Exhibit 10(a)
***The Registrant has omitted from this Exhibit 10(a) certain confidential
information that it has separately filed with the Securities and Exchange
Commission ("SEC"), pursuant to a request for confidential treatment of such
information. The portions of the Exhibit which have been omitted are contained
in Section 10 of the following First Amendment to Loan and Security Agreement
and are designated with the following ▇▇▇▇: "***".
FIRST AMENDMENT TO
LOAN AND SECURITY AGREEMENT
FIRST AMENDMENT dated as of November 16, 2001 (this "AMENDMENT") to the
LOAN AND SECURITY AGREEMENT dated as of July 17, 2001 (the "LOAN AGREEMENT"),
between and among, on the one hand, the lenders identified on the signature
pages thereof (such lenders, together with their respective successors and
assigns, are referred to hereinafter each individually as a "LENDER" and
collectively as the "LENDERS"), FOOTHILL CAPITAL CORPORATION, a California
corporation, as the arranger and administrative agent for the Lenders ("AGENT"),
and, on the other hand, FRONTSTEP, INC., an Ohio corporation ("PARENT"), and
each of the Parent's Subsidiaries identified on the signature pages hereof (such
Subsidiaries, together with Parent, are referred to hereinafter each
individually as a "BORROWER", and individually and collectively, jointly and
severally, as "BORROWERS").
WHEREAS, the Borrowers have (a) requested the Agent to amend the Loan
Agreement to provide for, among other things, (i) an overadvance limit through
and including January 15, 2002 and (ii) a new term loan in the principal amount
of $2,500,000 and (b) advised the Agent that the Borrowers are in default under
the Minimum EBITDA, Tangible Net Worth and Leverage Ratio covenants set forth in
the Loan Agreement and have requested the Lenders to waive such defaults, and
the Agent, on behalf of the Lenders, has agreed to such waiver.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants, agreements and conditions hereinafter set forth, and for other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto hereby agree as follows:
1. CAPITALIZED TERMS. All capitalized terms used in this Amendment
(including, without limitation, in the recitals hereto) and not otherwise
defined shall have their respective meanings set forth in the Loan Agreement.
2. DEFINITIONS IN THE LOAN AGREEMENT. Section 1.1 of the Loan Agreement is
hereby amended as follows:
(a) The term and the definition of "Base Rate Term Loan Margin" is hereby
deleted in its entirety.
(b) A definition of the term "Base Rate Term Loan A Margin" is hereby
inserted, in appropriate alphabetical order, to read as follows:
"'BASE RATE TERM LOAN A MARGIN' means 5.0 percentage points."
(c) A definition of the term "Base Rate Term Loan B Margin" is hereby
inserted, in appropriate alphabetical order, to read as follows:
"'BASE RATE TERM LOAN B MARGIN' means 4.0 percentage points."
(d) The definition of the term "Commitment" is hereby amended in its
entirety to read as follows:
"'COMMITMENT' means, with respect to each Lender, its Revolver
Commitment, its Term Loan A Commitment, its Term Loan B Commitment, or its
Total Commitment, as the context requires, and, with respect to all
Lenders, their Revolver Commitments, their Term Loan A Commitments, their
Page 26
Term Loan B Commitments, or their Total Commitments, as the context
requires, in each case as such Dollar amounts are set forth beside such
Lender's name under the applicable heading on SCHEDULE C-1 or on the
signature page of the Assignment and Acceptance pursuant to which such
Lender became a Lender hereunder in accordance with the provisions of
SECTION 14.1."
(e) A definition of the term "First Amendment Effective Date" is hereby
inserted, in appropriate alphabetical order, to read as follows:
"'FIRST AMENDMENT EFFECTIVE DATE' means the date on which all of the
conditions precedent to the effectiveness of First Amendment to Loan
Agreement dated as of November __, 2001, by and among the Borrowers, the
Agent and the Lenders have been fulfilled or waived."
(f) The definition of the term "Maximum Revolver Amount" is hereby amended
in its entirety to read as follows:
"'MAXIMUM REVOLVER AMOUNT' means $25,000,000 minus the Term Loan A
Amount."
(g) A definition of the term "Overadvance Amount" is hereby inserted, in
appropriate alphabetical order, to read as follows:
"'OVERADVANCE AMOUNT' means (i) $280,000, from the First Amendment
Effective Date through and including January 15, 2002 and (iv) $0.00, after
January 15, 2002; PROVIDED, HOWEVER, that the Overadvance Amount shall be
$0.00 at any time Advances are outstanding (except Advances attributable to
the charging to the Loan Account of the amendment fee payable by Borrowers
to Agent on the First Amendment Effective Date)."
(h) The definition of the term "Pro Rata Share" is hereby amended by (i)
deleting clauses (c) and (d) thereof and (ii) inserting new clauses (c), (d) and
(e) therein to read as follows:
"(c) with respect to a Lender's obligation to make the Term Loan A and
receive payments of interest, fees, and principal with respect thereto, the
percentage obtained by dividing (i) such Lender's Term Loan A Commitment,
by (ii) the aggregate amount of all Lenders' Term Loan A Commitments,
(d) with respect to a Lender's obligation to make the Term Loan B and
receive payments of interest, fees, and principal with respect thereto, the
percentage obtained by dividing (i) such Lender's Term Loan B Commitment,
by (ii) the aggregate amount of all Lenders' Term Loan B Commitments, and
(e) with respect to all other matters (including the indemnification
obligations arising under Section 16.7), the percentage obtained by
dividing (i) such Lender's Total Commitment, by (ii) the aggregate amount
of Total Commitments of all Lenders; PROVIDED, HOWEVER, that, in each case,
in the event all Commitments have been terminated, Pro Rata Share shall be
determined according to the Commitments in effect immediately prior to such
termination."
(i) The definition of the term "Term Loan" is hereby amended in its
entirety to read as follows:
"'TERM LOAN' means, collectively, the Term Loan A and the Term Loan
B."
(j) The definition of the term "Term Loan Amount" is hereby deleted its
entirety.
(k) A definition of the term "Term Loan A" is hereby inserted, in
appropriate alphabetical order, to read as follows:
"'TERM LOAN A' has the meaning set forth in SECTION 2.2(A)."
(l) The term and the definition of "Term Loan A Amount" is hereby inserted
therein, in appropriate alphabetical order, to read as follows:
Page 27
"'TERM LOAN A AMOUNT' means, as of the date of determination, the
outstanding principal amount of the Term Loan A, plus the then extant Term
Loan A PIK Amount."
(m) A definition of the term "Term Loan B" is hereby inserted, in
appropriate alphabetical order, to read as follows:
"'TERM LOAN B' has the meaning set forth in SECTION 2.2(B)."
(n) A definition of the term "Term Loan B Amount" is hereby inserted, in
appropriate alphabetical order, to read as follows:
"'TERM LOAN B AMOUNT' means, as of the date of determination, the
outstanding principal amount of the Term Loan B."
(o) The term and the definition of "Term Loan Commitment" is hereby deleted
in its entirety, and the term and the definition of "Term Loan A Commitment" is
hereby inserted, in appropriate alphabetical order, to read as follows:
"'TERM LOAN A COMMITMENT' means, with respect to each Lender, its Term
Loan A Commitment, and, with respect to all Lenders, their Term Loan A
Commitments, in each case as such Dollar amounts are set forth beside such
Lender's name under the applicable heading on SCHEDULE C-1 or on the
signature page of the Assignment and Acceptance pursuant to which such
Lender became a Lender hereunder in accordance with the provisions of
SECTION 14.1."
(p) A definition of the term "Term Loan B Commitment" is hereby inserted,
in appropriate alphabetical order, to read as follows:
"'TERM LOAN B COMMITMENT' means, with respect to each Lender, its Term
Loan B Commitment, and, with respect to all Lenders, their Term Loan B
Commitments, in each case as such Dollar amounts are set forth beside such
Lender's name under the applicable heading on SCHEDULE C-1 or on the
signature page of the Assignment and Acceptance pursuant to which such
Lender became a Lender hereunder in accordance with the provisions of
SECTION 14.1."
(q) The term "Term Loan PIK Amount" is hereby deleted in its entirety, and
the term and the definition of "Term Loan A PIK Amount" is hereby inserted, in
appropriate alphabetical order, to read as follows:
"'TERM LOAN A PIK AMOUNT' means, as of any date of determination, the
amount of all interest accrued with respect to the Term Loan A Amount that
has been paid in kind by being added to the balance thereof in accordance
with SECTION 2.6(A)(II)."
3. LENDERS' COMMITMENT SCHEDULE. Schedule C-1 to the Loan Agreement is
hereby amended in its entirety to read as set forth in Annex I to this
Amendment.
4. BORROWING BASE. (a) Clause (x) of Section 2.1(a) of the Loan Agreement
is hereby amended in its entirety to read as follows:
"(x) the sum of (I) the lesser of (i) 85% of the amount of Eligible
Non-Maintenance Accounts, less the amount, if any, of the Dilution Reserve,
and (ii) an amount equal to 33% of Borrowers' Domestic Collections with
respect to Accounts for the immediately preceding 90 day period, and (II)
the applicable Overadvance Amount, minus"
(b) Section 2.1(c) of the Loan Agreement is hereby amended by deleting the
term "Term Loan Amount" therein and inserting the term "Term Loan A Amount" in
lieu thereof.
5. TERM LOANS. Section 2.2 of the Loan Agreement is hereby amended in its
entirety to read as follows:
Page 28
"(a) (i) Subject to the terms and conditions of this Agreement, on the
Closing Date each Lender with a Term Loan A Commitment agrees (severally,
not jointly or jointly and severally) to make a term loan (collectively,
the "Term Loan A") to Borrowers in an amount equal to such Lender's Pro
Rata Share of $15,000,000.
(ii) The Term Loan A shall be repaid in consecutive monthly
installments each in a principal amount equal to 1/36th of the Term Loan A
Amount, plus accrued interest on the amount of principal so repaid, on the
first day of each month, commencing on October 1, 2001. Borrowers may, at
any time, prepay all or a portion of the Term Loan A without penalty or
premium. The outstanding unpaid principal balance and all accrued and
unpaid interest under the Term Loan A shall be due and payable on the date
of termination of this Agreement, whether by its terms, by prepayment, or
by acceleration. All amounts outstanding under the Term Loan A shall
constitute Obligations.
(b) (i) Subject to the terms and conditions of this Agreement, on the
First Amendment Effective Date each Lender with a Term Loan B Commitment
agrees (severally, not jointly or jointly and severally) to make a term
loan (collectively, the "Term Loan B") to Borrowers in an amount equal to
such Lender's Pro Rata Share of $2,500,000. The Term Loan B shall be repaid
on the following dates and in the following amounts: (A) $1,500,000 on
December 31, 2001; (B) $500,000 on January 7, 2002; and (C) $500,000 on
January 15, 2002.
(ii) Borrowers may, at any time, prepay all or a portion of the
Term Loan B without penalty or premium. The outstanding unpaid principal
balance and all accrued and unpaid interest under the Term Loan B shall be
due and payable upon the earliest of (A) January 15, 2002 or (B) the date
of termination of this Agreement, whether by its terms, by prepayment, or
by acceleration. All amounts outstanding under the Term Loan B shall
constitute Obligations."
6. PAYMENTS. Clause K of Section 2.4(b)(i) of the Loan Agreement is hereby
amended in its entirety to read as follows:
"K. ELEVENTH, if an Event of Default has occurred and is continuing,
to pay the outstanding principal balance of the Term Loan (in the inverse
order of the maturity of the installments due thereunder), including the
Term Loan A PIK Amount, until the Term Loan is paid in full,"
7. INTEREST RATES AND LETTER OF CREDIT FEE: RATES, PAYMENTS, AND
CALCULATIONS. Section 2.6(a) of the Loan Agreement is hereby amended in its
entirety to read as follows:
"(a) INTEREST RATES. Except as provided in clause (c) below,
(i) all Obligations (except for undrawn Letters of Credit and the
Term Loan Amount) that have been charged to the Loan Account
pursuant to the terms hereof shall bear interest on the Daily
Balance thereof at a per annum rate equal to (A) if the relevant
Obligation is an Advance that is a LIBOR Rate Loan, at a per
annum rate equal to the LIBOR Rate plus the LIBOR Rate Margin, or
(B) otherwise, at a per annum rate equal to the Base Rate plus
the Base Rate Margin;
(ii) the Term Loan A Amount (inclusive of any Term Loan A PIK
Amount) shall bear interest on the amount thereof outstanding
from time to time at a per annum rate equal to the greater of (A)
the Base Rate plus the Base Rate Term Loan A Margin and (B)
12.00% (to the extent that interest accrued hereunder at the rate
set forth herein would be less than the foregoing minimum daily
rate, the interest rate chargeable hereunder for such day
automatically shall be deemed increased to the minimum rate);
provided, however, that, so long as no Event of Default has
occurred and is continuing, that portion of such interest equal
to 1.50 percentage points per annum ( the "Term Loan A PIK
Amount") shall, in the absence of an election by Borrowers to pay
such interest in cash, be paid-in-kind by being added to the
principal balance of the Term Loan A
Page 29
Amount (inclusive of any Term Loan A PIK Amount theretofore so
added); provided, further, however, that Borrower may, on or
prior to the date that is 5 Business Days prior to the due date
thereof, elect to pay all accrued and unpaid interest under this
Section 2.6(a)(ii) in cash; and
(iii) the Term Loan B Amount shall bear interest on the amount
thereof outstanding from time to time at a per annum rate equal
to the greater of (A) the Base Rate plus the Base Rate Term Loan
B Margin and (B) 9.50% (to the extent that interest accrued
hereunder at the rate set forth herein would be less than the
foregoing minimum daily rate, the interest rate chargeable
hereunder for such day automatically shall be deemed increased to
the minimum rate)."
8. PAYMENT REMITTANCE. Section 2.8(b) of the Loan Agreement is hereby
amended in its entirety to read as follows:
"(b) So long as on any date:
(i) no Advances (other than Advances that are LIBOR Rate Loans)
are outstanding and no Obligations are due and payable on such date;
(ii) the difference between (A) the aggregate amount of the
Accounts Reserve, the Softech Reserves and any other reserves established
by Lender under SECTION 2.1(B) minus (B) the amount of the Borrowing Base
(exclusive of the Accounts Reserve, the Softech Reserves and any other
reserves established by Lender under SECTION 2.1(B)) shall not exceed
$500,000 (the amount by which the difference between clause (ii)(A) above
minus clause (ii)(B) above exceeds $500,000 is hereafter referred to as the
"RESERVE EXCESS"); and
(iii) no Event of Default has occurred and is continuing on such
date,
then all payment items received by Agent and constituting payments on
account on such day in accordance with SECTION 2.8(A) shall be remitted by
Agent to Borrowers' Designated Account subject to the terms of SECTION
7.13; PROVIDED, HOWEVER, that (1) if any Reserve Excess exists, all payment
items received by Agent in excess of the Reserve Excess and constituting
payments on account on such day in accordance with SECTION 2.8(A) shall be
remitted by Agent to Borrowers' Designated Account subject to the terms of
SECTION 7.13 and clauses (i) and (iii) of this SECTION 2.8(B), (2) if on
any day the amount of clause (ii)(A) above is greater than the amount of
clause (ii)(B) above (the amount by which clause (ii)(A) above exceeds
clause (ii)(B) above is hereafter referred to as an "OVERAGE"), then (x)
the provisions of the immediately preceding sub-clause (1) shall no longer
be effective and (y) so long as an Overage exists for six consecutive days
prior to the occurrence of such Overage, all payment items received by
Agent and constituting payments on account on such day in accordance with
SECTION 2.8(A) may, in Agent's sole and absolute discretion, be remitted by
Agent to Borrowers' Designated Account, and (3) if no Overage exists, then
any payments on account not previously remitted by Agent to Borrowers'
Designated Account as a result of this proviso shall be remitted to
Borrowers' Designated Account subject to the terms of SECTION 7.13 and
clauses (i) and (iii) of this SECTION 2.8(B). Notwithstanding anything to
the contrary contained in this Agreement, the condition set forth in clause
(ii) of, and the terms of the proviso to, this SECTION 2.8(B) shall only be
applicable until and including January 15, 2002."
9. COLLATERAL REPORTING. Section 6.2 of the Loan Agreement is hereby
amended by deleting the collateral reporting table set forth therein and
inserting a new collateral reporting table therein to read as follows:
============================= ========================================================================================
Daily A SALES JOURNAL, COLLECTION JOURNAL, AND CREDIT REGISTER SINCE THE LAST SUCH SCHEDULE
AND A CALCULATION OF THE BORROWING BASE AS OF SUCH DATE, AND
(d) notice of all returns, disputes, or claims.
----------------------------- ----------------------------------------------------------------------------------------
Weekly (not later than (e) a detailed calculation of the Borrowing Base (including detail regarding those
----------------------------- ----------------------------------------------------------------------------------------
Page 30
============================= ========================================================================================
Monday of each week for Accounts that are not Eligible Accounts),
the one week period ending
on Friday of the (f) a detailed aging, by total, of the Accounts, together with a reconciliation
immediately preceding week) to the detailed calculation of the Borrowing Base previously provided to
Agent, and
(g) a summary aging, by vendor, of Borrowers' accounts payable and any book
overdraft.
----------------------------- ----------------------------------------------------------------------------------------
Monthly (h) a calculation of Dilution for the prior month, and
(i) a list of any software license agreements, Maintenance Contracts or other
agreements giving rise to Accounts of a Borrower which contain proscriptions
of, or limitations on, a Borrower's right to assign such agreements.
----------------------------- ----------------------------------------------------------------------------------------
Quarterly (j) a detailed list of each Borrower's customers,
(k) a report regarding each Borrower's accrued, but unpaid, ad valorem taxes,
----------------------------- ----------------------------------------------------------------------------------------
Upon request by Agent (l) copies of invoices in connection with the Accounts, credit memos, remittance
advices, deposit slips, shipping and delivery documents in connection with
the Accounts and, for Inventory and Equipment acquired by Borrowers,
purchase orders and invoices, and
(m) such other reports as to the Collateral, or the financial condition of
Borrowers as Agent may request.
============================= ========================================================================================
10. PROJECTIONS; ***. (a) Section 6.3(c) of the Loan Agreement is hereby
amended by deleting the number "30" therein and inserting the number "60" in
lieu thereof.
(b) Section 6.3 of the Loan Agreement is hereby amended by (i) deleting the
word "and" at the end of clause (h) thereof, (ii) deleting the period at the end
of clause (i) thereof and inserting the word ", and" at the end thereof and
(iii) inserting a new clause (j) therein to read as follows:
"(j) on the 1st and 15th days (or, if any such day is not a
Business Day, the immediately succeeding Business Day) of each week, a
report setting forth ***.
11. INDEBTEDNESS. Section 7.1 of the Loan Agreement is hereby amended
by (a) deleting the word "and" at the end of clause (f) thereof, (b)
deleting the period at the end of clause (g) thereof and inserting the word
"; and" at the end thereof and (c) inserting a new clause (h) therein to
read as follows:
"(h) subordinated Indebtedness owing to Mitsui & Co. Ltd., the
terms and conditions of which, including provisions subordinating such
Indebtedness to the Obligations, are in form and substance satisfactory to
the Lenders; PROVIDED that Borrowers may make scheduled payments in respect
of such subordinated Indebtedness so long as (i) no Default or Event of
Default has occurred and is continuing or would result therefrom and (ii)
after giving effect to the making of each such payment, the sum of (A)
Excess Availability and (B) all of Borrowers' unrestricted cash and Cash
Equivalents is not less than $3,000,000."
12. FINANCIAL COVENANTS. Section 7.20 of the Loan Agreement is hereby
amended as follows:
--------
*** Reflects the omission of confidential information from this Exhibit 10(a).
The omitted information has been separately filed with the SEC, pursuant to a
request for confidential treatment of such information.
*** Reflects the omission of confidential information from this Exhibit 10(a).
The omitted information has been separately filed with the SEC, pursuant to a
request for confidential treatment of such information.
Page 31
(a) MINIMUM EBITDA. Clause (i) of Section 7.20(a) is hereby amended in its
entirety to read as follows:
"(i) MINIMUM EBITDA. EBITDA, measured on a fiscal quarter-end
basis, of not less than the required amount set forth in the following
table for the applicable period set forth opposite thereto:
---------------------------------------------- ------------------------------------------------------
APPLICABLE AMOUNT APPLICABLE PERIOD
---------------------------------------------- ------------------------------------------------------
$3,100,000 For the 6 month period ending
December 31, 2001
---------------------------------------------- ------------------------------------------------------
$3,700,000 For the 9 month period ending
March 31, 2002
---------------------------------------------- ------------------------------------------------------
$5,300,000 For the 12 month period ending
June 30, 2002
---------------------------------------------- ------------------------------------------------------
Borrowers' EBITDA for the 12 month period ending each month after June
30, 2002 shall be determined based upon Borrowers' projected EBITDA
for such period as set forth in the Projections delivered to Agent in
accordance with Section 6.3(c), which Projections are in form and
substance acceptable to Agent; provided, that if Agent and Borrowers
cannot agree on the EBITDA covenant number based upon Borrowers'
projected EBITDA, for purposes of this Section 7.20(a)(i), Borrowers'
EBITDA for such 12 month period shall not be less than $12,000,000."
(b) TANGIBLE NET WORTH. Clause (ii) of Section 7.20(a) is hereby amended in
its entirety to read as follows:
"(ii) TANGIBLE NET WORTH. Tangible Net Worth of at least the
required amount set forth in the following table as of the applicable date
set forth opposite thereto:
---------------------------------------------- ------------------------------------------------------
APPLICABLE AMOUNT APPLICABLE DATE
---------------------------------------------- ------------------------------------------------------
$11,500,000 December 31, 2001
---------------------------------------------- ------------------------------------------------------
$11,500,000 March 31, 2002
---------------------------------------------- ------------------------------------------------------
$11,700,000 June 30, 2002
---------------------------------------------- ------------------------------------------------------
Borrowers' Tangible Net Worth for each fiscal quarter ending after
June 30, 2002 shall be determined based upon Borrowers' projected
Tangible Net Worth for such period as set forth in the Projections
delivered to Agent in accordance with Section 6.3(c), which
Projections are in form and substance acceptable to Agent; provided,
that if Agent and Borrowers cannot agree on the Tangible Net Worth
covenant number based upon Borrowers' projected Tangible Net Worth,
for purposes of this Section 7.20(a)(ii), Borrowers' Tangible Net
Worth for such fiscal quarter shall not be less than $17,000,000."
(c) LEVERAGE RATIO. Clause (iii) of Section 7.20(a) is hereby amended in
its entirety to read as follows:
"(iii) LEVERAGE RATIO. Permit the ratio (the "Leverage Ratio") of
(i) the aggregate amount of the Indebtedness of Parent and its Subsidiaries
divided by (ii) EBITDA, for the applicable period set forth below to be
less than the applicable ratio set forth below:
Page 32
---------------------------------------------- ------------------------------------------------------
LEVERAGE RATIO APPLICABLE PERIOD
---------------------------------------------- ------------------------------------------------------
5.00:1 For the 6 month period ending
December 31, 2001
---------------------------------------------- ------------------------------------------------------
3.70:1 For the 9 month period ending
March 31, 2002
---------------------------------------------- ------------------------------------------------------
2.35:1 For the 12 month period ending
June 30, 2002
---------------------------------------------- ------------------------------------------------------
Borrowers' Leverage Ratio for the 12 month period ending each month
after June 30, 2002 shall be determined based upon Borrowers'
projected Leverage Ratio for such period as set forth in the
Projections delivered to Agent in accordance with Section 6.3(c),
which Projections are in form and substance acceptable to Agent;
provided, that if Agent and Borrowers cannot agree on the Leverage
Ratio covenant based upon Borrowers' projected Leverage Ratio, for
purposes of this Section 7.20(a)(iii), Borrowers' Leverage Ratio for
such 12 month period shall not be less than 0.85:1."
13. AMENDMENTS AND WAIVERS. Clause (j) of Section 15.1 of the Loan
Agreement is hereby amended in its entirety to read as follows:
"(j) change the definition of Borrowing Base or the definitions
of Eligible Accounts, Maximum Revolver Amount, Term Loan A Amount, Term
Loan B Amount, or change SECTION 2.1(B); or"
14. CONDITIONS. This Amendment shall become effective only upon
satisfaction in full of the following conditions precedent (the first date upon
which all such conditions have been satisfied being herein called the "AMENDMENT
EFFECTIVE DATE"):
(a) REPRESENTATIONS AND WARRANTIES; NO EVENT OF DEFAULT. The
representations and warranties contained herein, in Section 5 of the Loan
Agreement and in each other Loan Document and certificate or other writing
delivered to the Agent and the Lenders pursuant hereto on or prior to the
Amendment Effective Date shall be correct in all material respects on and as of
the Amendment Effective Date as though made on and as of such date (except to
the extent that such representations and warranties expressly relate solely to
an earlier date in which case such representations and warranties shall be true
and correct on and as of such date), and no Default or Event of Default shall
have occurred and be continuing on the Amendment Effective Date or would result
from this Amendment becoming effective in accordance with its terms, unless any
such Event of Default has previously been waived in accordance with Section 15
of the Loan Agreement.
(b) DELIVERY OF DOCUMENTS. The Agent shall have received on or
before the Amendment Effective Date the following, each in form and substance
reasonably satisfactory to the Agent and, unless indicated otherwise, dated the
Amendment Effective Date:
(i) counterparts of this Amendment, duly executed by the
Borrowers and the Agent;
(ii) the amended and restated Warrants, in form and
substance satisfactory to Agent, duly executed by the Parent;
(iii) a copy of the resolutions of each Borrower, certified
as of the Amendment Effective Date by an authorized officer thereof,
authorizing (A) the borrowings contemplated by this Amendment by each
Borrower and the transactions contemplated by the Loan Documents to
which such Person is or will be a party, and (B) the execution,
delivery and performance by each such Person of this Amendment and the
other Loan Documents to be executed and delivered pursuant hereto, and
the performance of the Loan Agreement, as amended; and
Page 33
(iv) such other agreements, instruments, approvals, opinions
and other documents as the Agent may reasonably request.
(c) AMENDMENT FEE. The Borrowers shall have paid to the Agent,
for the benefit of the Lenders, in immediately available funds, a fully earned
and nonrefundable amendment fee equal to $280,000, the payment of which shall be
effected by Agent charging such fee to Borrowers' Loan Account pursuant to
Section 2.6(d) of the Loan Agreement.
(d) PROCEEDINGS. All proceedings in connection with the
transactions contemplated by this Amendment, and all documents incidental
thereto, shall be reasonably satisfactory to the Agent and its special counsel,
and the Agent and such special counsel shall have received all such information
and such counterpart originals or certified copies of documents, and such other
agreements, instruments, approvals, opinions and other documents, as the Agent
or such special counsel may reasonably request.
15. REPRESENTATIONS AND WARRANTIES. Each of the Borrowers represent and
warrant as follows:
(a) Except as previously disclosed in writing to the Agent: (i)
the representations and warranties made by such Borrower herein, in the Loan
Agreement and in each other Loan Document and certificate or other writing
delivered to the Lenders on or prior to the Amendment Effective Date shall be
correct and accurate on and as of the Amendment Effective Date as though made on
and as of such date (except to the extent that such representations and
warranties expressly relate solely to an earlier date in which case such
representations and warranties shall be true and correct on and as of such
date); and (ii) subject to Section 13 hereof, no Default or Event of Default
shall have occurred and be continuing on the Amendment Effective Date or would
result from this Amendment becoming effective in accordance with its terms.
(b) Each of the Borrowers (i) is a corporation, duly organized,
validly existing and in good standing under the laws of its state of
organization, (ii) has all requisite power and authority to execute, deliver and
perform this Amendment, and to perform the Loan Agreement, as amended hereby,
and (iii) is duly qualified to do business and is in good standing in each
jurisdiction where the failure to be so qualified and in good standing
reasonably could be expected to have a Material Adverse Change.
(c) The execution, delivery and performance by each Borrower of
this Amendment, and the performance by each such Borrower of the Loan Agreement,
as amended hereby, (i) have been duly authorized by all necessary action, (ii)
do not and will not contravene such Borrower's charter or by-laws, any
applicable law or any contractual restriction binding on or otherwise affecting
it or any of its properties, (iii) do not and will not result in or require the
creation of any lien or other encumbrance (other than pursuant to any Loan
Documents) upon or with respect to any of its properties, and (iv) do not and
will not result in any suspension, revocation, impairment, forfeiture or
nonrenewal of any permit, license, authorization or approval applicable to its
operations or any of its properties.
(d) No authorization or approval or other action by, and no
notice to or filing with, any Governmental Authority or agency or other
regulatory body is required in connection with the due execution, delivery and
performance by such Borrower of this Amendment, or for the performance of the
Loan Agreement, as amended hereby.
(e) This Amendment, the Loan Agreement, as amended hereby, and
each other Loan Document to which such Borrower is a party is a legal, valid and
binding obligation of such Borrower, enforceable against such Borrower in
accordance with its terms, except as such enforceability may be limited by
equitable principles or by or subject to any bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting creditors' rights
generally.
16. WAIVER AND CONSENT. (a) Pursuant to the request of the Parent, the
Lenders hereby consent to and waive any Event of Default that would arise under
the Loan Agreement from any noncompliance by the Borrowers with Section 7.20 of
the Loan Agreement to the extent specifically described below:
Page 34
(i) the Borrowers and their Subsidiaries having a Minimum EBITDA
of less than $3,000,000 as of September 30, 2001; PROVIDED that the actual
Minimum EBITDA of the Borrowers and their Subsidiaries for the three month
period ending September 30, 2001 was not less than $1,300,000;
(ii) the Borrowers and their Subsidiaries having a Tangible Net
Worth of less than $12,500,000 as of September 30, 2001; PROVIDED that the
actual Tangible Net Worth of the Borrowers and their Subsidiaries as of
September 30, 2001 was not less than $11,500,000; and
(iii) the Borrowers and their Subsidiaries having a Leverage
Ratio of less than 5.40:1 as of September 30, 2001; PROVIDED that the actual
Leverage Ratio of the Borrowers and their Subsidiaries for the three month
period ending September 30, 2001 was not less than 11.75:1.
(b) The Lenders' waiver and consent provided for in this Amendment (i)
shall be deemed effective as of September 29, 2001 upon the execution of this
Amendment by the Lenders, (ii) shall be effective only in this specific instance
and for the specific purposes set forth herein, and (iii) does not allow for any
other or further departure from the terms and conditions of the Loan Agreement
or any other Loan Document, which terms and conditions shall continue in full
force and effect.
17. CONTINUED EFFECTIVENESS OF THE LOAN AGREEMENT. (a) Except as otherwise
expressly provided herein, the Loan Agreement and the other Loan Documents are,
and shall continue to be, in full force and effect and are hereby ratified and
confirmed in all respects, except that on and after the Amendment Effective Date
(i) all references in the Loan Agreement to "this Agreement", "hereto",
"hereof", "hereunder" or words of like import referring to the Loan Agreement
shall mean the Loan Agreement as amended by this Amendment and (ii) all
references in the other Loan Documents to the "Loan Agreement", "thereto",
"thereof", "thereunder" or words of like import referring to the Loan Agreement
shall mean the Loan Agreement as amended by this Amendment.
(b) The Borrowers hereby acknowledge and agree that this Amendment
constitutes a "Loan Document" under the Loan Agreement. Accordingly, it shall be
an Event of Default under the Loan Agreement if any representation or warranty
made by the Borrowers under or in connection with this Amendment shall have been
untrue, false or misleading in any material respect when made.
18. COSTS AND EXPENSES. The Borrowers shall pay all reasonable
out-of-pocket costs and expenses of the Lender Group (including, without
limitation, the reasonable fees and charges of counsel to any member of the
Lender Group) in connection with this Amendment.
19. MISCELLANEOUS. (a) This Amendment may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of
which shall be deemed to be an original, but all of which taken together shall
constitute one and the same agreement. Delivery of an executed counterpart of
this Amendment by telefacsimile shall be equally as effective as delivery of an
original executed counterpart of this Amendment. Any party delivering an
executed counterpart of this Amendment by telefacsimile also shall deliver an
original executed counterpart of this Amendment but the failure to deliver an
original executed counterpart shall not affect the validity, enforceability, and
binding effect of this Amendment.
(b) Section and paragraph headings herein are included for convenience
of reference only and shall not constitute a part of this Amendment for any
other purpose.
(c) This Amendment shall be governed by, and construed in accordance
with, the laws of the State of New York except to the extent governed by the
Bankruptcy Code.
20. THE BORROWERS, LENDERS AND THE AGENT EACH HEREBY IRREVOCABLY WAIVE ALL
RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED
ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO THIS AMENDMENT OR
THE ACTIONS OF THE LENDER GROUP IN THE NEGOTIATION, ADMINISTRATION, PERFORMANCE
OR ENFORCEMENT HEREOF.
[Remainder of this page intentionally left blank]
Page 35
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed as of the date first above written.
FRONTSTEP, INC.
an Ohio corporation
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
----------------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Vice President and Chief Financial Officer:
FRONTSTEP SOLUTIONS GROUP, INC.
an Ohio corporation
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
----------------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Vice President and Chief Financial Officer
FRONTSTEP CANADA, INC.
an Ontario corporation
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Vice President and Chief Financial Officer
FOOTHILL CAPITAL CORPORATION,
a California corporation, as Agent and as a Lender
By: /s/ Tent A. Smart
----------------------------------------------
▇▇▇▇▇ ▇. Smart:
Vice President
Page 36
ANNEX I
SCHEDULE C-1
COMMITMENTS
========================= ===================== ========================= ======================== ===================
TERM LOAN A
REVOLVER SUB-FACILITY TERM LOAN B TOTAL
LENDER COMMITMENT COMMITMENT* COMMITMENT COMMITMENT
------------------------- --------------------- ------------------------- ------------------------ -------------------
Foothill Capital $25,000,000 $15,000,000 $2,500,000 $27,500,000
Corporation
------------------------- --------------------- ------------------------- ------------------------ -------------------
------------------------- --------------------- ------------------------- ------------------------ -------------------
All Lenders $25,000,000 $15,000,000 $2,500,000 $27,500,000
========================= ===================== ========================= ======================== ===================
*The Term Loan A Commitment is a sub-facility of the Revolver Commitment.
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