Exhibit 10(a)
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
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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 MVC Corporation, a company
established under the laws of Japan ("MVC").
WHEREAS:
A. Frontstep Solutions and MVC entered into a Convertible Subordinated
Note Agreement on May 13, 2002, as amended (the "Agreement"), pursuant
to which Frontstep Solutions agreed to pay MVC the principal amount of
US$202,145 (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 MVC previously agreed to amend the Agreement to
extend the Maturity Date (as defined in the Agreement) to September 16,
2002. Frontstep Solutions and MVC 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 MVC, in cash, the
interest that has accrued on the Original Principal Amount from October
31, 2001 through September 1, 2002 in the amount of $7,417.
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 MVC, and MVC shall accept from Parent,
that number of common shares of Parent (hereinafter referred to as the
"Shares") equal to (i) the sum of $101,072.50 (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 MVC 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 MVC,
in cash, the remaining $101,072.50 (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 MVC 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 MVC 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 MVC interest on the entire outstanding Remaining
Principal Amount and accrued and unpaid interest at the rate of sixteen
percent (16%) per annum.
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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 MVC 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 MVC.
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 MVC 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 shall be determined exclusively
by the courts located in the State of New York. The
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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., MVC CORPORATION, a company
an Ohio corporation established under the laws of Japan
By: /S/ XXXXXX X. XXXXXXX By: /S/ XXXXX XXXXXXXXXX
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Name: Xxxxxx X. Xxxxxxx Name: Xxxxx Xxxxxxxxxx
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Title: Vice President and Chief Financial Officer Title: President & C.E.O. MVC
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AGREEMENT AND CONSENT
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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 MVC
Corporation to the extent necessary to allow MVC 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 MVC 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/ XXXXXX X. XXXXXXX
--------------------------------------------
Name: Xxxxxx X. Xxxxxxx
------------------------------------------
Title: Vice President & Chief Financial Officer
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