive options are irrevocable and will be valid only for one plan year. New
elections must be made to receive options for subsequent plan years.
Time of Grant. Options will be granted to each Non-Employee Director who
filed a timely election to receive stock options as payment of his Stock
Equivalent Fees, Discretionary Fees, or both, payable in the following plan
year. Such options will be granted on January 1, April 1, July 1 and October 1
for the preceding Quarterly Service Periods during such plan year.
Number of Options. The number of shares of Common Stock subject to an
option granted under the DSIP shall be the number of whole shares equal to (A
times B) divided by C, where: A is the dollar amount that the Non-Employee
Director elects shall be payable in options; and B is the quotient of 1 divided
by the Black-Scholes value of an option (expressed as a percentage of the fair
market value of one share of Common Stock); and C is the fair market value of
the Common Stock on the date of grant of the option. Any resulting fraction will
be rounded to the next highest whole number of shares.
Option Terms. The exercise price per share under each option granted under
the DSIP will be the fair market value of the Common Stock on the date of grant
of the option. Each option will be fully vested upon
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<PAGE> 40
grant and will remain exercisable for ten years from the grant date, regardless
of whether the optionee remains a director of the Company throughout such term.
The exercise price will be payable in cash or shares of Common Stock; provided
that if the shares surrendered in payment of the exercise price were acquired
otherwise than on the open market, such shares shall have been held for at least
six months. The Company may permit optionees to use other cashless exercise
methods that are permitted by law.
Transferability of Options. Options granted under the DSIP will not be
transferable other than by will or the laws of descent and distribution or to
family members of the Non-Employee Director, to trusts established solely for
the benefit of such family members, and to certain entities of which the only
interest holders are such family members (or trusts for their benefit). Options
held by permitted transferees are not further transferable.
ADJUSTMENTS
In the event that the Compensation Committee determines that any
distribution, recapitalization, reclassification, stock split, reverse stock
split, reorganization, merger, consolidation, split-up, spin-off, combination,
repurchase, or similar corporate transaction or event affects the Common Stock
such that an adjustment is determined by the Compensation Committee to be
appropriate in order to prevent dilution or enlargement of the benefits intended
to be made available under the DSIP or with respect to awards thereunder, then
the Compensation Committee may adjust the number and type of shares that may be
granted under the DSIP. In the event of any such corporate transaction or event
that results in shares of Common Stock being exchanged for or converted into
cash, securities or other property (including securities of another
corporation), the Compensation Committee will have the right to terminate the
DSIP as of the date of the transaction or event, in which case all stock grants
deferred under the DSIP will become the right to receive such cash, securities
or other property, and there will be substituted on an equitable basis for each
share of Common Stock then subject to an option granted under the DSIP the
consideration payable with respect to the outstanding shares of Common Stock in
connection with such corporate transaction or event, all without any change in
the aggregate purchase price for the shares then subject to the option.
TERMINATION AND AMENDMENT
The DSIP will remain in effect until February 2, 2008, unless terminated
earlier. The Compensation Committee may terminate or suspend the DSIP at any
time, without stockholder approval. The Compensation Committee may amend the
DSIP at any time and for any reason without stockholder approval; provided,
however, that the Compensation Committee may condition any amendment on the
approval of stockholders if such approval is necessary or deemed advisable with
respect to tax, securities or other applicable laws, policies or regulations. No
termination, modification or amendment of the DSIP may, without the consent of a
participant, adversely affect the participant's rights under a
previously-granted award.
CERTAIN FEDERAL INCOME TAX EFFECTS
Stock Awards. A participant receiving non-deferred Common Stock in lieu of
compensation as a director will recognize ordinary income equal to the fair
market value of the stock on the date of grant, and the Company will be entitled
to a corresponding tax deduction at that time.
Deferred Stock. Under present federal income tax regulations, a
participant receiving a right to receive stock in the future will not recognize
income, and the Company will not be allowed a tax deduction, at the time such
right is granted. When the stock is actually granted or the participant
otherwise has the right to receive such stock, the participant will recognize
ordinary income equal to the fair market value of the stock, and the Company
will be entitled to a corresponding tax deduction at that time.
Options. The options that may be granted under the DSIP will be
non-qualified stock options ("NSOs"). Under present federal income tax
regulations, there will be no federal income tax consequences to either the
Company or the participant upon the grant of a non-discounted NSO. However, the
participant will realize ordinary income on the exercise of the NSO in an amount
equal to the excess of the fair market value of the Common Stock acquired upon
the exercise of such option over the exercise price, and the Company will
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<PAGE> 41
receive a corresponding deduction. A subsequent sale or exchange of such shares
will result in gain or loss measured by the difference between (a) the exercise
price, increased by any compensation reported upon the participant's exercise of
the option, and (b) the amount realized on such sale or exchange. Such gain or
loss will be capital in nature if the shares were held as a capital asset and
will be long-term if such shares were held for the applicable long-term capital
gain holding period. If payment of the exercise price of an option is made other
than by cash or check, special rules may apply. Special rules also apply in the
case of transferred options: the original optionee, rather than the transferee,
will recognize taxable compensation income at the time of exercise by the
transferee, and the transferee's basis in the shares upon exercise will be the
fair market value at exercise, even though the tax at exercise is paid by the
original optionee or his or her estate.
BENEFITS TO NON-EMPLOYEE DIRECTORS
Only Non-Employee Directors of the Company are entitled to participate in
the DSIP (currently four persons, but expected to increase to five). The
following table shows the benefits that would accrue under the DSIP in 1998 to
the Non-Employee Directors assuming that (a) the Plan had been in effect
throughout fiscal 1998, (b) each such person elected to receive 100% of his
annual retainer and meeting fees for 1998 in the form of shares of Common Stock
and (c) that each Non-Employee Director personally attended 12 meetings during
1998.
<TABLE>
<CAPTION>
NUMBER OF SHARES
NAME AND POSITION DOLLAR VALUE ($) OF COMMON STOCK
- ----------------- ---------------- ----------------
<S> <C> <C>
All Non-Employee Directors, as a Group...................... $75,000 7,500
(5 persons)
</TABLE>
- ---------------
(1) Assumes a fair market value of $10.00 per share on each quarterly grant
date.
STOCKHOLDER VOTE REQUIRED TO APPROVE THE DSIP
Approval of the DSIP will require the affirmative vote of the holders of a
majority of all classes and series of the Company's capital stock which are
represented in person or by proxy at the Annual Meeting, voting together as a
single class.
PROPOSAL 5
APPROVAL OF THE 1998 LONG-TERM INCENTIVE PLAN
GENERAL
The Company currently maintains the Marcam Corporation 1994 Stock Plan,
under which stock options, stock purchase rights and restricted stock may be
awarded to employees, officers, consultants and directors of the Company. As of
December 1, 1997, there were approximately shares remaining available
for awards under the 1994 Stock Plan, and the Company anticipates the
cancellation on or about January 31, 1998 of currently outstanding options to
purchase 150,000 shares. On November 13, 1997, the Board of Directors adopted
the MAPICS, Inc. 1998 Long-Term Incentive Plan (the "Incentive Plan"), subject
to approval thereof by the stockholders at the Annual Meeting. If the
stockholders approve the Incentive Plan, no further awards will be granted under
the Company's 1994 Stock Plan. The Company has reserved 1,000,000 shares of
Common Stock for issuance in connection with options and awards under the
Incentive Plan, which is estimated to be the approximate number of shares that
would otherwise be available for awards under the 1994 Stock Plan as of the date
of the Annual Meeting if the Incentive Plan is not approved by the stockholders.
If approved by the stockholders at the Annual Meeting, the Incentive Plan will
be effective as of as of its adoption by the stockholders.
A summary of the Incentive Plan is set forth below. The summary is
qualified in its entirety by the full text of the Incentive Plan. The Company
will provide, upon request and without charge, a copy of the full text
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<PAGE> 42
of the Incentive Plan to each person to whom a copy of this Proxy Statement is
delivered. Requests should be directed to: Clerk, MAPICS, Inc., 5775-D Glenridge
Drive, Atlanta, Georgia 30328.
The purpose of the Incentive Plan is to promote the success, and enhance
the value, of the Company by linking the personal interests of employees,
officers, consultants and directors to those of the stockholders, and by
providing such persons with an incentive for outstanding performance. As of
December 1, 1997, there were approximately 280 persons eligible to participate
in the Incentive Plan.
The Incentive Plan authorizes the granting of awards ("Awards") to
employees, officers, consultants and directors of the Company or its affiliated
companies in the following forms: (a) options to purchase shares of Common Stock
("Options"), which may be incentive stock options or non-qualified stock
options; (b) stock appreciation rights ("SARs"); (c) performance units
("Performance Units"); (d) restricted stock ("Restricted Stock"); (e) dividend
equivalents ("Dividend Equivalents"); and (f) other stock-based awards.
Pursuant to Section 162(m) of the Internal Revenue Code of 1986, as amended
(the "Code"), the Company may not deduct compensation in excess of $1 million
paid to its chief executive officer and the four next most highly compensated
executive officers of the Company. The Incentive Plan is designed to comply with
Code Section 162(m) so that the grant of Options and SARs under the plan, and
other Awards, such as Performance Units, that are conditioned on the performance
goals described in Section 13.13 of the plan, will be excluded from the
calculation of annual compensation for purposes of Code Section 162(m) and will
be fully deductible by the Company.
Subject to adjustment as provided in the Incentive Plan, the aggregate
number of shares of Common Stock reserved and available for Awards or which may
be used to provide a basis of measurement for or to determine the value of an
Award (such as with a SAR or Performance Unit) is 1,000,000, of which no more
than 20% may be granted in the form of restricted or unrestricted stock awards.
The maximum number of shares of Common Stock with respect to one or more Options
and/or SARs that may be granted during any one calendar year under the Incentive
Plan to any one participant is 300,000. The maximum fair market value (measured
as of the date of grant) of any Awards other than Options and SARs that may be
received by a participant (less any consideration paid by the participant for
such Award) during any one calendar year under the Incentive Plan is $2,000,000.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE "FOR"
THE PROPOSAL TO APPROVE THE INCENTIVE PLAN.
ADMINISTRATION
The Incentive Plan will be administered by the Compensation Committee. The
Compensation Committee has the power, authority and discretion to designate
participants; determine the type or types of Awards to be granted to each
participant and the terms and conditions thereof; establish, adopt or revise any
rules and regulations as it may deem necessary or advisable to administer the
Incentive Plan; and make all other decisions and determinations that may be
required under, or as the Compensation Committee deems necessary or advisable to
administer, the Incentive Plan.
AWARDS
Stock Options. The Compensation Committee is authorized to grant Options,
which may be incentive stock options ("ISOs") or non-qualified stock options
("NSOs"), to participants. All Options will be evidenced by a written Award
Agreement between the Company and the participant, which will include such
provisions as may be specified by the Compensation Committee, provided that the
exercise price for any Option shall not be less than the fair market value of
the underlying Common Stock as of the date of grant, and the terms of any ISO
must meet the requirements of Section 422 of the Code. The Compensation
Committee may provide in an Award Agreement for the automatic grant of
additional Options to the participant equal to the number of shares of Common
Stock, if any, surrendered in payment of the exercise price of the original
Option. The exercise price for the new Option would be equal to the Fair Market
Value of
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<PAGE> 43
the surrendered Common Stock on the date of exercise of the original Option, and
the term of the new Option would be co-extensive with the term of the original
Option.
Stock Appreciation Rights. The Compensation Committee may grant SARs to
participants. Upon the exercise of a SAR, the participant has the right to
receive the excess, if any, of: the fair market value of one share of Common
Stock on the date of exercise, over the grant price of the SAR as determined by
the Compensation Committee, which will not be less than the fair market value of
one share of Common Stock on the date of grant. All awards of SARs will be
evidenced by an Award Agreement, reflecting the terms, methods of exercise,
methods of settlement, form of consideration payable in settlement, and any
other terms and conditions of the SAR, as determined by the Compensation
Committee at the time of grant.
Performance Units. The Compensation Committee may grant Performance Units
to participants on such terms and conditions as may be selected by the
Compensation Committee. The Compensation Committee will have the complete
discretion to determine the number of Performance Units granted to each
participant and to set performance goals and other terms or conditions to
payment of the Performance Units in its discretion which, depending on the
extent to which they are met, will determine the number and value of Performance
Units that will be paid to the participant.
Restricted Stock Awards. The Compensation Committee may make awards of
Restricted Stock to participants, which will be subject to such restrictions on
transferability and other restrictions as the Compensation Committee may impose
(including, without limitation, limitations on the right to vote Restricted
Stock or the right to receive dividends, if any, on the Restricted Stock).
Dividend Equivalents. The Compensation Committee is authorized to grant
Dividend Equivalents to participants subject to such terms and conditions as may
be selected by the Compensation Committee. Dividend Equivalents entitle the
participant to receive payments equal to dividends with respect to all or a
portion of the number of shares of Common Stock subject to an Award, as
determined by the Compensation Committee. The Compensation Committee may provide
that Dividend Equivalents be paid or distributed when accrued or be deemed to
have been reinvested in additional shares of Common Stock, or otherwise
reinvested.
Other Stock-Based Awards. The Compensation Committee may, subject to
limitations under applicable law, grant to participants such other Awards that
are payable in, valued in whole or in part by reference to, or otherwise based
on or related to shares of Common Stock, as deemed by the Compensation Committee
to be consistent with the purposes of the Incentive Plan, including without
limitation shares of Common Stock awarded purely as a "bonus" and not subject to
any restrictions or conditions, convertible or exchangeable debt securities,
other rights convertible or exchangeable into shares of Common Stock, and Awards
valued by reference to book value of shares of Common Stock or the value of
securities of or the performance of specified affiliated companies of the
Company. The Compensation Committee will determine the terms and conditions of
any such Awards.
Performance Goals. The Compensation Committee may determine that any Award
will be determined solely on the basis of (a) the achievement by the Company or
a parent or subsidiary of a specified target return, or target growth in return,
on equity or on assets, (b) the Company's or a parent's or subsidiary's stock
price, (c) the achievement by an individual or a business unit of the Company or
a parent or subsidiary of a specified target, or target growth in, revenues, net
income or earnings per share, (d) the achievement of objectively determinable
goals with respect to product delivery, product quality, customer satisfaction,
meeting budgets and/or retention of employees, or (e) any combination of the
goals set forth in (a) through (d) above. If an Award is made on such basis, the
Compensation Committee must establish goals prior to the beginning of the period
for which such performance goal relates (or such later date as may be permitted
under Code Section 162(m)), and the Compensation Committee may for any reason
reduce (but not increase) any Award, notwithstanding the achievement of a
specified goal. Any payment of an Award granted with performance goals will be
conditioned on the written certification of the Compensation Committee in each
case that the performance goals and any other material conditions were
satisfied.
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Limitations on Transfer; Beneficiaries. No unexercised or restricted Award
will be assignable or transferable by a participant other than by will or the
laws of descent and distribution or, except in the case of an ISO, pursuant to a
qualifying domestic relations order; provided, however, that the Compensation
Committee may (but need not) permit other transfers where the Compensation
Committee concludes that such transferability (a) does not result in accelerated
taxation, (b) does not cause any Option intended to be an ISO to fail to be
described in Code Section 422(b) and (c) is otherwise appropriate and desirable,
taking into account any factors deemed relevant, including without limitation,
any state or federal tax or securities laws or regulations applicable to
transferable Awards. A participant may, in the manner determined by the
Compensation Committee, designate a beneficiary to exercise the rights of the
participant and to receive any distribution with respect to any Award upon the
participant's death.
Acceleration Upon Certain Events. Upon the participant's death or
disability, all outstanding Options, SARs, and other Awards in the nature of
rights that may be exercised will become fully exercisable and all restrictions
on outstanding Awards will lapse. Any Options or SARs will thereafter continue
or lapse in accordance with the other provisions of the Incentive Plan and the
Award Agreement. In the event of a Change in Control (as defined in the
Incentive Plan) of the Company, all outstanding Options, SARs, and other Awards
in the nature of rights that may be exercised will become fully vested and all
restrictions on all outstanding Awards will lapse. In the event of the
occurrence of any circumstance, transaction or event not constituting a Change
in Control but which the Board of Directors deems to be, or to be reasonably
likely to lead to, an effective change in control of the Company, the
Compensation Committee or the Board of Directors may, in their respective sole
discretion, declare all outstanding Options, SARs, and other Awards in the
nature of rights that may be exercised to become fully vested, and/or all
restrictions on all outstanding Awards to lapse, in each case as of such date as
the Compensation Committee or the Board of Directors may, in their respective
sole discretion, declare, which may be on or before the consummation of such
transaction or event.
TERMINATION AND AMENDMENT
The Board or the Compensation Committee may amend, modify or terminate the
Incentive Plan without stockholder approval; provided, however, that the Board
or Committee may condition any amendment on the approval of stockholders of the
Company if such approval is necessary or deemed advisable with respect to tax,
securities or other applicable laws, policies or regulations. No termination,
amendment, or modification of the Incentive Plan may adversely affect any Award
previously granted under the Incentive Plan, without the written consent of the
participant. The Compensation Committee may amend, modify or terminate any
outstanding Award without approval of the participant; provided, however, that
such amendment, modification or termination may not, without the participant's
consent, reduce or diminish the value of such Award determined as if the Award
had been exercised, vested, cashed in or otherwise settled on the date of such
amendment or termination; and provided further that, except as otherwise
permitted in the Plan, the exercise price of any Option may not be reduced and
the original term of any Option may not be extended.
CERTAIN FEDERAL INCOME TAX EFFECTS
Non-qualified Stock Options. Under present federal income tax regulations,
there will be no federal income tax consequences to either the Company or the
participant upon the grant of a non-discounted NSO. However, the participant
will realize ordinary income on the exercise of the NSO in an amount equal to
the excess of the fair market value of the Common Stock acquired upon the
exercise of such option over the exercise price, and the Company will receive a
corresponding deduction (subject to the provisions of Section 162(m) of the
Code). A subsequent sale or exchange of such shares will result in gain or loss
measured by the difference between (a) the exercise price, increased by any
compensation reported upon the participant's exercise of the option and (b) the
amount realized on such sale or exchange. Such gain or loss will be capital in
nature if the shares were held as a capital asset and will be long-term if such
shares were held for the applicable long-term capital gain holding period.
Incentive Stock Options. Under present federal income tax regulations,
there will be no federal income tax consequences to either the Company or the
participant upon the grant of an ISO or the exercise thereof by
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the participant. If the participant holds the shares of Common Stock for the
greater of two years after the date the Option was granted or one year after the
acquisition of such shares of Common Stock (the "required holding period"), the
difference between the aggregate exercise price and the amount realized upon
disposition of the shares of Common Stock will constitute a capital gain or
loss, and the Company will not be entitled to a federal income tax deduction. If
the shares of Common Stock are disposed of in a sale, exchange or other
"disqualifying disposition" during the required holding period, the participant
will realize taxable ordinary income in an amount equal to the excess (if any)
of the fair market value of the Common Stock purchased at the time of exercise
(or, if less, the amount realized on the disposition of the shares) over the
aggregate exercise price, and the Company will be entitled to a federal income
tax deduction equal to such amount (subject to the provisions of Section 162(m)
of the Code). Upon exercise of an ISO, the participant may be subject to
alternative minimum tax on certain items of tax preference. If an ISO is
exercised at a time when it no longer qualifies as an incentive stock option,
the option will be treated as an NSO.
SARs. Under present federal income tax regulations, a participant
receiving a non-discounted SAR will not recognize income, and the Company will
not be allowed a tax deduction, at the time the Award is granted. When a
participant exercises the SAR, the amount of cash and the fair market value of
any shares of Common Stock received will be ordinary income to the participant
and will be allowed as a deduction for federal income tax purposes to the
Company (subject to the provisions of Section 162(m) of the Code).
Performance Units. Under present federal income tax regulations, a
participant receiving Performance Units will not recognize income and the
Company will not be allowed a tax deduction at the time the Award is granted.
When a participant receives payment of Performance Units, the amount of cash and
the fair market value of any shares of Common Stock received will be ordinary
income to the participant and will be allowed as a deduction for federal income
tax purposes to the Company (subject to the provisions of Section 162(m) of the
Code).
Restricted Stock. Under present federal income tax regulations, and unless
the participant makes an election to accelerate recognition of the income to the
date of grant, a participant receiving a Restricted Stock Award will not
recognize income, and the Company will not be allowed a tax deduction, at the
time the Award is granted. When the restrictions lapse, the participant will
recognize ordinary income equal to the fair market value of the Common Stock,
and the Company will be entitled to a corresponding tax deduction at that time
(subject to the provisions of Section 162(m) of the Code).
BENEFITS TO NAMED EXECUTIVE OFFICERS AND OTHERS
As of December 1, 1997, no awards had been granted or approved for grant
under the Incentive Plan. Any future awards will be made at the discretion of
the Compensation Committee. Therefore, it is not presently possible to determine
with respect to (a) the executive officers named in the Summary Compensation
Table, (b) all current executive officers, as a group, (c) all current directors
who are not executive officers, as a group or (d) all employees, including all
current officers who are not executive officers, as a group, either the benefits
or amounts that will be received by such persons or groups pursuant to the
Incentive Plan or the benefits or amounts that would have been received by such
persons or groups under the Incentive Plan if it had been in effect during the
last fiscal year.
STOCKHOLDER VOTE REQUIRED TO APPROVE THE INCENTIVE PLAN
Approval of the Incentive Plan will require the affirmative vote of the
holders of a majority of all classes and series of the Company's capital stock
which are represented in person or by proxy at the Annual Meeting, voting
together as a single class.
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PROPOSAL 6
AMENDMENT AND RESTATEMENT OF THE
1990 EMPLOYEE STOCK PURCHASE PLAN
GENERAL
The Company currently maintains the Marcam Corporation Amended and Restated
1990 Employee Stock Purchase Plan (the "Current ESPP"). The Board of Directors
has adopted, subject to approval thereof by the stockholders at the Annual
Meeting, an amendment and restatement of the Current ESPP, as described below
(the "Restated ESPP" and, together with the Current ESPP, the "ESPP"). If
approved by the stockholders at the Annual Meeting, the Restated ESPP will be
effective its adoption by the stockholders.
A summary of the Restated ESPP is set forth below. The summary is qualified
in its entirety by the full text of the Restated ESPP. The Company will provide,
upon request and without charge, a copy of the full text of the Restated ESPP to
each person to whom a copy of this Proxy Statement is delivered. Requests should
be directed to: Clerk, MAPICS, Inc. 5775-D Glenridge Drive, Atlanta, Georgia
30328.
The purpose of the ESPP is to encourage employees of the Company and any
participating subsidiaries to acquire a proprietary interest, or to increase
their existing proprietary interest, in the Company. The Board of Directors
believes that employee ownership of the Common Stock will serve as an incentive,
encouraging employees to continue employment and to perform diligently their
duties as employees.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE "FOR"
THE PROPOSAL TO APPROVE THE RESTATED ESPP.
SUMMARY OF PROPOSED AMENDMENTS
The Current ESPP is proposed to be amended by (a) changing the name of the
ESPP to the MAPICS, Inc. 1998 Employee Stock Purchase Plan, (b) extending the
expiration date of the ESPP from October 1, 1998 to December 31, 2007, (c)
increasing the number of shares available for purchase under the ESPP by 100,000
shares, (d) changing the purchase periods during which payroll deductions may be
accumulated under the ESPP for the purchase of shares of Common Stock from the
six-month periods ending on July 31 and January 31 of each year to the six-month
periods ending on June 30 and December 31 of each year (and to provide for one
five-month transition purchase period extending from July 31, 1998 through
December 31, 1998) and (e) eliminating certain obsolete holding period
requirements stemming from former versions of Rule 16b-3 under the Exchange Act.
ELIGIBILITY
Each employee of the Company and each employee of any designated subsidiary
corporation of the Company that has adopted the ESPP for the benefit of its
employees (the Company and each such other corporation being referred to herein
as a "Participating Company") is eligible to participate in the ESPP, provided
such employee: (a) is regularly scheduled to work at least 20 hours each week
and at least five months in the calendar year and (b) immediately after the
grant of an option to him under the ESPP would own less than five percent of the
total combined voting power or value of all classes of stock of the Company or
any of its subsidiaries. As of December 1, 1997, there were approximately 280
employees eligible to participate in the ESPP.
An eligible employee may elect to become a participant in the ESPP by
filing with the Compensation Committee an election form authorizing specified
regular payroll deductions over the next succeeding purchase period. Unless an
employee files a new election form or withdraws from the ESPP, the election form
continues from one purchase period to succeeding purchase periods as long as the
ESPP remains in effect. An employee may authorize payroll deductions in an
amount not less than 1% but not more than 10% of the employee's total
compensation, including base pay or salary and any bonuses or commissions.
Deductions may
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not be increased or decreased during a purchase period, but a participant may
withdraw in full from the ESPP at any time. A participant may not make cash
contributions or payments to the ESPP.
ADMINISTRATION
The ESPP will be administered by the Compensation Committee or the Board of
Directors, which will have authority to interpret and administer the ESPP.
SHARES SUBJECT TO PLAN
Shares subject to the ESPP may either be authorized but unissued shares or
shares that were once issued and subsequently reacquired by the Company. As of
December 1, 1997 the total remaining number of shares of Common Stock for which
options may be granted under the Current ESPP was 116,157 shares, out of 600,000
shares currently authorized. Under the Restated ESPP, that number would be
increased so that the total number of shares of Common Stock for which options
may be granted under the ESPP (including shares previously purchased under the
Current ESPP) will be 700,000 shares (an increase of 100,000 shares), subject to
adjustment in accordance with the ESPP.
TERMS AND CONDITIONS OF PARTICIPATION
Participant Accounts. The Compensation Committee will establish a
bookkeeping account for each participant and credit such participant's payroll
deductions to his account. Any funds actually held in accounts will remain part
of the general assets of the Company and may be used by the Company for any
corporate purpose. No interest will accrue or be paid on any payroll deductions
contributed to the ESPP or credited to the account of any participant.
Purchase Periods. Under the Current ESPP, the purchase periods during
which payroll deductions are accumulated under the ESPP are the six-month
periods commencing and ending on or about February 1 to July 31 and August 1 to
January 31 of each year. The first purchase period commencing after the
effective date of the Restated ESPP will be the five-month period from August 1,
1998 through December 31, 1998. Thereafter, the purchase periods during which
payroll deductions will be accumulated under the ESPP will be the six-month
periods from January 1 through June 30 and from July 1 through December 31 of
each year.
Grant of Options. On the first business day of each purchase period, the
Company will grant to each participant in the ESPP an option to purchase on the
last day of such purchase period a maximum of 500 shares of Common Stock. The
participant will be entitled to exercise such option to the extent of the
participant's accumulated payroll deductions on the last day of such purchase
period; provided, however, that if the participant's accumulated payroll
deductions on the last day of the purchase period would enable the participant
to purchase more than 500 shares, the excess of the amount of the accumulated
payroll deductions over the aggregate purchase price of the 500 shares will be
refunded to the participant, without interest. The Option Price for each
purchase period will be the lesser of (a) 85% of the fair market value of the
Common Stock on the first business day of the purchase period or (b) 85% of the
fair market value of the Common Stock on the last business day of the purchase
period.
Exercise of Options. Each eligible employee who continues to be a
participant in the ESPP on the last business day of a purchase period will be
deemed to have exercised his option on such date for such number of full shares
of Common Stock as his accumulated payroll deductions on such date will pay for
at the Option Price, subject to the 500-share limit of the option. Only full
shares of Common Stock may be purchased under the ESPP. Unused payroll
deductions remaining in an employee's account at the end of a purchase period
(other than amounts refunded to the employee as described above) will be carried
forward to the succeeding purchase period.
Special Limitations. No option will be granted to a participant if such
option, when combined with all other options granted under all of the Code
Section 423 employee stock purchase plans of the Company, its parents and its
subsidiary corporations, would permit such participant to purchase shares of
Common Stock having a fair market value in excess of $25,000 per year.
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Withdrawals. An employee may withdraw from the ESPP at any time prior to
the last business day of each purchase period by delivering a withdrawal notice
to the Company, in which event the Company will refund the entire balance of the
employee's deductions not previously used to purchase stock under the ESPP. To
re-enter the ESPP, an employee who has previously withdrawn must file a new
authorization at least ten days before the beginning date of the next purchase
period. A participant who elects to withdraw from the ESPP may not participate
again until the beginning of the next purchase period.
Adjustments. If the shares of Common Stock are subdivided or combined into
a greater or smaller number of shares or if, upon a reorganization, split-up,
liquidation, recapitalization or the like of the Company, shares of Common Stock
are exchanged for other securities of the Company, each optionee will be
entitled to purchase such number of shares of Common Stock or amount of other
securities of the Company as were exchangeable for the number of shares of
Common Stock such optionee would otherwise have been entitled to purchase, and
appropriate adjustments will be made in the exercise price per share to reflect
such subdivision, combination or exchange. In the event of a stock dividend,
each optionee upon exercising such an option will be entitled to receive the
shares as to which he is exercising the option and the stock dividend on such
shares. In any of the above events, appropriate adjustments will also be made to
the number of shares available for purchase under the ESPP. Any of the above
adjustments will be made only to the extent that they will not require
stockholder approval under Section 423(b)(2) of the Code. In the event of an
acquisition of the Company or substantially all of its stock or assets, the
Compensation Committee will either (a) make appropriate provision for the
continuation of options outstanding under the ESPP by arranging for the
substitution of consideration upon exercise or (b) terminate all outstanding
options in exchange for a cash payment equal to the excess of the fair market
value of the option shares over the exercise price of the options (determined
with reference only to the first business day of the applicable purchase
period).
Delivery of Common Stock; Stockholder Rights. As soon as practicable after
the end of each purchase period, the Company will issue to each participant the
shares of Common Stock, if any, purchased for such participant. Upon issuance of
such shares, the participant will have all of the rights and privileges of a
stockholder of the Company with respect to such shares.
Restrictions on Transfer. An employee's rights under the ESPP may not be
transferred other than by will or the laws of descent and distribution. Any
option granted under the ESPP to an employee may be exercised, during the
employee's lifetime, only by the employee.
Termination of Employee's Rights. An employee's rights under the ESPP will
terminate when he ceases to be an employee because of retirement, voluntary or
involuntary termination, resignation, lay-off, discharge, death, change of
status or for any other reason, except that if an employee is on a leave of
absence from work during the last three months of any purchase period, he will
be deemed to be a participant in the ESPP on the last day of that purchase
period. A withdrawal notice will be considered as having been received from the
employee on the day his employment ceases, and all payroll deductions not used
to purchase stock will be refunded. If an employee's payroll deductions are
interrupted by any legal process, a withdrawal notice will be considered as
having been received from the employee an the day the interruption occurs.
TERMINATION AND AMENDMENT
Unless terminated sooner as provided below, the Revised ESPP will terminate
on December 31, 2007. The ESPP may be terminated at any time by the Board but
such termination will not affect options then outstanding. The ESPP will
terminate in any case when all or substantially all of the unissued shares of
stock reserved for the purposes of the ESPP have been purchased. If at any time
shares of stock reserved for the ESPP remain available for purchase but not in
sufficient number to satisfy all then unfilled purchase requirements, the
available shares will be apportioned among participants in proportion to their
options and the ESPP will terminate. Upon termination, all payroll deductions
not used to purchase stock will be refunded. The Compensation Committee or the
Board may from time to time amend the ESPP provided that, without the approval
of the stockholders, no amendment may (a) increase the number of shares that may
be issued or change the class of employees eligible to receive options under the
ESPP or (b) cause Rule 16b-3 under the Exchange Act to become inapplicable to
the ESPP.
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FEDERAL INCOME TAX EFFECTS
The ESPP is intended to qualify for the favorable federal income tax
consequences of Code Section 423. Neither the grant nor the exercise of options
granted under the ESPP will have a tax impact on the participant or the Company.
A participant receives a tax basis in the purchased stock equal to his own
contributions. If a participant disposes of the stock acquired upon the exercise
of his options after at least two years from the date of grant and one year from
the date of exercise (the "required holding period"), then the participant will
recognize as ordinary income the amount by which the lesser of (a) the fair
market value of the stock at the time of disposition or (b) the fair market
value of the stock at the date of grant (i.e., at the beginning of the purchase
period) exceeds the participant's tax basis in such stock. Any gain in addition
to this amount will be treated as a capital gain. If a participant holds stock
at the time of his death, the required holding period will automatically be
deemed to have been satisfied and ordinary income must be realized by the
participant in the amount by which the lesser of (a) the fair market value of
the stock at the time of death or (b) the fair market value of the stock at the
date of grant (i.e., at the beginning of the purchase period) exceeds the
participant's tax basis in such stock. The Company will not be entitled to a
deduction if the holding period requirements are satisfied.
If a participant disposes of stock before the required holding period, then
the participant must recognize as ordinary income the excess of the fair market
value of the stock on the date of exercise of the option over the participant's
tax basis in such stock. Any additional gain will be treated as long-term or
short-term capital gain or loss, as the case may be. The Company will be allowed
a deduction equal to the amount of ordinary income recognized by the participant
(subject to the provisions of Section 162(m) of the Code).
At the time the option is exercised, in whole or in part, or at the time
some or all of the Common Stock issued under the ESPP is disposed of, the
participant must make adequate provision for the Company's federal, state or
other tax withholding obligations, if any, which arise upon the exercise of the
option or the disposition of such stock. At any time, the Company may, but will
not be obligated to, withhold from the participant's compensation the amount
necessary for the Company to meet applicable withholding obligations, including
any withholding required to make available to the Company any tax deductions or
benefits attributable to sale or early disposition of Common Stock by the
participant.
BENEFITS TO NAMED EXECUTIVE OFFICERS AND OTHERS
Participation in the ESPP is entirely voluntary. Therefore, it is not
presently possible to determine, with respect to (a) the executive officers
named in the Summary Compensation Table, (b) all current executive officers as a
group or (c) all employees, including all current officers who are not executive
officers, as a group, the benefits or amounts that will be received by such
persons or groups pursuant to the ESPP. Directors who are not employees are not
entitled to participate in the ESPP.
STOCKHOLDER VOTE REQUIRED TO APPROVE THE RESTATED ESPP
Approval of the Restated ESPP will require the affirmative vote of the
holders of a majority of all classes and series of the Company's capital stock
which are represented in person or by proxy at the Annual Meeting, voting
together as a single class.
PROPOSAL 7
RATIFICATION OF APPOINTMENT OF INDEPENDENT ACCOUNTANTS
The Board of Directors has appointed the firm of Coopers & Lybrand L.L.P.
to serve as independent accountants of the Company for the fiscal year ending
September 30, 1998. The Board has directed that such appointment be submitted to
the stockholders of the Company for ratification at the Annual Meeting. Coopers
& Lybrand L.L.P. has served as independent accountants of the Company since 1995
and is considered by management of the Company to be well qualified. If the
stockholders do not ratify the appointment of Coopers & Lybrand L.L.P., the
Board of Directors will reconsider the appointment.
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Representatives of Coopers & Lybrand L.L.P. will be present at the Annual
Meeting. They will have an opportunity to make a statement if they desire to do
so and will be available to respond to appropriate questions from stockholders.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE "FOR"
THE PROPOSAL TO RATIFY THE APPOINTMENT OF COOPERS & LYBRAND L.L.P. AS
INDEPENDENT ACCOUNTANTS OF THE COMPANY FOR THE FISCAL YEAR ENDING SEPTEMBER 30,
1998.
STOCKHOLDERS' PROPOSALS FOR 1999 ANNUAL MEETING
Nominations by stockholders for director elections and other proposals of
stockholders intended to be presented at the 1999 Annual Meeting of
Stockholders, together with certain related information specified in Rule 14a-13
of the Securities and Exchange Commission, must be submitted in writing to the
Company on or before August 18, 1998 in order for such matters to be included in
the Company's proxy materials for the 1999 Annual Meeting. All such proposals,
nominations and related information should be submitted on or before such date
by certified mail, return receipt requested, to the Clerk of the Company, 5775-D
Glenridge Drive, Atlanta, Georgia 30328.
OTHER MATTERS THAT MAY COME BEFORE THE ANNUAL MEETING
The Board of Directors of the Company knows of no matters other than those
referred to in the accompanying Notice of Annual Meeting of Stockholders which
may properly come before the Annual Meeting. However, if any other matter should
be properly presented for consideration and voting at the Annual Meeting or any
adjournments thereof, it is the intention of the persons named as proxies on the
enclosed form of proxy card to vote the shares represented by all valid proxy
cards in accordance with their judgment of what is in the best interest of the
Company.
By Order of the Board of Directors.
Martin D. Avallone
Clerk
Atlanta, Georgia
December 16, 1997
---------------------
The Company's 1997 Summary Annual Report and the Company's Annual Report on
Form 10-K for the fiscal year ended September 30, 1997, which includes audited
financial statements, have been mailed to stockholders of the Company with these
proxy materials. Such materials do not form any part of the material for the
solicitation of proxies.
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EXHIBIT A TO THE PROXY STATEMENT
AGREEMENT
AND
PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement") dated as of
, 1998 between MAPICS, Inc., a Massachusetts corporation
("MAPICS-Mass."), and MAPICS, Inc., a Georgia corporation ("MAPICS-Georgia";
together with MAPICS-Mass., the "Constituent Corporations") and a wholly-owned
subsidiary of MAPICS-Mass., sets forth certain agreements in connection with the
merger of MAPICS-Mass. with and into MAPICS-Georgia (the "Merger").
WITNESSETH:
WHEREAS, as of the date hereof, MAPICS-Mass. has the following authorized
capital stock: (a) 50,000,000 shares of common stock, $.01 par value per share
("MAPICS-Mass. Common Stock"), and (b) 1,000,000 shares of preferred stock,
$1.00 par value per share ("MAPICS-Mass. Preferred Stock"), of which (i) 1 share
has been designated Series A Preferred Stock ("MAPICS-Mass. Series A Preferred
Stock"), (ii) 1 share has been designated Series B Preferred Stock
("MAPICS-Mass. Series B Preferred Stock"), (iii) 1 share has been designated
Series C Preferred Stock ("MAPICS-Mass. Series C Preferred Stock"), (iv) 225,000
shares have been designated Series D Convertible Preferred Stock ("MAPICS-Mass.
Series D Preferred Stock"), (v) 100,000 shares have been designated Series E
Convertible Preferred Stock ("MAPICS-Mass. Series E Preferred Stock") and (vi)
30,000 shares have been designated Series F Junior Participating Preferred Stock
(MAPICS-Mass. Series F Preferred Stock"). The MAPICS-Mass. Common Stock and the
MAPICS-Mass. Preferred Stock are collectively referred to herein as the
"MAPICS-Mass. Stock."
WHEREAS, as of the date hereof, there are outstanding (a) shares
of MAPICS-Mass. Common Stock, (b) no shares of MAPICS-Mass. Series A Preferred
Stock, (c) no shares of MAPICS-Mass. Series B Preferred Stock, (d) no shares of
MAPICS-Mass. Series C Preferred Stock, (e) 225,000 shares of MAPICS-Mass. Series
D Preferred Stock, (f) 100,000 shares of MAPICS-Mass. Series E Preferred Stock
and (g) no shares of MAPICS-Mass. Series F Preferred Stock.
WHEREAS, as of the date hereof, MAPICS-Georgia has the following authorized
capital stock: (a) 50,000,000 shares of common stock, $.01 par value per share
("MAPICS-Georgia Common Stock"), and (b) 1,000,000 shares preferred stock, $1.00
par value per share ("MAPICS-Georgia Preferred Stock"), of which (i) 225,000
shares have been designated Series D Convertible Preferred Stock, (ii) 100,000
shares have been designated Series E Convertible Preferred Stock and (iii)
30,000 shares have been designated Series F Junior Participating Preferred
Stock. The MAPICS-Georgia Common Stock and the MAPICS-Georgia Preferred Stock
are collectively referred to herein as the "MAPICS-Georgia Stock."
WHEREAS, as of the date hereof, there are outstanding shares of
MAPICS-Georgia Common Stock, all of which are owned by MAPICS-Mass., and no
shares of MAPICS-Georgia Preferred Stock.
WHEREAS, the respective boards of directors and stockholders of the
Constituent Corporations have approved this Agreement, the Merger and the other
transactions contemplated hereby.
NOW, THEREFORE, in consideration of the premises and the mutual covenants
and agreements herein contained, and for the purpose of setting forth the terms
and conditions of the Merger, the method by which the Merger will be effected,
the manner and basis of converting the shares of MAPICS-Mass. Stock into
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<PAGE> 52
shares of MAPICS-Georgia Stock, the manner of determining the effective date of
the Merger and such other provisions as are deemed necessary or desirable, the
parties hereto do hereby agree as follows:
ARTICLE I
THE MERGER
1.1 Upon the terms and subject to the conditions of this Agreement and in
accordance with applicable law, at the Effective Time (as defined below)
MAPICS-Mass. shall be merged with and into MAPICS-Georgia and the separate
existence of MAPICS-Mass. shall thereupon cease. MAPICS-Georgia shall be the
surviving corporation in the Merger (hereinafter sometimes referred to as the
"Surviving Corporation"), and the Surviving Corporation shall retain the name
"MAPICS, Inc."
1.2 At the Effective Time, the Surviving Corporation shall thereupon and
thereafter possess all of the rights, privileges, immunities and franchises of a
public and a private nature of each of the Constituent Corporations; all
property, real, personal and mixed, tangible and intangible and all and every
other interest of or due to each of the Constituent Corporations shall be taken
and deemed to be transferred to and vested in the Surviving Corporation without
further action. The title to any real estate, or any interest therein, vested in
any of the Constituent Corporations shall not revert or in any way be impaired
by reason of the Merger. The Surviving Corporation shall thenceforth be
responsible and liable for all the liabilities and obligations of each of the
Constituent Corporations. Neither the rights of creditors nor any liens upon the
property of any of the Constituent Corporations shall be impaired by the Merger.
1.3 The location of the principal and registered office of the Surviving
Corporation is 5775-D Glenridge Drive, Suite 300, Atlanta, Georgia 30328.
1.4 The Merger shall be effective as of the date and time specified in the
Certificates of Merger delivered to the Georgia Secretary of State and the
Massachusetts Secretary of State (the "Effective Time").
ARTICLE II
CERTIFICATE OF INCORPORATION, BYLAWS, DIRECTORS AND
OFFICERS OF THE SURVIVING CORPORATION
2.1 The Articles of Incorporation of MAPICS-Georgia in effect immediately
prior to the Effective Time of the Merger shall be the Articles of Incorporation
of the Surviving Corporation unless and until amended as provided by law and by
such Articles of Incorporation.
2.2 The Bylaws of MAPICS-Georgia in effect immediately prior to the
Effective Time of the Merger shall be the Bylaws of the Surviving Corporation
unless and until amended or repealed as provided by law, by the Articles of
Incorporation of the Surviving Corporation and by such Bylaws.
2.3 The directors of MAPICS-Georgia immediately prior to the Effective Time
of the Merger shall be the directors of the Surviving Corporation, and the
officers of MAPICS-Georgia immediately prior to the Effective Time of the Merger
shall be the officers of the Surviving Corporation, in both cases until their
successors shall have been elected and shall qualify or until otherwise provided
by law, by the Articles of Incorporation of the Surviving Corporation and by the
Bylaws of the Surviving Corporation.
ARTICLE III
MANNER AND BASIS OF CONVERTING SHARES, OPTIONS
AND WARRANTS OF THE CONSTITUENT CORPORATIONS
3.1 Except as provided in Section 3.5, at the Effective Time, by virtue of
the Merger and without any action by the holder thereof or any action in
addition to that contemplated hereby by either Constituent Corporation:
(a) each then outstanding share of MAPICS-Mass. Common Stock will be
automatically converted into one (1) share of fully-paid and non-assessable
MAPICS-Georgia Common Stock;
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(b) each then outstanding share of MAPICS-Mass. Preferred Stock which
has been designated as a particular series thereof will be automatically
converted into one (1) share of fully-paid and non-assessable
MAPICS-Georgia Preferred Stock with such series designation;
(c) each share of MAPICS-Mass. Common Stock then held in the treasury
of MAPICS-Mass. will be automatically converted into one (1) share of
MAPICS-Georgia Common Stock, which share shall be held in the treasury of
MAPICS-Georgia; and
(d) each then outstanding option, warrant, purchase right, unit or
other security of MAPICS-Mass. will be automatically converted into, and
shall be an identical security of, MAPICS-Georgia, exercisable (if at all)
at the same price per share and upon the same terms and conditions
immediately before and immediately after such conversion, and the number of
shares of MAPICS-Georgia Common Stock reserved for issuance upon exercise
of such options, warrants, purchase rights, units or other securities, as
so converted, shall be equal to the number of shares of MAPICS-Mass. Common
Stock so reserved as of the Effective Time.
3.2 Notwithstanding any other provision of this Agreement, no certificate
or scrip for fractional shares of MAPICS-Georgia Stock shall be issued in the
Merger, and any such fractional interest that may result from the Merger shall
be disregarded and void ab initio.
3.3 Upon and after the Effective Time, all of the outstanding certificates
which immediately prior thereto represented shares of MAPICS-Mass. Stock or
warrants, units or other securities of MAPICS-Mass. shall be deemed for all
purposes to evidence ownership of and to represent the shares of MAPICS-Georgia
Stock or warrants, units or other securities of MAPICS-Georgia, as the case may
be, into which the shares of MAPICS-Mass. Stock or warrants, units or other
securities of MAPICS-Mass. represented by such certificates have been converted
as provided in Section 3.1 and shall be so registered on the books and records
of the Surviving Corporation or its transfer agent. The registered holder of any
such outstanding certificate shall, until such certificate shall have been
surrendered for transfer or otherwise accounted for to the Surviving Corporation
or its transfer agent, have and be entitled to exercise any voting and other
rights with respect to, and to receive any dividends and other distributions
upon, the shares of MAPICS-Georgia Stock or warrants, units or other securities
of MAPICS-Georgia, as the case may be, evidenced by such outstanding
certificate.
3.4 As of the Effective Time, the shares of MAPICS-Georgia Common
Stock issued upon its organization to MAPICS-Mass. shall be canceled, so that
immediately thereafter the then outstanding shares of MAPICS-Georgia Stock shall
consist only of the shares to be issued by the Surviving Corporation upon the
conversion and exchange of shares of MAPICS-Mass. Stock pursuant to Section 3.1.
3.5 Any outstanding shares of MAPICS-Mass. Stock held by a stockholder (a
"Dissenting Stockholder") who shall have elected to dissent from the Merger and
who shall have exercised and perfected appraisal rights ("Appraisal Rights")
with respect to such shares in accordance with Sections 85 through 98 of Chapter
156B of the Massachusetts Business Corporation Law ("MBCL") shall not be
converted into shares of MAPICS-Georgia Common Stock as a result of the Merger.
Such Dissenting Stockholder shall be entitled to receive therefor only the
consideration required to be paid to such Dissenting Stockholder by Sections 85
through 98 of Chapter 156B of the MBCL and, upon the payment of such
consideration, such shares of MAPICS-Mass. Stock shall be immediately cancelled
without any further action. Notwithstanding the foregoing provisions of this
Section 3.5, if any such Dissenting Stockholder shall, prior to the Effective
Time, (x) withdraw his election to dissent from the Merger or (y) fail to
properly exercise and perfect his appraisal rights in accordance with Sections
85 through 98 of Chapter 156B of the MBCL, such Dissenting Stockholder's shares
of MAPICS-Mass. Stock shall be converted, as of the Effective Time, into shares
of MAPICS-Georgia Stock in accordance with Section 3.1.
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ARTICLE IV
BENEFIT PLANS
4.1 Each option or other right to purchase or otherwise acquire shares of
MAPICS-Mass. Common Stock granted under any employee option plan, employee stock
purchase plan or other benefit plan maintained by MAPICS-Mass. (collectively,
the "Plans") which is outstanding immediately prior to the Effective Time shall,
by virtue of the Merger and without any action by the holder thereof or any
action in addition to that contemplated hereby by either Constituent
Corporation, be converted into and become an option or other right to purchase
or otherwise acquire (and MAPICS-Georgia hereby assumes the obligation to
deliver) the same number of shares of MAPICS-Georgia Common Stock, at the same
price per share and upon the same terms and conditions, as are set forth in the
Plan under which such option or other right was granted (together with any
instruments, agreements or other documents related thereto). The number of
shares of MAPICS-Georgia Common Stock reserved for issuance upon the exercise of
all such options or other rights, converted as described in the preceding
sentence, shall be equal to the number of shares of MAPICS-Mass. Common Stock so
reserved immediately prior to the Effective Time. MAPICS-Georgia hereby assumes,
as of the Effective Time, (a) the Plans and all obligations of MAPICS-Mass.
thereunder, including the outstanding options, stock purchase rights or awards
or portions thereof granted pursuant to the Plans and the right to grant
additional options and stock purchase rights thereunder, and (b) all obligations
of MAPICS-Mass. under all of its other benefit plans in effect immediately prior
to the Effective Time.
ARTICLE V
FURTHER ACTIONS AND AGREEMENTS
5.1 If at any time after the Effective Time of the Merger the Surviving
Corporation shall consider or be advised that any deeds, bills of sale,
assignments, assurances or any other actions or things are necessary or
desirable to vest, perfect or confirm of record or otherwise in the Surviving
Corporation its right, title or interest in, to or under any of the rights,
properties or assets of either Constituent Corporation acquired by the Surviving
Corporation as a result of, or in connection with, the Merger or to otherwise
carry out this Agreement, the officers and directors of the Surviving
Corporation shall, and hereby are authorized to, execute and deliver, in the
name and on behalf of the Constituent Corporations or otherwise, all such deeds,
bills of sale, assignments and assurances and to take and do, in the name and on
behalf of the Constituent Corporations or otherwise, all such other actions and
things as may be necessary or desirable to vest, perfect or confirm any and all
right, title and interest in, to and under such rights, properties or assets in
the Surviving Corporation or to otherwise carry out this Agreement.
5.2 As required by Section 79 of Chapter 156B of the MBCL, the Surviving
Corporation
(a) agrees that, for so long as required by Section 79 of Chapter 156B
of the MBCL, it may be sued in the Commonwealth of Massachusetts for any
obligation (including the obligation created by Section 85 of Chapter 156B
of the MBCL) of (i) a Constituent Corporation incurred prior to the
Effective Time and (ii) the Surviving Corporation incurred after the
Effective Time; and
(b) irrevocably appoints the Secretary of State of the Commonwealth of
Massachusetts as its agent to accept service of process in any action for
the enforcement of any obligation referred to in clause (a) of this Section
5.2, including taxes.
ARTICLE VI
MISCELLANEOUS
6.1 For the convenience of the parties hereto and to facilitate the filing
and recording of this Agreement, any number of counterparts hereof may be
executed, and each such counterpart shall be deemed an original instrument and
all of such counterparts shall constitute one document, and the signature of any
party to any counterpart shall be deemed a signature to, and may be appended to,
any other counterpart.
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6.2 This Agreement shall be governed by and construed in accordance with
the laws of the State of Georgia.
6.3 The parties hereto, by resolution of their respective boards of
directors, may amend, modify or supplement this Agreement, or waive the
application of any provision hereof (including, without limitation, the
condition set forth in Section 6.5), provided that any such amendment,
modification, supplement or waiver is in writing and signed by the parties
hereto.
6.4 By written notice to the other party hereto at any time prior to the
Effective Time, whether before or after approval by the stockholders of
MAPICS-Mass. of this Agreement, the Merger and the other transactions
contemplated hereby for any reason, either MAPICS-Mass. or MAPICS-Georgia, by
resolution of their respective boards of directors, may terminate this Agreement
and abandon the Merger and the other transactions contemplated hereby, and in
that event, neither party shall have any further obligation to the other party
or to the stockholders of the other party.
6.5 Subject to Section 6.3, it is a condition to the consummation of the
Merger and the other transactions contemplated hereby that the aggregate amounts
paid or to be paid to Dissenting Stockholders constitute less than 1% of the
value of the net assets of MAPICS-Mass. as of the date of the Merger. Any
determination pursuant to this Section 6.5 shall be made in the sole discretion
of the Boards of Directors of MAPICS-Mass. and MAPICS-Georgia.
IN WITNESS WHEREOF, each Constituent Corporation has caused this Agreement
to be executed by its duly authorized officers and its corporate seal to be
affixed hereto, as of the date first above written.
<TABLE>
<S> <C>
[SEAL] MAPICS, INC., a Massachusetts corporation
Attest:
By: By:
------------------------------------------ --------------------------------------------
Name: Name:
Title: Title:
[SEAL] MAPICS, INC., a Georgia corporation
Attest:
By: By:
------------------------------------------ --------------------------------------------
Name: Name:
Title: Title:
</TABLE>
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<PAGE> 56
EXHIBIT B TO THE PROXY STATEMENT
ARTICLES OF INCORPORATION
OF
MAPICS, INC.
ARTICLE I
NAME
The name of the corporation is MAPICS, Inc.
ARTICLE II
AUTHORIZED SHARES
The corporation shall have authority, to be exercised by the Board of
Directors, to issue not more than 50,000,000 shares of Common Stock, $.01 par
value per share, and not more than 1,000,000 shares of Preferred Stock, $1.00
par value per share. The shares of Common Stock shall have unlimited voting
rights and shall be entitled to receive the net assets of the corporation upon
dissolution. Subject to the provisions of these Articles of Incorporation and to
the provisions of the Georgia Business Corporation Code, the Board of Directors
is authorized to determine (a) the preferences, limitations, and relative rights
of the class of Preferred Stock prior to the issuance of any shares of Preferred
Stock and (b) the preferences, limitations, and relative rights of one or more
series within the class of Preferred Stock and may designate the number of
shares within that series prior to the issuance of any shares of that series;
provided, however, that the preferences, limitations and relative rights of the
corporation's (x) Series D Convertible Preferred Stock, par value $1.00 per
share, (y) Series E Convertible Preferred Stock, par value $1.00 per share, and
(z) Series F Junior Participating Preferred Stock, par value $1.00 per share,
are set forth in Annex A, Annex B and Annex C hereto, respectively.
ARTICLE III
INCORPORATOR, REGISTERED AGENT AND OFFICE
The name of the incorporator and the initial registered agent of the
corporation is Martin D. Avallone. The address of the incorporator and of the
initial registered office and initial principal office of the corporation is
5775-D Glenridge Drive, Atlanta, Georgia 30328.
ARTICLE IV
DIRECTORS
4.1 The number of directors of the corporation shall not be less than three
nor more than eleven, the precise number to be fixed by resolution of the
shareholders or of the Board of Directors from time to time. The directors shall
be divided into three classes, each consisting, as nearly equal in number as
possible, of one-third of the total number of directors constituting the entire
Board of Directors. At the first election of directors of the corporation, the
first class of directors (Class I) shall be elected for a term expiring at the
third next annual meeting of shareholders and upon the election and
qualification of their respective successors, the second class of directors
(Class III) shall be elected for a term expiring at the second next annual
meeting of shareholders and upon the election and qualification of their
respective successors, and the third class of directors (Class II) shall be
elected for a term expiring at the next following annual meeting of shareholders
and upon the election and qualification of their respective successors. At each
succeeding annual meeting of shareholders, successors to the class of directors
whose term expires at the annual meeting of shareholders shall be elected for a
three-year term. Except as provided in Section 4.3 of this Article Four, a
director shall be elected by the affirmative vote of the holders of a plurality
of the shares represented at the meeting of shareholders at which the director
stands for election and entitled to elect such director.
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4.2 The entire Board of Directors or any individual director may be removed
from office but only for cause and only by the affirmative vote of the holders
of at least 80% of all classes of stock of the corporation entitled to vote in
the election of such director or directors, considered for purposes of this
Section as one class. For purposes of this Section, "cause" shall mean only (a)
conviction of a felony, (b) declaration of unsound mind by order of a court, (c)
gross dereliction of duty, (d) commission of an action involving moral turpitude
or (e) commission of an action which constitutes intentional misconduct or a
knowing violation of law if such action in either event results both in an
improper substantial personal benefit and a material injury to the corporation.
Notwithstanding the foregoing, in the event that Preferred Stock of the
corporation is issued and authorizes the election of one or more directors by
the holders of such Preferred Stock, any individual director elected by the
holders of such Preferred Stock may be removed only by the holders of the
outstanding shares of such Preferred Stock in accordance with the terms of the
Preferred Stock as provided therein. Removal action may be taken at any
shareholders' meeting with respect to which notice of such purpose has been
given.
4.3 Any vacancies on the Board of Directors for any reason, including
vacancies resulting from an increase in the number of directors, may be filled
only by the Board of Directors, acting by the affirmative vote of a majority of
the total number of directors then remaining in office, though they constitute
fewer than a quorum of the Board of Directors. Notwithstanding the foregoing,
(a) in the event that a vacant office was held by a director elected by holders
of Preferred Stock of the corporation who are entitled to elect such director
pursuant to the terms of such Preferred Stock, only the remaining directors
elected by the holders of such Preferred Stock, or in the absence of any such
directors, the holders of such Preferred Stock, shall be entitled to fill such
vacancy in accordance with the terms of the Preferred Stock as provided therein
and (b) any vacancy on the Board of Directors resulting from the removal of a
director by shareholder action may be filled by the shareholders at their annual
meeting or at a special meeting the notice or waiver of notice of which
specifies such action as an item of business for such meeting. Any director
appointed to fill a vacancy shall be elected for the unexpired term of the
predecessor in office and until the successor is elected and qualified, except
that when a directorship is to be filled by reason of an increase in the number
of directors, the term of such director shall expire at the next election of
directors by the shareholders and upon the election and qualification of the
successor.
4.4 Notwithstanding any other provision hereof or any provision of law
which might otherwise permit a lesser vote or no vote, the affirmative vote of
the holders of at least 80% of all classes of stock ordinarily entitled to vote
in the election of directors, considered for the purposes of this Section as one
class, shall be required to alter, amend or repeal this Article Four.
ARTICLE V
LIMITATION OF DIRECTOR LIABILITY
5.1 A director of the corporation shall not be liable to the corporation or
its shareholders for monetary damages for any action taken, or any failure to
take any action, as a director, except liability (i) for any appropriation, in
violation of his or her duties, of any business opportunity of the corporation,
(ii) for acts or omissions which involve intentional misconduct or a knowing
violation of law, (iii) of the types set forth in Section 14-2-832 of the
Georgia Business Corporation Code (or any successor provision), or (iv) for any
transaction from which the director received an improper personal benefit.
5.2 Any repeal or modification of the provisions of this Article by the
shareholders of the corporation shall be prospective only, and shall not
adversely affect any limitation on the liability of a director of the
corporation with respect to any act or omission occurring prior to the effective
date of such repeal or modification.
5.3 If the Georgia Business Corporation Code is hereafter amended to
authorize the further elimination or limitation of the liability of directors,
then the liability of a director of the corporation, in addition to the
limitation on liability provided herein, shall be limited to the fullest extent
permitted by the Georgia Business Corporation Code, as so amended.
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5.4 In the event that any of the provisions of this Article (including any
provision within a single sentence) is held by a court of competent jurisdiction
to be invalid, void or otherwise unenforceable, the remaining provisions are
severable and shall remain enforceable to the fullest extent permitted by law.
ARTICLE VI
CONSTITUENCY CONSIDERATIONS
In discharging the duties of their respective positions and in determining
what is believed to be in the best interests of the corporation, the Board of
Directors, committees of the Board of Directors, and individual directors, in
addition to considering the effects of any action on the corporation or its
shareholders, may consider the interests of the employees, customers, suppliers,
and creditors of the corporation and its subsidiaries, the communities in which
offices or other establishments of the corporation and its subsidiaries are
located, and all other factors such directors consider pertinent; provided,
however, that this Article shall be deemed solely to grant discretionary
authority to the directors and shall not be deemed to provide to any
constituency any right to be considered.
ARTICLE VII
SHAREHOLDER ACTION WITHOUT A MEETING
Except as may be otherwise provided by the terms of any Preferred Stock,
action required or permitted to be taken at a meeting of shareholders may be
taken without a meeting if the action is taken by all shareholders entitled to
vote on the action. The action must be evidenced by one or more written consents
describing the action taken, signed by all shareholders and delivered to the
corporation for inclusion in the minutes or filing with the corporate records.
ARTICLE VIII
AMENDMENT OF BYLAWS
The Bylaws may be altered, amended or repealed, and new Bylaws may be
adopted, by (a) the affirmative vote of the holders of a majority of the voting
power of all the shares of capital stock of the corporation then entitled to
vote generally in the election of directors, voting together as a single class,
or (b) the Board of Directors of the corporation, but any bylaws adopted by the
Board of Directors may be altered, amended or repealed, or new bylaws may be
adopted, by the affirmative vote of the holders of a majority of the voting
power of all of the shares of capital stock of the corporation then entitled to
vote generally in the election of directors, voting together as a single class.
The shareholders may prescribe, by so expressing in the action they take in
amending or adopting any Bylaw or Bylaws, that the Bylaw or Bylaws so amended or
adopted by them shall not be altered, amended or repealed by the Board of
Directors.
ARTICLE IX
SEVERABILITY
In the event that any of the provisions of these Articles of Incorporation
are held by a court of competent jurisdiction to be invalid, void or otherwise
unenforceable, the remaining provisions are severable and shall remain
enforceable to the full extent permitted by law.
IN WITNESS WHEREOF, the undersigned, being the incorporator named above,
for the purpose of forming a corporation pursuant to the Georgia Business
Corporation Code, executes these Articles of Incorporation on this day of
, 1998.
--------------------------------------
Martin D. Avallone
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<PAGE> 59
ANNEX A
SERIES D CONVERTIBLE PREFERRED STOCK
1. Designation and Number of Shares. There shall be hereby established the
series of Preferred Stock designated and known as "Series D Convertible
Preferred Stock." The authorized number of shares of Series D Convertible
Preferred Stock shall be 225,000 shares.
2. Voting.
(a) General. Except as may be otherwise provided in these terms of
the Series D Convertible Preferred Stock or by law, the Series D
Convertible Preferred Stock shall vote together with all other classes and
series of stock of the Corporation as a single class on all actions to be
taken by the stockholders of the Corporation. Each share of Series D
Convertible Preferred Stock shall entitle the holder thereof to such number
of votes per share on each such action as shall equal the number of shares
of Common Stock (including fractions of a share) into which each share of
Series D Convertible Preferred Stock is then convertible.
(b) Board Seats. If General Atlantic Partners 21, L.P., GAP
Coinvestment Partners, L.P. and any affiliate (as defined in Rule 12b-2
under the Securities Exchange Act of 1934) thereof own in the aggregate (a)
at least a majority of the outstanding shares of Series D Convertible
Preferred Stock and (b) shares of Common Stock and/or Series D Convertible
Preferred Stock or other securities of the Company convertible into or
exchangeable for shares of voting capital stock of the Company that
represent (after giving effect to any adjustments) at least 10% of the
total number of shares of Common Stock outstanding on an as converted
basis, the holders of the Series D Convertible Preferred Stock, voting as a
separate series, shall be entitled to elect one director of the
Corporation, which directorship shall be apportioned among the classes of
directors by the Board of Directors of the Corporation. The Series D
Convertible Preferred Stock shall vote together with all other classes and
series of stock of the Corporation as a single class with respect to the
election of all of the other directors of the Corporation; provided,
however, that if the conditions specified in the first sentence of this
paragraph 2(b) necessary for the holders of the Series D Convertible
Preferred Stock to have a separate series vote for one director are not
satisfied, the Series D Convertible Preferred Stock shall vote together
with all other classes and series of stock of the Corporation as a single
class with respect to the election of all of the directors of the
Corporation. At any meeting (or in a written consent in lieu thereof) held
for the purpose of electing directors, the presence in person or by proxy
(or the written consent) of the holders of a majority of the shares of
Series D Convertible Preferred Stock then outstanding shall constitute a
quorum of the Series D Convertible Preferred Stock for the election of the
director to be elected solely by the holders of the Series D Convertible
Preferred Stock. A vacancy in the directorship elected by the holders of
the Series D Convertible Preferred Stock shall be filled only by vote or
written consent of the holders of the Series D Convertible Preferred Stock.
3. Dividends. The holders of the Series D Convertible Preferred Stock
shall be entitled to receive, out of funds legally available therefor, dividends
at the same rate as dividends (other than dividends paid in additional shares of
Common Stock) are paid with respect to the Common Stock (treating each share of
Series D Convertible Preferred Stock as being equal to the number of shares of
Common Stock (including fractions of a share) into which each share of Series D
Convertible Preferred Stock is then convertible).
4. Liquidation. Upon any liquidation, dissolution or winding up of the
Corporation, whether voluntary or involuntary, the holders of the shares of
Series D Convertible Preferred Stock shall be entitled, before any distribution
or payment is made upon any stock ranking on liquidation junior to the Series D
Convertible Preferred Stock, to be paid an amount equal to the greater of (i)
$100 per share plus, in the case of each share, an amount equal to any dividends
declared but unpaid thereon, through the date payment thereof is made available,
or (ii) such amount per share as would have been payable had each such share
been converted to Common Stock pursuant to paragraph 6 immediately prior to such
liquidation, dissolution or winding up, and the holders of Series D Convertible
Preferred Stock shall not be entitled to any further payment (such amount
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payable with respect to one share of Series D Convertible Preferred Stock being
sometimes referred to as the "Liquidation Payment" and with respect to all
shares of Series D Convertible Preferred Stock being sometimes referred to as
the "Liquidation Payments"). If upon such liquidation, dissolution or winding up
of the Corporation, whether voluntary or involuntary, the assets to be
distributed among the holders of Series D Convertible Preferred Stock shall be
insufficient to permit payment to the holders of Series D Convertible Preferred
Stock of the amount distributable as aforesaid, then the entire assets of the
Corporation to be so distributed shall be distributed ratably among the holders
of Series D Convertible Preferred Stock. Upon any such liquidation, dissolution
or winding up of the Corporation, after the holders of Series D Convertible
Preferred Stock shall have been paid in full the amounts to which they shall be
entitled, the remaining net assets of the Corporation may be distributed to the
holders of stock ranking on liquidation junior to the Series D Convertible
Preferred Stock. Written notice of such liquidation, dissolution or winding up,
stating a payment date, the amount of the Liquidation Payments and the place
where said Liquidation Payments shall be payable, shall be delivered in person,
mailed by certified or registered mail, return receipt requested, or sent by
telecopier or telex, not less than 10 days prior to the payment date stated
therein, to the holders of record of Series D Convertible Preferred Stock, such
notice to be addressed to each such holder at its address as shown by the
records of the Corporation. For purposes hereof, the Common Stock shall rank on
liquidation junior to the Series D Convertible Preferred Stock.
For purposes of this paragraph 4, a liquidation, dissolution or winding up
of the Corporation shall be deemed to include (i) the Corporation's sale of all
or substantially all of its assets or (ii)(x) the merger or consolidation of the
Corporation into or with any other corporation, or (y) the merger of any other
corporation into or with the Corporation, if the stockholders of the Corporation
prior to such merger or consolidation do not retain at least a majority of the
voting power of the surviving corporation. Nothing in this paragraph 4 shall
limit the rights of the holders of the Series D Convertible Preferred Stock to
convert their shares of Series D Convertible Preferred Stock in accordance with
the terms hereof.
The Series D Convertible Preferred Stock shall, with respect to
distribution of assets and rights upon the liquidation, dissolution or winding
up of the Corporation, rank on a parity with any class or series of capital
stock of the Corporation hereafter created which expressly provides that it
ranks on a parity with the Series D Convertible Preferred Stock with respect to
distribution of assets and rights upon the liquidation, dissolution or winding
up of the Corporation. The Series D Convertible Preferred Stock shall, with
respect to distribution of assets and rights upon the liquidation, dissolution
or winding up of the Corporation, rank senior to each class or series of capital
stock of the Corporation hereafter created which do not expressly provide that
it ranks on a parity with or senior to the Series D Convertible Preferred Stock
with respect to distribution of assets and rights upon the liquidation,
dissolution or winding up of the Corporation.
5. Restrictions. At any time when shares of Series D Convertible Preferred
Stock are outstanding, except where the vote or written consent of the holders
of a greater number of shares of the Corporation is required by law or by the
articles of organization, and in addition to any other vote required by law or
the articles of organization, without the approval of the holders of at least a
majority of the then outstanding shares of Series D Convertible Preferred Stock,
given in writing or by vote at a meeting, consenting or voting (as the case may
be) separately as a series, the Corporation will not:
(a) Create, issue or authorize the creation or issuance of any
additional class or series of shares of stock unless the same ranks junior
to the Series D Convertible Preferred Stock as to the distribution of
assets on the liquidation, dissolution or winding up of the Corporation, or
increase the authorized amount of the Series D Convertible Preferred Stock
or increase the authorized amount of any additional class or series of
shares of stock unless the same ranks junior to the Series D Convertible
Preferred Stock as to the distribution of assets on the liquidation,
dissolution or winding up of the Corporation, or create, issue or authorize
the creation or issuance of any obligation or security convertible into
shares of Series D Convertible Preferred Stock or into shares of any other
class or series of stock unless the same ranks junior to the Series D
Convertible Preferred Stock as to the distribution of assets on the
liquidation, dissolution or winding up of the Corporation, whether any such
creation, issuance, authorization or increase shall be by means of
amendment to the articles of organization or by merger, consolidation or
otherwise; or
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(b) Amend, alter or repeal its articles of organization to adversely
affect the rights of the holders of the Series D Convertible Preferred
Stock.
6. Conversions. The holders of shares of Series D Convertible Preferred
Stock shall have the following conversion rights:
(a) Right to Convert. Subject to the terms and conditions of this
paragraph 6, the holder of any share or shares of Series D Convertible
Preferred Stock shall have the right, at its option at any time, to convert
any such shares (or fractions thereof) of Series D Convertible Preferred
Stock (except that upon any liquidation of the Corporation the right of
conversion shall terminate at the close of business on the business day
fixed for payment of the amount distributable on the Series D Convertible
Preferred Stock) into such number of fully paid and nonassessable shares of
Common Stock as is obtained by (i) multiplying the number of shares of
Series D Convertible Preferred Stock so to be converted by $100 and (ii)
dividing the result by the conversion price of $10 per share or, in case an
adjustment of such price has taken place pursuant to the further provisions
of this paragraph 6, then by the conversion price as last adjusted and in
effect at the date any share or shares of Series D Convertible Preferred
Stock are surrendered for conversion (such price, or such price as last
adjusted, being referred to as the "Conversion Price"). Such rights of
conversion shall be exercised by the holder thereof by giving written
notice that the holder elects to convert a stated number of shares of
Series D Convertible Preferred Stock into Common Stock and by surrender of
a certificate or certificates for the shares so to be converted to the
Corporation at its principal office (or such other office or agency of the
Corporation as the Corporation may designate by notice in writing to the
holders of the Series D Convertible Preferred Stock) at any time during its
usual business hours on the date set forth in such notice, together with a
statement of the name or names (with address) in which the certificate or
certificates for shares of Common Stock shall be issued.
(b) Issuance of Certificates; Time Conversion Effected. Promptly
after the receipt of the written notice referred to in subparagraph 6(a)
and surrender of the certificate or certificates for the share or shares of
Series D Convertible Preferred Stock to be converted, the Corporation shall
issue and deliver, or cause to be issued and delivered, to the holder,
registered in such name or names as such holder may direct, a certificate
or certificates for the number of whole shares of Common Stock issuable
upon the conversion of such share or shares of Series D Convertible
Preferred Stock. To the extent permitted by law, such conversion shall be
deemed to have been effected and the Conversion Price shall be determined
as of the close of business on the date on which such written notice shall
have been received by the Corporation and the certificate or certificates
for such share or shares shall have been surrendered as aforesaid, and at
such time the rights of the holder of such share or shares of Series D
Convertible Preferred Stock shall cease, and the person or persons in whose
name or names any certificate or certificates for shares of Common Stock
shall be issuable upon such conversion shall be deemed to have become the
holder or holders of record of the shares of Common Stock represented
thereby.
(c) Fractional Shares; Dividends; Partial Conversion. No fractional
shares of Common Stock shall be issued upon conversion of Series D
Convertible Preferred Stock into Common Stock and no payment or adjustment
shall be made upon any conversion on account of any cash dividends on the
Common Stock issued upon such conversion. At the time of each conversion,
the Corporation shall pay in cash an amount equal to all dividends (other
than dividends paid in additional shares of Common Stock) declared but
unpaid on the shares of Series D Convertible Preferred Stock surrendered
for conversion to the date upon which such conversion is deemed to take
place as provided in subparagraph 6(b). If the number of shares of Series D
Convertible Preferred Stock represented by the certificate or certificates
surrendered pursuant to subparagraph 6(a) exceeds the number of shares
converted, the Corporation shall, upon such conversion, execute and deliver
to the holder, at the expense of the Corporation, a new certificate or
certificates for the number of shares (or fractions thereof) of Series D
Convertible Preferred Stock represented by the certificate or certificates
surrendered which are not to be converted. If any fractional share of
Common Stock would, except for the provisions of the first sentence of this
subparagraph 6(c), be delivered upon such conversion, the Corporation, in
lieu of delivering such fractional share, shall pay to the holder
surrendering the Series D Convertible Preferred Stock for
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conversion an amount in cash equal to the current market price of such
fractional share as determined in good faith by the Board of Directors of
the Corporation.
(d) Subdivision or Combination of Common Stock. In case the
Corporation shall at any time subdivide (by any stock split, stock dividend
or otherwise) its outstanding shares of Common Stock into a greater number
of shares, the Conversion Price in effect immediately prior to such
subdivision shall be proportionately reduced, and, conversely, in case the
outstanding shares of Common Stock shall be combined into a smaller number
of shares, the Conversion Price in effect immediately prior to such
combination shall be proportionately increased.
(e) Reorganization or Reclassification. If any capital reorganization
or reclassification of the capital stock of the Corporation (other than a
merger or consolidation of the Corporation in which the Corporation is the
surviving corporation and which does not result in a reclassification or
change of outstanding shares of Common Stock or a merger or consolidation
which is deemed to be a liquidation, dissolution or winding up of the
Corporation pursuant to paragraph 4) shall be effected in such a way that
holders of Common Stock shall be entitled to receive stock, securities or
assets with respect to or in exchange for Common Stock, then, as a
condition of such reorganization or reclassification, lawful and adequate
provisions shall be made whereby each holder of a share or shares of Series
D Convertible Preferred Stock shall thereupon have the right to receive,
upon the basis and upon the terms and conditions specified herein and in
lieu of the shares of Common Stock immediately theretofore receivable upon
the conversion of such share or shares of Series D Convertible Preferred
Stock, such shares of stock, securities or assets as may be issued or
payable with respect to or in exchange for a number of outstanding shares
of such Common Stock equal to the number of shares of such Common Stock
immediately theretofore receivable upon such conversion had such
reorganization or reclassification not taken place, and in any such case
appropriate provisions shall be made with respect to the rights and
interests of such holder to the end that the provisions hereof (including
without limitation provisions for adjustments of the Conversion Price)
shall thereafter be applicable, as nearly as may be, in relation to any
shares of stock, securities or assets thereafter deliverable upon the
exercise of such conversion rights.
(f) Notice of Adjustment. Upon any adjustment of the Conversion
Price, then and in each such case the Corporation shall give written notice
thereof, by delivery in person, certified or registered mail, return
receipt requested, telecopier or telex, addressed to each holder of shares
of Series D Convertible Preferred Stock at the address of such holder as
shown on the books of the Corporation, which notice shall state the
Conversion Price resulting from such adjustment, setting forth in
reasonable detail the method upon which such calculation is based.
(g) Other Notices. In case at any time:
(1) the Corporation shall declare any dividend upon its Common
Stock payable in cash or stock or make any other distribution to the
holders of its Common Stock;
(2) the Corporation shall offer for subscription pro rata to the
holders of its Common Stock any additional shares of stock of any class
or other rights;
(3) there shall be any capital reorganization or reclassification
of the capital stock of the Corporation, or a consolidation or merger of
the Corporation with or into another entity or entities, or a sale,
lease, abandonment, transfer or other disposition of all or
substantially all its assets; or
(4) there shall be a voluntary or involuntary dissolution,
liquidation or winding up of the Corporation;
then, in any one or more of said cases, the Corporation shall give, by
delivery in person, certified or registered mail, return receipt requested,
telecopier or telex, addressed to each holder of any shares of Series D
Convertible Preferred Stock at the address of such holder as shown on the
books of the Corporation, (i) at least 10 days' prior written notice of the
date on which the books of the Corporation shall close or a record shall be
taken for such dividend, distribution or subscription rights or for
determining rights to vote in respect of any such reorganization,
reclassification, consolidation, merger,
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disposition, dissolution, liquidation or winding up and (ii) in the case of
any such reorganization, reclassification, consolidation, merger,
disposition, dissolution, liquidation or winding up, at least 10 days'
prior written notice of the date when the same shall take place. Such
notice in accordance with the foregoing clause (i) shall also specify, in
the case of any such dividend, distribution or subscription rights, the
date on which the holders of Common Stock shall be entitled thereto and
such notice in accordance with the foregoing clause (ii) shall also specify
the date on which the holders of Common Stock shall be entitled to exchange
their Common Stock for securities or other property deliverable upon such
reorganization, reclassification, consolidation, merger, disposition,
dissolution, liquidation or winding up, as the case may be.
(h) Stock to be Reserved. The Corporation will at all times reserve
and keep available out of its authorized shares of Common Stock, solely for
the purpose of issuance upon the conversion of Series D Convertible
Preferred Stock as herein provided, such number of shares of Common Stock
as shall then be issuable upon the conversion of all outstanding shares of
Series D Convertible Preferred Stock. The Corporation covenants that all
shares of Common Stock which shall be so issued shall be duly authorized,
validly issued, fully paid and nonassessable and free from all taxes, liens
and charges with respect to the issue thereof, and, without limiting the
generality of the foregoing, the Corporation covenants that it will from
time to time take all such action as may be requisite to assure that the
par value per share of the Common Stock is at all times equal to or less
than the Conversion Price in effect at the time. The Corporation will take
all such action as may be necessary to assure that all such shares of
Common Stock may be so issued without violation of any applicable law or
regulation, or of any requirement of any national securities exchange upon
which the Common Stock may be listed. The Corporation will not take any
action which results in any adjustment of the Conversion Price if the total
number of shares of Common Stock issued and issuable after such action upon
conversion of the Series D Convertible Preferred Stock would exceed the
total number of shares of Common Stock then authorized by the articles of
organization.
(i) No Reissuance of Series D Convertible Preferred Stock. Shares of
Series D Convertible Preferred Stock which are converted into shares of
Common Stock as provided herein shall not be reissued as shares of Series D
Convertible Preferred Stock.
(j) Issue Tax. The issuance of certificates for shares of Common
Stock upon conversion of Series D Convertible Preferred Stock shall be made
without charge to the holders thereof for any issuance tax in respect
thereof, provided that the Corporation shall not be required to pay any tax
which may be payable in respect of any transfer involved in the issuance
and delivery of any certificate in a name other than that of the holder of
the Series D Convertible Preferred Stock which is being converted.
(k) Closing of Books. The Corporation will at no time close its
transfer books against the transfer of any Series D Convertible Preferred
Stock or of any shares of Common Stock issued or issuable upon the
conversion of any shares of Series D Convertible Preferred Stock in any
manner which interferes with the timely conversion of such Series D
Convertible Preferred Stock, except as may otherwise be required to comply
with applicable securities laws.
(l) Mandatory Conversion. If, at any time after September 30, 1998,
for a period of not less than thirty (30) consecutive trading days, the
market value of shares of Common Stock on the principal securities exchange
or market on which such shares are then traded exceeds $40 per share
(appropriately adjusted to reflect the occurrence of any event referred to
in paragraph 6(d)), then the Corporation may elect that all then
outstanding shares of Series D Convertible Preferred Stock be mandatorily
converted into shares of Common Stock in accordance with this paragraph 6
by providing written notice thereof, by delivery in person, certified or
registered mail, return receipt requested, telecopier or telex, addressed
to each holder of shares of Series D Convertible Preferred Stock at the
address of such holder as shown on the books of the Corporation, which
notice shall state that the Corporation has made such election and shall
specify a date not more than 10 days nor less than 20 days after the date
of such notice on which all then outstanding shares of Series D Convertible
Preferred Stock shall be mandatorily converted into shares of Common Stock
in accordance with this paragraph 6. Effective at the close of business on
the
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date specified in such notice, all outstanding shares of Series D
Convertible Preferred Stock shall automatically convert to shares of Common
Stock on the basis set forth in this paragraph 6. Holders of shares of
Series D Convertible Preferred Stock so converted may deliver to the
Corporation at its principal office (or such other office or agency of the
Corporation as the Corporation may designate by notice in writing to such
holders) during its usual business hours, the certificate or certificates
for the shares so converted. As promptly as practicable thereafter, the
Corporation shall issue and deliver to such holder a certificate or
certificates for the number of whole shares of Common Stock to which such
holder is entitled, together with any cash dividends and payment in lieu of
fractional shares to which such holder may be entitled pursuant to
subparagraph 6(c). Until such time as a holder of shares of Series D
Convertible Preferred Stock shall surrender his or its certificates
therefor as provided above, such certificates shall be deemed to represent
the shares of Common Stock to which such holder shall be entitled upon the
surrender thereof.
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ANNEX B
SERIES E CONVERTIBLE PREFERRED STOCK
1. Designation and Number of Shares. There shall be hereby established the
series of Preferred Stock designated and known as "Series E Convertible
Preferred Stock." The authorized number of shares of Series E Convertible
Preferred Stock shall be 100,000 shares.
2. Voting.
(a) General. Except as may be otherwise provided in these terms of
the Series E Convertible Preferred Stock or by law, the Series E
Convertible Preferred Stock shall vote together with all other classes and
series of stock of the Corporation as a single class on all actions to be
taken by the stockholders of the Corporation. Each share of Series E
Convertible Preferred Stock shall entitle the holder thereof to such number
of votes per share on each such action as shall equal the number of shares
of Common Stock (including fractions of a share) into which each share of
Series E Convertible Preferred Stock is then convertible.
(b) Board Seats. If General Atlantic Partners 32, L.P., GAP
Coinvestment Partners, L.P. and any affiliate (as defined in Rule 12b-2
under the Securities Exchange Act of 1934) thereof own in the aggregate (a)
less than a majority of the outstanding shares of Series D Convertible
Preferred Stock, (b) at least a majority of the outstanding shares of
Series E Convertible Preferred Stock, and (c) shares of Common Stock and/or
Series D Convertible Preferred Stock and/or Series E Convertible Preferred
Stock or other securities of the Company convertible into or exchangeable
for shares of voting capital stock of the Company that represent (after
giving effect to any adjustments) at least 10% of the total number of
shares of Common Stock outstanding on an as converted basis, the holders of
the Series E Convertible Preferred Stock, voting as a separate series,
shall be entitled to elect one director of the Corporation, which
directorship shall be apportioned among the classes of directors by the
Board of Directors of the Corporation. The Series E Convertible Preferred
Stock shall vote together with all other classes and series of stock of the
Corporation as a single class with respect to the election of all of the
other directors of the Corporation; provided, however, that if the
conditions specified in the first sentence of this paragraph 2(b) necessary
for the holders of the Series E Convertible Preferred Stock to have a
separate series vote for one director are not satisfied, the Series E
Convertible Preferred Stock shall vote together with all other classes and
series of stock of the Corporation as a single class with respect to the
election of all of the directors of the Corporation. At any meeting (or in
a written consent in lieu thereof) held for the purpose of electing
directors, the presence in person, or by proxy (or the written consent) of
the holders of a majority of the shares of Series E Convertible Preferred
Stock then outstanding shall constitute a quorum of the Series E
Convertible Preferred Stock for the election of the director to be elected
solely by the holders of the Series E Convertible Preferred Stock. A
vacancy in the directorship elected by the holders of the Series E
Convertible Preferred Stock shall be filled only by vote or written consent
of the holders of the Series E Convertible Preferred Stock.
3. Dividends. The holders of the Series E Convertible Preferred Stock
shall be entitled to receive, out of funds legally available therefor, dividends
at the same rate as dividends (other than dividends paid in additional shares of
Common Stock) are paid with respect to the Common Stock (treating each share of
Series E Convertible Preferred Stock as being equal to the number of shares of
Common Stock (including fractions of a share) into which each share of Series E
Convertible Preferred Stock is then convertible).
4. Liquidation. Upon any liquidation, dissolution or winding up of the
Corporation, whether voluntary or involuntary, the holders of the shares of
Series E Convertible Preferred Stock shall be entitled, before any distribution
or payment is made upon any stock ranking on liquidation junior to the Series E
Convertible Preferred Stock, to be paid an amount equal to the greater of (i)
$100 per share plus, in the case of each share, an amount equal to any dividends
declared but unpaid thereon, through the date payment thereof is made available,
or (ii) such amount per share as would have been payable had each such share
been converted to Common Stock pursuant to paragraph 6 immediately prior to such
liquidation, dissolution or winding up, and
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the holders of Series E Convertible Preferred Stock shall not be entitled to any
further payment (such amount payable with respect to one share of Series E
Convertible Preferred Stock being sometimes referred to as the "Liquidation
Payment" and with respect to all shares of Series E Convertible Preferred Stock
being sometimes referred to as the "Liquidation Payments"). If upon such
liquidation, dissolution or winding up of the Corporation, whether voluntary or
involuntary, the assets to be distributed among the holders of Series E
Convertible Preferred Stock shall be insufficient to permit payment to the
holders of Series E Convertible Preferred Stock of the amount distributable as
aforesaid, then the entire assets of the Corporation to be so distributed shall
be distributed ratably among the holders of Series E Convertible Preferred
Stock. Upon any such liquidation, dissolution or winding up of the Corporation,
after the holders of Series E Convertible Preferred Stock shall have been paid
in full the amounts to which they shall be entitled, the remaining net assets of
the Corporation may be distributed to the holders of stock ranking on
liquidation junior to the Series E Convertible Preferred Stock. Written notice
of such liquidation, dissolution or winding up, stating a payment date, the
amount of the Liquidation Payments and the place where said Liquidation Payments
shall be payable, shall be delivered in person, mailed by certified or
registered mail, return receipt requested, or sent by telecopier or telex, not
less than 10 days prior to the payment date stated therein, to the holders of
record of Series E Convertible Preferred Stock, such notice to be addressed to
each such holder at its address as shown by the records of the Corporation. For
purposes hereof, the Common Stock shall rank on liquidation junior to the Series
E Convertible Preferred Stock.
For purposes of this paragraph 4, a liquidation, dissolution or winding up
of the Corporation shall be deemed to include (i) the Corporation's sale of all
or substantially all of its assets or (ii)(x) the merger or consolidation of the
Corporation into or with any other corporation, or (y) the merger of any other
corporation into or with the Corporation, if the stockholders of the Corporation
prior to such merger or consolidation do not retain at least a majority of the
voting power of the surviving corporation. Nothing in this paragraph 4 shall
limit the rights of the holders of the Series E Convertible Preferred Stock to
convert their shares of Series E Convertible Preferred Stock in accordance with
the terms hereof.
The Series E Convertible Preferred Stock shall, with respect to
distribution of assets and rights upon the liquidation, dissolution or winding
up of the Corporation, rank on a parity with (i) the Corporation's Series D
Convertible Preferred Stock, $1.00 par value per share, and (ii) any class or
series of capital stock of the Corporation hereafter created which expressly
provides that it ranks on a parity with the Series E Convertible Preferred Stock
with respect to distribution of assets and rights upon the liquidation,
dissolution or winding up of the Corporation. The Series E Convertible Preferred
Stock shall, with respect to distribution of assets and rights upon the
liquidation, dissolution or winding up of the Corporation, rank senior to each
class or series of capital stock of the Corporation hereafter created which does
not expressly provide that it ranks on a parity with or senior to the Series E
Convertible Preferred Stock with respect to distribution of assets and rights
upon the liquidation, dissolution or winding up of the Corporation.
5. Restrictions. At any time when shares of Series E Convertible Preferred
Stock are outstanding, except where the vote or written consent of the holders
of a greater number of shares of the Corporation is required by law or by the
articles of organization, and in addition to any other vote required by law or
the articles of organization, without the approval of the holders of at least a
majority of the then outstanding shares of Series E Convertible Preferred Stock,
given in writing or by vote at a meeting, consenting or voting (as the case may
be) separately as a series, the Corporation will not:
(a) Create, issue or authorize the creation or issuance of any
additional class or series of shares of stock unless the same ranks junior
to the Series E Convertible Preferred Stock as to the distribution of
assets on the liquidation, dissolution or winding up of the Corporation, or
increase the authorized amount of the Series E Convertible Preferred Stock
or increase the authorized amount of any additional class or series of
shares of stock unless the same ranks junior to the Series E Convertible
Preferred Stock as to the distribution of assets on the liquidation,
dissolution or winding up of the Corporation, or create, issue or authorize
the creation or issuance of any obligation or security convertible into
shares of Series E Convertible Preferred Stock or into shares of any other
class or series of stock unless the same ranks junior to the Series E
Convertible Preferred Stock as to the distribution of assets on the
liquidation, dissolution or winding up of the Corporation, whether any such
creation, issuance, authorization or
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increase shall be by means of amendment to the articles of organization or
by merger, consolidation or otherwise; or
(b) Amend, alter or repeal its articles of organization to adversely
affect the rights of the holders of the Series E Convertible Preferred
Stock.
6. Conversions. The holders of shares of Series E Convertible Preferred
Stock shall have the following conversion rights:
(a) Right to Convert. Subject to the terms and conditions of this
paragraph 6, the holder of any share or shares of Series E Convertible
Preferred Stock shall have the right, at its option at any time, to convert
any such shares (or fractions thereof) of Series E Convertible Preferred
Stock (except that upon any liquidation of the Corporation the right of
conversion shall terminate at the close of business on the business day
fixed for payment of the amount distributable on the Series E Convertible
Preferred Stock) into such number of fully paid and nonassessable shares of
Common Stock as is obtained by (i) multiplying the number of shares of
Series E Convertible Preferred Stock so to be converted by $100 and (ii)
dividing the result by the conversion price of $10 per share or, in case an
adjustment of such price has taken place pursuant to the further provisions
of this paragraph 6, then by the conversion price as last adjusted and in
effect at the date any share or shares of Series E Convertible Preferred
Stock are surrendered for conversion (such price, or such price as last
adjusted, being referred to as the "Conversion Price"). Such rights of
conversion shall be exercised by the holder thereof by giving written
notice that the holder elects to convert a stated number of shares of
Series E Convertible Preferred Stock into Common Stock and by surrender of
a certificate or certificates for the shares so to be converted to the
Corporation at its principal office (or such other office or agency of the
Corporation as the Corporation may designate by notice in writing to the
holders of the Series E Convertible Preferred Stock) at any time during its
usual business hours on the date set forth in such notice, together with a
statement of the name or names (with address) in which the certificate or
certificates for shares of Common Stock shall be issued.
(b) Issuance of Certificates; Time Conversion Effected. Promptly
after the receipt of the written notice referred to in subparagraph 6(a)
and surrender of the certificate or certificates for the share or shares of
Series E Convertible Preferred Stock to be converted, the Corporation shall
issue and deliver, or cause to be issued and delivered, to the holder,
registered in such name or names as such holder may direct, a certificate
or certificates for the number of whole shares of Common Stock issuable
upon the conversion of such share or shares of Series E Convertible
Preferred Stock. To the extent permitted by law, such conversion shall be
deemed to have been effected and the Conversion Price shall be determined
as of the close of business on the date on which such written notice shall
have been received by the Corporation and the certificate or certificates
for such share or shares shall have been surrendered as aforesaid, and at
such time the rights of the holder of such share or shares of Series E
Convertible Preferred Stock shall cease, and the person or persons in whose
name or names any certificate or certificates for shares of Common Stock
shall be issuable upon such conversion shall be deemed to have become the
holder or holders of record of the shares of Common Stock represented
thereby.
(c) Fractional Shares; Dividends; Partial Conversion. No fractional
shares of Common Stock shall be issued upon conversion of Series E
Convertible Preferred Stock into Common Stock and no payment or adjustment
shall be made upon any conversion on account of any cash dividends on the
Common Stock issued upon such conversion. At the time of each conversion,
the Corporation shall pay in cash an amount equal to all dividends (other
than dividends paid in additional shares of Common Stock) declared but
unpaid on the shares of Series E Convertible Preferred Stock surrendered
for conversion to the date upon which such conversion is deemed to take
place as provided in subparagraph 6(b). If the number of shares of Series E
Convertible Preferred Stock represented by the certificate or certificates
surrendered pursuant to subparagraph 6(a) exceeds the number of shares
converted, the Corporation shall, upon such conversion, execute and deliver
to the holder, at the expense of the Corporation, a new certificate or
certificates for the number of shares (or fractions thereof) of Series E
Convertible Preferred Stock represented by the certificate or certificates
surrendered which are not to be converted. If any
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fractional share of Common Stock would, except for the provisions of the
first sentence of this subparagraph 6(c), be delivered upon such
conversion, the Corporation, in lieu of delivering such fractional share,
shall pay to the holder surrendering the Series E Convertible Preferred
Stock for conversion an amount in cash equal to the current market price of
such fractional share as determined in good faith by the Board of Directors
of the Corporation.
(d) Subdivision or Combination of Common Stock. In case the
Corporation shall at any time subdivide (by any stock split, stock dividend
or otherwise) its outstanding shares of Common Stock into a greater number
of shares, the Conversion Price in effect immediately prior to such
subdivision shall be proportionately reduced, and, conversely, in case the
outstanding shares of Common Stock shall be combined into a small number of
shares, the Conversion Price in effect immediately prior to such
combination shall be proportionately increased.
(e) Reorganization or Reclassification. If any capital reorganization
or reclassification of the capital stock of the Corporation (other than a
merger or consolidation of the Corporation in which the Corporation is the
surviving corporation and which does not result in a reclassification or
change of outstanding shares of Common Stock or a merger or consolidation
which is deemed to be a liquidation, dissolution or winding up of the
Corporation pursuant to paragraph 4) shall be effected in such a way that
holders of Common Stock shall be entitled to receive stock, securities or
assets with respect to or in exchange for Common Stock, then, as a
condition of such reorganization or reclassification, lawful and adequate
provisions shall be made whereby each holder of a share or shares of Series
E Convertible Preferred Stock shall thereupon have the right to receive,
upon the basis and upon the terms and conditions specified herein and in
lieu of the shares of Common Stock immediately theretofore receivable upon
the conversion of such share or shares of Series E Convertible Preferred
Stock, such shares of stock, securities or assets as may be issued or
payable with respect to or in exchange for a number of outstanding shares
of such Common Stock equal to the number of shares of such Common Stock
immediately theretofore receivable upon such conversion had such
reorganization or reclassification not taken place, and in any such case
appropriate provisions shall be made with respect to the rights and
interests of such holder to the end that the provisions hereof (including
without limitation provisions for adjustments of the Conversion Price)
shall thereafter be applicable, as nearly as may be, in relation to any
shares of stock, securities or assets thereafter deliverable upon the
exercise of such conversion rights.
(f) Notice of Adjustment. Upon any adjustment of the Conversion
Price, then and in each such case the Corporation shall give written notice
thereof, by delivery in person, certified or registered mail, return
receipt requested, telecopier or telex, addressed to each holder of shares
of Series E Convertible Preferred Stock at the address of such holder as
shown on the books of the Corporation, which notice shall state the
Conversion Price resulting from such adjustment, setting forth in
reasonable detail the method upon which such calculation is based.
(g) Other Notices. In case at any time:
(1) the Corporation shall declare any dividend upon its Common
Stock payable in cash or stock or make any other distribution to the
holders of its Common Stock;
(2) the Corporation shall offer for subscription pro rata to the
holders of its Common Stock any additional shares of stock of any class
or other rights;
(3) there shall be any capital reorganization or reclassification
of the capital stock of the Corporation, or a consolidation or merger of
the Corporation with or into another entity or entities, or a sale,
lease, abandonment, transfer or other disposition of all or
substantially all its assets; or
(4) there shall be a voluntary or involuntary dissolution,
liquidation or winding up of the Corporation;
then, in any one or more of said cases, the Corporation shall give, by delivery
in person, certified or registered mail, return receipt requested, telecopier or
telex, addressed to each holder of any shares of Series E Convertible Preferred
Stock at the address of such holder as shown on the books of the Corporation,
(i) at
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least 10 days' prior written notice of the date on which the books of the
Corporation shall close or a record shall be taken for such dividend,
distribution or subscription rights or for determining rights to vote in respect
of any such reorganization, reclassification, consolidation, merger,
disposition, dissolution, liquidation or winding up and (ii) in the case of any
such reorganization, reclassification, consolidation, merger, disposition,
dissolution, liquidation or winding up, at least 10 days' prior written notice
of the date when the same shall take place. Such notice in accordance with the
foregoing clause (i) shall also specify, in the case of any such dividend,
distribution or subscription rights, the date on which the holders of Common
Stock shall be entitled thereto and such notice in accordance with the foregoing
clause (ii) shall also specify the date on which the holders of Common Stock
shall be entitled to exchange their Common Stock for securities or other
property deliverable upon such reorganization, reclassification, consolidation,
merger, disposition, dissolution, liquidation or winding up, as the case may be.
(h) Stock to be Reserved. The Corporation will at all times reserve
and keep available out of its authorized shares of Common Stock, solely for
the purpose of issuance upon the conversion of Series E Convertible
Preferred Stock as herein provided, such number of shares of Common Stock
as shall then be issuable upon the conversion of all outstanding shares of
Series E Convertible Preferred Stock. The Corporation covenants that all
shares of Common Stock which shall be so issued shall be duly authorized,
validly issued, fully paid and nonassessable and free from all taxes, liens
and charges with respect to the issue thereof, and, without limiting the
generality of the foregoing, the Corporation covenants that it will from
time to time take all such action as may be requisite to assure that the
par value per share of the Common Stock is at all times equal to or less
than the Conversion Price in effect at the time. The Corporation will take
all such action as may be necessary to assure that all such shares of
Common Stock may be so issued without violation of any applicable law or
regulation, or of any requirement of any national securities exchange upon
which the Common Stock may be listed. The Corporation will not take any
action which results in any adjustment of the Conversion Price if the total
number of shares of Common Stock issued and issuable after such action upon
conversion of the Series E Convertible Preferred Stock would exceed the
total number of shares of Common Stock then authorized by the articles of
organization.
(i) No Reissuance of Series E Convertible Preferred Stock. Shares of
Series E Convertible Preferred Stock which are converted into shares of
Common Stock as provided herein shall not be reissued as shares of Series E
Convertible Preferred Stock.
(j) Issue Tax. The issuance of certificates for shares of Common
Stock upon conversion of Series E Convertible Preferred Stock shall be made
without charge to the holders thereof for any issuance tax in respect
thereof, provided that the Corporation shall not be required to pay any tax
which may be payable in respect of any transfer involved in the issuance
and delivery of any certificate in a name other than that of the holder of
the Series E Convertible Preferred Stock which is being converted.
(k) Closing of Books. The corporation will at no time close its
transfer books against the transfer of any Series E Convertible Preferred
Stock or of any shares of Common Stock issued or issuable upon the
conversion of any shares of Series E Convertible Preferred Stock in any
manner which interferes with the timely conversion of such Series E
Convertible Preferred Stock, except as may otherwise be required to comply
with applicable securities laws.
(l) Mandatory Conversion. If, at any time after July 23, 1999, for a
period of not less than thirty (30) consecutive trading days, the market
value of shares of Common Stock on the principal securities exchange or
market on which such shares are then traded exceeds $40 per share
(appropriately adjusted to reflect the occurrence of any event referred to
in paragraph 6(d)), then the Corporation may elect that all then
outstanding shares of Series E Convertible Preferred Stock be mandatorily
converted into shares of Common Stock in accordance with this paragraph 6
by providing written notice thereof, by delivery in person, certified or
registered mail, return receipt requested, telecopier or telex, addressed
to each holder of shares of Series E Convertible Preferred Stock at the
address of such holder as shown on the books of the Corporation, which
notice shall state that the Corporation has made such election and shall
specify a date not more than 10 days nor less than 20 days after the date
of such notice on which all then
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outstanding shares of Series E Convertible Preferred Stock shall be
mandatorily converted into shares of Common Stock in accordance with this
paragraph 6. Effective at the close of business on the date specified in
such notice, all outstanding shares of Series E Convertible Preferred Stock
shall automatically convert to shares of Common Stock on the basis set
forth in this paragraph 6. Holders of shares of Series E Convertible
Preferred Stock so converted may deliver to the Corporation at its
principal office (or such other office or agency of the Corporation as the
Corporation may designate by notice in writing to such holders) during its
usual business hours, the certificate or certificates for the shares so
converted. As promptly as practicable thereafter, the Corporation shall
issue and deliver to such holder a certificate or certificates for the
number of whole shares of Common Stock to which such holder is entitled,
together with any cash dividends and payment in lieu of fractional shares
to which such holder may be entitled pursuant to subparagraph 6(c). Until
such time as a holder of shares of Series E Convertible Preferred Stock
shall surrender his or its certificates therefor as provided above, such
certificates shall be deemed to represent the shares of Common Stock to
which such holder shall be entitled upon the surrender thereof.
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ANNEX C
SERIES F JUNIOR PARTICIPATING PREFERRED STOCK
Section 1. Designation and Amount. The shares of such series shall be
designated as "Series F Junior Participating Preferred Stock" and the number of
shares constituting such series shall be 30,000.
Section 2. Dividends and Distributions.
(A) Subject to the rights of the holders of any shares of any series
of Preferred Stock ranking prior and superior to the shares of Series F
Junior Participating Preferred Stock with respect to dividends, the holders
of shares of Series F Junior Participating Preferred Stock, in preference
to the holders of Common Stock, $.01 par value per share (the "Common
Stock"), of the Corporation, and of any other junior stock, shall be
entitled to receive, when, as and if declared by the Board of Directors,
out of funds of the Corporation legally available for the payment of
dividends, quarterly dividends payable in cash on March 31, June 30,
September 30 and December 31 in each year (each such date being referred to
herein as a "Quarterly Dividend Payment Date"), commencing on the first
Quarterly Dividend Payment Date after the first issuance of a share or
fraction of a share of Series F Junior Participating Preferred Stock, in an
amount per share (rounded to the nearest cent) equal to the greater of (a)
$1.00 or (b) subject to the provision for adjustment hereinafter set forth,
1,000 times the aggregate per share amount of all cash dividends, and 1,000
times the aggregate per share amount (payable in kind) of all non-cash
dividends or other distributions, other than a dividend payable in shares
of Common Stock or a subdivision of the outstanding shares of Common Stock
(by reclassification or otherwise), declared on the Common Stock since the
immediately preceding Quarterly Dividend Payment Date, or, with respect to
the first Quarterly Dividend Payment Date, since the first issuance of any
share or fraction of a share of Series F Junior Participating Preferred
Stock. In the event the Corporation shall at any time declare or pay any
dividend on Common Stock payable in shares of Common Stock or effect a
subdivision, combination or consolidation of the outstanding Common Stock
(by reclassification or otherwise than by payment of a dividend in shares
of Common Stock) into a greater or lesser number of shares of Common Stock,
then in each such case the amount to which holders of shares of Series F
Junior Participating Preferred Stock were entitled immediately prior to
such event under clause (b) of the preceding sentence shall be adjusted by
multiplying such amount by a fraction, the numerator of which is the number
of shares of Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
(B) The Corporation shall declare a dividend or distribution on the
Series F Junior Participating Preferred Stock as provided in paragraph (A)
above immediately after it declares a dividend or distribution on the
Common Stock (other than a dividend payable in shares of Common Stock) and
the Corporation shall pay such dividend or distribution on the Series F
Junior Participating Preferred Stock before the dividend or distribution
declared on the Common Stock is paid or set apart; provided, however, that,
in the event no dividend or distribution shall have been declared on the
Common Stock during the period between any Quarterly Dividend Payment Date
and the next subsequent Quarterly Dividend Payment Date, a dividend of
$1.00 per share on the Series F Junior Participating Preferred Stock shall
nevertheless be payable on such subsequent Quarterly Dividend Payment Date.
(C) Dividends shall begin to accrue and be cumulative on outstanding
shares of Series F Junior Participating Preferred Stock from the Quarterly
Dividend Payment Date next preceding the date of issue of such shares of
Series F Junior Participating Preferred Stock, unless the date of issue of
such shares is prior to the record date for the first Quarterly Dividend
Payment Date, in which case dividends on such shares shall begin to accrue
from the date of issue of such shares, or unless the date of issue is a
Quarterly Dividend Payment Date or is a date after the record date for the
determination of holders of shares of Series F Junior Participating
Preferred Stock entitled to receive a quarterly dividend and before such
Quarterly Dividend Payment Date, in either of which events such dividends
shall begin to accrue and be cumulative from such Quarterly Dividend
Payment Date. Accrued but unpaid dividends shall not bear interest.
Dividends paid on the shares of Series F Junior Participating Preferred
Stock in an amount
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less than the total amount of such dividends at the time accrued and
payable on such shares shall be allocated pro rata on a share-by-share
basis among all such shares at the time outstanding. The Board of Directors
may fix a record date for the determination of holders of shares of Series
F Junior Participating Preferred Stock entitled to receive payment of a
dividend or distribution declared thereon, which record date shall be no
more than 60 days prior to the date fixed for the payment thereof.
Section 3. Voting Rights. The holders of shares of Series F Junior
Participating Preferred Stock shall have the following voting rights:
(A) Subject to the provision for adjustment hereinafter set forth,
each share of Series F Junior Participating Preferred Stock shall entitle
the holder thereof to 1,000 votes on all matters submitted to a vote of the
stockholders of the Corporation. In the event the Corporation shall at any
time declare or pay any dividend on Common Stock payable in shares of
Common Stock or effect a subdivision, combination or consolidation of the
outstanding Common Stock (by reclassification or otherwise than by payment
of a dividend in shares of Common Stock) into a greater or lesser number of
shares of Common Stock, then in each such case the number of votes per
share to which holders of shares of Series F Junior Participating Preferred
Stock were entitled immediately prior to such event shall be adjusted by
multiplying such number by a fraction, the numerator of which is the number
of shares of Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
(B) Except as otherwise provided herein, by law, or in any other
Certificate of Vote of Directors establishing a series of Preferred Stock
or any similar stock, the holders of shares of Series F Junior
Participating Preferred Stock, the holders of shares of Common Stock and
any other capital stock of the Corporation having general voting rights
shall vote together as one class on all matters submitted to a vote of
stockholders of the Corporation.
(C) (i) If at any time dividends on any Series F Junior Participating
Preferred Stock shall be in arrears in an amount equal to six(6) quarterly
dividends thereon, the occurrence of such contingency shall mark the
beginning of a period (herein called a "default period") which shall extend
until such time when all accrued and unpaid dividends for all previous
quarterly dividend periods and for the current quarterly dividend period on
all shares of Series F Junior Participating Preferred Stock then
outstanding shall have been declared and paid or set apart for payment.
During each default period, all holders of Preferred Stock (including
holders of the Series F Junior Participating Preferred Stock) with
dividends in arrears in an amount equal to six(6) quarterly dividends
thereon, voting as a class, irrespective of series, shall have the right to
elect two(2) Directors.
(ii) During any default period, such voting right of the holders of
Series F Junior Participating Preferred Stock may be exercised initially
at a special meeting called pursuant to subparagraph (iii) of this
Section 3(C) or at any annual meeting of stockholders, and thereafter at
annual meetings of stockholders, provided that neither such voting right
nor the right of the holders of any other series of Preferred Stock, if
any, to increase, in certain cases, the authorized number of Directors
shall be exercised unless the holders of ten percent (10%) in number of
shares of Preferred Stock outstanding shall be present in person or by
proxy. The absence of a quorum of the holders of Common Stock shall not
affect the exercise by the holders of Preferred Stock of such voting
right. At any meeting at which the holders of Preferred Stock shall
exercise such voting right initially during an existing default period,
they shall have the right, voting as a class, to elect Directors to fill
such vacancies, if any, in the Board of Directors as may then exist up
to two (2) Directors or, if such right is exercised at an annual
meeting, to elect two (2) Directors. If the number which may be so
elected at any special meeting does not amount to the required number,
the holders of the Preferred Stock shall have the right to make such
increase in the number of Directors as shall be necessary to permit the
election by them of the required number. After the holders of the
Preferred Stock shall have exercised their right to elect Directors in
any default period and during the continuance of such period, the number
of Directors shall not be increased or decreased except by vote of the
holders of
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Preferred Stock as herein provided or pursuant to the rights of any
equity securities ranking senior to or pari passu with the Series F
Junior Participating Preferred Stock.
(iii) Unless the holders of Preferred Stock shall, during an
existing default period, have previously exercised their right to elect
Directors, the Board of Directors shall within twenty (20) Business Days
after such default amend the Corporation's by-laws to make provision for
the election of directors consistent with the provisions of this Section
3 and call a special meeting of the holders of shares of the Series F
Junior Participating Preferred Stock and all other holders of Preferred
Stock who are then entitled to participate in the election of such
Directors for the purpose of electing the additional Directors provided
by this Section 3. Notice of such meeting and of any annual meeting at
which holders of Preferred Stock are entitled to vote pursuant to this
paragraph (C)(iii) shall be given to each holder of record of Preferred
Stock by mailing a copy of such notice to him at his last address as the
same appears on the books of the Corporation. Such meeting shall be
called for a time not earlier than 10 days and not later than 60 days
after such order or request. Notwithstanding the provisions of this
paragraph (C)(iii), no such special meeting shall be called during the
period within 60 days immediately preceding the date fixed for the next
annual meeting of the stockholders.
(iv) In any default period, the holders of Common Stock, and other
classes of stock of the Corporation, if applicable, shall continue to be
entitled to elect the whole number of Directors until the holders of
Preferred Stock shall have exercised their right to elect two (2)
Directors voting as a class, after the exercise of which right (x) the
Directors so elected by the holders of Preferred Stock shall continue in
office until their successors shall have been elected by such holders or
until the expiration of the default period, and (y) any vacancy in the
Board of Directors may (except as provided in paragraph (C)(ii) of this
Section 3) be filled by vote of a majority of the remaining Directors
theretofore elected by the holders of the class of stock which elected
the Director whose office shall have become vacant. References in this
paragraph (C) to Directors elected by the holders of a particular class
of stock shall include Directors elected by such Directors to fill
vacancies as provided in clause (y) of the foregoing sentence.
(v) Immediately upon the expiration of a default period, (x) the
right of the holders of Preferred Stock as a class to elect Directors
shall cease, (y) the term of any Directors elected by the holders of
Preferred Stock as a class shall terminate, and (z) the number of
Directors shall be such number as may be provided for in the
Corporation's by-laws irrespective of any increase made pursuant to the
provisions of paragraph (C)(ii) of this Section 3 (such number being
subject, however, to change thereafter in any manner provided by law or
in the Corporation's articles of organization or by-laws). Any vacancies
in the Board of Directors effected by the provisions of clauses (y) and
(z) in the preceding sentence may be filled by a majority of the
remaining Directors.
(D) Except as set forth herein, or as otherwise provided by law,
holders of Series F Junior Participating Preferred Stock shall have no
special voting rights and their consent shall not be required (except to
the extent they are entitled to vote with holders of Common Stock as set
forth herein) for taking any corporate action.
Section 4. Certain Restrictions.
(A) Whenever quarterly dividends or other dividends or distributions
payable on the Series F Junior Participating Preferred Stock as provided in
Section 2 are in arrears, thereafter and until all accrued and unpaid
dividends and distributions, whether or not declared, on shares of Series F
Junior Participating Preferred Stock outstanding shall have been paid in
full, the Corporation shall not:
(i) declare or pay dividends on or make any other distributions on
any shares of stock ranking junior (either as to dividends or upon
liquidation, dissolution or winding up) to the Series F Junior
Participating Preferred Stock;
(ii) declare or pay dividends on or make any other distributions on
any shares of stock ranking on a parity (either as to dividends or upon
liquidation, dissolution or winding up) with the Series F
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Junior Participating Preferred Stock, except dividends paid ratably on
the Series F Junior Participating Preferred Stock and all such parity
stock on which dividends are payable or in arrears in proportion to the
total amounts to which the holders of all such shares are then entitled;
(iii) redeem or purchase or otherwise acquire for consideration
shares of any stock ranking junior (either as to dividends or upon
liquidation, dissolution or winding up) to the Series F Junior
Participating Preferred Stock, provided that the Corporation may at any
time redeem, purchase or otherwise acquire shares of any such junior
stock in exchange for shares of any stock of the Corporation ranking
junior (either as to dividends or upon dissolution, liquidation or
winding up) to the Series F Junior Participating Preferred Stock;
(iv) purchase or otherwise acquire for consideration any shares of
Series F Junior Participating Preferred Stock, or any shares of stock
ranking on a parity with the Series F Junior Participating Preferred
Stock, except in accordance with a purchase offer made in writing or by
publication (as determined by the Board of Directors) to all holders of
such shares upon such terms as the Board of Directors, after
consideration of the respective annual dividend rates and other relative
rights and preferences of the respective series and classes, shall
determine in good faith will result in fair and equitable treatment
among the respective series or classes.
(B) The Corporation shall not permit any subsidiary of the Corporation
to purchase or otherwise acquire for consideration any shares of stock of
the Corporation unless the Corporation could, under paragraph (A) of this
Section 4, purchase or otherwise acquire such shares at such time and in
such manner.
Section 5. Reacquired Shares. Any shares of Series F Junior Participating
Preferred Stock purchased or otherwise acquired by the Corporation in any manner
whatsoever shall be retired and canceled promptly after the acquisition thereof.
All such shares shall upon their cancellation become authorized but unissued
shares of undesignated Preferred Stock and may be reissued as part of a new
series of Preferred Stock to be created by resolution or resolutions of the
Board of Directors, subject to the conditions and restrictions on issuance set
forth herein.
Section 6. Liquidation, Dissolution or Winding Up.
(A) Upon any liquidation (voluntary or otherwise), dissolution or
winding up of the Corporation, no distribution shall be made to the holders
of shares of stock ranking junior (either as to dividends or upon
liquidation, dissolution or winding up) to the Series F Junior
Participating Preferred Stock unless, prior thereto, the holders of shares
of Series F Junior Participating Preferred Stock shall have received $1,000
per share, plus an amount equal to accrued and unpaid dividends and
distributions thereon, whether or not declared, to the date of such payment
(the "Series F Liquidation Preference"). Following the payment of the full
amount of the Series F Liquidation Preference, no additional distributions
shall be made to the holders of shares of Series F Junior Participating
Preferred Stock unless, prior thereto, the holders of shares of Common
Stock shall have received an amount per share (the "Common Adjustment")
equal to the quotient obtained by dividing (i) the Series F Liquidation
Preference by (ii) 1,000 (as appropriately adjusted as set forth in
subparagraph C below to reflect such events as stock splits, stock
dividends and recapitalizations with respect to the Common Stock) (such
number in clause (ii), the "Adjustment Number"). Following the payment of
the full amount of the Series F Liquidation Preference and the Common
Adjustment in respect of all outstanding shares of Series F Junior
Participating Preferred Stock and Common Stock, respectively, holders of
Series F Junior Participating Preferred Stock and holders of shares of
Common Stock shall receive their ratable and proportionate share of the
remaining assets to be distributed in the ratio of the Adjustment Number to
1 with respect to such Preferred Stock and Common Stock, on a per share
basis, respectively.
(B) In the event, however, that there are not sufficient assets
available to permit payment in full of the Series F Liquidation Preference
and the liquidation preferences of all other series of Preferred Stock, if
any, which rank on a parity with the Series F Junior Participating
Preferred Stock, then such remaining assets shall be distributed ratably to
the holders of such parity shares in proportion to their respective
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liquidation preferences. In the event, however, that there are not
sufficient assets available to permit payment in full of the Common
Adjustment, then such remaining assets shall be distributed ratably to the
holders of Common Stock.
(C) In the event the Corporation shall at any time declare or pay any
dividend on Common Stock payable in shares of Common Stock, or effect a
subdivision, combination or consolidation of the outstanding Common Stock
(by reclassification or otherwise than by payment of a dividend in shares
of Common Stock) into a greater or lesser number of shares of Common Stock,
then in each such case the Adjustment Number in effect immediately prior to
such event shall be adjusted by multiplying such Adjustment Number by a
fraction the numerator of which is the number of shares of Common Stock
outstanding immediately after such event and the denominator of which is
the number of shares of Common Stock that were outstanding immediately
prior to such event.
(D) Neither the consolidation, merger or other business combination of
the Corporation with or into any other corporation nor the sale, lease,
exchange or conveyance of all or any part of the property, assets or
business of the Corporation shall be deemed to be a liquidation,
dissolution or winding up of the Corporation for purposes of this Section
6.
Section 7. Consolidation, Merger, etc. In case the Corporation shall
enter into any consolidation, merger, combination or other transaction in which
the shares of Common Stock are exchanged for or changed into other stock or
securities, cash and/or any other property, then in any such case the shares of
Series F Junior Participating Preferred Stock shall at the same time be
similarly exchanged or changed in an amount per share (subject to the provision
for adjustment hereinafter set forth) equal to 1,000 times the aggregate amount
of stock, securities, cash and/or any other property (payable in kind), as the
case may be, into which or for which each share of Common Stock is changed or
exchanged. In the event the Corporation shall at any time declare or pay any
dividend on Common Stock payable in shares of Common Stock, or effect a
subdivision, combination or consolidation of the outstanding Common Stock (by
reclassification or otherwise than by payment of a dividend in shares of Common
Stock) into a greater or lesser number of shares of Common Stock, then in each
such case the amount set forth in the preceding sentence with respect to the
exchange or change of shares of Series F Junior Participating Preferred Stock
shall be adjusted by multiplying such amount by a fraction the numerator of
which is the number of shares of Common Stock outstanding immediately after such
event and the denominator of which is the number of shares of Common Stock that
were outstanding immediately prior to such event.
Section 8. No Redemption. The shares of Series F Junior Participating
Preferred Stock shall not be redeemable.
Section 9. Ranking. The Series F Junior Participating Preferred Stock
shall rank junior to all other series of the Corporation's Preferred Stock as to
the payment of dividends and the distribution of assets upon liquidation,
dissolution, winding up or otherwise, unless the terms of any such series shall
provide otherwise.
Section 10. Amendment. The articles of organization of the Corporation
shall not be further amended in any manner which would materially alter or
change the powers, preferences or special rights of the Series F Junior
Participating Preferred Stock so as to affect them adversely without the
affirmative vote of the holders of at least seventy-five percent of the
outstanding shares of Series F Junior Participating Preferred Stock, voting
together as a single class.
Section 11. Fractional Shares. Series F Junior Participating Preferred
Stock may be issued in fractions of a share which shall entitle the holder, in
proportion to such holders fractional shares, to exercise voting rights, receive
dividends, participate in distributions and to have the benefit of all other
rights of holders of Series F Junior Participating Preferred Stock.
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EXHIBIT C TO THE PROXY STATEMENT
MAPICS, INC.
BYLAWS
Adopted as of , 1998
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ARTICLE I
OFFICES AND AGENT
Section 1.1 Registered Office and Agent. The corporation shall maintain a
registered office in the State of Georgia and shall have a registered agent
whose business office is identical to the registered office.
Section 1.2 Other Offices. In addition to its registered office, the
corporation may have offices at any other place or places, within or without the
State of Georgia, as the Board of Directors may from time to time select or as
the business of the corporation may require or make desirable.
ARTICLE II
SHAREHOLDERS' MEETINGS
Section 2.1 Place of Meetings. Meetings of shareholders may be held at
any place within or without the State of Georgia, as set forth in the notice
thereof or, in the event of a meeting held pursuant to waiver of notice, as set
forth in the waiver, or, if no place is so specified, at the principal office of
the corporation.
Section 2.2 Annual Meetings. The annual meeting of shareholders shall be
held on a day to be determined by the Board of Directors for the purpose of
electing directors and transacting any and all business that may properly come
before the meeting. If an annual meeting of shareholders is not held as provided
in this Section 2.2, any business, including the election of directors, that
might properly have been acted upon at such annual meeting may be acted upon at
a special meeting in lieu of the annual meeting held pursuant to these bylaws or
held pursuant to a court order.
Section 2.3 Special Meetings. Special meetings of shareholders or a
special meeting in lieu of the annual meeting of shareholders may be called at
any time by (a) the Board of Directors, (b) the Chairman of the Board of
Directors or the President or (c) the holders of 40% of the votes entitled to be
cast on any issue proposed to be considered at such special meeting following
delivery by such holders to the corporation's Secretary of a signed and dated
written request setting forth the purpose or purposes of such special meeting.
Section 2.4 Notice of Meetings. Unless waived as contemplated in Section
5.2, a notice of each meeting of shareholders stating the date, time and place
of the meeting shall be given not less than 10 days nor more than 60 days before
the date thereof, by or at the direction of the Chairman of the Board of
Directors, the President, the Secretary or the officer or persons calling the
meeting, to each shareholder entitled to vote at that meeting. In the case of an
annual meeting, the notice need not state the purpose or purposes of the meeting
unless the articles of incorporation or the Georgia Business Corporation Code
(the "Code") requires otherwise. In the case of a special meeting, including a
special meeting in lieu of an annual meeting, the notice of meeting shall state
the purpose or purposes for which the meeting is called.
Section 2.5 Voting Group. Voting group means all shares of one or more
classes or series that are entitled to vote and be counted together collectively
on a matter at a meeting of shareholders. All shares entitled to vote generally
on the matter are for that purpose a single voting group.
Section 2.6 Quorum. With respect to shares entitled to vote as a separate
voting group on a matter at a meeting of shareholders, the presence, in person
or by proxy, of a majority of the votes entitled to be cast on the matter by the
voting group shall constitute a quorum of that voting group for action on that
matter unless the articles of incorporation or the Code provides otherwise. Once
a share is represented for any purpose at a meeting, other than solely to object
to holding the meeting or to transacting business at the meeting, it is deemed
present for quorum purposes for the remainder of the meeting and for any
adjournment of the meeting unless a new record date is or must be set for the
adjourned meeting pursuant to Section 8.7 of these bylaws.
Section 2.7 Vote Required for Action. If a quorum exists, action on a
matter (other than the election of directors) by a voting group is adopted if it
is approved by the vote of the holders of a majority of the shares of such
voting group present in person or by proxy, unless the articles of
incorporation, provisions of these bylaws validly adopted by the shareholders or
the Code requires a greater number of affirmative votes. If the articles of
incorporation or the Code provides for voting by two or more voting groups on a
matter, action on
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that matter is taken only when voted upon by each of those voting groups counted
separately. Action may be taken by one voting group on a matter even though no
action is taken by another voting group entitled to vote on the matter. With
regard to the election of directors, unless otherwise provided in the articles
of incorporation, if a quorum exists, action on the election of directors is
taken by the affirmative vote of the holders of a majority of the shares
represented in person or by proxy at the meeting and entitled to vote in the
election.
Section 2.8 Voting of Shares. Unless the articles of incorporation or the
Code provides otherwise, each outstanding share having voting rights shall be
entitled to one vote on each matter submitted to a vote at a meeting of
shareholders. Voting on all matters shall be by voice vote or by show of hands
unless any qualified voter, prior to the voting on any matter, demands vote by
ballot, in which case each ballot shall state the name of the shareholder voting
and the number of shares voted by him or her, and if the ballot be cast by
proxy, it shall also state the name of the proxy.
Section 2.9 Proxies. A shareholder entitled to vote pursuant to Section
2.8 may vote in person or by proxy pursuant to an appointment of proxy executed
in writing by the shareholder or by his or her attorney-in-fact. An appointment
of proxy shall be valid for only one meeting to be specified therein, and any
adjournments of such meeting, but shall not be valid for more than eleven months
unless expressly provided therein. Appointments of proxy shall be dated and
filed with the records of the meeting to which they relate. If the validity of
any appointment of proxy is questioned, it must be submitted to the secretary of
the meeting of shareholders for examination or to a proxy officer or committee
appointed by the person presiding at the meeting. The secretary of the meeting
or, if appointed, the proxy officer or committee, as the case may be, shall
determine the validity or invalidity of any appointment of proxy submitted, and
reference by the secretary in the minutes of the meeting to the regularity of an
appointment of proxy shall be received as prima facie evidence of the facts
stated for the purpose of establishing the presence of a quorum at the meeting
and for all other purposes.
Section 2.10 Presiding Officer. The Chairman of the Board of Directors
shall serve as the chairman of every meeting of shareholders unless another
person is elected by the shareholders to serve as chairman at the meeting. The
chairman shall appoint any persons he or she deems required to assist with the
meeting.
Section 2.11 Adjournments. Whether or not a quorum is present to organize
a meeting, any meeting of shareholders (including an adjourned meeting) may be
adjourned by the holders of a majority of the voting shares represented at the
meeting to reconvene at a specific time and place, but no later than 120 days
after the date fixed for the original meeting unless the requirements of the
Code concerning the selection of a new record date have been met. At any
reconvened meeting within that time period, any business may be transacted that
could have been transacted at the meeting that was adjourned. If notice of the
adjourned meeting was properly given, it shall not be necessary to give any
notice of the reconvened meeting or of the business to be transacted, if the
date, time and place of the reconvened meeting are announced at the meeting that
was adjourned and before adjournment; provided, however, that if a new record
date is or must be fixed, notice of the reconvened meeting must be given to
persons who are shareholders as of the new record date.
Section 2.12 Action of Shareholders Without a Meeting. Action required or
permitted to be taken at a meeting of shareholders may be taken without a
meeting if the action is taken by all shareholders entitled to vote on the
action. The action must be evidenced by one or more written consents describing
the action taken, signed by all shareholders and delivered to the corporation
for inclusion in the minutes or filing with the corporate records.
ARTICLE III
THE BOARD OF DIRECTORS
Section 3.1 General Powers. All corporate powers shall be exercised by or
under the authority of, and the business and affairs of the corporation shall be
managed under the direction of, the Board of Directors. In addition to the
powers and authority expressly conferred upon it by these bylaws, the Board of
Directors may exercise all powers of the corporation and do all lawful acts and
things that are not by law, by any legal
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agreement among shareholders, by the articles of incorporation or by these
bylaws directed or required to be exercised or done by the shareholders.
Section 3.2 Number, Election and Term of Office. The number of directors
of the corporation shall not be less than three nor more than eleven, the
precise number to be fixed by resolution of the shareholders or of the Board of
Directors from time to time. The directors shall be divided into three classes,
each consisting, as nearly equal in number as possible, of one-third of the
total number of directors constituting the entire Board of Directors. At the
first election of directors of the corporation, the first class of directors
(Class I) shall be elected for a term expiring at the third next annual meeting
of shareholders and upon the election and qualification of their respective
successors, the second class of directors (Class III) shall be elected for a
term expiring at the second next annual meeting of shareholders and upon the
election and qualification of their respective successors, and the third class
of directors (Class II) shall be elected for a term expiring at the next
following annual meeting of shareholders and upon the election and qualification
of their respective successors. At each succeeding annual meeting of
shareholders, successors to the class of directors whose term expires at the
annual meeting of shareholders shall be elected for a three-year term. Except as
provided in Section 3.4, a director shall be elected by the affirmative vote of
the holders of a plurality of the shares represented at the meeting of
shareholders at which the director stands for election and entitled to elect
such director.
The number of directors may be increased or decreased from time to time as
provided herein or by amendment to these Bylaws and the articles of
incorporation of the corporation; provided, however, that the total number of
directors at any time shall not be less than three; and provided further, that
no decrease in the number of directors shall have the effect of shortening the
term of an incumbent director. In the event that preferred stock of the
corporation is issued and authorizes the election of one or more directors by
the holders of such preferred stock, the number of directors may be increased in
accordance with the terms of the preferred stock. In the event of any increase
or decrease in the authorized number of directors, each director then serving
shall continue as a director of the class of which he is a member until the
expiration of his current term, or his earlier resignation, retirement,
disqualification, removal from office or death, and the newly created or
eliminated directorships resulting from such increase or decrease shall be
apportioned by the Board of Directors among the three classes of directors so as
to maintain such classes as nearly equal as possible; provided, however, that
any such additional directors elected by the Board shall serve only for a term
expiring at the next meeting of the shareholders called for the purpose of
electing directors. Each director shall serve until his successor is elected and
qualified or until his earlier resignation, retirement, disqualification,
removal from office, or death.
Section 3.3 Removal. The entire Board of Directors or any individual
director may be removed from office but only for cause and only by the
affirmative vote of the holders of at least 80% of all classes of stock of the
corporation entitled to vote in the election of such director or directors,
considered for purposes of this Section as one class. For purposes of this
Section, "cause" shall mean only (a) conviction of a felony, (b) declaration of
unsound mind by order of a court, (c) gross dereliction of duty, (d) commission
of an action involving moral turpitude or (e) commission of an action which
constitutes intentional misconduct or a knowing violation of law if such action
in either event results both in an improper substantial personal benefit and a
material injury to the corporation. Notwithstanding the foregoing, in the event
that preferred stock of the corporation is issued and authorizes the election of
one or more directors by the holders of such preferred stock, any individual
director elected by the holders of such preferred stock may be removed only by
the holders of the outstanding shares of such preferred stock in accordance with
the terms of the preferred stock as provided therein. Removal action may be
taken at any shareholders' meeting with respect to which notice of such purpose
has been given.
Section 3.4 Vacancies. Any vacancies on the Board of Directors for any
reason, including vacancies resulting from an increase in the number of
directors, may be filled only by the Board of Directors, acting by the
affirmative vote of a majority of the total number of directors then remaining
in office, though they constitute fewer than a quorum of the Board of Directors.
Notwithstanding the foregoing, (a) in the event that a vacant office was held by
a director elected by holders of preferred stock of the corporation who are
entitled to elect such director pursuant to the terms of such preferred stock,
only the remaining directors elected by the holders of such preferred stock, or
in the absence of any such directors, the holders of such preferred stock,
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shall be entitled to fill such vacancy in accordance with the terms of the
preferred stock as provided therein and (b) any vacancy on the Board of
Directors resulting from the removal of a director by shareholder action may be
filled by the shareholders at their annual meeting or at a special meeting the
notice or waiver of notice of which specifies such action as an item of business
for such meeting. Any director appointed to fill a vacancy shall be elected for
the unexpired term of the predecessor in office and until the successor is
elected and qualified, except that when a directorship is to be filled by reason
of an increase in the number of directors, the term of such director shall
expire at the next election of directors by the shareholders and upon the
election and qualification of the successor.
Section 3.5 Compensation. Unless the articles of incorporation provide
otherwise, the Board of Directors may determine from time to time the
compensation, if any, directors may receive for their services as directors. A
director may also serve the corporation in a capacity other than that of
director and receive compensation, as determined by the Board of Directors, for
services rendered in such other capacity.
ARTICLE IV
MEETINGS OF THE BOARD OF DIRECTORS
Section 4.1 Regular Meetings. Regular meetings of the Board of Directors
shall be held immediately after the annual meeting of shareholders or a special
meeting in lieu of the annual meeting. In addition, the Board of Directors may
schedule other meetings to occur at regular intervals throughout the year.
Section 4.2 Special Meetings. Special meetings of the Board of Directors
may be called by or at the request of the Chairman of the Board of Directors or
the President or by any two directors in office at that time.
Section 4.3 Place of Meetings. Directors may hold their meetings at any
place within or without the State of Georgia as the Board of Directors may from
time to time establish for regular meetings or as set forth in the notice of a
special meeting or, in the event of a meeting held pursuant to waiver of notice,
as set forth in the waiver.
Section 4.4 Notice of Meetings. No notice shall be required for any
regularly scheduled meeting of the directors. Unless waived as contemplated in
Section 5.2, each director shall be given at least one day's notice (as set
forth in Section 5.1) of each special meeting stating the date, time and place
of the meeting.
Section 4.5 Quorum. Unless a greater number is required by the articles
of incorporation, these bylaws or the Code, or unless otherwise specifically
provided in the Code, a quorum of the Board of Directors consists of a majority
of the total number of directors that has been prescribed by resolution of the
shareholders or of the Board of Directors pursuant to Section 3.2.
Section 4.6 Vote Required for Action.
(a) If a quorum is present when a vote is taken, the affirmative vote
of a majority of directors present is the act of the Board of Directors
unless the Code, the articles of incorporation or these bylaws require the
vote of a greater number of directors.
(b) A director who is present at a meeting of the Board of Directors
or a committee of the Board of Directors when corporate action is taken is
deemed to have assented to the action taken unless:
(i) he or she objects at the beginning of the meeting (or promptly
upon his or her arrival) to holding it or transacting business at the
meeting;
(ii) his or her dissent or abstention from the action taken is
entered in the minutes of the meeting; or
(iii) he or she delivers written notice of his or her dissent or
abstention to the presiding officer of the meeting before its
adjournment or to the corporation immediately after adjournment of the
meeting.
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The right of dissent or abstention is not available to a director who votes
in favor of the action taken.
Section 4.7 Participation by Conference Telephone. Any or all directors
may participate in a meeting of the Board of Directors or of a committee of the
Board of Directors through the use of any means of communication by which all
directors participating may simultaneously hear each other during the meeting.
Section 4.8 Action by Directors Without a Meeting. Unless the articles of
incorporation or these bylaws provide otherwise, any action required or
permitted to be taken at any meeting of the Board of Directors, or any action
that may be taken at a meeting of a committee of the Board of Directors, may be
taken without a meeting if the action is taken by all the members of the Board
of Directors (or of the committee, as the case may be). The action must be
evidenced by one or more written consents describing the action taken, signed by
each director (or each director serving on the committee, as the case may be),
and delivered to the corporation for inclusion in the minutes or filing with the
corporate records.
Section 4.9 Adjournments. Whether or not a quorum is present to organize
a meeting, any meeting of directors (including an adjourned meeting) may be
adjourned by a majority of the directors present to reconvene at a specific time
and place. At any reconvened meeting, any business may be transacted that could
have been transacted at the meeting that was adjourned. If notice of the
adjourned meeting was properly given, it shall not be necessary to give any
notice of the reconvened meeting or of the business to be transacted, if the
date, time and place of the reconvened meeting are announced at the meeting that
was adjourned.
Section 4.10 Committees of the Board of Directors. The Board of Directors
by resolution may designate from among its members one or more committees, each
consisting of one or more directors all of whom serve at the pleasure of the
Board of Directors. Except as limited by the Code, each committee shall have the
authority set forth in the resolution establishing the committee. The provisions
of this Article Four as to the Board of Directors and its deliberations shall be
applicable to any committee of the Board of Directors.
ARTICLE V
MANNER OF NOTICE AND WAIVER AS TO SHAREHOLDERS AND DIRECTORS
Section 5.1 Procedure. Whenever these bylaws require notice to be given
to any shareholder or director, the notice shall be given in accordance with
this Section 5.1. Notice under these bylaws shall be in writing unless oral
notice is reasonable under the circumstances. Any notice to directors may be
written or oral. Notice may be communicated in person; by telephone, facsimile,
telegraph, teletype or other form of wire or wireless communication; or by mail
or private carrier. If these forms of personal notice are impracticable, notice
may be communicated by a newspaper of general circulation in the area where
published, or by radio, television or other form of public broadcast
communication. Written notice to the shareholders, if in a comprehensible form,
is effective when mailed, if mailed with first-class postage prepaid and
correctly addressed to the shareholder's address shown in the corporation's
current record of shareholders. Except as otherwise provided in this Section
5.1, written notice, if in a comprehensible form, is effective at the earliest
of the following:
(a) if communicated in person or by means other than the mail, when
received or when delivered, properly addressed, to the addressee's last
known principal place of business or residence;
(b) three days after its deposit in the mail, as evidenced by the
postmark, if mailed with first-class postage prepaid and correctly
addressed; or
(c) on the date shown on the return receipt, if sent by registered or
certified mail, return receipt requested, and the receipt is signed by or
on behalf of the addressee.
Oral notice is effective when communicated if communicated in a comprehensible
manner.
In calculating time periods for notice, when a period of time measured in
days, weeks, months, years or other measurement of time is prescribed for the
exercise of any privilege or the discharge of any duty, the first day shall not
be counted but the last day shall be counted.
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Section 5.2 Waiver.
(a) A shareholder may waive any notice before or after the date and
time stated in the notice. Except as provided in subsection 5.2(b), the
waiver must be in writing, be signed by the shareholder entitled to the
notice, and be delivered to the corporation for inclusion in the minutes or
filing with the corporate records.
(b) A shareholder's attendance at a meeting (i) waives objection to
lack of notice or defective notice of the meeting, unless the shareholder
at the beginning of the meeting objects to holding the meeting or
transacting business at the meeting; and (ii) waives objection to
consideration of a particular matter at the meeting that is not within the
purpose or purposes described in the meeting notice, unless the shareholder
objects to considering the matter when it is presented.
(c) Unless required by the Code, neither the business transacted nor
the purpose of the meeting need be specified in the waiver.
(d) A director may waive any notice before or after the date and time
stated in the notice. Except as provided in subsection 5.2(e), the waiver
must be in writing, signed by the director entitled to the notice, and
delivered to the corporation for inclusion in the minutes or filing with
the corporate records.
(e) A director's attendance at or participation in a meeting waives
any required notice to him or her of the meeting unless the director at the
beginning of the meeting (or promptly upon his or her arrival) objects to
holding the meeting or transacting business at the meeting and does not
thereafter vote for or assent to an action taken at the meeting.
ARTICLE VI
OFFICERS
Section 6.1 Number. The officers of the corporation shall consist of a
Chairman of the Board of Directors, a President, a Secretary and a Treasurer and
any other officers as may be appointed by the Board of Directors or appointed by
a duly appointed officer pursuant to this Article Six. The Board of Directors
shall from time to time create and establish the duties of the other officers.
Any two or more offices may be held by the same person.
Section 6.2 Appointment and Term. All officers shall be appointed by the
Board of Directors or by a duly appointed officer pursuant to this Article Six
and shall serve at the pleasure of the Board of Directors or the appointing
officers, as the case may be. All officers, however appointed, may be removed
with or without cause by the Board of Directors and any officer appointed by
another officer may also be removed by the appointing officer with or without
cause.
Section 6.3 Compensation. The compensation of all officers of the
corporation appointed by the Board of Directors shall be fixed by the Board of
Directors.
Section 6.4 Chairman of the Board of Directors. The Chairman of the Board
of Directors shall preside at all meetings of the Board of Directors and shall
preside at all meetings of shareholders.
Section 6.5 President. The President shall be the chief executive officer
of the corporation and shall have general supervision of the business of the
corporation. The President shall (a) in the absence or the disability of the
Chairman of the Board of Directors, preside at all meetings of shareholders, and
(b) see that all orders and resolutions of the Board of Directors are carried
into effect. The President shall perform such other duties as may from time to
time be delegated by the Board of Directors.
Section 6.6 Vice Presidents. In the absence or disability of the
President, or at the direction of the President, the Vice President, if any,
shall perform the duties and exercise the powers of the President. If the
corporation has more than one Vice President, the one designated by the Board of
Directors shall act in lieu of the President. Vice Presidents shall perform
whatever duties and have whatever powers the Board of Directors may from time to
time assign.
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Section 6.7 Secretary. The Secretary shall be responsible for preparing
minutes of the acts and proceedings of all meetings of the shareholders and of
the Board of Directors and any committees thereof. The Secretary shall have
authority to give all notices required by the Code or other applicable law or
these bylaws. The Secretary shall be responsible for the custody of the
corporate books, records, contracts and other documents. The Secretary may affix
the corporate seal to any lawfully executed documents and shall sign any
instruments as may require his or her signature. The Secretary shall
authenticate records of the corporation. The Secretary shall perform whatever
additional duties and have whatever additional powers the Board of Directors may
from time to time assign. In the absence or disability of the Secretary or at
the direction of the President, any assistant secretary may perform the duties
and exercise the powers of the Secretary.
Section 6.8 Treasurer. The Treasurer shall be responsible for the custody
of all funds and securities belonging to the corporation and for the receipt,
deposit or disbursement of funds and securities under the direction of the Board
of Directors. The Treasurer shall cause to be maintained full and true accounts
of all receipts and disbursements and shall make reports of the same to the
Board of Directors and the President upon request. The Treasurer shall perform
all duties as may be assigned to him or her from time to time by the Board of
Directors.
Section 6.9 Bonds. The Board of Directors by resolution may require any
or all of the officers, agents or employees of the corporation to give bonds to
the corporation, with sufficient surety or sureties, conditioned on the faithful
performance of the duties of their respective offices or positions, and to
comply with any other conditions as from time to time may be required by the
Board of Directors.
ARTICLE VII
DISTRIBUTIONS AND SHARE DIVIDENDS
Section 7.1 Authorization or Declaration. Unless the articles of
incorporation provide otherwise, the Board of Directors from time to time in its
discretion may authorize or declare distributions or share dividends in
accordance with the Code.
Section 7.2 Record Date With Regard to Distributions and Share
Dividends. For the purpose of determining shareholders entitled to a
distribution (other than one involving a purchase, redemption or other
reacquisition of the corporation's shares) or a share dividend, the Board of
Directors may fix a date as the record date. If no record date is fixed by the
Board of Directors, the record date shall be determined in accordance with the
provisions of the Code.
ARTICLE VIII
SHARES
Section 8.1 Authorization and Issuance of Shares. In accordance with the
Code, the Board of Directors may authorize shares of any class or series
provided for in the articles of incorporation to be issued for any consideration
valid under the provisions of the Code. To the extent provided in the articles
of incorporation, the Board of Directors shall determine the preferences,
limitations and relative rights of the shares.
Section 8.2 Share Certificates. The interest of each shareholder in the
corporation shall be evidenced by a certificate or certificates representing
shares of the corporation which shall be in such form as the Board of Directors
from time to time may adopt. Share certificates shall be numbered consecutively,
shall be in registered form, shall indicate the date of issuance, the name of
the corporation and that it is organized under the laws of the State of Georgia,
the name of the shareholder, and the number and class of shares and the
designation of the series, if any, represented by the certificate. Each
certificate shall be signed by any one of the Chairman of the Board of
Directors, the President, a Vice President, the Secretary or the Treasurer. The
corporate seal need not be affixed.
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Section 8.3 Rights of Corporation With Respect to Registered
Owners. Prior to due presentation for transfer of registration of its shares,
the corporation may treat the registered owner of the shares as the person
exclusively entitled to vote the shares, to receive any share dividend or
distribution with respect to the shares, and for all other purposes; and the
corporation shall not be bound to recognize any equitable or other claim to or
interest in the shares on the part of any other person, whether or not it shall
have express or other notice thereof, except as otherwise provided by law.
Section 8.4 Transfers of Shares. Transfers of shares shall be made upon
the transfer books of the corporation, kept at the office of the transfer agent
designated to transfer the shares, only upon direction of the person named in
the certificate, or by an attorney lawfully constituted in writing; and before a
new certificate is issued, the old certificate shall be surrendered for
cancellation or, in the case of a certificate alleged to have been lost, stolen
or destroyed, the requirements of Section 8.6 of these bylaws shall have been
met.
Section 8.5 Duty of Corporation to Register Transfer. Notwithstanding any
of the provisions of Section 8.4 of these bylaws, the corporation is under a
duty to register the transfer of its shares only if:
(a) the certificate is endorsed by the appropriate person or persons;
(b) reasonable assurance is given that the endorsement or affidavit is
genuine and effective;
(c) the corporation either has no duty to inquire into adverse claims
or has discharged that duty;
(d) the requirements of any applicable law relating to the collection
of taxes have been met; and
(e) the transfer in fact is rightful or is to a bona fide purchaser.
Section 8.6 Lost, Stolen or Destroyed Certificates. Any person claiming a
share certificate to be lost, stolen or destroyed shall make an affidavit or
affirmation of the fact in the manner required by the Board of Directors and, if
the Board of Directors requires, shall give the corporation a bond of indemnity
in form and amount, and with one or more sureties satisfactory to the Board of
Directors, as the Board of Directors may require, whereupon an appropriate new
certificate may be issued in lieu of the one alleged to have been lost, stolen
or destroyed.
Section 8.7 Fixing of Record Date With Regard to Shareholder Action. For
the purpose of determining shareholders entitled to notice of a shareholders'
meeting, to demand a special meeting, to vote or to take any other action, the
Board of Directors may fix a future date as the record date, which date shall be
not more than 60 days prior to the date on which the particular action requiring
a determination of shareholders is to be taken. A determination of shareholders
entitled to notice of or to vote at a shareholders' meeting is effective for any
adjournment of the meeting unless the Board of Directors fixes a new record
date, which it must do if the meeting is adjourned to a date more than 120 days
after the date fixed for the original meeting. If no record date is fixed by the
Board of Directors, the record date shall be determined in accordance with the
provisions of the Code.
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ARTICLE IX
INDEMNIFICATION
Section 9.1 Definitions. As used in this Article, the term:
(a) "Corporation" includes any domestic or foreign predecessor entity
of the corporation in a merger or other transaction in which the
predecessor's existence ceased upon consummation of the transaction.
(b) "Director" or "officer" means an individual who is or was a
director or board-appointed officer, respectively, of the corporation or
who, while a director or officer of the corporation, is or was serving at
the corporation's request as a director, officer, partner, trustee,
employee, or agent of another domestic or foreign corporation, partnership,
joint venture, trust, employee benefit plan or other entity. A director or
officer is considered to be serving an employee benefit plan at the
corporation's request if his or her duties to the corporation also impose
duties on, or otherwise involve services by, the director or officer to the
plan or to participants in or beneficiaries of the plan. "Director" or
"officer" includes, unless the context otherwise requires, the estate or
personal representative of a director or officer.
(c) "Disinterested director" or "disinterested officer" means a
director or officer, respectively, who at the time of a vote or selection
referred to in subsection 9.5(b), 9.5(c) or 9.7(a) is not:
(i) a party to the proceeding; or
(ii) an individual having a familial, financial, professional or
employment relationship with the person whose indemnification or advance
for expenses is the subject of the decision being made with respect to
the proceeding, which relationship would, in the circumstances,
reasonably be expected to exert an influence on the director's or
officer's judgment when voting on the decision being made.
(d) "Expenses" includes counsel fees.
(e) "Liability" means the obligation to pay a judgment, settlement,
penalty, fine (including an excise tax assessed with respect to an employee
benefit plan) or reasonable expenses incurred with respect to a proceeding.
(f) "Official capacity" means:
(i) when used with respect to a director, the office of director in
the corporation; and
(ii) when used with respect to an officer, the office in the
corporation held by the officer.
Official capacity does not include service for any other domestic or foreign
corporation or any partnership, joint venture, trust, employee benefit plan or
other entity.
(g) "Party" includes an individual who was, is, or is threatened to be
made a named defendant or respondent in a proceeding.
(h) "Proceeding" means any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative, arbitrative or
investigative and whether formal or informal.
Section 9.2 Basic Indemnification Arrangement.
(a) Except as provided in subsection 9.2(d), the corporation shall
indemnify an individual who is a party to a proceeding because he or she is
or was a director or officer against liability incurred in the proceeding
if:
(i) such individual conducted himself or herself in good faith; and
(ii) such individual reasonably believed:
(A) in the case of conduct in his or her official capacity, that
such conduct was in the best interests of the corporation;
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(B) in all other cases, that such conduct was at least not
opposed to the best interests of the corporation; and
(C) in the case of any criminal proceeding, that the individual
had no reasonable cause to believe such conduct was unlawful.
(b) A director's or officer's conduct with respect to an employee
benefit plan for a purpose he or she believed in good faith to be in the
interests of the participants in and beneficiaries of the plan is conduct
that satisfies the requirement of subsection 9.2(a)(ii)(B).
(c) The termination of a proceeding by judgment, order, settlement or
conviction, or upon a plea of nolo contendere or its equivalent is not, of
itself, determinative that the director or officer did not meet the
standard of conduct described in subsection 9.2(a).
(d) The corporation may not indemnify a director or officer under this
Article:
(i) in connection with a proceeding by or in the right of the
corporation, except for reasonable expenses incurred in connection with
the proceeding if it is determined that the director or officer has met
the relevant standard of conduct under subsection 9.2(a); or
(ii) in connection with any proceeding with respect to conduct for
which he or she was adjudged liable on the basis that personal benefit
was improperly received by him or her, whether or not involving action
in his or her official capacity.
Section 9.3 Advances for Expenses.
(a) The corporation shall, before final disposition of a proceeding,
advance funds to pay for or reimburse the reasonable expenses incurred by a
director or officer who is a party to a proceeding because he or she is a
director or officer if he or she delivers to the corporation:
(i) a written affirmation of his or her good faith belief that he
or she has met the relevant standard of conduct described in subsection
9.2(a) or that the proceeding involves conduct for which such person's
liability has been eliminated under the corporation's articles of
incorporation; and
(ii) his or her written undertaking to repay any funds advanced if
it is ultimately determined that the director or officer is not entitled
to indemnification under this Article or the Code.
(b) The undertaking required by subsection 9.3(a)(ii) must be an
unlimited general obligation of the director or officer but need not be
secured and may be accepted without reference to the financial ability of
the director or officer to make repayment.
Section 9.4 Court-Ordered Indemnification and Advances for Expenses.
(a) A director or officer who is a party to a proceeding because he or
she is a director or officer may apply for indemnification or advance for
expenses to the court conducting the proceeding or to another court of
competent jurisdiction. Pursuant to Section 14-2-854 of the Code, after
receipt of an application and after giving any notice it considers
necessary, the court shall:
(i) order indemnification or advance for expenses if it determines
that the director or officer is entitled to indemnification; or
(ii) order indemnification or advance for expenses if it
determines, in view of all the relevant circumstances, that it is fair
and reasonable to indemnify the director or officer, or to advance
expenses to the director or officer, even if the director or officer has
not met the relevant standard of conduct, failed to comply with the
requirements for advance of expenses, or was adjudged liable in a
proceeding referred to in subsection 9.2(d), but if the director or
officer was adjudged so liable, the indemnification shall be limited to
reasonable expenses incurred in connection with the proceeding.
(b) If the court determines that the director or officer is entitled
to indemnification or advance for expenses, it may also order the
corporation to pay the director's or officer's reasonable expenses to
obtain court-ordered indemnification or advance for expenses.
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Section 9.5 Determination and Authorization of Indemnification.
(a) The corporation acknowledges that indemnification of a director or
officer under Section 9.2 has been pre-authorized by the corporation as
permitted by Section 14-2-859(a) of the Code. Nevertheless, the corporation
shall not indemnify a director or officer under Section 9.2 unless a
determination has been made for the specific proceeding that
indemnification of the director or officer is permissible in the
circumstances because he or she has met the relevant standard of conduct
set forth in subsection 9.2(a); provided, however, that regardless of the
result or absence of any such determination, the corporation shall
indemnify a director or officer who was wholly successful, on the merits or
otherwise, in the defense of any proceeding to which he or she was a party
because he or she was a director or officer of the corporation against
reasonable expenses incurred by the director or officer in connection with
the proceeding.
(b) The determination referred to in subsection 9.5(a) shall be made:
(i) (1) by the Board of Directors by majority vote of a quorum
consisting of disinterested directors or (2) if such a quorum cannot be
obtained, by majority vote of a committee duly designated by the Board
of Directors (in which designation directors who do not qualify as
disinterested directors may participate) consisting solely of two or
more disinterested directors;
(ii) by special legal counsel:
(A) selected in the manner prescribed in paragraph (i) of this
subsection 9.5(b); or
(B) if a quorum cannot be obtained under paragraph (i)(1) of
subsection 9.5(b) and a committee cannot be designated under
paragraph (i)(2) thereof, selected by majority vote of the full Board
of Directors (in which selection directors who do not qualify as
disinterested directors may participate); or
(iii) by the shareholders, but shares owned by or voted under the
control of a director or officer who at the time does not qualify as a
disinterested director or disinterested officer may not be voted on the
determination.
(c) As acknowledged above, the corporation has pre-authorized the
indemnification of directors and officers hereunder, subject to a
determination for a specific proceeding that the director or officer met
the relevant standard of conduct under subsection 9.2(a). Consequently, no
further decision need or shall be made on a case-by-case basis as to the
authorization of the corporation's indemnification of directors or officers
hereunder. Nevertheless, evaluation as to reasonableness of expenses of a
director or officer for a specific proceeding shall be made in the same
manner as the determination that indemnification is permissible, as
described in subsection 9.5(b), except that if there are fewer than two
disinterested directors or if the determination is made by special legal
counsel, evaluation as to reasonableness of expenses shall be made by those
entitled under subsection 9.5(b)(ii)(B) to select special legal counsel.
Section 9.6 Indemnification of Employees and Agents. The corporation may
indemnify and advance expenses under this Article to an employee or agent of the
corporation who is not a director or officer to the extent, consistent with
public policy, that such indemnification and advances may be provided to a
director or officer.
Section 9.7 Shareholder Approved Indemnification.
(a) If authorized by the articles of incorporation or a bylaw,
contract or resolution approved or ratified by shareholders of the
corporation by a majority of the votes entitled to be cast, the corporation
may indemnify or obligate itself to indemnify a director or officer made a
party to a proceeding, including a proceeding brought by or in the right of
the corporation, without regard to the limitations in other sections of
this Article, but shares owned or voted under the control of a director or
officer who at the time of such authorization does not qualify as a
disinterested director or disinterested officer with respect to any
existing or threatened proceeding that would be covered by the
authorization may not be voted on the authorization.
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(b) The corporation shall not indemnify a director or officer under
this Section 9.7 for any liability incurred in a proceeding in which the
director or officer is adjudged liable to the corporation or is subjected
to injunctive relief in favor of the corporation:
(i) for any appropriation, in violation of his or her duties, of
any business opportunity of the corporation;
(ii) for acts or omissions which involve intentional misconduct or
a knowing violation of law;
(iii) for the types of liability set forth in Section 14-2-832 of
the Code; or
(iv) for any transaction from which he or she received an improper
personal benefit.
(c) Where approved or authorized in the manner described in subsection
9.7(a), the corporation may advance or reimburse expenses incurred in
advance of final disposition of the proceeding only if:
(i) the director or officer furnishes the corporation a written
affirmation of his or her good faith belief that his or her conduct does
not constitute behavior of the kind described in subsection 9.7(b); and
(ii) the director or officer furnishes the corporation a written
undertaking, executed personally or on his or her behalf, to repay any
advances if it is ultimately determined that he or she is not entitled
to indemnification under this Article.
Section 9.8 Insurance. The corporation may purchase and maintain
insurance on behalf of an individual who is a director, officer, employee or
agent of the corporation or who, while a director, officer, employee or agent of
the corporation, serves at the corporation's request as a director, officer,
partner, trustee, employee or agent of another domestic or foreign corporation,
partnership, joint venture, trust, employee benefit plan or other entity against
liability asserted against or incurred by him or her in that capacity or arising
from his or her status as a director, officer, employee or agent, whether or not
the corporation would have power to indemnify or advance expenses to him or her
against the same liability under this Article or the Code.
Section 9.9 Witness Fees. Nothing in this Article shall limit the
corporation's power to pay or reimburse expenses incurred by a director or
officer in connection with his or her appearance as a witness in a proceeding at
a time when he or she is not a party.
Section 9.10 Report to Shareholders. To the extent and in the manner
required by the Code from time to time, if the corporation indemnifies or
advances expenses to a director or officer in connection with a proceeding by or
in the right of the corporation, the corporation shall report the
indemnification or advance to the shareholders.
Section 9.11 Amendments; Severability. No amendment, modification or
rescission of this Article Nine, or any provision hereof, the effect of which
would diminish the rights to indemnification or advancement of expenses as set
forth herein shall be effective as to any person with respect to any action
taken or omitted by such person prior to such amendment, modification or
rescission. In the event that any of the provisions of this Article (including
any provision within a single section, subsection, division or sentence) is held
by a court of competent jurisdiction to be invalid, void or otherwise
unenforceable, the remaining provisions of this Article shall remain enforceable
to the fullest extent permitted by law.
ARTICLE X
MISCELLANEOUS
Section 10.1 Inspection of Books and Records. The Board of Directors
shall have the power to determine which accounts, books and records of the
corporation shall be opened to the inspection of the shareholders, except those
as may by law specifically be made open to inspection, and shall have the power
to fix reasonable rules and regulations not in conflict with the applicable law
for the inspection of accounts, books and records which by law or by
determination of the Board of Directors shall be open to inspection. Without
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the prior approval of the Board of Directors in their discretion, the right of
inspection set forth in Section 14-2-1602(e) of the Code shall not be available
to any shareholder owning 0.25% or less of the shares outstanding.
Section 10.2 Fiscal Year. The Board of Directors is authorized to fix the
fiscal year of the corporation and to change the same from time to time as it
deems appropriate.
Section 10.3 Corporate Seal. If the Board of Directors determines that
there should be a corporate seal for the corporation, it shall be in the form as
the Board of Directors may from time to time determine.
Section 10.4 Annual Financial Statements. In accordance with the Code,
the corporation shall prepare and provide to the shareholders such financial
statements as may be required by the Code.
Section 10.5 Conflict With Articles of Incorporation. In the event that
any provision of these bylaws conflicts with any provision of the articles of
incorporation, the articles of incorporation shall govern.
ARTICLE XI
AMENDMENTS
Section 11.1 Power to Amend Bylaws. The bylaws may be altered, amended or
repealed, and new bylaws may be adopted, by (a) the affirmative vote of the
holders of a majority of the voting power of all the shares of capital stock of
the corporation then entitled to vote generally in the election of directors,
voting together as a single class, or (b) the Board of Directors of the
corporation, but any bylaws adopted by the Board of Directors may be altered,
amended or repealed, or new bylaws may be adopted, by the affirmative vote of
the holders of a majority of the voting power of all of the shares of capital
stock of the corporation then entitled to vote generally in the election of
directors, voting together as a single class. The shareholders may prescribe, by
so expressing in the action they take in amending or adopting any bylaw or
bylaws that the bylaw or bylaws so amended or adopted by them shall not be
altered, amended or repealed by the Board of Directors.
ARTICLE XII
CERTAIN PROVISIONS OF GEORGIA LAW
Section 12.1 Fair Price Requirements. All of the requirements of Article
11, Part 2, of the Code, included in Sections 14-2-1110 through 1113 (and any
successor provisions thereto), shall be applicable to the corporation in
connection with any business combination, as defined therein, with any
interested shareholder, as defined therein.
Section 12.2 Business Combinations. All of the requirements of Article
11, Part 3, of the Code, included in Sections 14-2-1131 through 1133 (and any
successor provisions thereto), shall be applicable to the corporation in
connection with any business combination, as defined therein, with any
interested shareholder, as defined therein.
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EXHIBIT D TO THE PROXY STATEMENT
SECTIONS 85 THROUGH 98 OF CHAPTER 156B OF THE MASSACHUSETTS BUSINESS CORPORATION
LAW
Section 85. [Payment for Stock of Dissenting Stockholder]. A stockholder
in any corporation organized under the laws of Massachusetts which shall have
duly voted to consolidate or merge with another corporation or corporations
under the provisions of sections seventy-eight or seventy-nine who objects to
such consolidation or merger may demand payment for his stock from the resulting
or surviving corporation and an appraisal in accordance with the provisions of
sections eighty-six to ninety-eight, inclusive, and such stockholder and the
resulting or surviving corporation shall have the rights and duties and follow
the procedure set forth in those sections. This section shall not apply to the
holders of any shares of stock of a constituent corporation surviving a merger
if, as permitted by subsection (c) of section seventy-eight, the merger did not
require for its approval a vote of the stockholders of the surviving
corporation.
Section 86. [Right of Appraisal]. If a corporation proposes to take a
corporate action as to which any section of this chapter provides that a
stockholder who objects to such action shall have the right to demand payment
for his shares and an appraisal thereof, sections eighty-seven to ninety-eight,
inclusive, shall apply except as otherwise specifically provided in any section
of this chapter. Except as provided in sections eighty-two and eighty-three, no
stockholder shall have such right unless (1) he files with the corporation
before the taking of the vote of the stockholders on such corporate action,
written objection to the proposed action stating that he intends to demand
payment for his shares if the action is taken and (2) his shares are not voted
in favor of the proposed action.
Section 87. [Notice of Stockholders Meeting to Contain Statement as to
Appraisal Rights]. The notice of the meeting of stockholders at which the
approval of such proposed action is to be considered shall contain a statement
of the rights of objecting stockholders. The giving of such notice shall not be
deemed to create any rights in any stockholder receiving the same to demand
payment for his stock, and the directors may authorize the inclusion in any such
notice of a statement of opinion by the management as to the existence or
non-existence of the right of the stockholders to demand payment for their stock
on account of the proposed corporate action. The notice may be in such form as
the directors or officers calling the meeting deem advisable, but the following
form of notice shall be sufficient to comply with this section:
"If the action proposed is approved by the stockholders at the meeting and
effected by the corporation, any stockholder (1) who files with the corporation
before the taking of the vote on the approval of such action, written objection
to the proposed action stating that he intends to demand payment for his shares
if the action is taken and (2) whose shares are not voted in favor of such
action has or may have the right to demand in writing from the corporation (or,
in the case of a consolidation or merger, the name of the resulting or surviving
corporation shall be inserted), within twenty days after the date of mailing to
him of notice in writing that the corporate action has become effective, payment
for his shares and an appraisal of the value thereof. Such corporation and any
such stockholder shall in such cases have the rights and duties and shall follow
the procedure set forth in sections 88 to 98, inclusive, of chapter 156B of the
General Laws of Massachusetts."
Section 88. [Notice to Objecting Stockholder that Corporate Action has
Become Effective]. The corporation taking such action, or in the case of a
merger or consolidation the surviving or resulting corporation, shall, within
ten days after the date on which such corporate action became effective, notify
each stockholder who filed written objection meeting the requirements of section
eighty-six and whose shares were not voted in favor of the approval of such
action, that the action approved at the meeting of the corporation of which he
is a stockholder has become effective. The giving of such notice shall not be
deemed to create any rights in any stockholder receiving the same to demand
payment for his stock. The notice shall be sent by registered or certified mail
addressed to the stockholder at his last known address as it appears in the
records of the corporation.
Section 89. [Demand for Payment by Objecting Stockholder]. If within
twenty days after the date of mailing of a notice under subsection (e) of
section eighty-two, subsection (f) of section eighty-three, or
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section eighty-eight any stockholder to whom the corporation was required to
give such notice shall demand in writing from the corporation taking such
action, or in the case of a consolidation or merger from the resulting or
surviving corporation, payment for his stock, the corporation upon which such
demand is made shall pay to him the fair value of his stock within thirty days
after the expiration of the period during which such demand may be made.
Section 90. [Determination of Value of Stock by Superior Court]. If
during the period of thirty days provided for in section eighty-nine the
corporation upon which such demand is made and any such objecting stockholder
fail to agree as to the value of such stock, such corporation or any such
stockholder may within four months after the expiration of such thirty-day
period demand a determination of the value of the stock of all such objecting
stockholders by a bill in equity filed in the superior court in the county where
the corporation in which such objecting stockholder held stock had or has its
principal office in the commonwealth.
Section 91. Bill in Equity to Determine Value of Stock of Objecting
Stockholders on Failure to Agree on Value Thereof Etc.; Parties to Bill Etc.;
Service of Bill on Corporation; Notice to Stockholder Parities Etc. If the bill
is filed by the corporation, it shall name as parties respondent all
stockholders who have demanded payment for their shares and with whom the
corporation has not reached agreement as to the value thereof. If the bill is
filed by a stockholder, he shall bring the bill in his own behalf and in behalf
of all other stockholders who have demanded payment for their shares and with
whom the corporation has not reached agreement as to the value thereof, and
service of the bill shall be made upon the corporation by subpoena with a copy
of the bill annexed. The corporation shall file with its answer a duly verified
list of all such other stockholders, and such stockholders shall thereupon be
deemed to have been added as parties to the bill. The corporation shall give
notice in such form and returnable on such date as the court shall order to each
stockholder party to the bill by registered or certified mail, addressed to the
last known address of such stockholder as shown in the records of the
corporation, and the court may order such additional notice by publication or
otherwise as it deems advisable. Each stockholder who makes demand as provided
in section eighty-nine shall be deemed to have consented to the provisions of
this section relating to notice, and the giving of notice by the corporation to
any such stockholder in compliance with the order of the court shall be
sufficient service of process on him. Failure to give notice to any stockholder
making demand shall not invalidate the proceedings as to other stockholders to
whom notice was properly given, and the court may at any time before the entry
of a final decree make supplementary orders of notice.
Section 92. Bill in Equity to Determine Value of Stock of Objecting
Stockholders on Failure to Agree on Value Thereof, Etc.; Entry of Decree
Determining Value of Stock; Date on Which Value is to be Determined. After
hearing the court shall enter a decree determining the fair value of the stock
of those stockholders who have become entitled to the valuation of and payment
for their shares, and shall order the corporation to make payment of such value,
together with interest, if any, as hereinafter provided, to the stockholders
entitled thereto upon the transfer by them to the corporation of the
certificates representing such stock if certificated or if uncertificated, upon
receipt of an instruction transferring such stock to the corporation. For this
purpose, the value of the shares shall be determined as of the day preceding the
date of the vote approving the proposed corporate action and shall be exclusive
of any element of value arising from the expectation or accomplishment of the
proposed corporate action.
Section 93. Bill in Equity to Determine Value of Stock of Objecting
Stockholders on Failure to Agree on Value Thereof, Etc.; Court May Refer Bill,
Etc., To Special Master to Hear Parties, Etc. The court in its discretion may
refer the bill or any question arising thereunder to a special master to hear
the parties, make finding and report the same to the court, all in accordance
with the usual practice in suits in equity in the superior court.
Section 94. Bill in Equity to Determine Value of Stock of Objecting
Stockholders on Failure to Agree on Value Thereof, Etc.; Stockholder Parties May
be Required to Submit their Stock Certificates for Notation Thereon of Pendency
of Bill, Etc. On motion the court may order stockholder parties to the bill to
summit their certificates of stock to the corporation for notation thereon of
the pendency of the bill, and may order the corporation to note such pendency in
its records with respect to any uncertificated shares held by such
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stockholder parties, and may on motion dismiss the bill as to any stockholder
who fails to comply with such order.
Section 95. Bill in Equity to Determine Value of Stock of Objecting
Stockholders on Failure to Agree on Value Thereof, Etc.; Taxation of Costs,
Etc.; Interest on Award, Etc. The costs of the bill, including the reasonable
compensation and expenses of any master appointed by the court, but exclusive of
fees of counsel or of experts retained by any party, shall be determined by the
court and taxed upon the parties to the bill, or any of them, in such manner as
appears to be equitable, except that all costs of giving notice to stockholders
as provided in this chapter shall be paid by the corporation. Interest shall be
paid upon any award from the date of the vote approving the proposed corporate
action, and the court may on application of any interested party determine the
amount of interest to be paid in the case of any stockholder.
Section 96. Stockholder Demanding Payment for Stock not Entitled to Notice
to Stockholders' Meetings or to Vote Stock or to Receive Dividends, Etc.;
Exceptions. Any stockholder who has demanded payment for his stock as provided
in this chapter shall not thereafter be entitled to notice of any meeting of
stockholders or to vote such stock for any purpose and shall not be entitled to
the payment of dividends or other distribution on the stock (except dividends or
other distributions payable to stockholders of record at a date which is prior
to the date of the vote approving the proposed corporate action) unless:
(1) A bill shall not be filed within the time provided in section
ninety;
(2) A bill, if filed, shall be dismissed as to such stockholder; or
(3) Such stockholder shall with the written approval of the
corporation, or in the case of a consolidation or merger, the resulting or
surviving corporation, deliver to it a written withdrawal of his objections
to and an acceptance of such corporate action.
Notwithstanding the provisions of clauses (1) to (3), inclusive, said
stockholder shall have only the rights of a stockholder who did not so demand
payment for his stock as provided in this chapter.
Section 97. Certain Shares Paid for by Corporation to Have Status of
Treasury Stock, Etc. The shares of the corporation paid for by the corporation
pursuant to the provisions of this chapter shall have the status of treasury
stock or in the case of a consolidation or merger the shares of the securities
of the resulting or surviving corporation into which the shares of such
objecting stockholder would have been converted had he not objected to such
consolidation or merger shall have the status of treasury stock or securities.
Section 98. Enforcement by Stockholder of Right to Receive Payment for His
Shares to be Exclusive Remedy; Exception. The enforcement by a stockholder of
his right to receive payment for his shares in the manner provided in this
chapter shall be an exclusive remedy except that this chapter shall not exclude
the right of such stockholder to bring or maintain an appropriate proceeding to
obtain relief on the ground that such corporate action will be or is illegal or
fraudulent as to him.
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ANNEX I TO THE PROXY STATEMENT
MAPICS, INC.
1998 NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN
(F/K/A MARCAM CORPORATION 1991 NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN,
AS AMENDED AND RESTATED AS OF FEBRUARY 3, 1998)
1. Purpose. The Marcam Corporation 1991 Non-Employee Director Stock Option
Plan is hereby amended and restated in its entirety and renamed the MAPICS, Inc.
1998 Non-Employee Director Stock Option Plan (hereinafter, the "Plan"). The Plan
is intended to promote the interests of MAPICS, Inc. (formerly known as Marcam
Corporation, the "Company") by providing an inducement to obtain and retain the
services of qualified persons who are neither employees nor officers of the
Company to serve as members of its Board of Directors (the "Board").
2. Available Shares. The total number of shares of Common Stock, par value
$.01 per share, of the Company (the "Common Stock"), for which options may be
granted under the Plan shall not exceed 310,000 shares, subject to adjustment in
accordance with Section 10 of the Plan. Shares subject to the Plan are
authorized but unissued shares or shares that were once issued and subsequently
reacquired by the Company. If any options granted under the Plan are surrendered
before exercise or lapse without exercise, in whole or in part, the shares
reserved therefor shall continue to be available under the Plan.
3. Administration. This Plan shall be administered by the Compensation
Committee of the Board of Directors of the Company (the "Committee"). Any action
which may be taken by the Committee hereunder may be taken instead by the full
Board of Directors and in such event, the word "Committee" wherever used herein
shall be deemed to mean the Board. The Committee shall, subject to the
provisions of the Plan, have the power to construe the Plan, to determine all
questions hereunder, and to adopt and amend such rules and regulations for the
administration of the Plan as it may deem desirable. No member of the Board or
the Committee shall be liable for any action or determination made in good faith
with respect to the Plan or any option granted under it.
4. Automatic Grant of Options. Subject to the availability of shares under
the Plan, (a) as of the date that a person either (i) is first elected to the
board and is neither an employee nor an officer of the Company at such time, or
(ii) while continuing to serve on the Board, ceases to serve as an employee or
officer of the Company, such person shall be automatically granted on such date,
without further action by the Board, an option to purchase twenty thousand
(20,000) shares of the Common Stock; provided, however, that no such option
shall be granted if prohibited pursuant to the terms of any agreement, whether
existing at the time of grant or thereafter, between the Company and any member
of the Board of Directors or any affiliate of such member, and (b) each person
who is a member of the Board on January 1 of each year, commencing with January
1, 1996, and who is neither an employee nor an officer of the Company on such
date shall be automatically granted on each such date, without further action of
the Board, an option to purchase three thousand (3,000) shares of the Common
Stock; provided, however, that no such option shall be granted if prohibited
pursuant to the terms of any agreement, whether existing at the time of grant or
thereafter, between the Company and any member of the Board of Directors or any
affiliate of such member. The options to be granted under this Section 4 shall
be the only options ever to be granted at any time to such member under the
Plan.
If on any grant date, shares of Common Stock are not available under the
Plan to grant to non-employee directors the full amount of a grant contemplated
by the immediately preceding paragraph, then each such director shall receive an
award (a "Reduced Grant") equal to the number of shares of Common Stock then
available under the Plan divided by the number of non-employee directors as of
the applicable grant date. Fractional shares shall be ignored and not granted.
If a Reduced Grant has been made and, thereafter, during the term of the Plan,
additional shares of Common Stock become available for grant (e.g., because of
the forfeiture or lapse of an option), then each person who was a non-employee
director both on the date on which the Reduced Grant was made and on the date
additional shares of Common Stock become available (a
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"Continuing Non-Employee Director") shall receive an additional option to
purchase shares of Common Stock. The number of newly available shares shall be
divided equally among the options granted to the Continuing Non-Employee
Directors; provided, however, that the aggregate number of shares of Common
Stock subject to a Continuing Outside Director's additional option plus any
prior Reduced Grant to the Continuing non-Employee Director on the applicable
grant date shall not exceed the number of shares to which he or she is otherwise
entitled under the preceding paragraph. If more than one Reduced Grant has been
made, available options shall be granted beginning with the earliest such grant
date.
Anything in the Plan to the contrary notwithstanding, the effectiveness of
this amended and restated Plan and of the grant of all options hereunder is in
all respects subject to, and the Plan and options granted under it after April
29, 2001 shall be of no force and effect unless and until, the approval of this
amended and restated Plan by the affirmative vote of the holders of a majority
of the shares of the Common Stock present in person or by proxy and entitled to
vote at a meeting of stockholders at which this amended and restated Plan is
presented for approval. Except for the specific options referred to above, no
other options shall be granted under the Plan.
5. Option Price. The purchase price of the stock covered by an option
granted pursuant to the Plan shall be 100% of the fair market value of such
shares on the day the option is granted. The option price will be subject to
adjustment in accordance with the provisions of Section 10 of the Plan. For
purposes of the Plan, if, at the time an option is granted under the Plan, the
Company's Common Stock is publicly traded, "fair market value" shall be
determined as of the last business day for which the prices or quotes discussed
in this sentence are available prior to the date such option is granted and
shall mean (1) the average (on that date) of the high and low prices of the
Common Stock on the principal national securities exchange on which the Common
Stock is traded, if the Common Stock is then traded on a national securities
exchange; or (ii) the last reported sale price (on that date) of the Common
Stock on the Nasdaq National Market, if the Common Stock is not then traded on a
national securities exchange; or (iii) the closing bid price (or average of bid
prices) last quoted (on that date) by an established quotation service for
over-the-counter securities, if the Common Stock is not traded on the Nasdaq
National Market.
6. Period of Option. Unless sooner terminated in accordance with the
provisions of Section 8 of the Plan, an option granted hereunder shall expire on
the date which is ten (10) years after the date of grant of the option.
7. Vesting of Shares and Transferability of Options.
(a) Vesting. Options granted under the Plan shall not become
exercisable until they become vested. Options granted under clause (a) of
the first sentence of paragraph 4 of the Plan shall vest in the optionee
and thus become exercisable, in accordance with the following schedule
provided that the optionee has continuously served as a member of the Board
through such vesting date:
<TABLE>
<CAPTION>
CUMULATIVE NUMBER OF SHARES FOR WHICH
OPTION WILL BE EXERCISABLE DATE OF VESTING
------------------------------------- ---------------
<S> <C>
5,000 shares............................................ One year after date of grant
10,000 shares........................................... Two years after date of grant
15,000 shares........................................... Three years after date of grant
20,000 shares........................................... Four years after date of grant
</TABLE>
Options granted under clause (b) of the first sentence of Section 4 of the
Plan shall vest in the optionee and thus become exercisable, in accordance with
the following schedule provided that the optionee has continuously served as a
member of the Board through such vesting date:
<TABLE>
<CAPTION>
CUMULATIVE NUMBER OF SHARES FOR WHICH
OPTION WILL BE EXERCISABLE DATE OF VESTING
------------------------------------- ---------------
<S> <C>
750 shares.............................................. One year after date of grant
1,500 shares............................................ Two years after date of grant
2,250 shares............................................ Three years after date of grant
3,000 shares............................................ Four years after date of grant
</TABLE>
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The number of shares as to which options may be exercised shall be
cumulative, so that once the option shall become exercisable as to any shares it
shall continue to be exercisable as to said shares, until expiration or
termination of the option as provided in the Plan.
(b) In the event of a Change in Control (as hereinafter defined) of
the Company, the date on which all outstanding options and all installments
of such options may be exercised shall be accelerated to immediately prior
to the time of the Change in Control.
(c) For purposes of the Plan and any options granted hereunder, a
"Change in Control" means and includes each of the following:
(i) The acquisition by any individual, entity or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of the 1934 Act) (a "Person") of
beneficial ownership (within the meaning of Rule 13d-3 promulgated under
the 1934 Act) of 25% or more of the combined voting power of the then
outstanding voting securities of the Company entitled to vote generally
in the election of directors (the "Outstanding Company Voting
Securities"); provided, however, that for purposes of this subsection
(i), the following acquisitions shall not constitute a Change of
Control: (1) any acquisition by a Person who is on January 1, 1998 the
beneficial owner of 25% or more of the Outstanding Company Voting
Securities, (2) any acquisition directly from the Company, (3) any
acquisition by the Company, (4) any acquisition by any employee benefit
plan (or related trust) sponsored or maintained by the Company or any
corporation controlled by the Company, or (5) any acquisition by any
corporation pursuant to a transaction which complies with clauses (1),
(2) and (3) of subsection (iii) of this definition; or
(ii) Individuals who, as of January 1, 1998, constitute the Board
(the "Incumbent Board") cease for any reason to constitute at least a
majority of the Board; provided, however, that any individual becoming a
director subsequent to January 1, 1998 whose election, or nomination for
election by the Company's shareholders, was approved by a vote of at
least a majority of the directors then comprising the Incumbent Board
shall be considered as though such individual were a member of the
Incumbent Board, but excluding, for this purpose, any such individual
whose initial assumption of office occurs as a result of an actual or
threatened election contest with respect to the election or removal of
directors or other actual or threatened solicitation of proxies or
consents by or on behalf of a Person other than the Board; or
(iii) Consummation of a reorganization, merger or consolidation or
sale or other disposition of all or substantially all of the assets of
the Company (a "Business Combination"), in each case, unless, following
such Business Combination, (1) all or substantially all of the
individuals and entities who were the beneficial owners of the
Outstanding Company Voting Securities immediately prior to such Business
Combination beneficially own, directly or indirectly, more than 50% of
the combined voting power of the then outstanding voting securities
entitled to vote generally in the election of directors of the
corporation resulting from such Business Combination (including, without
limitation, a corporation which as a result of such transaction owns the
Company or all or substantially all of the Company's assets either
directly or through one or more subsidiaries) in substantially the same
proportions as their ownership, immediately prior to such Business
Combination of the Outstanding Company Voting Securities, and (2) no
Person (excluding any corporation resulting from such Business
Combination or any employee benefit plan (or related trust) of the
Company or such corporation resulting from such Business Combination)
beneficially owns, directly or indirectly, 25% or more of the combined
voting power of the then outstanding voting securities of such
corporation except to the extent that such ownership existed prior to
the Business Combination, and (3) at least a majority of the members of
the board of directors of the corporation resulting from such Business
Combination were members of the Incumbent Board at the time of the
execution of the initial agreement, or of the action of the Board,
providing for such Business Combination; or
(iv) Approval by the shareholders of the Company of a complete
liquidation or dissolution of the Company.
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(d) Legend on Certificates. The certificates representing such shares
shall carry such appropriate legend, and such written instructions shall be
given to the Company's transfer agent, as may be deemed necessary or
advisable by counsel to the Company in order to comply with the
requirements of the Securities Act of 1933 or any state securities laws.
(e) Transferability. Any option granted pursuant to the Plan shall be
transferable by the optionee to any of the following permitted transferees,
upon such reasonable terms and conditions as the Committee may establish:
(i) one or more of the following family members of the optionee: spouse,
former spouse, child (whether natural or adopted), stepchild, any other
lineal descendent of the optionee; (ii) a trust, partnership or other
entity established and existing for the sole benefit of, or under the sole
control of, one or more of the above family members of the optionee, or
(iii) any other transferee specifically approved by the Committee after
taking into account any state or federal tax, securities or other laws
applicable to transferable options.
8. Termination of Option Rights.
(a) In the event an optionee ceases to be a member of the Board for
any reason other than death, permanent disability or voluntary resignation
from the Board after age 55 ("Retirement"), any then unexercised portion of
options granted to such optionee shall, to the extent not then vested,
immediately terminate and become void; any portion of an option which is
then vested but has not been exercised at the time the optionee so ceases
to be a member of the Board may be exercised, to the extent it is then
vested, by the optionee within 90 days of the date the optionee ceased to
be a member of the Board; and all options shall terminate after such 90
days have expired.
(b) In the event an optionee ceases to be a member of the Board by
reason of Retirement, all vested installments of such optionee's options
shall terminate on their respective expiration dates pursuant to Section 6
of the Plan. All installments of such optionee's options not vested as of
the effective date of the optionee's retirement shall continue to vest in
accordance with Section 7 and thereafter shall terminate on their
respective expiration dates in accordance with Section 6.
(c) In the event that an optionee ceases to be a member of the Board
by reason of his or her death or permanent disability, any option granted
to such optionee shall be immediately and automatically accelerated and
become fully vested and all unexercised options shall be exercisable by the
optionee (or by the optionee's personal representative, heir or legatee, in
the event of death) until the scheduled expiration date of the option.
(d) For purposes of this Section 8, from and after the Distribution
Date (as defined in that certain Distribution Agreement, by and between the
Company and Marcam Solutions, Inc., dated as of July 17, 1997), the service
by the holder of an option that was outstanding on the Distribution Date as
a director of any of the Company, Marcam Solutions, Inc. or their
respective subsidiaries or successors shall be treated as the service by
such holder as a member of the Board of Directors of the Company.
9. Exercise of Option. Subject to the terms and conditions of the Plan and
the option agreements, an option granted hereunder shall, to the extent then
exercisable, be exercisable in whole or in part by giving written notice to the
Company by mail or in person addressed to Martin D. Avallone, General Counsel,
MAPICS, Inc., at its principal executive offices, stating the number of shares
with respect to which the option is being exercised; provided, however, that
there shall be no such exercise at any one time as to fewer than one hundred
(100) shares or all of the remaining shares then purchasable by the person or
persons exercising the option, if fewer than one hundred (100) shares. The
exercise price shall be payable in United States dollars upon the exercise of
the option and may be paid in cash, by check, or in shares of Common Stock
having a total fair market value on the date of exercise equal to the exercise
price; provided that if the shares surrendered in payment of the exercise price
were themselves acquired pursuant to the exercise of a stock option, such shares
shall have been held by the optionee for at least six months. The Committee may
permit optionees to use any cashless exercise methods that are permitted by law.
The Company's transfer agent shall, on behalf of the Company, prepare a
certificate or certificates representing such shares acquired pursuant to
exercise of the option, shall register the optionee (or the permitted transferee
exercising such option) as the
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owner of such shares on the books of the Company and shall cause the fully
executed certificate(s) representing such shares to be delivered to the optionee
(or the permitted transferee exercising such option) as soon as practicable
after payment of the option price in full. The holder of an option shall not
have any rights of a stockholder with respect to the shares covered by the
option, except to the extent that one or more certificates for such shares shall
be delivered to him or her upon the due exercise of the option.
10. Adjustments Upon Changes in Capitalization and Other Matters. Upon the
occurrence of any of the following events, an optionee's rights with respect to
options granted to him or her hereunder shall be adjusted as hereinafter
provided:
(a) Stock Dividends and Stock Splits. If the shares of Common Stock
shall be subdivided or combined into a greater or smaller number of shares
or if the Company shall issue any shares of Common Stock as a stock
dividend on its outstanding Common Stock, the number of shares of Common
Stock deliverable upon the exercise of options shall be appropriately
increased or decreased proportionately, and appropriate adjustments shall
be made in the purchase price per share to reflect such subdivision,
combination or stock dividend.
(b) Consolidations or Mergers. In the event of a Change in Control of
the Company, each option granted under the Plan which is outstanding but
unvested as of the effective date of the Change in Control shall become
exercisable pursuant to Section 7(b) hereof. In addition, the Committee
shall make appropriate provision in order to preserve but not exceed the
value of outstanding options, for the continuation of all outstanding
options by substituting on an equitable basis for the shares then subject
to such options the consideration payable with respect to the outstanding
shares of Common Stock in connection with the Change in Control.
(c) Recapitalization or Reorganization. If the Company is merged,
consolidated or reorganized into or with another corporation or other legal
person, or if the Company sells or otherwise transfers all or substantially
all of its assets to any other corporation or other legal person, pursuant
to which securities of the Company or of another corporation, cash or other
property are issued with respect to the outstanding shares of Common Stock,
and such transaction does not constitute a Change in Control, a holder of
an option upon exercising an option shall be entitled to receive for the
purchase price paid upon such exercise the securities, cash or other
property he would have received if he had exercised his option prior to
such merger, consolidation, reorganization or sale.
(d) Issuances of Securities. Except as expressly provided herein, no
issuance by the Company of shares of stock of any class, or securities
convertible into shares of stock of any class, shall affect, and no
adjustment by reason thereof shall be made with respect to, the number or
price of shares subject to options. No adjustments shall be made for
dividends paid in cash or in property other than securities of the Company.
(e) Adjustments. Upon the happening of any of the foregoing events,
the class and aggregate number of shares set forth in Sections 2, 4 and 7
of the Plan that are subject to options which previously have been or
subsequently may be granted under the Plan shall also be appropriately
adjusted to reflect such events. The Board shall determine the specific
adjustments to be made under this Section 10 and its determination shall be
conclusive.
11. Restrictions on Issuance of Shares. Notwithstanding the provisions of
Sections 4 and 9 of the Plan, the Company shall have no obligation to deliver
any certificate or certificates upon exercise of an option until one of the
following conditions shall be satisfied: (i) the shares with respect to which
the option has been exercised are at the time of the issue of such shares
effectively registered under applicable Federal and state securities laws as now
in force or hereafter amended, or (ii) counsel for the Company shall have given
an opinion that such shares are exempt from registration under Federal and state
securities laws as now in force or hereafter amended; and the Company has
compiled with all applicable laws and regulations with respect thereto,
including without limitation all regulations required by any stock exchange upon
which the Company's outstanding Common Stock is then listed.
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12. Representation of Optionee. If requested by the Company, the optionee
shall deliver to the Company written representations and warranties upon
exercise of the option that are necessary to show compliance with Federal and
state securities laws, including to the effect that a purchase of shares under
the option is made for investment and not with a view to their distribution (as
that term is used in the Securities Act of 1933, as amended, and the regulations
thereunder).
13. Option Agreement. Each option granted under the provisions of the Plan
shall be evidenced by a written agreement, contract, or other instrument or
document evidencing the option ("Option Agreement") in such form as may be
approved by the Board, which Option Agreement shall be duly executed and
delivered on behalf of the Company. The Option Agreement shall contain such
terms, provisions and conditions not inconsistent with the Plan as may be
determined by the Board.
14. Termination and Amendment of Plan. Options may no longer be granted
under the Plan after March 30, 2007, and the Plan shall terminate when all
options granted or to be granted hereunder are no longer outstanding. The Board
may at any time terminate the Plan or make such modification or amendment
thereof as it deems advisable; provided, however, that the Board may not,
without approval by the affirmative vote of the holders of a majority of the
shares of Common Stock present in person or by proxy and entitled to vote at the
meeting, (a) increase the maximum number of shares for which options may be
granted under the Plan or the number of shares for which an option may be
granted to any participating director hereunder, (b) change the provisions of
the Plan regarding the termination of the options or the times when they may be
exercised, (c) change the period during which any options may be granted or
remain outstanding or the date on which the Plan shall terminate, or (d) change
the designation of the class of persons eligible to receive options, or
otherwise change Section 4. Termination or any modification or amendment of the
Plan shall not, without consent of a participant, affect his or her rights under
an option previously granted to him or her.
15. Governing Law. The validity and construction of the Plan and the
instruments evidencing options shall be governed by the laws of the State of
Georgia, without giving effect to the principles of conflicts of law thereof.
Date Approved by Board of Directors:
April 30, 1991
Date Approved by Stockholders:
February 13, 1992
Dates Amended by Board of Directors:
November 6, 1991
November 14, 1995
September 18, 1996
November 13, 1997
Dates Amendments Approved by Stockholders:
February 13, 1996
February 12, 1997
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ANNEX II TO PROXY STATEMENT
MAPICS, INC.
1998 NON-EMPLOYEE DIRECTORS STOCK INCENTIVE PLAN
1. Purpose. The purpose of the MAPICS, Inc. 1998 Non-Employee Directors
Stock Incentive Plan is to attract, retain and compensate highly-qualified
individuals who are not employees of MAPICS, Inc. or any of its subsidiaries or
affiliates for service as members of the Board by providing them with an
ownership interest in the Common Stock of the Company. The Company intends that
the Plan will benefit the Company and its stockholders by allowing Non-Employee
Directors to have a personal financial stake in the Company through an ownership
interest in the Common Stock and will closely associate the interests of
Non-Employee Directors with that of the Company's stockholders.
2. Defined Terms. Unless the context clearly indicates otherwise, the
following terms shall have the following meanings:
"Board" means the Board of Directors of the Company.
"Company" means MAPICS, Inc.
"Committee" has the meaning assigned such term in Section 3.
"Common Stock" means the common stock, par value $0.01 per share, of the
Company.
"Deferral Period" has the meaning set forth in Section 6(d) of the Plan.
"Discretionary Fees" means the 50% of Fees that may be, but is not required
by Section 6(a) of the Plan to be, received in the form of Stock or Options.
"Distributions" has the meaning set forth in Section 6(d) of the Plan.
"Election Form" means a form approved by the Committee pursuant to which a
Non-Employee Director elects a method of payment of Fees and whether payment
will be deferred, as provided herein.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Fair Market Value", on any date, means (i) if the Common Stock is listed
on a securities exchange or is traded over the Nasdaq National Market, the
closing sales price on such exchange or over such system on such date or, in the
absence of reported sales on such date, the closing sales price on the
immediately preceding date on which sales were reported, or (ii) if the Common
Stock is not listed on a securities exchange or traded over the Nasdaq National
Market, the mean between the bid and offered prices as quoted by Nasdaq for such
date, provided that if it is determined that the fair market value is not
properly reflected by such Nasdaq quotations, Fair Market Value will be
determined by such other method as the Committee determines in good faith to be
reasonable.
"Fees" means the cash retainer and meeting fees payable by the Company to a
Non-Employee Director for service as a director (and, if applicable, as the
member of a committee of the Board) of the Company, as such amount may be
changed from time to time.
"Hardship" has the meaning set forth in Section 6(e) of the Plan.
"Non-Employee Director" means a director of the Company who is not an
employee of the Company or of any of its subsidiaries or affiliates.
"Option" means an option to purchase Shares granted under Section 7.
Options granted under the Plan are not incentive stock options within the
meaning of Section 422 of the Internal Revenue Code.
"Option Grant Date" means the date upon which an Option is granted to a
Non-Employee Director pursuant to Section 7.
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"Option Notice" means a written notice, agreement or certificate with a
Non-Employee Director from the Company evidencing an Option.
"Optionee" means a Non-Employee Director of the Company to whom an Option
has been granted or, in the event of such Non-Employee Director's death prior to
the expiration of an Option, such Non-Employee Director's estate or other
designated beneficiary.
"Options Election Period" means the period designated by the Committee each
year during which Non-Employee Directors may elect to receive Options as payment
of some or all of their Fees. The Options Election Period shall end on or before
September 30 of each year for the following Plan Year.
"Participant" means any Non-Employee Director who is participating in the
Plan.
"Permitted Transferee" of an Optionee means (i) one or more of the
following family members of the Optionee: spouse, former spouse, child (whether
natural or adopted), stepchild, any other lineal descendent of the Optionee;
(ii) a trust, partnership or other entity established and existing for the sole
benefit of, or under the sole control of, one or more of the above family
members of the Optionee, or (iii) any other transferee specifically approved by
the Committee after taking into account any state or federal tax, securities or
other laws applicable to transferable options.
"Plan" means the MAPICS, Inc. 1998 Non-Employee Directors Stock Incentive
Plan, as amended from time to time.
"Plan Year" means the twelve-month period ending on September 30 of each
year which, for purposes of the Plan, is the period for which Fees are earned.
"Quarterly Service Period" has the meaning set forth in Section 6(a) of the
Plan.
"Stock Grant Date" has the meaning set forth in Section 6(a) of the Plan.
"Rule 16b-3" means Rule 16b-3, as amended from time to time, of the
Securities and Exchange Commission as promulgated under the Exchange Act.
"Securities Act" means the Securities Act of 1933, as amended.
"Shares" means shares of Common Stock.
"Stock Equivalent Fees" means the 50% of Fees that is required by the Plan
to be received in the form of Shares or Options.
3. Administration. The Plan shall be administered by the Compensation
Committee of the Board of Directors (the "Committee"). Subject to the provisions
of the Plan, the Committee shall be authorized to interpret the Plan, to
establish, amend and rescind any rules and regulations relating to the Plan, and
to make all other determinations necessary or advisable for the administration
of the Plan; provided, however, that the Committee shall have no discretion with
respect to the eligibility or selection of Non-Employee Directors to receive
awards under the Plan, the number of Shares subject to any such awards or the
time at which any such awards are to be granted, and provided further, that the
Committee shall not have the authority to take any action or make any
determination that would materially increase the benefits accruing to
Participants under the Plan. The Committee's interpretation of the Plan, and all
actions taken and determinations made by the Committee pursuant to the powers
vested in it hereunder, shall be conclusive and binding upon all parties
concerned including the Company, its stockholders and persons granted awards
under the Plan. The Committee may appoint a plan administrator to carry out the
ministerial functions of the Plan, but the administrator shall have no other
authority or powers of the Committee. Notwithstanding the foregoing, the Board
shall exercise any and all rights, duties and powers of the Committee under the
Plan to the extent required by the applicable exemptive conditions of Rule
16b-3, as determined by the Board its sole discretion.
4. Shares Subject to Plan. The Shares issued under the Plan shall not
exceed in the aggregate 60,000 shares of Common Stock. Such Shares may be
authorized and unissued shares or treasury shares.
5. Participants. All active Non-Employee Directors shall be eligible to
participate in the Plan.
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6. Stock Awards.
(a) Grant Dates and Formula for Automatic Grants. Unless a
Non-Employee Director has elected pursuant to Section 7 to receive Options
as payment of his or her Stock Equivalent Fees (as defined below) for such
Plan Year or to defer receipt of Shares as provided in Section 6(d), Shares
of Common Stock shall be automatically granted on October 1, January 1,
April 1 and July 1 of each Plan Year (each such date is hereinafter
referred to as a "Stock Grant Date") to each eligible Non-Employee Director
commencing with the April 1, 1998 Stock Grant Date. The total number of
Shares included in each grant under this Section 6(a) shall be determined
by dividing fifty percent (50%) of the Fees (the "Stock Equivalent Fees")
earned by the Non-Employee Director during the three-month period
immediately preceding the Stock Grant Date (the "Quarterly Service Period")
by the Fair Market Value per Share on the Stock Grant Date. Fractions will
be rounded to the next highest Share. The Shares or rights to which a
Participant is entitled under this Section 6(a) shall be in lieu of the
payment of the Stock Equivalent Fees in cash or Options.
(b) Grant Dates and Requirements for Elective Grants. Unless a
Non-Employee Director has elected pursuant to Section 6(d) to defer receipt
of Shares, then, commencing with the April 1, 1998 Stock Grant Date, Shares
of Common Stock shall be automatically granted on each Stock Grant Date to
each eligible Non-Employee Director who elects to receive Shares under this
Plan as payment of his or her Discretionary Fees. Such election must be
made on an Election Form filed with the Committee or the plan administrator
prior to the commencement of the first Quarterly Service Period to which
such election applies (or before March 1, 1998 with respect to the April 1,
1998 Stock Grant Date) and such election shall remain in effect with
respect to all future Quarterly Service Periods until a subsequent Election
Form shall have been received by the Committee or the plan administrator
indicating a different election. Individuals who are nominated to become
Non-Employee Directors may make such election after such nomination but
prior to the time they are elected to the Board. The total number of Shares
included in each grant under this Section 6(b) shall be determined by
dividing 100% of the Discretionary Fees earned by the Non-Employee Director
during the Quarterly Service Period by the Fair Market Value per Share on
the Stock Grant Date. Fractions will be rounded to the next highest Share.
The Shares or rights to which a Participant is entitled under this Section
6(b) shall be in lieu of the payment of the Discretionary Fees in cash or
Options.
(c) Termination of Service During Quarterly Service Period. In the
event of termination of service on the Board by any Participant during a
Quarterly Service Period, such Participant's award for the Quarterly
Service Period shall be determined in accordance with Sections 6(a) and
6(b) of the Plan based upon the amount of Fees earned during such Quarterly
Service Period through the date of termination of service, provided, that
the grant date shall be the date of termination of service unless the grant
has been deferred pursuant to Section 6(d) below.
(d) Deferral of Receipt of Shares.
(i) Election to Defer. Each Participant will have the right to
elect, pursuant to a written Election Form delivered to the Committee or
the plan administrator prior to the commencement of each Plan Year
(i.e., each October 1 through September 30), to defer until after the
Participant's termination of service the grant of the Shares that would
otherwise be granted to the Participant during the next ensuing Plan
Year. Pursuant to this Election Form, the Participant will elect whether
all of the deferred grant will be (a) granted within 30 days after
termination of service or (b) granted in approximately equal annual
installments of Shares over a period of two to ten years (as the
Participant may elect) after the termination of service, each such
annual grant to be made within 30 days after the anniversary of the
termination of service. The deferral Election Form signed by the
Participant prior to the Plan Year will be irrevocable except in case of
Hardship (as defined in Section 6(e)) as determined in good faith by the
Board pursuant to Section 6(e). No Shares will be issued until the grant
date(s) so deferred (the "Deferred Grant Date") at which time the
Company agrees to issue the Shares to the Participant. The Participant
will have no rights as a stockholder with respect to the deferred rights
to Shares, and the rights to such Shares will be unsecured.
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(ii) Deferred Dividend Account. If any dividends or other rights or
distributions of any kind ("Distributions") are distributed to holders of
Common Stock during the period from the applicable Stock Grant Date until
the Deferred Grant Date (the "Deferral Period") but prior to the
Participant's termination of service, an amount equal to the cash value of
such Distributions on their distribution date, as such value is determined
by the Committee, will be credited to a deferred dividend account for the
Participant as follows: the account will be credited with the right to
receive Shares having a Fair Market Value as of the date of the
Distribution equal to the cash value of the Distribution. The Company will
issue Shares equal to the cumulative total of rights to Shares in such
account within 30 days after the Participant's termination of service.
If a Distribution is distributed to holders of Common Stock after the
Participant's termination of service but prior to the issuance in full of
the deferred Shares, an amount equal to the cash value of such
Distributions pertaining to any Shares still deferred shall be converted
into Shares equivalent in value to the Distribution (based on the Fair
Market Value as of the date of Distribution) and such Shares will be issued
to the Participant as soon as practical after the date of the Distribution.
No right or interest in the deferred dividend account shall be subject
to liability for the debts, contracts or engagements of the Participant or
shall be subject to disposition by transfer, alienation, anticipation,
pledge, encumbrance, assignment or any other means whether such disposition
be voluntary or involuntary or by operation of law by judgment, levy,
attachment, garnishment or any other legal or equitable proceedings
(including bankruptcy), and any attempted disposition thereof shall be null
and void and of no effect; provided, however, that nothing in this Section
6(d) shall prevent transfers by will or by the applicable laws of descent
and distribution. The Committee will have the right to adopt other
regulations and procedures to govern deferral of grants of Shares.
(e) Hardship. The Board may accelerate the distribution of all or a
portion of a Participant's deferred grants of Shares on account of his or
her Hardship, subject to the following requirements: (i) the value of such
accelerated distribution shall not exceed the amount necessary to satisfy
the Hardship, less the amount which can be satisfied from other resources
which are reasonably available to the Participant, (ii) the denial of the
Participant's request for a Hardship acceleration would result in severe
financial hardship to the Participant, and (iii) the Participant has not
received an accelerated distribution on account of Hardship within the
12-month period preceding the acceleration.
For purposes of this Plan, "Hardship" of a Participant, as determined
by the Board in its discretion on the basis of all relevant facts and
circumstances and in accordance with the following nondiscriminatory and
objective standards uniformly interpreted and consistently applied, shall
mean a severe financial hardship to the Participant resulting from a sudden
and unexpected illness or accident of the Participant or of his or her
dependent, loss of the Participant's property due to casualty, or other
extraordinary and unforeseeable circumstances arising as a result of events
beyond the control of the Participant. A financial need shall not
constitute a Hardship unless it is for at least $1,000,000 or the entire
value of the principal amount of the Participant's deferred grants.
7. Stock Option Awards.
(a) Election to Receive Options. A Non-Employee Director may elect to
defer (i) 100% of his or her Stock Equivalent Fees, (ii) 100% of his or her
Discretionary Fees, or (iii) 100% of his or her total Fees by conversion to
Options in accordance with this Section 7. A Non-Employee Director who
wishes to receive Fees for a Plan Year in the form of Options must
irrevocably elect to do so during the Options Election Period for such Plan
Year, by delivering a valid Election Form to the Committee or the plan
administrator. A Non-Employee Director's participation in Section 7 of the
Plan will be effective as of the first day of the Plan Year beginning after
the Committee or the plan administrator receives the Non-Employee
Director's Election Form.
(b) Irrevocable, Annual Election. Elections to receive Options as
payment of Fees are irrevocable and shall be valid only for one Plan Year.
New elections must be made for participation in Section 7 of the Plan for
subsequent Plan Years.
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(c) Time of Grant. Options shall be granted to each Non-Employee
Director who, during the applicable Options Election Period, filed with the
Committee or the plan administrator a written irrevocable election to
receive Options as payment of such Non-Employee Director's Stock Equivalent
Fees, Discretionary Fees, or both, payable in the following Plan Year. Such
Options will be granted on January 1, April 1, July 1 and October 1 for the
preceding Quarterly Service Periods during such Plan Year.
(d) Number of Options. The Committee or the plan administrator shall
cause to be calculated in the month of August of each year the
Black-Scholes value of an Option under the Plan to purchase one Share of
Common Stock. Such Black-Scholes value shall apply for purposes of this
Section 7(d) for all Options to be granted in the following Plan Year. The
number of Shares subject to an Option granted pursuant to this Section 7
shall be the number of whole Shares equal to:
(A times B) divided by C, where
A = the dollar amount of the Fees that the Non-Employee Director
elects shall be payable in Options; and
B = the quotient of 1 divided by the Black-Scholes value of an Option
for one Share (expressed as a percentage of the Fair Market Value of one
Share of Common Stock); and
C = the Fair Market Value per Share on the Option Grant Date.
In determining the number of Shares subject to an Option, any fraction
of a Share will be rounded to the next highest whole number of Shares.
For example:
Assume that a Non-Employee Director has elected to defer $5,000 of his
or her Fees, that the Fair Market Value per Share on the Option Grant Date
was $20, and that the most recently determined Black-Scholes value of an
Option was 50% of the Fair Market Value. The Non-Employee Director would be
granted 500 Options as payment of the $5,000 compensation. ($5,000 times
1/50%) divided by $20 FMV = 500 options granted.
(e) Exercise Price. The total price paid per Share under each Option
granted under this Section 7 shall be the Fair Market Value per Share on
the Option Grant Date.
(f) Exercise of Options. Each Option shall be fully exercisable upon
grant and will remain exercisable for 10 years from the Option Grant Date
regardless of whether the Optionee remains a director of the Company
throughout such term. An Option, or portion thereof, may be exercised in
whole or in part only with respect to whole Shares.
(g) Payment of Exercise Price. Shares shall be issued to the Optionee
(or his Permitted Transferee) pursuant to the exercise of an Option only
upon receipt by the Company from the Optionee (or his Permitted Transferee)
of payment in full of the exercise price. The exercise price shall be
payable in United States dollars upon the exercise of the Option and may be
paid in cash, by check, or in Shares having a total Fair Market Value on
the date of exercise equal to the exercise price; provided that if the
Shares surrendered in payment of the exercise price were themselves
acquired otherwise than on the open market, such Shares shall have been
held for at least six months. The Committee may permit the use of any
cashless exercise methods that are permitted by law.
(h) Option Notice. Each Option granted under the Plan shall be
evidenced by an Option Notice which shall be executed by an authorized
officer of the Company. Such Option Notice shall contain provisions
regarding (a) the number of Shares that may be issued upon exercise of the
Option, (b) the exercise price per Share of the Option and the means of
payment therefor, (c) the term of the Option, and (d) such other terms and
conditions not inconsistent with the Plan as may be determined from time to
time by the Committee.
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(i) Transferability of Options. No Option shall be assignable or
transferable by the Optionee other than by will or the laws of descent and
distribution or to a Permitted Transferee Any transfer to a Permitted
Transferee shall be subject to the following terms and conditions:
(i) An Option transferred to a Permitted Transferee shall not be
assignable or transferable by the Permitted Transferee other than by
will or the laws of descent and distribution.
(ii) Transferred Options shall continue to be subject to all the
terms and conditions of the Option as applicable to the original
Optionee (other than the ability to further transfer the Option).
(iii) The Optionee and the Permitted Transferee shall execute any
and all documents reasonably requested by the Committee or the plan
administrator, including without limitation documents (A) to confirm the
status of the transferee as a Permitted Transferee, (B) to satisfy any
requirements for an exemption for the transfer under applicable federal
and state securities laws, and (C) to evidence the transfer.
(iv) Shares acquired by a Permitted Transferee through exercise of
an Option have not been registered under the federal Securities Act or
any state securities act and may not be transferred, nor will any
assignee or transferee thereof be recognized as an owner of such Shares
by the Company for any purpose, unless a registration statement under
the Securities Act and any applicable state securities act with respect
to such Shares shall then be in effect or unless the availability of an
exemption from registration with respect to any proposed transfer or
disposition of such Shares shall be established to the satisfaction of
counsel for the Company.
8. Prorated Grants. If on any Quarterly Grant Date, shares of Common Stock
are not available under the Plan to grant to Non-Employee Directors the full
amount of a grant contemplated by the Plan, then each such director shall
receive an award equal to the number of shares of Common Stock then available
under the Plan divided by the number of Non-Employee Directors entitled to a
grant of shares or options on such date. Fractional shares shall be ignored and
not granted. Any shortfall resulting from such proration shall be paid in the
form of cash.
9. Withholding. Whenever the Company issues Shares under the Plan, the
Company shall have the right to withhold from sums due the recipient, or to
require the recipient to remit to the Company, any amount sufficient to satisfy
any federal, state and/or local withholding tax requirements prior to the
delivery of any certificate for such Shares.
10. Adjustments.
(a) Subject to Section 10(c) but notwithstanding any other term of
this Plan, in the event that the Committee determines that any Distribution
(whether in the form of cash, Common Stock, other securities, or other
property), recapitalization, reclassification, stock split, reverse stock
split, reorganization, merger, consolidation, split-up, spin-off,
combination, repurchase, or exchange of Common Stock or other securities of
the Company, issuance of warrants or other rights to purchase Common Stock
or other securities of the Company, or other similar corporate transaction
or event, in the Committee's sole discretion, affects the Common Stock such
that an adjustment is determined by the Committee to be appropriate in
order to prevent dilution or enlargement of the benefits or potential
benefits intended to be made available under the Plan or with respect to an
award or awards hereunder, then the Committee shall, in such manner as it
may deem equitable, adjust the number and type of Shares (or other
securities or property) which may be granted under the Plan (including, but
not limited to, adjustments of the maximum number and kind of securities
which may be issued); provided, however, that to the extent required by the
applicable exemptive conditions of Rule 16b-3, any such adjustment shall be
subject to approval by the Board.
(b) Subject to Section 10(c) but notwithstanding any other term of
this Plan, in the event of any corporate transaction or event described in
paragraph (a) which results in Shares being exchanged for or converted into
cash, securities or other property (including securities of another
corporation), the Committee will have the right to terminate this Plan as
of the date of the transaction or event, in which
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case all stock grants deferred under Section 6 shall become the right to
receive such cash, securities or other property, and there shall be
substituted on an equitable basis for each share of Common Stock then
subject to an Option granted pursuant to Section 7 the consideration
payable with respect to the outstanding shares of Common Stock in
connection with such corporate transaction or event, all without any change
in the aggregate purchase price for the Shares then subject to the Option
(c) The number of Shares finally granted under this Plan shall always
be rounded to the next highest whole Share.
(d) Any decision of the Committee pursuant to the terms of this
Section 10 shall be final, binding and conclusive upon the Participants,
the Company and all other interested parties; provided, however, that to
the extent required by the applicable exemptive conditions of Rule 16b-3,
any such decision shall be subject to approval by the Board.
11. Amendment. The Committee may terminate or suspend the Plan at any
time, without stockholder approval. The Committee may amend the Plan at any time
and for any reason without stockholder approval; provided, however, that the
Committee may condition any amendment on the approval of stockholders of the
Company if such approval is necessary or deemed advisable with respect to tax,
securities or other applicable laws, policies or regulations. No termination,
modification or amendment of the Plan may, without the consent of a Participant,
adversely affect a Participant's rights under an award granted prior thereto.
12. Indemnification. Each person who is or has been a member of the
Committee or who otherwise participates in the administration or operation of
this Plan shall be indemnified by the Company against, and held harmless from,
any loss, cost, liability or expense that may be imposed upon or incurred by him
or her in connection with or resulting from any claim, action, suit or
proceeding in which such person may be involved by reason of any action taken or
failure to act under the Plan and shall be fully reimbursed by the Company for
any and all amounts paid by such person in satisfaction of judgment against him
or her in any such action, suit or proceeding, provided he or she will give the
Company an opportunity, by written notice to the Committee, to defend the same
at the Company's own expense before he or she undertakes to defend it on his or
her own behalf. This right of indemnification shall not be exclusive of any
other rights of indemnification.
The Committee and the Board may rely upon any information furnished by the
Company, its public accountants and other experts. No individual will have
personal liability by reason of anything done or omitted to be done by the
Company, the Committee or the Board in connection with the Plan.
13. Duration of the Plan. The Plan shall remain in effect until February
2, 2008, unless terminated earlier by the Committee.
14. Expenses of the Plan. The expenses of administering the Plan shall be
borne by the Company.
15. Effective Date. The Plan was originally adopted by the Board on
November 13, 1997, and became effective upon the approval thereof by the
stockholders of the Company on February 3, 1998 (the "Effective Date").
MAPICS, Inc.
By:
--------------------------------------
Its:
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ANNEX III TO PROXY STATEMENT
MAPICS, INC.
1998 LONG-TERM INCENTIVE PLAN
ARTICLE I
PURPOSE
1.1 General. The purpose of the MAPICS, Inc. 1998 Long-Term Incentive Plan
(the "Plan") is to promote the success, and enhance the value, of MAPICS, Inc.
(the "Corporation"), by linking the personal interests of its employees,
officers, consultants and directors to those of Corporation stockholders and by
providing such persons with an incentive for outstanding performance. The Plan
is further intended to provide flexibility to the Corporation in its ability to
motivate, attract, and retain the services of employees, officers, consultants
and directors upon whose judgment, interest, and special effort the successful
conduct of the Corporation's operation is largely dependent. Accordingly, the
Plan permits the grant of incentive awards from time to time to selected
employees, officers, consultants and directors.
ARTICLE II
EFFECTIVE DATE
2.1 Effective Date. The Plan shall be effective as of the date upon which
it shall be approved by the Board. However, the Plan shall be submitted to the
stockholders of the Corporation for approval within 12 months of the Board's
approval thereof. No Incentive Stock Options granted under the Plan may be
exercised prior to approval of the Plan by the stockholders and if the
stockholders fail to approve the Plan within 12 months of the Board's approval
thereof, any Incentive Stock Options previously granted hereunder shall be
automatically converted to Non-Qualified Stock Options without any further act.
In the discretion of the Committee, Awards may be made to Covered Employees
which are intended to constitute qualified performance-based compensation under
Code Section 162(m). Any such Awards shall be contingent upon the stockholders
having approved the Plan. If the Plan is approved by the stockholders, no
further awards will be granted under the Marcam Corporation 1994 Stock Plan.
ARTICLE III
DEFINITIONS
3.1 Definitions. When a word or phrase appears in this Plan with the
initial letter capitalized, and the word or phrase does not commence a sentence,
the word or phrase shall generally be given the meaning ascribed to it in this
Section or in Section 1.1 unless a clearly different meaning is required by the
context. The following words and phrases shall have the following meanings:
(a) "Award" means any Option, Stock Appreciation Right, Restricted
Stock Award, Performance Unit Award, Dividend Equivalent Award, or Other
Stock-Based Award, or any other right or interest relating to Stock or
cash, granted to a Participant under the Plan.
(b) "Award Agreement" means any written agreement, contract, or other
instrument or document evidencing an Award.
(c) "Board" means the Board of Directors of the Corporation.
(d) "Change in Control" means and includes each of the following:
(1) The acquisition by any individual, entity or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of the 1934 Act) (a "Person") of
beneficial ownership (within the meaning of Rule 13d-3 promulgated under
the 1934 Act) of 25% or more of the combined voting power of the then
outstanding voting securities of the Company entitled to vote generally
in the
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election of directors (the "Outstanding Company Voting Securities");
provided, however, that for purposes of this subsection (1), the
following acquisitions shall not constitute a Change of Control: (i) any
acquisition by a Person who is on the Effective Date the beneficial
owner of 25% or more of the Outstanding Company Voting Securities, (ii)
any acquisition directly from the Company, (iii) any acquisition by the
Company, (iv) any acquisition by any employee benefit plan (or related
trust) sponsored or maintained by the Company or any corporation
controlled by the Company, or (v) any acquisition by any corporation
pursuant to a transaction which complies with clauses (i), (ii) and
(iii) of subsection (3) of this definition; or
(2) Individuals who, as of the Effective Date, constitute the Board
(the "Incumbent Board") cease for any reason to constitute at least a
majority of the Board; provided, however, that any individual becoming a
director subsequent to the Effective Date whose election, or nomination
for election by the Company's stockholders, was approved by a vote of at
least a majority of the directors then comprising the Incumbent Board
shall be considered as though such individual were a member of the
Incumbent Board, but excluding, for this purpose, any such individual
whose initial assumption of office occurs as a result of an actual or
threatened election contest with respect to the election or removal of
directors or other actual or threatened solicitation of proxies or
consents by or on behalf of a Person other than the Board; or
(3) Consummation of a reorganization, merger or consolidation or
sale or other disposition of all or substantially all of the assets of
the Company (a "Business Combination"), in each case, unless, following
such Business Combination, (i) all or substantially all of the
individuals and entities who were the beneficial owners of the
Outstanding Company Voting Securities immediately prior to such Business
Combination beneficially own, directly or indirectly, more than 50% of
the combined voting power of the then outstanding voting securities
entitled to vote generally in the election of directors of the
corporation resulting from such Business Combination (including, without
limitation, a corporation which as a result of such transaction owns the
Company or all or substantially all of the Company's assets either
directly or through one or more subsidiaries) in substantially the same
proportions as their ownership, immediately prior to such Business
Combination of the Outstanding Company Voting Securities, and (ii) no
Person (excluding any corporation resulting from such Business
Combination or any employee benefit plan (or related trust) of the
Company or such corporation resulting from such Business Combination)
beneficially owns, directly or indirectly, 25% or more of the combined
voting power of the then outstanding voting securities of such
corporation except to the extent that such ownership existed prior to
the Business Combination, and (iii) at least a majority of the members
of the board of directors of the corporation resulting from such
Business Combination were members of the Incumbent Board at the time of
the execution of the initial agreement, or of the action of the Board,
providing for such Business Combination; or
(4) Approval by the stockholders of the Company of a complete
liquidation or dissolution of the Company.
(e) "Code" means the Internal Revenue Code of 1986, as amended from
time to time.
(f) "Committee" means the committee of the Board described in Article
4.
(g) "Corporation" means MAPICS, Inc., a Massachusetts corporation.
(h) "Covered Employee" means a covered employee as defined in Code
Section 162(m)(3).
(i) "Disability" shall mean any illness or other physical or mental
condition of a Participant that renders the Participant incapable of
performing his customary and usual duties for the Corporation, or any
medically determinable illness or other physical or mental condition
resulting from a bodily injury, disease or mental disorder which, in the
judgment of the Committee, is permanent and continuous in nature. The
Committee may require such medical or other evidence as it deems necessary
to judge the nature and permanency of the Participant's condition.
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(j) "Dividend Equivalent" means a right granted to a Participant under
Article 11.
(k) "Effective Date" has the meaning assigned such term in Section
2.1.
(l) "Fair Market Value", on any date, means (i) if the Stock is listed
on a securities exchange or is traded over the Nasdaq National Market, the
closing sales price on such exchange or over such system on such date or,
in the absence of reported sales on such date, the closing sales price on
the immediately preceding date on which sales were reported, or (ii) if the
Stock is not listed on a securities exchange or traded over the Nasdaq
National Market, the mean between the bid and offered prices as quoted by
Nasdaq for such date, provided that if it is determined that the fair
market value is not properly reflected by such Nasdaq quotations, Fair
Market Value will be determined by such other method as the Committee
determines in good faith to be reasonable.
(m) "Incentive Stock Option" means an Option that is intended to meet
the requirements of Section 422 of the Code or any successor provision
thereto.
(n) "Non-Qualified Stock Option" means an Option that is not an
Incentive Stock Option.
(o) "Option" means a right granted to a Participant under Article 7 of
the Plan to purchase Stock at a specified price during specified time
periods. An Option may be either an Incentive Stock Option or a
Non-Qualified Stock Option.
(p) "Other Stock-Based Award" means a right, granted to a Participant
under Article 12, that relates to or is valued by reference to Stock or
other Awards relating to Stock.
(q) "Parent" means a corporation which owns or beneficially owns a
majority of the outstanding voting stock or voting power of the
Corporation. For Incentive Stock Options, the term shall have the same
meaning as set forth in Code Section 424(e).
(r) "Participant" means a person who, as an employee, officer,
consultant or director of the Corporation or any Subsidiary, has been
granted an Award under the Plan.
(s) "Performance Unit" means a right granted to a Participant under
Article 9, to receive cash, Stock, or other Awards, the payment of which is
contingent upon achieving certain performance goals established by the
Committee.
(t) "Plan" means the MAPICS, Inc. 1998 Long-Term Incentive Plan, as
amended from time to time.
(u) "Restricted Stock Award" means Stock granted to a Participant
under Article 10 that is subject to certain restrictions and to risk of
forfeiture.
(v) "Retirement" means a Participant's voluntary termination of
employment with the Corporation, Parent or Subsidiary after attaining age
55.
(w) "Stock" means the $.01 par value common stock of the Corporation
and such other securities of the Corporation as may be substituted for
Stock pursuant to Article 14.
(x) "Stock Appreciation Right" or "SAR" means a right granted to a
Participant under Article 8 to receive a payment equal to the difference
between the Fair Market Value of a share of Stock as of the date of
exercise of the SAR over the grant price of the SAR, all as determined
pursuant to Article 8.
(y) "Subsidiary" means any corporation, limited liability company,
partnership or other entity of which a majority of the outstanding voting
stock or voting power is beneficially owned directly or indirectly by the
Corporation. For Incentive Stock Options, the term shall have the meaning
set forth in Code Section 424(f).
(z) "1933 Act" means the Securities Act of 1933, as amended from time
to time.
(z) "1934 Act" means the Securities Exchange Act of 1934, as amended
from time to time.
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ARTICLE IV
ADMINISTRATION
4.1 Committee. The Plan shall be administered by the Compensation
Committee of the Board or, at the discretion of the Board from time to time, by
the Board. The Committee shall consist of two or more members of the Board.
During any time that the Board is acting as administrator of the Plan, it shall
have all the powers of the Committee hereunder, and any reference herein to the
Committee (other than in this Section 4.1) shall include the Board.
4.2 Action By the Committee. For purposes of administering the Plan, the
following rules of procedure shall govern the Committee. A majority of the
Committee shall constitute a quorum. The acts of a majority of the members
present at any meeting at which a quorum is present, and acts approved
unanimously in writing by the members of the Committee in lieu of a meeting,
shall be deemed the acts of the Committee. Each member of the Committee is
entitled to, in good faith, rely or act upon any report or other information
furnished to that member by any officer or other employee of the Corporation or
any Parent or Subsidiary, the Corporation's independent certified public
accountants, or any executive compensation consultant or other professional
retained by the Corporation to assist in the administration of the Plan.
4.3 Authority of Committee. The Committee has the exclusive power,
authority and discretion to:
(a) Designate Participants;
(b) Determine the type or types of Awards to be granted to each
Participant;
(c) Determine the number of Awards to be granted and the number of
shares of Stock to which an Award will relate;
(d) Determine the terms and conditions of any Award granted under the
Plan, including but not limited to, the exercise price, grant price, or
purchase price, any restrictions or limitations on the Award, any schedule
for lapse of forfeiture restrictions or restrictions on the exercisability
of an Award, and accelerations or waivers thereof, based in each case on
such considerations as the Committee in its sole discretion determines;
(e) Accelerate the vesting or lapse of restrictions of any outstanding
Award, based in each case on such considerations as the Committee in its
sole discretion determines;
(f) Determine whether, to what extent, and under what circumstances an
Award may be settled in, or the exercise price of an Award may be paid in,
cash, Stock, other Awards, or other property, or an Award may be canceled,
forfeited, or surrendered;
(g) Prescribe the form of each Award Agreement, which need not be
identical for each Participant;
(h) Decide all other matters that must be determined in connection
with an Award;
(i) Establish, adopt or revise any rules and regulations as it may
deem necessary or advisable to administer the Plan;
(j) Make all other decisions and determinations that may be required
under the Plan or as the Committee deems necessary or advisable to
administer the Plan; and
(k) Amend the Plan or any Award Agreement as provided herein.
4.4. Decisions Binding. The Committee's interpretation of the Plan, any
Awards granted under the Plan, any Award Agreement and all decisions and
determinations by the Committee with respect to the Plan are final, binding, and
conclusive on all parties.
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ARTICLE V
SHARES SUBJECT TO THE PLAN
5.1. Number of Shares. Subject to adjustment as provided in Section 14.1,
the aggregate number of shares of Stock reserved and available for Awards or
which may be used to provide a basis of measurement for or to determine the
value of an Award (such as with a Stock Appreciation Right or Performance Unit
Award) shall be 1,000,000, of which not more than 20% may be granted as Awards
of Restricted Stock or unrestricted Stock Awards.
5.2. Lapsed Awards. To the extent that an Award is canceled, terminates,
expires or lapses for any reason, any shares of Stock subject to the Award will
again be available for the grant of an Award under the Plan and shares subject
to SARs or other Awards settled in cash will be available for the grant of an
Award under the Plan.
5.3. Stock Distributed. Any Stock distributed pursuant to an Award may
consist, in whole or in part, of authorized and unissued Stock, treasury Stock
or Stock purchased on the open market.
5.4. Limitation on Awards. Notwithstanding any provision in the Plan to
the contrary, the maximum number of shares of Stock with respect to one or more
Options and/or SARs that may be granted during any one calendar year under the
Plan to any one Covered Employee shall be 300,000. The maximum fair market value
(measured as of the date of grant) of any Awards other than Options and SARs
that may be received by a Covered Employee (less any consideration paid by the
Participant for such Award) during any one calendar year under the Plan shall be
$2,000,000.
ARTICLE VI
ELIGIBILITY
6.1. General. Awards may be granted only to individuals who are employees,
officers, consultants or directors of the Corporation or a Parent or Subsidiary.
ARTICLE VII
STOCK OPTIONS
7.1. General. The Committee is authorized to grant Options to Participants
on the following terms and conditions:
(a) Exercise Price. The exercise price per share of Stock under an
Option shall be determined by the Committee, provided that the exercise
price for any Option shall not be less than the Fair Market Value as of the
date of the grant.
(b) Time and Conditions of Exercise. The Committee shall determine
the time or times at which an Option may be exercised in whole or in part.
The Committee also shall determine the performance or other conditions, if
any, that must be satisfied before all or part of an Option may be
exercised. The Committee may waive any exercise provisions at any time in
whole or in part based upon factors as the Committee may determine in its
sole discretion so that the Option becomes exerciseable at an earlier date.
(c) Payment. The Committee shall determine the methods by which the
exercise price of an Option may be paid, the form of payment, including,
without limitation, cash, shares of Stock, or other property (including
"cashless exercise" arrangements), and the methods by which shares of Stock
shall be delivered or deemed to be delivered to Participants; provided that
if shares of Stock surrendered in payment of the exercise price were
themselves acquired otherwise than on the open market, such shares shall
have been held by the Participant for at least six months.
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(d) Evidence of Grant. All Options shall be evidenced by a written
Award Agreement between the Corporation and the Participant. The Award
Agreement shall include such provisions, not inconsistent with the Plan, as
may be specified by the Committee.
(e) Additional Options Upon Exercise. The Committee may, in its sole
discretion, provide in an Award Agreement, or in an amendment thereto, for
the automatic grant of a new Option to any Participant who delivers shares
of Stock as full or partial payment of the exercise price of the original
Option. Any new Option granted in such a case (i) shall be for the same
number of shares of Stock as the Participant delivered in exercising the
original Option, (ii) shall have an exercise price of 100% of the Fair
Market Value of the surrendered shares of Stock on the date of exercise of
the original Option (the grant date for the new Option), and (iii) shall
have a term equal to the unexpired term of the original Option.
7.2. Incentive Stock Options. The terms of any Incentive Stock Options
granted under the Plan must comply with the following additional rules:
(a) Exercise Price. The exercise price per share of Stock shall be
set by the Committee, provided that the exercise price for any Incentive
Stock Option shall not be less than the Fair Market Value as of the date of
the grant.
(b) Exercise. In no event may any Incentive Stock Option be
exercisable for more than ten years from the date of its grant.
(c) Lapse of Option. An Incentive Stock Option shall lapse under the
earliest of the following circumstances; provided, however, that the
Committee may, prior to the lapse of the Incentive Stock Option under the
circumstances described in paragraphs (3), (4) and (5) below, provide in
writing that the Option will extend until a later date, but if Option is
exercised after the dates specified in paragraphs (3), (4) and (5) below,
it will automatically become a Non-Qualified Stock Option:
(1) The Incentive Stock Option shall lapse as of the option
expiration date set forth in the Award Agreement.
(2) The Incentive Stock Option shall lapse ten years after it is
granted, unless an earlier time is set in the Award Agreement.
(3) If the Participant terminates employment for any reason other
than as provided in paragraph (4) or (5) below, the Incentive Stock
Option shall lapse, unless it is previously exercised, three months
after the Participant's termination of employment; provided, however,
that if the Participant's employment is terminated by the Company for
cause or by the Participant without the consent of the Company, the
Incentive Stock Option shall (to the extent not previously exercised)
lapse immediately.
(4) If the Participant terminates employment by reason of his
Disability, the Incentive Stock Option shall lapse, unless it is
previously exercised, one year after the Participant's termination of
employment.
(5) If the Participant dies while employed, or during the
three-month period described in paragraph (3) or during the one-year
period described in paragraph (4) and before the Option otherwise
lapses, the Option shall lapse one year after the Participant's death.
Upon the Participant's death, any exercisable Incentive Stock Options
may be exercised by the Participant's beneficiary, determined in
accordance with Section 13.6.
Unless the exercisability of the Incentive Stock Option is accelerated
as provided in Article 13, if a Participant exercises an Option after
termination of employment, the Option may be exercised only with respect to
the shares that were otherwise vested on the Participant's termination of
employment.
(d) Individual Dollar Limitation. The aggregate Fair Market Value
(determined as of the time an Award is made) of all shares of Stock with
respect to which Incentive Stock Options are first exercisable by a
Participant in any calendar year may not exceed $100,000.00.
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(e) Ten Percent Owners. No Incentive Stock Option shall be granted to
any individual who, at the date of grant, owns stock possessing more than
ten percent of the total combined voting power of all classes of stock of
the Corporation or any Parent or Subsidiary unless the exercise price per
share of such Option is at least 110% of the Fair Market Value per share of
Stock at the date of grant and the Option expires no later than five years
after the date of grant.
(f) Expiration of Incentive Stock Options. No Award of an Incentive
Stock Option may be made pursuant to the Plan after the day immediately
prior to the tenth anniversary of the Effective Date.
(g) Right to Exercise. During a Participant's lifetime, an Incentive
Stock Option may be exercised only by the Participant or, in the case of
the Participant's Disability, by the Participant's guardian or legal
representative.
(h) Directors. The Committee may not grant an Incentive Stock Option
to a non-employee director. The Committee may grant an Incentive Stock
Option to a director who is also an employee of the Corporation or Parent
or Subsidiary but only in that individual's position as an employee and not
as a director.
ARTICLE VIII
STOCK APPRECIATION RIGHTS
8.1. Grant of Sars. The Committee is authorized to grant SARs to
Participants on the following terms and conditions:
(a) Right to Payment. Upon the exercise of a Stock Appreciation
Right, the Participant to whom it is granted has the right to receive the
excess, if any, of:
(1) The Fair Market Value of one share of Stock on the date of
exercise; over
(2) The grant price of the Stock Appreciation Right as determined
by the Committee, which shall not be less than the Fair Market Value of
one share of Stock on the date of grant.
(b) Other Terms. All awards of Stock Appreciation Rights shall be
evidenced by an Award Agreement. The terms, methods of exercise, methods of
settlement, form of consideration payable in settlement, and any other
terms and conditions of any Stock Appreciation Right shall be determined by
the Committee at the time of the grant of the Award and shall be reflected
in the Award Agreement.
ARTICLE IX
PERFORMANCE UNITS
9.1. Grant of Performance Units. The Committee is authorized to grant
Performance Units to Participants on such terms and conditions as may be
selected by the Committee. The Committee shall have the complete discretion to
determine the number of Performance Units granted to each Participant. All
Awards of Performance Units shall be evidenced by an Award Agreement.
9.2. Right to Payment. A grant of Performance Units gives the Participant
rights, valued as determined by the Committee, and payable to, or exercisable
by, the Participant to whom the Performance Units are granted, in whole or in
part, as the Committee shall establish at grant or thereafter. The Committee
shall set performance goals and other terms or conditions to payment of the
Performance Units in its discretion which, depending on the extent to which they
are met, will determine the number and value of Performance Units that will be
paid to the Participant.
9.3. Other Terms. Performance Units may be payable in cash, Stock, or
other property, and have such other terms and conditions as determined by the
Committee and reflected in the Award Agreement.
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ARTICLE X
RESTRICTED STOCK AWARDS
10.1. Grant of Restricted Stock. The Committee is authorized to make
Awards of Restricted Stock to Participants in such amounts and subject to such
terms and conditions as may be selected by the Committee. All Awards of
Restricted Stock shall be evidenced by a Restricted Stock Award Agreement.
10.2. Issuance and Restrictions. Restricted Stock shall be subject to such
restrictions on transferability and other restrictions as the Committee may
impose (including, without limitation, limitations on the right to vote
Restricted Stock or the right to receive dividends on the Restricted Stock).
These restrictions may lapse separately or in combination at such times, under
such circumstances, in such installments, upon the satisfaction of performance
goals or otherwise, as the Committee determines at the time of the grant of the
Award or thereafter.
10.3. Forfeiture. Except as otherwise determined by the Committee at the
time of the grant of the Award or thereafter, upon termination of employment
during the applicable restriction period or upon failure to satisfy a
performance goal during the applicable restriction period, Restricted Stock that
is at that time subject to restrictions shall be forfeited and reacquired by the
Corporation; provided, however, that the Committee may provide in any Award
Agreement that restrictions or forfeiture conditions relating to Restricted
Stock will be waived in whole or in part in the event of terminations resulting
from specified causes, and the Committee may in other cases waive in whole or in
part restrictions or forfeiture conditions relating to Restricted Stock.
10.4. Certificates For Restricted Stock. Restricted Stock granted under
the Plan may be evidenced in such manner as the Committee shall determine. If
certificates representing shares of Restricted Stock are registered in the name
of the Participant, certificates must bear an appropriate legend referring to
the terms, conditions, and restrictions applicable to such Restricted Stock.
ARTICLE XI
DIVIDEND EQUIVALENTS
11.1 Grant of Dividend Equivalents. The Committee is authorized to grant
Dividend Equivalents to Participants subject to such terms and conditions as may
be selected by the Committee. Dividend Equivalents shall entitle the Participant
to receive payments equal to dividends with respect to all or a portion of the
number of shares of Stock subject to an Award, as determined by the Committee.
The Committee may provide that Dividend Equivalents be paid or distributed when
accrued or be deemed to have been reinvested in additional shares of Stock, or
otherwise reinvested.
ARTICLE XII
OTHER STOCK-BASED AWARDS
12.1. Grant of Other Stock-Based Awards. The Committee is authorized,
subject to limitations under applicable law, to grant to Participants such other
Awards that are payable in, valued in whole or in part by reference to, or
otherwise based on or related to shares of Stock, as deemed by the Committee to
be consistent with the purposes of the Plan, including without limitation shares
of Stock awarded purely as a "bonus" and not subject to any restrictions or
conditions, convertible or exchangeable debt securities, other rights
convertible or exchangeable into shares of Stock, and Awards valued by reference
to book value of shares of Stock or the value of securities of or the
performance of specified Parents or Subsidiaries. The Committee shall determine
the terms and conditions of such Awards.
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ARTICLE XIII
PROVISIONS APPLICABLE TO AWARDS
13.1. Stand-Alone, Tandem, and Substitute Awards. Awards granted under the
Plan may, in the discretion of the Committee, be granted either alone or in
addition to, in tandem with, or in substitution for, any other Award granted
under the Plan. If an Award is granted in substitution for another Award, the
Committee may require the surrender of such other Award in consideration of the
grant of the new Award. Awards granted in addition to or in tandem with other
Awards may be granted either at the same time as or at a different time from the
grant of such other Awards.
13.2. Exchange Provisions. The Committee may at any time offer to exchange
or buy out any previously granted Award for a payment in cash, Stock, or another
Award (subject to Section 14.1), based on the terms and conditions the Committee
determines and communicates to the Participant at the time the offer is made.
13.3. Term of Award. The term of each Award shall be for the period as
determined by the Committee, provided that in no event shall the term of any
Incentive Stock Option or a Stock Appreciation Right granted in tandem with the
Incentive Stock Option exceed a period of ten years from the date of its grant
(or, if Section 7.2(e) applies, five years from the date of its grant).
13.4. Form of Payment for Awards. Subject to the terms of the Plan and any
applicable law or Award Agreement, payments or transfers to be made by the
Corporation or a Parent or Subsidiary on the grant or exercise of an Award may
be made in such form as the Committee determines at or after the time of grant,
including without limitation, cash, Stock, other Awards, or other property, or
any combination, and may be made in a single payment or transfer, in
installments, or on a deferred basis, in each case determined in accordance with
rules adopted by, and at the discretion of, the Committee.
13.5. Limits on Transfer. No right or interest of a Participant in any
unexercised or restricted Award may be pledged, encumbered, or hypothecated to
or in favor of any party other than the Corporation or a Parent or Subsidiary,
or shall be subject to any lien, obligation, or liability of such Participant to
any other party other than the Corporation or a Parent or Subsidiary. No
unexercised or restricted Award shall be assignable or transferable by a
Participant other than by will or the laws of descent and distribution or,
except in the case of an Incentive Stock Option, pursuant to a domestic
relations order that would satisfy Section 414(p)(1)(A) of the Code if such
Section applied to an Award under the Plan; provided, however, that the
Committee may (but need not) permit other transfers where the Committee
concludes that such transferability (i) does not result in accelerated taxation,
(ii) does not cause any Option intended to be an incentive stock option to fail
to be described in Code Section 422(b), and (iii) is otherwise appropriate and
desirable, taking into account any factors deemed relevant, including without
limitation, any state or federal tax or securities laws or regulations
applicable to transferable Awards.
13.6 Beneficiaries. Notwithstanding Section 13.5, a Participant may, in
the manner determined by the Committee, designate a beneficiary to exercise the
rights of the Participant and to receive any distribution with respect to any
Award upon the Participant's death. A beneficiary, legal guardian, legal
representative, or other person claiming any rights under the Plan is subject to
all terms and conditions of the Plan and any Award Agreement applicable to the
Participant, except to the extent the Plan and Award Agreement otherwise
provide, and to any additional restrictions deemed necessary or appropriate by
the Committee. If no beneficiary has been designated or survives the
Participant, payment shall be made to the Participant's estate. Subject to the
foregoing, a beneficiary designation may be changed or revoked by a Participant
at any time provided the change or revocation is filed with the Committee.
13.7. Stock Certificates. All Stock certificates delivered under the Plan
are subject to any stop-transfer orders and other restrictions as the Committee
deems necessary or advisable to comply with federal or state securities laws,
rules and regulations and the rules of any national securities exchange or
automated quotation system on which the Stock is listed, quoted, or traded. The
Committee may place legends on any Stock certificate to reference restrictions
applicable to the Stock.
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13.8 Acceleration Upon Death or Disability. Notwithstanding any other
provision in the Plan or any Participant's Award Agreement to the contrary, upon
the Participant's death or Disability during his employment or service as a
consultant or director, all outstanding Options, Stock Appreciation Rights, and
other Awards in the nature of rights that may be exercised shall become fully
exercisable and all restrictions on outstanding Awards shall lapse. Any Option
or Stock Appreciation Rights Awards shall thereafter continue or lapse in
accordance with the other provisions of the Plan and the Award Agreement. To the
extent that this provision causes Incentive Stock Options to exceed the dollar
limitation set forth in Section 7.2(d), the excess Options shall be deemed to be
Non-Qualified Stock Options.
13.9. Acceleration Upon a Change in Control. Except as otherwise provided
in the Award Agreement, upon the occurrence of a Change in Control, all
outstanding Options, Stock Appreciation Rights, and other Awards in the nature
of rights that may be exercised shall become fully exercisable and all
restrictions on outstanding Awards shall lapse; provided, however that such
acceleration will not occur if, in the opinion of the Company's accountants,
such acceleration would preclude the use of "pooling of interest" accounting
treatment for a Change in Control transaction that (a) would otherwise qualify
for such accounting treatment, and (b) is contingent upon qualifying for such
accounting treatment. To the extent that this provision causes Incentive Stock
Options to exceed the dollar limitation set forth in Section 7.2(d), the excess
Options shall be deemed to be Non-Qualified Stock Options.
13.10. Acceleration Upon Certain Events Not Constituting a Change in
Control. In the event of the occurrence of any circumstance, transaction or
event not constituting a Change in Control (as defined in Section 3.1) but which
the Board of Directors deems to be, or to be reasonably likely to lead to, an
effective change in control of the Company of a nature that would be required to
be reported in response to Item 6(e) of Schedule 14A of the 1934 Act, the
Committee may in its sole discretion declare all outstanding Options, Stock
Appreciation Rights, and other Awards in the nature of rights that may be
exercised to be fully exercisable, and/or all restrictions on all outstanding
Awards to have lapsed, in each case, as of such date as the Committee may, in
its sole discretion, declare, which may be on or before the consummation of such
transaction or event. To the extent that this provision causes Incentive Stock
Options to exceed the dollar limitation set forth in Section 7.2(d), the excess
Options shall be deemed to be Non-Qualified Stock Options.
13.11. Acceleration for Any Other Reason. Regardless of whether an event
has occurred as described in Section 13.9 or 13.10 above, the Committee may in
its sole discretion at any time determine that all or a portion of a
Participant's Options, Stock Appreciation Rights, and other Awards in the nature
of rights that may be exercised shall become fully or partially exercisable,
and/or that all or a part of the restrictions on all or a portion of the
outstanding Awards shall lapse, in each case, as of such date as the Committee
may, in its sole discretion, declare. The Committee may discriminate among
Participants and among Awards granted to a Participant in exercising its
discretion pursuant to this Section 13.11.
13.12 Effect of Acceleration. If an Award is accelerated under Section
13.9 or 13.10, the Committee may, in its sole discretion, provide (i) that the
Award will expire after a designated period of time after such acceleration to
the extent not then exercised, (ii) that the Award will be settled in cash
rather than Stock, (iii) that the Award will be assumed by another party to the
transaction giving rise to the acceleration or otherwise be equitably converted
in connection with such transaction, or (iv) any combination of the foregoing.
The Committee's determination need not be uniform and may be different for
different Participants whether or not such Participants are similarly situated.
13.13. Performance Goals. The Committee may determine that any Award
granted pursuant to this Plan to a Participant (including, but not limited to,
Participants who are Covered Employees) shall be determined solely on the basis
of (a) the achievement by the Corporation or a Parent or Subsidiary of a
specified target return, or target growth in return, on equity or assets, (b)
the Corporation's, Parent's or Subsidiary's stock price, (c) the achievement by
an individual or a business unit of the Corporation, Parent or Subsidiary of a
specified target, or target growth in, revenues, net income or earnings per
share, (d) the achievement of objectively determinable goals with respect to
product delivery, product quality, customer satisfaction, meeting budgets and/or
retention of employees or (e) any combination of the goals set forth in (a)
through (d) above. If an Award is made on such basis, the Committee shall
establish goals prior to the
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beginning of the period for which such performance goal relates (or such later
date as may be permitted under Code Section 162(m) or the regulations
thereunder) and the Committee may for any reason reduce (but not increase) any
Award, notwithstanding the achievement of a specified goal. Any payment of an
Award granted with performance goals shall be conditioned on the written
certification of the Committee in each case that the performance goals and any
other material conditions were satisfied.
13.14. Termination of Employment. Whether military, government or other
service or other leave of absence shall constitute a termination of employment
shall be determined in each case by the Committee at its discretion, and any
determination by the Committee shall be final and conclusive. A termination of
employment shall not occur in a circumstance in which a Participant transfers
from the Corporation to one of its Parents or Subsidiaries, transfers from a
Parent or Subsidiary to the Corporation, or transfers from one Parent or
Subsidiary to another Parent or Subsidiary.
ARTICLE XIV
CHANGES IN CAPITAL STRUCTURE
14.1. General. In the event a stock dividend is declared upon the Stock,
the shares of Stock then subject to each Award shall be increased
proportionately without any change in the aggregate purchase price therefor. In
the event the Stock shall be changed into or exchanged for a different number or
class of shares of stock or securities of the Corporation or of another
corporation, whether through reorganization, recapitalization, reclassification,
stock split-up, combination of shares, merger or consolidation, there shall be
substituted for each such share of Stock then subject to each Award the number
and class of shares into which each outstanding share of Stock shall be so
exchanged, all without any change in the aggregate purchase price for the shares
then subject to each Award.
ARTICLE XV
AMENDMENT, MODIFICATION AND TERMINATION
15.1. Amendment, Modification and Termination. The Board or the Committee
may, at any time and from time to time, amend, modify or terminate the Plan
without stockholder approval; provided, however, that the Board or Committee may
condition any amendment or modification on the approval of stockholders of the
Company if such approval is necessary or deemed advisable with respect to tax,
securities or other applicable laws, policies or regulations.
15.2 Awards Previously Granted. At any time and from time to time, the
Committee may amend, modify or terminate any outstanding Award without approval
of the Participant; provided, however, that such amendment, modification or
termination shall not, without the Participant's consent, reduce or diminish the
value of such Award determined as if the Award had been exercised, vested,
cashed in or otherwise settled on the date of such amendment or termination; and
provided further that, except as otherwise permitted in the Plan, the exercise
price of any Option may not be reduced and the original term of any Option may
not be extended. No termination, amendment, or modification of the Plan shall
adversely affect any Award previously granted under the Plan, without the
written consent of the Participant.
ARTICLE XVI
GENERAL PROVISIONS
16.1. No Rights to Awards. No Participant or employee, officer, consultant
or director shall have any claim to be granted any Award under the Plan, and
neither the Corporation nor the Committee is obligated to treat Participants and
employees, officers, consultants or directors uniformly.
16.2. No Stockholder Rights. No Award gives the Participant any of the
rights of a stockholder of the Corporation unless and until shares of Stock are
in fact issued to such person in connection with such Award.
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16.3. Withholding. The Corporation or any Parent or Subsidiary shall have
the authority and the right to deduct or withhold, or require a Participant to
remit to the Corporation, an amount sufficient to satisfy federal, state, and
local taxes (including the Participant's FICA obligation) required by law to be
withheld with respect to any taxable event arising as a result of the Plan. With
respect to withholding required upon any taxable event under the Plan, the
Committee may, at the time the Award is granted or thereafter, require that any
such withholding requirement be satisfied, in whole or in part, by withholding
shares of Stock having a Fair Market Value on the date of withholding equal to
the amount to be withheld for tax purposes, all in accordance with such
procedures as the Committee establishes.
16.4. No Right to Employment or Other Status. Nothing in the Plan or any
Award Agreement shall interfere with or limit in any way the right of the
Corporation or any Parent or Subsidiary to terminate any Participant's
employment or status as a consultant or director at any time, nor confer upon
any Participant any right to continue as an employee, officer, consultant or
director of the Corporation or any Parent or Subsidiary.
16.5. Unfunded Status of Awards. The Plan is intended to be an "unfunded"
plan for incentive and deferred compensation. With respect to any payments not
yet made to a Participant pursuant to an Award, nothing contained in the Plan or
any Award Agreement shall give the Participant any rights that are greater than
those of a general creditor of the Corporation or any Parent or Subsidiary.
16.6. Relationship to Other Benefits. No payment under the Plan shall be
taken into account in determining any benefits under any pension, retirement,
savings, profit sharing, group insurance, welfare or benefit plan of the
Corporation or any Parent or Subsidiary unless provided otherwise in such other
plan.
16.7. Expenses. The expenses of administering the Plan shall be borne by
the Corporation and its Parents or Subsidiaries.
16.8. Titles and Headings. The titles and headings of the Sections in the
Plan are for convenience of reference only, and in the event of any conflict,
the text of the Plan, rather than such titles or headings, shall control.
16.9. Gender and Number. Except where otherwise indicated by the context,
any masculine term used herein also shall include the feminine; the plural shall
include the singular and the singular shall include the plural.
16.10. Fractional Shares. No fractional shares of Stock shall be issued
and the Committee shall determine, in its discretion, whether cash shall be
given in lieu of fractional shares or whether such fractional shares shall be
eliminated by rounding up.
16.11. Government and Other Regulations. The obligation of the Corporation
to make payment of awards in Stock or otherwise shall be subject to all
applicable laws, rules, and regulations, and to such approvals by government
agencies as may be required. The Corporation shall be under no obligation to
register under the 1933 Act, or any state securities act, any of the shares of
Stock paid under the Plan. The shares paid under the Plan may in certain
circumstances be exempt from registration under the 1933 Act, and the
Corporation may restrict the transfer of such shares in such manner as it deems
advisable to ensure the availability of any such exemption.
16.12. Governing Law. To the extent not governed by federal law, the Plan
and all Award Agreements shall be construed in accordance with and governed by
the laws of the State of Georgia.
16.13 Additional Provisions. Each Award Agreement may contain such other
terms and conditions as the Committee may determine; provided that such other
terms and conditions are not inconsistent with the provisions of this Plan.
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The foregoing is hereby acknowledged as being the MAPICS, Inc. 1998
Long-Term Incentive Plan as adopted by the Board of Directors of the Company on
November 12, 1997, and approved by the stockholders of the Company on February
3, 1998.
MAPICS, INC.
By:
-----------------------------------
Its:
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ANNEX IV TO PROXY STATEMENT
MAPICS, INC.
1998 EMPLOYEE STOCK PURCHASE PLAN
ARTICLE I
PURPOSE
The Amended and Restated 1990 Employee Stock Purchase Plan is hereby
amended and restated in its entirety and renamed the MAPICS, Inc. 1998 Employee
Stock Purchase Plan (hereinafter the "Plan"). The Plan is intended as an
incentive to, and to encourage stock ownership by, all eligible employees of
MAPICS, Inc. (formerly known as Marcam Corporation, the "Company"), and its
participating subsidiaries (as defined in Article 17) so that they may share in
the growth of the Company by acquiring or increasing their proprietary interest
in the Company. The Plan is designed to encourage eligible employees to remain
in the employ of the Company. It is intended that options issued pursuant to
this Plan will constitute options issued pursuant to an "employee stock purchase
plan" within the meaning of Section 423(b) of the Internal Revenue Code of 1986,
as amended (the "Code").
ARTICLE II
ADMINISTRATION OF THE PLAN
The Plan may be administered by the Compensation Committee of the Board of
Directors of the Company (the "Committee"). Any action which may be taken by the
Committee hereunder may be taken instead by the full Board of Directors and, in
such event, the word "Committee" wherever used herein shall be deemed to mean
the full Board.
The interpretation and construction by the Committee of any provisions of
the Plan or of any option granted under it shall be final, unless otherwise
determined by the Board of Directors. The Committee may from time to time adopt
such rules and regulations for carrying out the Plan as it may deem best,
provided that any such rules and regulations shall be applied on a uniform basis
to all employees under the Plan. No member of the Board of Directors or the
Committee shall be liable for any action or determination made in good faith
with respect to the Plan or any option granted under it. In the event the Board
of Directors fails to appoint or refrains from appointing a Committee, the Board
of Directors shall have all power and authority to administer the Plan. In such
event, the word "Committee" wherever used herein shall be deemed to mean the
Board of Directors.
ARTICLE III
ELIGIBLE EMPLOYEES
All employees of the Company or any of its participating subsidiaries shall
be eligible to receive options under this Plan to purchase the Company's Common
Stock, and all eligible employees shall have the same rights and privileges
hereunder. Persons who are employed on the first day of any Payment Period (as
defined in Article 5) shall receive their options as of such day. Persons who
are employed after any date on which options are granted under this Plan shall
be granted options on the next date of the next succeeding Payment Period on
which options are granted to all eligible employees. Directors who are not
employees of the Company shall not be eligible to receive options under this
Plan. In no event may an employee be granted an option if such employee,
immediately after the option is granted, owns stock possessing five percent (5%)
or more of the total combined voting power or value of all classes of stock of
the Company or of its parent corporation or subsidiary corporations, as the
terms, "parent corporation" and "subsidiary corporation" are defined in Section
424(e) and (f) of the Code. For purposes of determining stock ownership under
this paragraph, the rules of Section 424(d) of the Code shall apply, and stock
which the employee may purchase under outstanding options shall be treated as
stock owned by the employee.
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For purposes of this Article 3, the term "employee" shall not include an
employee whose customary employment is twenty (20) hours or less per week or
whose customary employment is for not more than five (5) months in any calendar
year.
ARTICLE IV
STOCK SUBJECT TO THE PLAN
The stock subject to the options under the Plan shall be shares of the
Company's authorized but unissued Common Stock, par value $.01 per share, or
shares of such Common Stock reacquired by the Company, including shares
purchased in the open market. The aggregate number of shares which may be
purchased pursuant to the Plan is 700,000, subject to adjustment as provided in
Article 12. In the event any option granted under the Plan shall expire or
terminate for any reason without having been exercised in full or shall cease
for any reason to be exercisable in whole or in part, the unpurchased shares
subject thereto shall again be available under the Plan.
ARTICLE V
PAYMENT PERIODS AND STOCK OPTIONS
Prior to this amendment and restatement of the Plan, the Payment Periods
during which payroll deductions have been accumulated under the Plan were the
six-month periods commencing and ending on or about February 1 to July 31 and
August 1 to January 31 of each year. The first Payment Period commencing after
the effective date of this amendment and restatement of the Plan shall be the
five-month period from August 1, 1998 through December 31, 1998. Thereafter, the
Payment Periods during which payroll deductions will be accumulated under the
Plan will be the six-month periods from January 1 through June 30 and from July
1 through December 31 of each year, respectively Payroll deductions made from
bonus and commission payments will be deemed accumulated under the Plan during
the Payment Period during which such payments are made. All other payroll
deductions will be deemed accumulated under the Plan during the Payment Period
during which the regular payroll period to which it relates ends.
Twice each year, on the first business day of each Payment Period, the
Company will grant to each eligible employee who is then a participant in the
Plan an option to purchase on the last day of such Payment Period, at the Option
Price hereinafter provided for, a maximum of Five Hundred (500) shares, on
condition that such employee remains eligible to participate in the Plan
throughout such Payment Period. The participant shall be entitled to exercise
such option so granted only to the extent of the participant's accumulated
payroll deductions on the last day of such Payment Period. In the event that the
participant's accumulated payroll deductions on the last day of the Payment
Period would enable the participant to purchase more than 500 shares except for
the 500-share limitation, the excess of the amount of the accumulated payroll
deductions over the aggregate purchase price of the 500 shares shall be promptly
refunded to the participant by the Company, without interest. The Option Price
for each Payment Period shall be the lesser of (i) 85% of the fair market value
of the Company's Common Stock on the first business day of the Payment Period,
or (ii) 85% of the fair market value of the Company's Common Stock on the last
business day of the Payment Period, in either event rounded up to avoid
fractions of a dollar other than 1/4, 1/2 and 3/4. The foregoing limitation on
the number of shares which may be granted in any Payment Period and the Option
Price per share shall be subject to adjustment as provided in Article 12.
For purposes of this Plan, the term "fair market value" on any date means
(i) the average (on that date) of the high and low prices of the Company's
Common Stock on the principal national securities exchange on which the Common
Stock is traded if the Common Stock is then traded on a national securities
exchange; or (ii) the last reported sale price (on that date) of the Common
Stock on the Nasdaq National Market, if the Common Stock is not then traded on a
national securities exchange; or (iii) the average of the closing bid and asked
prices last quoted (on that date) by an established quotation service for
over-the-counter securities, if the Common Stock is not reported on the Nasdaq
National Market. If the Company's Common Stock is not publicly traded at the
time an option is granted under this Plan, "fair market value" shall mean the
fair market
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value of the Common Stock as determined by the Committee after taking into
consideration all factors which it deems appropriate, including, without
limitation, recent sale and offer prices of the Common Stock in private
transactions negotiated at arm's length.
For purposes of this Plans the term "business day" means a day on which
there is trading on the Nasdaq National Market or on the aforementioned national
securities exchange, whichever is applicable pursuant to the preceding
paragraph.
No employee shall be granted an option which permits the employee's right
to purchase common Stock under this Plan, and under all other Section 423(b)
employee stock purchase plans of the Company or any parent or subsidiary
corporations, to accrue at a rate which exceeds $25,000 of fair market value of
such stock (determined at the time such option is granted) for each calendar
year in which such option is outstanding at any time. The purpose of the
limitation in the preceding sentence is to comply with Section 423(b)(8) of the
Code.
ARTICLE VI
EXERCISE OF OPTION
Each eligible employee who continues to be a participant in the Plan on the
last business day of a Payment Period shall be deemed to have exercised his/her
option on such date and shall be deemed to have purchased from the Company such
number of full shares of Common Stock reserved for the purpose of the Plan as
his/her accumulated payroll deductions on such date will pay for at the Option
Price, subject to the 500-share limit of the option. If a participant is not an
employee on the last business day of a Payment Period, he/she shall not be
entitled to exercise his/her option. Only full shares of Common Stock may be
purchased under the Plan. Unused payroll deductions remaining in an employee's
account at the end of a Payment Period (other than amounts refunded to the
employee pursuant to Article 5) will be carried forward to the succeeding
Payment Period.
ARTICLE VII
AUTHORIZATION FOR ENTERING THE PLAN
An employee may enter the Plan by filling out, signing and delivering to
the Company an authorization:
A. Stating the percentage to be deducted regularly from the employee's
pay;
B. Authorizing the purchase of stock for the employee in each Payment
Period in accordance with the terms of the Plan; and
C. Specifying the exact name in which stock purchased for the employee
is to be issued as provided under Article 11 hereof.
Such authorization must be received by the Company at least ten (10) days
before the beginning date of the next succeeding Payment Period.
Unless an employee files a new authorization or withdraws from the Plan,
the deductions and purchases under the authorization the employee has on file
under the Plan will continue from one Payment Period to succeeding Payment
Periods as long as the Plan remains in effect.
The Company will accumulate and hold for the employee's account the amounts
deducted from his/her pay. No interest will be paid on these amounts.
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ARTICLE VIII
MAXIMUM AMOUNT
An employee may authorize payroll deductions in an amount (expressed as a
percentage) not less than one percent (1%) but not more than ten percent (10%)
of the employee's total compensation, including base pay or salary and any
bonuses or commissions.
ARTICLE IX
CHANGE IN PAYROLL DEDUCTIONS
Deductions may not be increased or decreased during a Payment Period.
However, an employee may withdraw in full from the Plan.
ARTICLE X
WITHDRAWAL FROM THE PLAN
An eligible employee may withdraw from the Plan in whole but not in part,
at any time prior to the last business day of each Payment Period by delivering
a withdrawal notice to the Company, in which event the Company will promptly
refund the entire balance of the employee's deductions not previously used to
purchase stock under the Plan.
To re-enter the Plan, an eligible employee who has previously withdrawn
must file a new authorization at least ten (10) days before the beginning date
of the next Payment Period. The employee's re-entry into the Plan cannot,
however, become effective before the beginning of the next Payment Period
following his/her withdrawal.
ARTICLE XI
ISSUANCE OF STOCK
Certificates for stock issued to participants will be delivered as soon as
practicable after each Payment Period by the Company's transfer agent. Stock
purchased under the Plan will be issued only in the name of the employee, or if
his/her authorization so specifies, in the name of the employee and another
person of legal age as joint tenants with rights of survivorship.
ARTICLE XII
ADJUSTMENTS
Upon the happening of any of the following described events, an optionee's
rights under options granted under the Plan shall be adjusted as hereinafter
provided.
A. In the event shares of Common Stock of the Company shall be
subdivided or combined into a greater or smaller number of shares or if,
upon a reorganization, split-up, liquidation, recapitalization or the like
of the Company, the shares of the Company's Common Stock shall be exchanged
for other securities of the Company, each optionee shall be entitled,
subject to the conditions herein stated, to purchase such number of shares
of Common Stock or amount of other securities of the Company as were
exchangeable for the number of shares of Common Stock of the Company which
such optionee would have been entitled to purchase except for such action,
and appropriate adjustments shall be made in the purchase price per share
to reflect such subdivision, combination or exchange; and
B. In the event the Company shall issue any of its shares as a stock
dividend upon or with respect to the shares of stock of the class which
shall at the time be subject to option hereunder, each optionee upon
exercising such an option shall be entitled to receive (for the purchase
price paid upon such exercise) the
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shares as to which he/she is exercising his/her option and, in addition
thereto (at no additional cost), such number of shares of the class or
classes in which such stock dividend or dividends were declared or paid,
and such amount of cash in lieu of fractional shares, as is equal to the
number of shares thereof and the amount of cash in lieu of fractional
shares, respectively, which he/she would have received if he/she had been
the holder of the shares as to which he/she is exercising his/her option at
all times between the date of the granting of such option and the date of
its exercise.
Upon the happening of any of the foregoing events, the class and aggregate
number of shares set forth in Article 4 hereof which are subject to options
which have been or may be granted under the Plan and the limitations set forth
in the second paragraph of Article 5 shall also be appropriately adjusted to
reflect the events specified in paragraphs A and B above. Notwithstanding the
foregoing, any adjustments made pursuant to paragraphs A and B shall be made
only to the extent that the Committee, based on advice of counsel for the
Company, determines that such adjustments will not constitute a change requiring
stockholder approval under Section 423(b)(2) of the Code.
If the Company is to be consolidated with or acquired by another entity in
a merger, a sale of all or substantially all of the Company's assets or
otherwise (an "Acquisition"), the Committee shall, with respect to options then
outstanding under this Plan, either (i) make appropriate provision for the
continuation of such options by arranging for the substitution on an equitable
basis for the shares then subject to such options the consideration payable with
respect to the outstanding shares of the Company's Common Stock in connection
with the Acquisition or (ii) terminate all outstanding options in exchange for a
cash payment equal to the excess of the fair market value of the shares subject
to the options (determined as of the date of the Acquisition) over the Option
Price thereof (determined with reference only to the first business day of the
applicable Payment Period).
The Committee or Board of Directors shall determine the adjustments to be
made under this Article 12, and its determination shall be conclusive.
ARTICLE XIII
NO TRANSFER OR ASSIGNMENT OF EMPLOYEE'S RIGHTS
An employee's rights under the Plan are the employee's alone and may not be
transferred or assigned to, or availed of by, any other person other than by
will or the laws of descent and distribution. Any option granted under the Plan
to an employee may be exercised, during the employee's lifetime, only by the
employee.
ARTICLE XIV
TERMINATION OF EMPLOYEE'S RIGHTS
An employee's rights under the Plan will terminate when he/she ceases to be
an employee because of retirement, voluntary or involuntary termination,
resignation, lay-off, discharge, death, change of status or for any other
reason, except that if an employee is on a leave of absence from work during the
last three months of any Payment Period, he/she shall be deemed to be a
participant in the Plan on the last day of that Payment Period. A withdrawal
notice will be considered as having been received from the employee on the day
his/her employment ceases, and all payroll deductions not used to purchase stock
will be refunded without interest.
If an employee's payroll deductions are interrupted by any legal process, a
withdrawal notice will be considered as having been received from the employee
on the day the interruption occurs.
ARTICLE XV
TERMINATION AND AMENDMENTS TO PLAN
Unless terminated sooner as provided below, the Plan shall terminate on
December 31, 2007. The Plan may be terminated at any time by the Company's Board
of Directors but such termination shall not affect
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options then outstanding under the Plan. It will terminate in any case when all
or substantially all of the unissued shares of stock reserved for the purposes
of the Plan have been purchased. If at any time shares of stock reserved for the
purpose of the Plan remain available for purchase but not in sufficient number
to satisfy all then unfilled purchase requirements, the available shares shall
be apportioned among participants in proportion to their options and the Plan
shall terminate. Upon such termination or any other termination of the Plan, all
payroll deductions not used to purchase stock will be refunded without interest.
The Committee or the Board of Directors may from time to time adopt amendments
to the Plan provided that, without the approval of the stockholders of the
company, no amendment may (i) increase the number of shares that may be issued
under the Plan or change the class of employees eligible to receive options
under the Plan or (ii) cause Rule 16b-3 under the Securities and Exchange Act of
1934 to become inapplicable to the Plan.
ARTICLE XVI
LIMITS ON SALE OF STOCK PURCHASED UNDER THE PLAN
The Plan is intended to provide shares of Common stock for investment and
not for resale. The Company does not, however, intend to restrict or influence
any employee in the conduct of his/her own affairs. An employee may, therefore,
sell stock purchased under the Plan at any time the employee chooses, subject to
compliance with any applicable Federal or state securities laws; provided,
however, that because of certain Federal tax requirements, each employee agrees
by entering the Plan, promptly to give the Company notice of any such stock
disposed of within two years after the date of grant of the applicable option
showing the number of such shares disposed of. THE EMPLOYEE ASSUMES THE RISK OF
ANY MARKET FLUCTUATIONS IN THE PRICE OF THE STOCK.
ARTICLE XVII
PARTICIPATING SUBSIDIARIES
The term "participating subsidiary" shall mean any subsidiary of the
Company, as that term is defined in Section 424(f) of the Code, which is
designated from time to time by the Board of Directors to participate in the
Plan. The Board of Directors shall have the power to make such designation
before or after the Plan is approved by the stockholders.
ARTICLE XVIII
OPTIONEES NOT STOCKHOLDERS
Neither the granting of an option to an employee nor the deductions from
his/her pay shall constitute such employee a stockholder of the shares covered
by an option until such shares have been actually purchased by the employee.
ARTICLE XIX
APPLICATION OF FUNDS
The proceeds received by the Company from the sale of Common Stock pursuant
to options granted under the Plan will be used for general corporate purposes.
ARTICLE XX
GOVERNMENTAL REGULATIONS
The Company's obligation to sell and deliver shares of the Company's Common
Stock under this Plan is subject to the approval of any governmental authority
required in connection with the authorization, issuance or sale of such shares,
including the Securities and Exchange Commission and the Internal Revenue
Service.
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ARTICLE XXI
APPROVAL OF STOCKHOLDERS; EFFECTIVENESS
The Plan, as amended and restated, shall be subject to approval by the
holders of a majority of the shares of the Common Stock of the Company present
or represented by proxy at a duly called meeting of stockholders, which approval
must occur by October 1, 1998.
Date Plan adopted by Board of Directors:
June 25, 1990
Date Plan approved by Stockholders:
June 26, 1990
Date Plan amended by Board of Directors:
October 31, 1990
Date Plan amended by Board of Directors:
January 6, 1995
Date Plan approved by Stockholders:
February 21, 1995
Date Plan amended by Board of Directors:
November 13, 1997
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APPENDIX
REVOCABLE PROXY
COMMON STOCK
MAPICS, INC.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS FOR THE 1998 ANNUAL
MEETING OF STOCKHOLDERS.
The undersigned hereby appoints Richard C. Cook and Willliam J. Gilmour,
and each of them, proxies, with full power of substitution, to act for and in
the name of the undersigned to vote all shares of Common Stock of MAPICS, Inc.
(the "Company") which the undersigned is entitled to vote at the 1998 Annual
Meeting of Stockholders of the Company, to be held at ________, ________,
_______, Georgia, on Tuesday, February 3, 1998 at : .m., local time, and at any
and all adjournments thereof, as indicated below.
THIS PROXY CARD WILL BE VOTED AS DIRECTED. IF NO INSTRUCTIONS ARE
SPECIFIED, THIS PROXY CARD WILL BE VOTED IN THE DISCRETION OF THE PROXIES "FOR"
THE ELECTION OF THE TWO NOMINEES NAMED IN PROPOSAL 2 AND "FOR" PROPOSALS 1, 3,
4, 5, 6 and 7. If any other business is presented to a vote of the stockholders
at the Annual Meeting, this proxy card will be voted by the proxies in their
best judgment. At the present time, the Board of Directors knows of no other
business to be presented to a vote of the stockholders at the Annual Meeting.
If the undersigned elects to withdraw this proxy card on or before the time
of the Annual Meeting or any adjournments thereof and notifies the Clerk of the
Company at or prior to the Annual Meeting of the decision of the undersigned to
withdraw this proxy card, then the power of said proxies shall be deemed
terminated and of no further force and effect. If the undersigned withdraws this
proxy card in the manner described above and prior to the Annual Meeting does
not submit a duly executed and subsequently dated proxy card to the Company, the
undersigned may vote in person at the Annual Meeting all shares of Common Stock
of the Company owned by the undersigned as of the record date, December 12,
1997.
(Continued, and to be signed and dated, on the reverse side)
<PAGE> 127
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" EACH OF THE LISTED PROPOSALS.
1. The approval of a change in domicile of the Company from Massachusetts
to Georgia, including the approval of the related Agreement and Plan of Merger
between the Company and MAPICS, Inc., a Georgia corporation, and new Georgia
articles of incorporation.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
2. The election of Roger Heinen, Jr. and Edward J. Kfoury as Class I
directors to serve until the 2001 Annual Meeting of Stockholders and until their
successors are elected and qualified.
[ ] FOR ALL NOMINEES LISTED [ ] WITHHOLD AUTHORITY TO
BELOW (EXCEPT AS MARKED VOTE FOR ALL NOMINEES LISTED BELOW.
TO THE CONTRARY BELOW)
INSTRUCTION: To withhold authority to vote for any individual nominee,
strike a line through the nominee's name in the list below.
ROGER HEINEN JR. AND EDWARD J. KFOURY
3. The approval of the amendment and restatement of the Company's 1991
Non-Employee Director Stock Option Plan.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. The approval of the Company's 1998 Non-Employee Directors Stock
Incentive Plan.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
5. The approval of the Company's 1998 Long-Term Incentive Plan.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
6. The approval of the amendment and restatement of the Company's 1990
Employee Stock Purchase Plan.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
7. The ratification of the appointment of Coopers & Lybrand L.L.P. as
independent accountants for the fiscal year ending September 30, 1998.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
<PAGE> 128
In their discretion, the proxies are authorized to vote upon such other
business as properly may come before the Annual Meeting and any adjournments
thereof.
DO YOU PLAN TO ATTEND THE ANNUAL MEETING? YES [ ] NO [ ]
Please mark, date and sign exactly as your name appears
on this proxy card. When shares are held jointly, both holders
should sign. When signing as attorney, executor, administrator,
trustee or guardian, please give your full title. If the holder
is a corporation or a partnership, the full corporate or
partnership name should be signed by a duly authorized officer.
DATE:
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SIGNATURE
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SIGNATURE, IF SHARES HELD JOINTLY
PLEASE COMPLETE, DATE, SIGN AND MAIL THIS PROXY CARD IN THE
ENCLOSED PREPAID ENVELOPE.
