EX-10.Q 11 l96355aexv10wq.txt EXHIBIT 10(Q) Exhibit 10(q) FOURTH AMENDMENT TO LOAN AND SECURITY AGREEMENT --------------------------- FOURTH AMENDMENT dated as of July 9, 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 and the Third Amendment dated as of May 13, 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 and the Lenders to amend the Loan Agreement to, among other things, permit the incurrence of certain unsecured Indebtedness, and the Agent, on behalf of the Lenders, has agreed to such request subject to the terms and conditions hereof. 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 definition of the term "Bridge Loan" is hereby deleted in its entirety. (b) A definition of the term "Convertible Loans" is hereby inserted, in appropriate alphabetical order, to read as follows: "'CONVERTIBLE LOANS' means the unsecured term loans in the aggregate original principal amount of $5,000,000 to be made by Persons (other than a Borrower) to one or more of the Borrowers on and after July 9, 2002 (inclusive of the bridge loans made to the Borrowers on or about May 13, 2002 in the aggregate original principal amount of $1,500,000 that are being refinanced and/or replaced by such Convertible Loans) pursuant to that certain Securities Purchase Agreement dated as of March 7, 2002 by and among the Parent and the investors named therein, as amended by Amendment Number One dated as of July 9, 2002 and as further amended, modified or supplemented from time to time with the prior written consent of the Agent." 3. CONVERTIBLE LOANS. Section 7.1(i) of the Loan Agreement is hereby amended by (a) deleting the phrase "the Bridge Loan" set forth therein and (b) inserting the following provision in lieu thereof: "(i) the Convertible Loans, PROVIDED that the proceeds of such Convertible Loans are remitted by the makers of such loans directly to the Agent and applied by the Agent to repay the Advances then outstanding." 4. MITSUI INDEBTEDNESS. Section 7.1(h) of the Loan Agreement is hereby amended in its entirety to read as follows: "(h) subordinated Indebtedness owing to Mitsui & Co., Asia Investment Ltd., a company established under the laws of Singapore, Mitsui & Co. Ltd., a company established under the laws of Japan, and MVC Corporation, a company established under the laws of Japan, 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." 5. MITSUI LIENS. Clause (l) of the definition of the term "Permitted Liens" is hereby amended in its entirety to read as follows: "(l) Liens in favor of Mitsui & Co., Asia Investment Ltd., a company established under the laws of Singapore, Mitsui & Co. Ltd., a company established under the laws of Japan, and MVC Corporation, a company established under the laws of Japan, on the Stock of Frontstep (Singapore) Pte Ltd. that is owned by any Borrower to the extent such Liens secure such Borrower's obligations in respect of the Indebtedness permitted under SECTION 7.1(h) hereof." 6. 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. 2 (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; and (ii) such other agreements, instruments, approvals, opinions and other documents as the Agent may reasonably request. (c) 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. 7. 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. 3 (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. 8. 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. 9. 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. 10. 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. 4 11. 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] 5 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/ Daniel P. Buettin ---------------------------------------------- Name: Daniel P. Buettin Title: Vice President and Chief Financial Officer FRONTSTEP SOLUTIONS GROUP, INC. an Ohio corporation By: /s/ Daniel P. Buettin ---------------------------------------------- Name: Daniel P. Buettin Title: Vice President and Chief Financial Officer FRONTSTEP CANADA, INC. an Ontario corporation By: /s/ Daniel P. Buettin ---------------------------------------------- Name: Daniel P. Buettin Title: Vice President and Chief Financial Officer FOOTHILL CAPITAL CORPORATION, a California corporation, as Agent and as a Lender By: /s/ Trent A. Smart ---------------------------------------------- Name: Trent A. Smart Title: Vice President 6