Exhibit 10(b)
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "ACT"), OR ANY OTHER APPLICABLE STATE SECURITIES
LAWS AND MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED, ASSIGNED, PLEDGED OR
HYPOTHECATED UNLESS AND UNTIL REGISTERED UNDER THE ACT AND SUCH LAWS OR UNLESS
FRONTSTEP SOLUTIONS GROUP, INC. HAS RECEIVED AN OPNION OF COUNSEL REASONABLY
SATISFACTORY TO IT AND ITS LEGAL COUNSEL THAT SUCH REGISTRATION IS NOT REQUIRED.
AMENDMENT TO
CONVERTIBLE SUBORDINATED NOTE AGREEMENT
---------------------------------------
THIS AMENDMENT TO CONVERTIBLE SUBORDINATED NOTE AGREEMENT (this
"Amendment") is dated as of September 16, 2002 by and between Frontstep
Solutions Group, Inc., an Ohio corporation (formerly known as Symix Computer
Systems, Inc.) ("Frontstep Solutions"), and Mitsui & Co., Asia Investment Ltd.,
a company established under the laws of Singapore ("Mitsui Asia").
WHEREAS:
A. Frontstep Solutions and Mitsui Asia entered into a Convertible
Subordinated Note Agreement on May 13, 2002, as amended (the
"Agreement"), pursuant to which Frontstep Solutions agreed to pay
Mitsui Asia the principal amount of US$1,059,608 (the "Original
Principal Amount") together with interest at the rate of 4.37375% per
annum in one lump sum payment not later than September 1, 2002.
B. Frontstep Solutions and Mitsui Asia previously agreed to amend the
Agreement to extend the Maturity Date (as defined in the Agreement) to
September 16, 2002. Frontstep Solutions and Mitsui Asia have agreed to
further amend the Agreement as provided in this Amendment. Capitalized
terms used but not defined herein shall have the meanings ascribed to
them in the Agreement.
NOW IT IS HERBY AGREED as follows:
1. PAYMENT OF ACCRUED INTEREST. Concurrent with the execution and delivery
of this Amendment, Frontstep Solutions shall pay Mitsui Asia, in cash,
the interest that has accrued on the Original Principal Amount from
October 31, 2001 through September 1, 2002 in the amount of $38,878.
2. PARTIAL PAYMENT OF ORIGINAL PRINCIPAL AMOUNT IN SHARES. On or before
January 1, 2003 (the "Extended Maturity Date"), Frontstep Solutions
shall cause Parent to issue to Mitsui Asia, and Mitsui Asia shall
accept from Parent, that number of common shares of Parent (hereinafter
referred to as the "Shares") equal to (i) the sum of $529,804
(representing one half of the Original Principal Amount) plus accrued
interest thereon at the Interest Rate to the date of issuance of such
shares (the "Share Payment Amount"), divided by (ii) $2.85. The Shares
shall be subject to anti-dilution provisions similar to those described
in SECTION 4.5 of the Agreement. For purposes of the Agreement, the
date of issuance of the Shares shall be deemed to be the Date of
Conversion.
3. REGISTRATION OF THE SHARES. Frontstep Solutions will use, and will
cause Parent to use, its reasonable efforts to register such shares for
transfer or resale by Mitsui Asia under the U.S. Securities Act of
1933, as amended (the "Act"), on Form S-3 under the Act or any
successor form under the Act which permits inclusion or incorporation
of substantial information by reference to other documents filed by
Parent with the U.S. Securities and Exchange Commission; and Frontstep
Solutions shall pay for all reasonable out-of-pocket costs and expenses
relating or incidental to such registration (including, without
limitation, attorneys' fees); PROVIDED, however, that no registration
rights created hereunder shall have any priority over or be more
favorable than any then existing registration rights granted by Parent
to holders of Parent's outstanding preferred shares or warrants or
convertible securities.
4. PARTIAL PAYMENT OF ORIGINAL PRINCIPAL AMOUNT IN CASH. On or before the
Extended Maturity Date, Frontstep Solutions hereby promises to pay
Mitsui Asia, in cash, the remaining $529,804 (representing one half of
the Original Principal Amount) (with such portion of such amount
remaining unpaid at any time being referred to herein as the "Remaining
Principal Amount") with interest at the Interest Rate.
5. NO DEFAULT; EVENT OF DEFAULT. Neither the partial payment of the
Original Principal Amount through issuance of the Shares, nor the
extension of the Maturity Date to the Extended Maturity Date with
respect to the Remaining Principal Amount, shall constitute an Event of
Default under the Agreement or this Amendment. However, if Frontstep
Solutions fails to cause Parent to issue the Shares to Mitsui Asia as
contemplated hereby, or fails to pay the Remaining Principal Amount and
interest thereon on or prior to the Extended Maturity Date, an Event of
Default shall exist and Mitsui Asia shall have the right:
(a) to demand that the Shares be immediately issued in accordance
herewith and that the entire unpaid Remaining Principal
Amount, all accrued interest thereon, and all other sums
payable hereunder to be immediately due and payable, whereupon
the same shall become immediately due and payable, without
presentment, demand, protest of further notice of any kind,
all of which are hereby expressly waived by Frontstep
Solutions; or
(b) to convert all, but not less than all, of the unpaid Remaining
Principal Amount, accrued but unpaid interest thereon, and all
other sums payable hereunder into common shares of Parent at
the Amended Conversion Price (defined in SECTION 6 of this
Amendment) in accordance with SECTION 4 of the Agreement.
If Parent fails to issue the Shares in accordance herewith, or
Frontstep Solutions fails to pay any amount payable under this
Amendment, whether of the Shares, the Remaining Principal Amount or
otherwise, on the due date thereof, Frontstep shall, except in case of
exercise of the conversion right specified in SECTION 5(b) of this
Amendment, pay Mitsui Asia interest on the entire outstanding Remaining
Principal Amount and accrued and unpaid interest at the rate of sixteen
percent (16%) per annum.
2
6. AMENDED CONVERSION PRICE. Subject to adjustment as provided in SECTION
4.5 of the Agreement, if an Event of Default described in SECTION 5 of
this Amendment shall occur, then the amended conversion price per share
of Parent common shares issuable upon the conversion of the unpaid
Remaining Principal Amount, accrued by unpaid interest thereon, and all
other sums payable hereunder shall be the lesser of either the
following (the "Amended Conversion Price"):
(a) the average (weighted by daily trading volume) of the Daily
Prices (as defined below) per common share of Parent for the
30 consecutive trading days immediately preceding the Extended
Maturity Date; or
(b) US$2.85.
For purposes of this Amendment, Daily Price shall mean (i) if the
common shares of Parent then are traded on the New York Stock Exchange,
Inc. ("NYSE"), the closing price per share on such day as reported on
the NYSE Composite Transaction Tape; (ii) if the common shares of
Parent then are not listed and traded on the NYSE, the closing price
per share on such day as reported by the principal national securities
exchange on which the shares are listed and traded; (iii) if the common
shares of Parent then are not listed and traded on any such securities
exchange, the last reported sale price per share on such day on the
NASDAQ Stock Market; (iv) if the common shares of Parent then are not
traded on the NASDAQ Stock Market, the average of the highest reported
bid and lowest reported asked price per share on such day as reported
by NASDAQ; (v) if on any determination date the common shares of Parent
then are not quoted by any such organization, the fair market value per
share on such determination date as determined by the Board of
Directors of Parent; or (vi) if Mitsui Asia shall object to any
determination by the Board of Directors of Parent, the fair market
value per share on such determination date as determined by an
independent appraiser retained by Frontstep Solutions at its expense
and reasonably acceptable to Mitsui Asia.
8. RIGHT TO PREPAY. Notwithstanding anything to the contrary contained in
this Amendment or the Agreement, Frontstep Solutions shall have the
right to pay or prepay, in cash, all amounts due to Mitsui Asia from
Frontstep Solutions under the Agreement, whether constituting the Share
Payment Amount or the Remaining Principal Amount, in whole or in part,
at any time without penalty or fee.
9. REMAINING TERMS AND CONDITIONS UNAFFECTED. Except as expressly amended
by this Amendment, the terms and conditions contained in the Agreement
shall continue in full force and effect as provided in the Agreement
and are hereby ratified and confirmed in all respects, except that all
references to this "Agreement" shall mean this Agreement as amended by
this Amendment.
10. GOVERNING LAW AND VENUE. This Amendment shall be construed and governed
by the laws of the State of New York applicable to contracts negotiated
and fully performed within the State of New York. Any dispute or
disagreement between the parties hereto
3
shall be determined exclusively by the courts located in the State of
New York. The parties expressly consent to the personal jurisdiction of
these courts and waive any right to object to the same for all matters
arising out of or relating to this Amendment.
11. COMPLETE AGREEMENT; AMENDMENTS. This Amendment contains the entire
agreement between the parties hereto as to the subject matter hereof
and supersedes all prior or contemporaneous discussions, negotiations,
representations, or agreements relating to the subject matter of this
Amendment. No amendments, changes, or modifications to this Amendment
shall be made or be binding on either party hereto unless made in
writing and signed by such party.
IN WITNESS WHEREOF, the parties hereto have executed this Amendment as
of the date and year first written above.
FRONTSTEP SOLUTIONS GROUP, INC., MITSUI & CO., ASIA INVESTMENT LTD., a company
an Ohio corporation established under the laws of Singapore
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
------------------------------------------------- --------------------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ Name: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
----------------------------------------------- ------------------------------------------------
Title: Vice President and Chief Financial Officer Title: President/Managing Director
--------------------------------------------- -----------------------------------------------
4
AGREEMENT AND CONSENT
---------------------
Frontstep, Inc., an Ohio corporation ("Parent"), hereby agrees
to be bound by and consents to the terms and provisions of the
foregoing Amendment to Convertible Subordinated Note Agreement dated
September 16, 2002 between Frontstep Solutions Group, Inc. and Mitsui &
Co., Asia Investment Ltd. ("Mitsui Asia") to the extent necessary to
allow Mitsui Asia to convert the Share Payment Amount (and the
Remaining Principal Amount in the Event of Default) to common shares of
Parent as provided therein. To the extent required in said Amendment,
Parent will use its reasonable efforts to register such shares for
transfer or resale by Mitsui Asia under the U.S. Securities Act of
1933, as amended (the "Act") on Form S-3 under the Act or any successor
form under the Act which permits inclusion or incorporation of
substantial information by reference to other documents filed by Parent
with the U.S. Securities and Exchange Commission.
FRONTSTEP, INC.,
an Ohio corporation
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
----------------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------------------------
Title: Vice President & Chief Financial Officer
-------------------------------------------
5