Exhibit 10(c)
SEVENTH AMENDMENT TO
LOAN AND SECURITY AGREEMENT
---------------------------
SEVENTH AMENDMENT dated as of September 30, 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 15,
2002, and the Sixth Amendment, dated as of September 10, 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 requested the Agent to amend the Loan
Agreement to provide for, among other things, modifications to the financial
covenants set forth in the Loan Agreement, 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. 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:
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APPLICABLE AMOUNT APPLICABLE PERIOD
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($209,000) For the 12 month period ending
June 30, 2002
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APPLICABLE AMOUNT APPLICABLE PERIOD
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($1,980,000) For the 12 month period ending
September 30, 2002
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$2,284,000 For the 12 month period ending
December 31, 2002
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$4,351,000 For the 12 month period ending
March 31, 2003
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$5,752,000 For the 12 month period ending
June 30, 2003
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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 $5,752,000."
(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. 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
--------------------------------- -------------------------------------
$5,355,000 June 30, 2002
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$3,928,000 September 30, 2002
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$4,207,000 December 31, 2002
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$4,110,000 March 31, 2003
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$4,610,000 June 30, 2003
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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
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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 $4,610,000."
(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:
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LEVERAGE RATIO APPLICABLE PERIOD
------------------------------ ---------------------------------------
(80.99:1) For the 12 month period ending
June 30, 2002
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(11.67:1) For the 12 month period ending
September 30, 2002
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7.16:1 For the 12 month period ending
December 31, 2002
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3.45:1 For the 12 month period ending
March 31, 2003
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2.37:1 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 2.37:1."
3. 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/WAIVER EFFECTIVE DATE"):
(a) REPRESENTATIONS AND WARRANTIES; NO EVENT OF DEFAULT. The
representations and warranties contained herein, in Section 4 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/Waiver Effective Date shall be correct in all
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material respects on and as of the Amendment/Waiver 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/Waiver 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/Waiver Effective Date the following, each in form and
substance reasonably satisfactory to the Agent and, unless indicated otherwise,
dated the Amendment/Waiver Effective Date, provided that the amendments set
forth in Section 2 of this Amendment shall be deemed effective as of September
30, 2002:
(i) counterparts of this Amendment, duly executed by the
Borrowers and the Agent; and
(ii) such other agreements, instruments, approvals,
opinions and other documents as the Agent may reasonably request.
(c) ACCOMMODATION FEE. The Borrowers shall have paid to the Agent,
for the benefit of the Lenders, a non-refundable accommodation fee equal to
$650,000 which fee shall be earned in full on the Amendment/Waiver Effective
Date and shall be payable in installments of $50,000 on the first day of each
month, commencing on October 1, 2002, provided that payment of such fee may be
effected by Agent charging such fee to Borrowers' Loan Account pursuant to
Section 2.6(d) of the Loan Agreement. The outstanding balance of such
accommodation fee shall paid on the date on which the Loan Agreement shall
terminate.
(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.
4. 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/Waiver Effective Date
shall be correct and accurate on and as of the Amendment/Waiver 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/Waiver Effective Date or would result from
this Amendment becoming effective in accordance with its terms.
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(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.
5. 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/Waiver 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.
6. COSTS AND EXPENSES. The Borrowers shall pay all reasonable
out-of-pocket costs and expenses of the Lender Group (including, without
limitation, the reasonable
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fees and charges of counsel to any member of the Lender Group) in connection
with this Amendment.
7. 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.
8. 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.
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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
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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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