Exhibit 10(d)
EIGHTH AMENDMENT TO
LOAN AND SECURITY AGREEMENT
---------------------------
EIGHTH AMENDMENT dated as of November 12, 2002 (this "AMENDMENT") to
the LOAN AND SECURITY AGREEMENT dated as of July 17, 2001, as amended by the
First Amendment dated as of November 15, 2001, the Second Amendment dated as of
February 14, 2002, the Third Amendment dated as of May 13, 2002, the Fourth
Amendment dated as of July 9, 2002, the Fifth Amendment dated as of July 31,
2002, the Sixth Amendment, dated as of September 10, 2002, and the Seventh
Amendment, dated as of September 30, 2002 (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 advised the Agent that they are developing
a strategic business plan and evaluating business options, including the
possibility of merging with a third party or seeking additional capital, and
have requested the Agent to amend the Loan Agreement to provide for, among other
things, accommodations related to such strategic business options as well as to
modify the financial covenants set forth therein, and the Agent, on behalf of
the Lenders, has agreed to such request.
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) A definition of the term "Contingency Plan" is hereby inserted, in
appropriate alphabetical order, to read as follows:
"'CONTINGENCY PLAN' has the meaning set forth in SECTION 6.19."
(b) A definition of the term "Target Date" is hereby inserted, in
appropriate alphabetical order, to read as follows:
"'TARGET DATE' has the meaning set forth in SECTION 6.20."
(c) A definition of the term "Transaction Agreement" is hereby
inserted, in appropriate alphabetical order, to read as follows:
"'TRANSACTION AGREEMENT' has the meaning set forth in SECTION 6.20."
(d) The definition of the term "Accounts Reserve" is hereby deleted in
its entirety.
(e) The definition of the term "Base Rate Margin" is hereby amended in
its entirety to read as follows:
"BASE RATE MARGIN' means 2 percentage points."
(f) The definition of the term "LIBOR Rate Margin" is hereby amended in
its entirety to read as follows:
"'LIBOR RATE MARGIN' means 4 percentage points."
(g) The definition of the term "Maximum Revolver Amount" is hereby
amended in its entirety to read as follows:
"'MAXIMUM REVOLVER AMOUNT' means $1,500,000."
(h) 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,
its Term Loan C Commitment, or its Total Commitment, as the context
requires, and, with respect to all Lenders, their Revolver
Commitments, their Term Loan A Commitments, their Term Loan B
Commitments, their Term Loan C 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."
(i) A definition of the term "Eighth Amendment Effective Date" is
hereby inserted, in appropriate alphabetical order, to read as follows:
"'EIGHTH AMENDMENT EFFECTIVE DATE' means the date on which all
of the conditions precedent to the effectiveness of Eighth Amendment
to Loan Agreement dated as of November __, 2002, by and among the
Borrowers, the Agent and the Lenders have been fulfilled or waived."
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(j) The definition of the term "Pro Rata Share" is hereby amended by
(i) re-designating clause (e) as clause (f) and (ii) inserting new clause (e)
therein to read as follows:
"(e) with respect to a Lender's obligation to make the Term
Loan C and receive payments of interest, fees, and principal with
respect thereto, the percentage obtained by dividing (i) such
Lender's Term Loan C Commitment, by (ii) the aggregate amount of all
Lenders' Term Loan C Commitments, and"
(k) 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, the Term Loan
B and the Term Loan C."
(l) A definition of the term "Term Loan C" is hereby inserted, in
appropriate alphabetical order, to read as follows:
"'TERM LOAN C' has the meaning set forth in SECTION 2.2(c)."
(m) A definition of the term "Term Loan C Amount" is hereby
inserted, in appropriate alphabetical order, to read as follows:
"'TERM LOAN C AMOUNT' means, as of the date of determination,
the outstanding principal amount of the Term Loan C."
(n) A definition of the term "Term Loan C Commitment" is hereby
inserted, in appropriate alphabetical order, to read as follows:
"'TERM LOAN C COMMITMENT' means, with respect to each Lender,
its Term Loan C Commitment, and, with respect to all Lenders, their
Term Loan C 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."
3. REVOLVER ADVANCES. Section 2.1(a) of the Loan Agreement is hereby
amended in its entirety to read as follows:
"(a) Subject to the terms and conditions of this Agreement, and
during the term of this Agreement, each Lender with a Revolver
Commitment agrees (severally, not jointly or jointly and severally)
to make advances ("Advances") to Borrowers in an amount at any one
time outstanding not to exceed such Lender's Pro Rata Share of an
amount equal to the lesser of (A) the Maximum Revolver Amount LESS
the Letter of Credit Usage, or (B) the Borrowing Base less the Letter
of Credit Usage. For purposes of this Agreement, "Borrowing Base," as
of any date of determination, shall mean the result of:
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(x) 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, minus,
(y) the Softech Reserve, minus
(z) the aggregate amount of reserves, if any,
established by Agent under SECTION 2.1(b)."
4. DEFERRAL OF CERTAIN PAYMENTS. (a) Section 2.2(a)(ii) of the Loan
Agreement is hereby amended in its entirety to read as follows:
"(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 August 1, 2002,
except that (A) the amortization payment in respect of the Term Loan
A due on November 1, 2002 shall be deferred until the date of
termination of this Agreement so long as no Event of Default has
occurred and is continuing on November 1, 2002, and (B) if Parent has
delivered to Agent a fully executed Transaction Agreement to Agent in
accordance with SECTION 6.20(b) and Parent and Agent have established
the benchmarks referenced in SECTION 6.20(b), the amortization
payment in respect of the Term Loan A due on December 1, 2002 shall
be deferred until the date of termination of this Agreement so long
as no Event of Default has occurred and is continuing on December 1,
2002. 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) The second sentence of Section 2.2(b)(i) of the Loan Agreement
is hereby amended in its entirety to read as follows:
"The Term Loan B shall be repaid on the first day of each
month, commencing on August 1, 2002, in equal monthly installments of
$75,000, except that (A) the amortization payment in respect of the
Term Loan B due on November 1, 2002 shall be deferred until the date
of termination of this Agreement so long as no Event of Default has
occurred and is continuing on November 1, 2002, and (B) if Parent has
delivered to Agent a fully executed Transaction Agreement to Agent in
accordance with SECTION 6.20(b) and Parent and Agent have established
the benchmarks referenced in SECTION 6.20(b), the amortization
payment in respect of the Term Loan B due on December 1, 2002 shall
be deferred until the date of termination of this Agreement so long
as no Event of Default has occurred and is continuing on December 1,
2002."
(c) Section 3(c) of the Seventh Amendment, dated as of September 30,
2002, to the Loan Agreement is hereby deleted.
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5. TERM LOAN C. A new subsection (c) is hereby inserted in Section 2.2
of the Loan Agreement to read as follows:
"(c) (i) Subject to the terms and conditions of this
Agreement, on the Eighth Amendment Effective Date each Lender with a
Term Loan C Commitment agrees (severally, not jointly or jointly and
severally) to make a term loan (collectively, the "Term Loan C") to
Borrowers in an amount equal to such Lender's Pro Rata Share of
$650,000. The Term Loan C shall be repaid on the first day of each
month, commencing on November 1, 2002, in equal monthly installments
of $25,000.
(ii) Borrowers may, at any time, prepay all or a portion
of the Term Loan C without penalty or premium. The outstanding
unpaid principal balance and all accrued and unpaid interest under
the Term Loan C shall be due and payable upon the date of
termination of this Agreement, whether by its terms, by prepayment,
or by acceleration. All amounts outstanding under the Term Loan C
shall constitute Obligations."
6. INTEREST RATES. Section 2.6(a)(iii) of the Loan Agreement is hereby
amended in its entirety to read as follows:
"(iii) the Term Loan B Amount and the Term Loan C Amount shall not
bear interest on the amount thereof outstanding."
7. CONTINGENCY PLAN; TRANSACTION AGREEMENT. New Sections 6.19 and 6.20
are hereby inserted in the Loan Agreement immediately following Section 6.18
thereof to read as follows:
"6.19 CONTINGENCY PLAN. Parent shall provide to Agent
more detailed information regarding the current strategic and
business plans and objectives of Parent and its Subsidiaries and
shall permit Agent to participate in the evaluation of such plans
and objectives. In that regard, prior to November 13, 2002, Parent
will furnish to Agent a detailed budget, prepared in consultation
with and in form and substance acceptable to Agent, reflecting a
plan to restructure the business operations of Parent and its
Subsidiaries to a level at which the revenues, at existing levels
(excluding the effects from any projected increases), will provide
sufficient cash flow to support the business operations of Parent
and its Subsidiaries, including their debt service obligations under
the Loan Agreement (the "CONTINGENCY PLAN").
6.20 TRANSACTION AGREEMENT; ALTERNATE OPTIONS.
(a) Unless prior to November 13, 2002 (the "TARGET
DATE") Parent delivers to Agent a copy of a fully executed agreement
(a "TRANSACTION AGREEMENT") between Parent and a bona fide purchaser
with the financial means to acquire Parent (as reasonably determined
by Agent) that provides for the acquisition of Parent by such
purchaser and requires such purchaser and Agent to execute an
agreement satisfactory to Agent with respect to the repayment of the
Obligations, then:
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(i) no later than the Target Date, Parent shall engage
an investment banking firm, acceptable to Agent in its sole and
absolute discretion, to assist Parent in reviewing and evaluating
the strategic and business options available to Parent and its
Subsidiaries and in developing both a short and long-term strategic
business plan, which may include, without limitation, the sale of
the Parent and its Subsidiaries, the seeking of additional capital,
a business combination with a third party, a financial restructuring
or any other strategy recommended by the investment banking firm and
reasonably acceptable to Parent as evidenced by the approval of a
majority of Parent's Board of Directors in a meeting properly called
for approval of such a recommendation. Agent acknowledges that
Parent (A) has already hired Updata Capital, Inc., an investment
banking firm, pursuant to an agreement dated February 25, 2002, to
conduct such a review and (B) has already hired Xxxxxxx Xxxxx &
Company, pursuant to an agreement dated February 15, 2002, to
provide, among other things, a fairness opinion on any transaction
proposed by the Parent for approval by its shareholders. Agent
agrees that it will in good faith consider accepting the continued
use of the firms referenced in clauses (A) and (B) above. If Agent
does not, on or before the Target Date, consent in writing to
Parent's continue use of the firms referenced in clauses (A) and (B)
above and if Parent fails to engage an investment banking firm,
acceptable to Agent in its sole and absolute discretion, within ten
(10) days following the Target Date, the Commitments of the Lenders
to make Advances and issue Letters of Credit for the account of the
Borrowers shall, on the date of such determination by the Agent,
terminate and, thereafter, the Agent and the Lenders may, in their
sole and absolute discretion, make Advances to the Borrowers and/or
issue Letters of Credit for the account of the Borrowers; and
(ii) no later than November 15, 2002, Parent and Agent
shall establish certain benchmarks for (A) the completion of the
review and evaluation of available strategic and business options by
Parent and the investment banking firm as contemplated in clause
(a)(i) above, (B) the selection of the course of action to be taken
by Parent and its Subsidiaries as a result of such review and
evaluation, and (C) the execution or implementation of the strategic
plan or option so selected, PROVIDED that (1) if the course of
action chosen by Parent is not acceptable to Agent in its sole and
absolute discretion, (2) if Parent and Agent fail to agree, by
November 15, 2002, on the aforementioned benchmarks or (3) if,
following the establishment of the benchmarks referenced in clauses
(A) and (B) above, Parent fails to comply with such benchmarks, in
any one of these three cases, the Commitments of the Lenders to make
Advances and issue Letters of Credit for the account of the
Borrowers shall terminate and, thereafter, the Agent and the Lenders
may, in their sole and absolute discretion, make Advances to the
Borrowers and/or issue Letters of Credit for the account of the
Borrowers. Further, if, following the establishment of the
benchmarks referenced in clause (C) above, Parent fails to comply
with any such benchmark, such noncompliance shall constitute an
Event of Default.
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(b) In the event that Parent delivers to Agent a copy of
a fully executed Transaction Agreement on or before the Target Date,
Parent and Agent shall establish, within five (5) Business Days of
the delivery of such Transaction Agreement to Agent, certain
benchmarks related to the closing of the transaction under the
Transaction Agreement (including, without limitation, the deadline
for submitting required regulatory filings, obtaining shareholder
approval and closing such transaction), PROVIDED that if Parent and
Agent fail to agree on the aforementioned benchmarks within such
five (5) Business Day period, the Commitments of the Lenders to make
Advances and issue Letters of Credit for the account of the
Borrowers shall terminate and, thereafter, the Agent and the Lenders
may, in their sole and absolute discretion, make Advances to the
Borrowers and/or issue Letters of Credit for the account of the
Borrowers. Further, if, following the establishment of such
benchmarks, Parent fails to comply with any such benchmark, such
noncompliance shall constitute an Event of Default."
8. FINANCIAL COVENANTS. Section 7.20(a) of the Loan Agreement is
hereby amended by amending clauses (i), (ii) and (iii) thereof as follows:
(a) MINIMUM EBITDA. Clause (i) of Section 7.20(a) is hereby amended
in its entirety to read as follows:
"(i) MINIMUM EBITDA. Fail to maintain 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
-------------------------------- -------------------------------------
$5,699,000 For the 12 month period ending
September 30, 2002
-------------------------------- -------------------------------------
$9,569,000 For the 12 month period ending
December 31, 2002
-------------------------------- -------------------------------------
$11,327,000 For the 12 month period ending
March 31, 2003
-------------------------------- -------------------------------------
$11,852,000 For the 12 month period ending
June 30, 2003
-------------------------------- -------------------------------------
Borrowers' EBITDA for the 12 month period ending each quarter after
June 30, 2003 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 be determined by Agent
in its Permitted Discretion and shall not be less than $11,852,000."
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(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. Fail to maintain 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
--------------------------------- ------------------------------------
$1,527,000 September 30, 2002
--------------------------------- ------------------------------------
$1,958,000 December 31, 2002
--------------------------------- ------------------------------------
$2,051,000 March 31, 2003
--------------------------------- ------------------------------------
$2,501,000 June 30, 2003
--------------------------------- ------------------------------------
Borrowers' Tangible Net Worth for each fiscal quarter ending after June
30, 2003 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 be determined by Agent in its Permitted Discretion and
shall not be less than $2,501,000."
(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 more than the applicable ratio set forth below:
---------------------------- ------------------------------------------
LEVERAGE RATIO APPLICABLE PERIOD
---------------------------- ------------------------------------------
3.69:1 For the 12 month period ending
September 30, 2002
---------------------------- ------------------------------------------
1.82:1 For the 12 month period ending
December 31, 2002
---------------------------- ------------------------------------------
1.41:1 For the 12 month period ending
March 31, 2003
---------------------------- ------------------------------------------
1.22:1 For the 12 month period ending
June 30, 2003
---------------------------- ------------------------------------------
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Borrowers' Leverage Ratio for the 12 month period ending each
quarter after June 30, 2003 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 be determined by Agent in its Permitted Discretion
and shall not be more than 1.22:1."
9. EVENTS OF DEFAULT. Section 8 of the Loan Agreement is hereby amended
as follows:
(a) Section 8.13 is hereby amended by deleting the word "or"
at the end of such Section.
(b) Section 8.14 is hereby amended by deleting the period at
the end thereof and inserting a semi-colon in lieu thereof.
(c) New Sections 8.15 and 8.16 are hereby inserted immediately
following Section 8.14 to read as follows:
"8.15 If the Parent shall fail to comply with (i) any
benchmark established by the Parent and Agent for the execution or
implementation of the course of action so selected pursuant to SECTION
6.20(a)(ii)(C), or (ii) any benchmark established by the Parent and
Agent related to the closing of the transaction under the Transaction
Agreement pursuant to SECTION 6.20(b), PROVIDED that, for the avoidance
of doubt, Agent and the Lenders hereby agree that SECTION 8.2 shall not
apply to any noncompliance by Borrowers with the terms and conditions
of SECTION 6.20; or
8.16 If the Transaction Agreement delivered to Agent
pursuant to SECTION 6.20 shall at any time be terminated prior to the
consummation of the transaction contemplated thereunder."
10. 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.
11. 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", provided that the amendments set forth in Section 8 of this
Amendment shall be deemed effective as of September 30, 2002):
(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
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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) an amendment to the Warrant, duly executed by the Parent,
relating to the reduction of the warrant exercise price to $2.85 (the
"WARRANT AMENDMENT"); and
(iii) such other agreements, instruments, approvals, opinions
and other documents as the Agent may reasonably request.
(c) FINANCIAL COVENANTS. In addition to the other conditions
precedent set forth in this Section 11, the amendments to the financial
covenants set forth in Section 8 of this Amendment shall be effective upon the
Parent's delivery to the Agent of evidence (in the form of an affirmative
statement in a Form 8-K filed by the Parent with the SEC) that the Parent has
implemented the accounting change in connection with the financial reporting
standard documented by Statement of Position (SOP) 97-2, Software Revenue
Recognition, requiring additional deferred recognition of certain software
revenue. The Agent hereby acknowledges that any Event of Default arising due to
the noncompliance by the Borrowers with any financial covenant set forth in
SECTION 7.20 of the Loan Agreement, occurring in any fiscal period prior to the
Amendment Effective Date as a result of the retroactive implementation of the
foregoing accounting change, is hereby waived.
(d) 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 $650,000, the payment of which shall be
effected by Agent applying the proceeds of the Term Loan C made pursuant to the
Loan Agreement (as amended hereby).
(e) 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.
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12. 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) 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.
13. WAIVER AND CONSENT. (a) If (i) a Transaction Agreement is delivered
to the Agent prior to November 13, 2002 or otherwise accepted by the Agent in
its sole and absolute discretion in accordance with SECTION 6.20(b) of the Loan
Agreement (as amended hereby), (ii) the Parent complies with each of the
benchmarks established in accordance with SECTION 6.20(b) of the Loan Agreement
(as amended hereby) in respect of the transaction contemplated by such
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Transaction Agreement and (iii) the Agent determines, in its reasonable credit
judgment, that the Parent has sufficient liquidity to fund all of its
operational needs through the estimated closing date of the transaction
contemplated by such Transaction Agreement, then the Lenders hereby agree to
waive any Event of Default that would arise under the financial covenants set
forth in SECTION 7.20(a)(i) [Minimum EBITDA], SECTION 7.20(a)(ii) [Tangible Net
Worth] and SECTION 7.20(a)(iii) [Leverage Ratio] of the Loan Agreement, in each
case for the twelve month period ended December 31, 2002. The foregoing waiver
of the Lenders (x) shall be effective only in this specific instance and for the
specific purposes set forth herein and (y) 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, including, without limitation, the reporting requirements set forth in
SECTION 6.3 of the Loan Agreement.
(b) If (i) a Transaction Agreement is delivered to the Agent prior
to November 13, 2002 or otherwise accepted by the Agent in its sole and absolute
discretion in accordance with SECTION 6.20(b) of the Loan Agreement (as amended
hereby) and (ii) the Parent complies with each of the benchmarks established in
accordance with SECTION 6.20(b) of the Loan Agreement (as amended hereby) in
respect of the transaction contemplated by such Transaction Agreement, the
Lenders hereby agree to waive any Applicable Prepayment Premium payable by the
Borrowers as a result of the prepayment of the Obligations in connection with
the consummation of such transaction.
14. 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 or if Borrowers
fail to perform any covenant contained in this Amendment.
15. 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.
16. 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
12
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.
17. 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]
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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/ XXXXXX X. XXXXXXX
----------------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: Vice President & Chief Financial
Officer
FRONTSTEP SOLUTIONS GROUP, INC.
an Ohio corporation
By: /s/ XXXXXX X. XXXXXXX
----------------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: Vice President & Chief Financial
Officer
FRONTSTEP CANADA, INC.
an Ontario corporation
By: /s/ XXXXXX X. XXXXXXX
----------------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: Vice President & Chief Financial
Officer
FOOTHILL CAPITAL CORPORATION,
a California corporation, as Agent and as a
Lender
By: /s/ XXXXX X. SMART
----------------------------------------
Name: Xxxxx X. Smart
Title: Vice President
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ANNEX I
-------
SCHEDULE C-1
------------
COMMITMENTS
================= ================= ==================== ================== ================= ===================
TERM LOAN A
REVOLVER SUB-FACILITY TERM LOAN B TERM LOAN C
LENDER COMMITMENT COMMITMENT* COMMITMENT COMMITMENT TOTAL COMMITMENT
----------------- ----------------- -------------------- ------------------ ----------------- -------------------
Foothill Capital $25,000,000 $15,000,000 $900,000 $650,000 $26,550,000
Corporation
----------------- ----------------- -------------------- ------------------ ----------------- -------------------
----------------- ----------------- -------------------- ------------------ ----------------- -------------------
All Lenders $25,000,000 $15,000,000 $900,000 $650,000 $26,550,000
================= ================= ==================== ================== ================= ===================
*The Term Loan A Commitment is a sub-facility of the Revolver Commitment.
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