-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, F7wRhvNmska5D7DUYbRgOxoYx6HFG+h70NwvcWBP+m+gAnnz+4qdK7OzqmA3u/+8 e9lBb++aWHLkh7mx+nc0oQ== /in/edgar/work/0000950152-00-007018/0000950152-00-007018.txt : 20000929 0000950152-00-007018.hdr.sgml : 20000929 ACCESSION NUMBER: 0000950152-00-007018 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 11 CONFORMED PERIOD OF REPORT: 20000630 FILED AS OF DATE: 20000927 FILER: COMPANY DATA: COMPANY CONFORMED NAME: SYMIX SYSTEMS INC CENTRAL INDEX KEY: 0000872443 STANDARD INDUSTRIAL CLASSIFICATION: [7372 ] IRS NUMBER: 311083175 STATE OF INCORPORATION: OH FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10-K SEC ACT: SEC FILE NUMBER: 000-19024 FILM NUMBER: 729605 BUSINESS ADDRESS: STREET 1: 2800 CORPORATE EXCHANGE DR CITY: COLUMBUS STATE: OH ZIP: 43231 BUSINESS PHONE: 6145237000 MAIL ADDRESS: STREET 1: 2800 CORPORATE EXCHANGE DR CITY: COLUMBUS STATE: OH ZIP: 43231 10-K 1 l83289ae10-k.txt SYMIX SYSTEMS, INC. FORM 10-K 1 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ------------------------ FORM 10-K
(MARK ONE) [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED JUNE 30, 2000. OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM TO . COMMISSION FILE NUMBER: 0-19024 ------------------------ SYMIX SYSTEMS, INC. (Exact name of registrant as specified in its charter) OHIO 31-1083175 (State or other jurisdiction of (I.R.S. Employer Identification No.) incorporation or organization) 2800 CORPORATE EXCHANGE DRIVE 43231 COLUMBUS, OHIO (Zip Code) (Address of principal executive offices)
Registrant's telephone number, including area code: (614) 523-7000 ------------------------ Securities registered pursuant to section 12(b) of the Act: NONE Securities registered pursuant to Section 12(g) of the Act: COMMON SHARES NO-PAR VALUE Title of Class ------------------------ Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No __ Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (sec. 229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [ ] The aggregate market value of the voting and non-voting common equity held by non-affiliates of the registrant at September 19, 2000 was $42,183,986. The number of common shares outstanding at September 19, 2000 was 7,505,157. DOCUMENTS INCORPORATED BY REFERENCE: (1) The Registrant's Definitive Proxy Statement for its Annual Meeting of Shareholders to be held on November 8, 2000 is incorporated by reference into Part III of this Annual Report on Form 10-K. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 2 PART I ITEM 1. BUSINESS. Symix Systems, Inc. ("Symix" or the "Company") is a leading global provider of integrated enterprise software solutions for mid-sized manufacturing and distribution companies and business units of larger companies. These software solutions include a comprehensive suite of integrated business to business ("b2b") e-business offerings that support customer relationship management ("CRM"), web based procurement and supply chain management activities. The Symix enterprise software solution also delivers extensive traditional "back office" requirements for manufacturing, distribution and financial management. Through workflow automation and open architecture integration tools, Symix provides a comprehensive end to end business system solution that encompasses both e-business and traditional enterprise solutions. As the primary business system provider for its customers, Symix also offers implementation and e-business consulting services to support customer requirements. The e-business suite of software can be sold and deployed independently of Symix's traditional "back office" enterprise solution and can be integrated with third party enterprise software packages. Recognizing the opportunity to expand into new markets and channels through its extensive e-business offerings, Symix established a new subsidiary, Frontstep, Inc., in January 2000 to focus on the Company's e-business initiatives. In its transition to a leading b2b e-business provider, Symix plans to change its name from Symix Systems, Inc. to Frontstep, Inc., subject to shareholder approval at the annual meeting of shareholders to be held on November 8, 2000. Following its change of name to Frontstep, Inc., the Company plans to continue selling its total business system solution to manufacturers, including both the e-business front-end and the traditional enterprise solution, under the Symix brand name. Additional channels selling the e-business suite of products have been established under the Frontstep brand name and will target distribution companies and third party partners such as consulting firms, resellers, application service providers and trading exchanges. In addition to providing traditional implementation and training services, the Company established a new subsidiary, brightwhite solutions, inc., in February 2000, to deliver e-business consulting services. Through these services, brightwhite rapidly designs and deploys an e-business web site, then builds market, channel and customer intelligence through this site. The Company has more than 4,000 customer sites, which it services and supports through a worldwide network of 27 offices in 13 countries. Symix was incorporated under the laws of the State of Ohio in 1984. The Company's principal executive offices are located at 2800 Corporate Exchange Drive, Columbus, Ohio 43231, and its telephone number is (614) 523-7000. INDUSTRY BACKGROUND An extremely competitive environment and the rapid growth of e-business (the exchange of goods and services electronically) are dramatically impacting the business system requirements of manufacturers and distributors. The Company believes that managing customer relationships, maximizing productivity of distribution channels, procuring goods and services over the web and improving performance of supply chains are essential requirements for the new world economy. The Company further believes that web based technology represents both a requirement and a significant opportunity for continued productivity gains, customer satisfaction and revenue growth. The expanded connectivity and collaboration over the Internet between buyers and suppliers has changed the way that business is being conducted. A growing percentage of business transactions is being handled over the web where promises are being made. The Company believes that the ultimate success of e-business will turn on the ability of enterprises to keep those promises by ensuring that customer orders are properly planned, scheduled and fulfilled. The Company further believes that supporting the Internet world of "make a promise" with the "keep a promise" physical world will require the integration of e-business solutions with traditional back office enterprise offerings. In the view of the Company, traditional back office enterprise resource planning ("ERP") 2 3 solutions are still required today to enhance operational efficiencies of production and distribution and to manage resources across the enterprise. The Internet is also bringing significant opportunities for improving the performance of the supply chain. In its simplest form, a supply chain is a network of companies or enterprises that work together to deliver value to a customer. The rationale for a supply chain is that a network of companies working together can outperform other groups that do not work together. Effective supply chain management can provide improved customer services, improved asset management such as reduced inventories and receivables and lower transaction costs. Web based technology and the network infrastructure has enabled supply chains to improve real-time communication and collaboration between and within enterprises. The Company has seen another significant trend in the increasing number of manufacturers and distributors that are seeking ways to use CRM software to improve both customer interaction and the effectiveness of the direct sales channel and third party channel partners. These solutions include managing CRM from lead generation, to sales quoting and configuration and to after-market customer service. The Company believes that requirements for the mid-market include an enterprise software solution that integrates e-business, supply chain, CRM and traditional ERP and that the solution must be rapidly deployable, scalable and flexible, resulting in a low total cost of ownership and rapid return on investment. According to AMR, a software market analysis firm, the worldwide software marketplace for each of the major markets and projected annual growth rates are as follows:
WORLDWIDE SOFTWARE REVENUE IN 2000 PROJECTED ANNUAL MARKET (IN BILLIONS) GROWTH THROUGH 2004 -------- --------------- ------------------- e-commerce......................................... $ 3.9 56% supply chain....................................... $ 5.4 40% CRM................................................ $ 6.8 36% ERP................................................ $19.1 7%
THE SYMIX SOLUTION The Symix solution includes a comprehensive suite of e-business and enterprise software products that are intended to be rapidly deployable, scalable, flexible and reliable, resulting in a low total cost of ownership and a rapid return on investment. Although integrated to the traditional Symix core enterprise systems, SyteLine and SyteCentre, the e-business product suite can be sold as stand alone modules that can be integrated to third party enterprise solutions. Therefore, customers interested in rapidly deploying an e-business strategy can implement e-business products and integrate to existing enterprise software solutions using workflow automation and open architecture integration tools provided by Symix without having to implement SyteLine and SyteCentre. The Company combines its core enterprise systems with complementary e-business products, in order to deliver a complete end to end business system that integrates customer needs and requirements, CRM with channel management, supplier sourcing, and enterprise supply chain management with the business planning and execution systems. The Company believes its approach results in enhanced customer relationships, increased productivity, improved operating efficiency, including maximizing supply chain performance and lower total cost of ownership. The goal of the Symix solution is to provide the following benefits to its customers: Improved customer relationships. The Company's e-business product offerings and core enterprise systems integrate customer requirements with sales, marketing, engineering, manufacturing and customer service information, in order to achieve more accurate planning and scheduling decisions, rapid response times, better on-time deliveries, improved order fulfillment, improved field service delivery and overall customer satisfaction. Improved supplier relationships. The Company's web based procurement software and access to trading exchanges are intended to enable manufacturers and distributors to better control procurement activities, negotiate volume discounts and develop preferred vendor relationships resulting in improved efficiency of purchasing efforts, improved vendor service levels and reduced cost of materials. 3 4 Improved supply chain performance. The Company's digital supply chain approach utilizes Internet technology in a distributed environment to provide real-time collaborative planning, workflow automation and committed delivery dates that are geared to the largest components of supply chains, mid-market suppliers and customers. The digital supply chain approach enables orders to be taken via the web, via other supply chain systems and via trade exchanges. An improved supply chain results in enhanced customer service, improved asset management such as lower inventories and receivables and lower transaction costs. Reduced total cost of ownership. The Company's solutions are designed to minimize the total cost of implementing, operating and maintaining enterprise systems and to maximize operating efficiency. Symix's software runs on standard hardware platforms, providing users with the flexibility to leverage existing technology systems and to optimize system configurations. The modular design of the Company's software allows manufacturers and distributors to implement systems quickly and easily and provides the flexibility to add additional functionality or change business process models as customer needs and business requirements change. Reduced time to benefit. The Company believes its ability to implement its software solution rapidly and to reduce manufacturers' and distributors' time to benefit is a key competitive advantage. The Company attempts to reduce implementation time in three ways. First, Symix employs a structured implementation methodology that separates the solution implementation process into distinct and manageable phases, in order to ensure coordination throughout the implementation process. Second, the Company's proprietary business process modeling tool enables customers to map the appropriate systems and procedures necessary to increase the speed of the deployment process. Third, Symix maintains strategic relationships with numerous business partners, which enable the Company to provide a solution that addresses enterprise system needs in an integrated fashion with minimal customer disruption. STRATEGY Based on the vision that "the network is the business," the Company's mission is to provide a complete source of integrated b2b e-business solutions for manufacturers and distributors. The key components of the Company's strategy include: Capitalize on new opportunities and new markets through e-business software, connections to web services and consulting services. The Company's objective is to serve as a "one-stop source" for e-business products, partnerships expertise, connection to web services and integration with ERP systems by delivering the following b2b e-business products and services: - e-business software that enables and enhances both selling and buying, CRM with channel management and supply chain management over the web; - software that automates the exchange of information and data between trading partners, between suppliers and customers and between external and internal business systems; - e-business consulting services through the Company's subsidiary, brightwhite solutions, inc., to support the design, development and technical resources required to rapidly deploy e-business solutions; and - access and integration with industry-specific marketplaces, trading exchanges and buying and selling communities. As the primary business system provider for its traditional manufacturing customers, the Company's goal is to deliver a complete end to end solution through the integration of its core enterprise systems, SyteLine and SyteCentre, with its e-business suite of products. The Company believes that the success of deploying e-business offerings will ultimately be dependent on the successful integration with traditional enterprise systems that can ensure the execution and fulfillment of transactions conducted over the Internet. Strengthen mid-market leadership position. The Company believes that it is a leading provider of enterprise system solutions to mid-market manufacturers. The Company has more than 4,000 customer sites, which it services and supports through a worldwide network of 27 offices in 13 countries. The Company intends to leverage its technology and customer base to enhance its leadership position in its targeted vertical markets and to pursue new vertical markets in which it has expertise. 4 5 Embrace simple and easy to use technology. The Company's business system approach emphasizes the commitment to a simple but powerful technology solution through Microsoft and Progress software. The Company uses technology tools from Microsoft and Progress in an effort to standardize and simplify integration efforts and to avoid the costly maintenance of internally supported proprietary development tools. The Company plans to continue to concentrate its development resources on these technology platforms. Pursue strategic partnerships. The Company also plans to continue to provide the tools, techniques, methodologies and other elements required to simplify the task of implementing and supporting software solutions. Symix intends to pursue this strategy through alliances with industry leading partners and/or acquisitions of new technology. Key strategic partners currently include: - Commerce One -- procurement software and access to market exchange; - Agilera -- hosting services for hosted software applications such as procurement and CRM software; - Trilogy -- configuration software; - Cognos -- business intelligence; and - Microsoft -- technology and infrastructure. PRODUCTS Symix products are comprised of the following: - SyteLine. SyteLine is the Company's heavy manufacturing oriented product that was re-architected and developed from earlier versions of Symix enterprise system solutions. SyteLine targets make-to-order, high configuration manufacturers of industrial products in five key vertical markets: - industrial equipment; - fabricated metals; - furniture and fixtures; - containers and packaging; and - industrial electronics. - SyteCentre. SyteCentre was released in February 1999 and targets light manufacturers of discrete products with heavy distribution requirements in three key vertical markets: - consumer electronics; - consumer durable and packaged goods; and - computer and related peripherals. - Frontstep E-business Suite. The Company offers a full suite of web based products, either as stand-alone or complementary to both SyteLine and SyteCentre. These e-business products include: - Customer Center provides a user-friendly and intuitive storefront to sell products and services. Customer Center offers complex order management and fulfillment capabilities, including sophisticated product catalog features, product configuration and available-to-promise capabilities. - Channel Center (including eCRM) provides Internet channel support for sales representatives and dealers. Through multiple customer views from the Customer Center, the Channel Center provides the sales organization with order management, product configuration and available-to-promise capabilities. Channel Center also is a robust web-centric customer relationship management solution providing marketing automation and sales and services management. - Procurement Center provides Internet procurement for company-wide purchasing. Through its relationship with Commerce One, a leader in global trading exchanges, the Company delivers 5 6 Commerce One's eProcurement software, BuySite, and access to Commerce One's MarketSite, the largest trading network of buyers and sellers in the world. The Procurement Center also can provide access to other trading communities such as E-Steel and works.com. - Supply Chain Center provides real-time, Internet-based synchronization of manufacturing, distribution and external supply to customer demand. The system streamlines the planning process by providing real-time order promising, dynamic synchronization, real-time intelligent messaging and analysis in both single-site and multi-site, multi-ERP environments. - Active Link provides intelligent messaging and workflow through e-mail to effectively support a collaborative environment within the enterprise and outside the enterprise with customers and suppliers. By leveraging advanced workflow and data transfer technology, XML technology and Microsoft's BizTalk Framework, the Company's Active Link connects, automates and streamlines work processes between the Frontstep E-business Suite and the transaction enterprise business system. The Frontstep E-business Suite is independent of the transaction enterprise system and therefore can be integrated with non-Symix enterprise systems through its messaging capabilities. The Frontstep E-business Suite, SyteCentre, and various supporting modules for both SyteLine and SyteCentre such as advanced planning and scheduling and sales and order configuration, are written in C++ programming language, operate in a Microsoft Windows NT operating environment and use SQL as a database. The core enterprise system, SyteLine, operates in either a Windows NT or UNIX operating environment and is written in PROGRESS, a proprietary programming language licensed by Symix from Progress Software Corporation. Symix depends upon the license of PROGRESS to its customers and the acceptance of PROGRESS by its customers. Symix markets and distributes PROGRESS in connection with the sale of its product under a non-exclusive agreement with Progress. The agreement may be terminated by either party upon 90 days written notice to the other party. In addition, the agreement may be terminated immediately by either party if a material breach of the agreement by the other party continues after 30 days' written notice. Symix's relationship with Progress involves other risks which could have a material adverse effect on Symix's business, operating results or financial condition, including the following: - the failure of Progress to continue its relationship with Symix; - the failure of Progress to develop, support or enhance PROGRESS in a manner which is competitive with enhancements of other programming languages; - the loss of market acceptance of PROGRESS and its relational database management system; and - the inability of Symix to migrate its software products to other programming languages on a timely basis if PROGRESS is no longer available. SyteLine handles multi-national and multi-site requirements and is available currently in nineteen languages. Currently, SyteCentre is available in North America only, with multi-site functionality scheduled to be delivered in late calendar year 2000. Various components of the Frontstep E-business Suite of products have been or are in the process of being translated and localized for the major commercial markets throughout the world. SERVICES AND SUPPORT The Company offers a full range of services that allows its customers to maximize the benefits of the Company's software products, including: - project management; - implementation; - product education; - technical consulting; - programming and system integration services; and 6 7 - maintenance and support. The Company's services are priced separately, and fees for its services generally are not included in the price for its software products. Fees for maintenance and support services generally are billed 12 months in advance while all remaining consulting, education and programming services generally are billed as incurred. The Company considers its ability to implement its software solution rapidly a key competitive factor. The Company's professional services organization, which employs approximately 200 consultants and managers, uses a structured implementation methodology. That methodology divides a customer's implementation into the following distinct phases: - planning and installation; - education and business system simulations; - development of operating procedures; - conversion planning; - end-user training; and - cut-over and post-implementation evaluation. The Company offers both on-site and classroom training. In addition to the consultants employed directly by the Company, customers can receive consulting services from the Company's approximately 50 business partners. The Company also has actively established relationships with consulting firms to provide additional support in project management, implementation and system integration services for customers. The Company views these relationships as an important source of future leads for prospective customers. Although the Company attempts to minimize customization of its software products, the Company does provide professional programming services to modify its software products to address specific customer requirements. These modifications may include designing and programming complete applications or integrating the Company's software products with legacy systems. Maintenance and support services are available to all customers using an active release of the Company's software products. Maintenance and support services include product enhancements and updates, free upgrades to new versions, telephone support during extended business hours, full-time emergency support and access to the Company's customer support module on the Company's Internet home page. The price for maintenance and support services is based primarily on a percentage of the list price of the Company's software product at the time a license is granted. Fees for maintenance and support services are billed 12 months in advance, and maintenance and service revenue is deferred and recognized ratably over the term of the maintenance and support agreement. SERVICES -- BRIGHTWHITE SOLUTIONS, INC. brightwhite solutions, inc., a new subsidiary of the Company established in February 2000, was created to deliver e-business consulting services that support the Company's mission to provide a complete source of rapid and easy to employ integrated b2b e-business solutions. Not to be confused with traditional software implementation services, brightwhite focuses on marketing, technology and business consulting with the goal of ensuring the ultimate success of a company pursuing an Internet strategy. For many companies, new business models, skills, knowledge, tools and technologies can become barriers that keep Internet opportunities out of reach. According to Gartner Group, an independent provider of research and analysis on the computer hardware, software, communication and related technology industries, e-business deployment often proves difficult and costly since a great deal of effort is spent tying front-end systems to the back-end, causing timeframes for implementation to run up to a year. The goal of brightwhite is to combat these deployment challenges by utilizing a "roadmap" that deploys fast-paced services and the Frontstep E-business Suite. The roadmap establishes clear objectives, verifying a scalable technical infrastructure, applying the 7 8 functionality of the Frontstep E-business Suite and executing a market launch to promote the site to customers and channel representatives. The services include: - e-business planning and education; - web site design and development; - Internet technology and ERP integration; - marketing communications; and - results measurement and redevelopment. SALES AND DISTRIBUTION The Company currently licenses its software to customers primarily based on a license fee for each concurrent session or concurrent execution of its software products. The Company receives additional license fees whenever a customer increases the number of concurrent sessions, usually as a result of the growth of the customer's business or expansion to other sites. Both SyteLine and SyteCentre use an encrypted key that allows the customer to use only the number of concurrent sessions for which the customer has received a license. The Company's product offerings are being sold through three primary channels: - The traditional sales channel, which is comprised of direct sales representatives and business partners selling to manufacturers, focuses on selling the total business system under the Symix brand name including the e-business front-end and the traditional enterprise solutions. This channel targets the Company's traditional manufacturing market. - A second direct sales channel focuses on selling the Frontstep E-business Suite of products to distribution companies. The Company created this sales channel, referred to as "Frontstep e-distribution" through its acquisitions of Distribution Architects International, Inc. in June 1999 and Profit Solutions, Inc. in February 2000. - A third channel targets third party partners that resell the Company's e-business suite of products. These partners will include consulting firms, resellers of third party enterprise software solutions requiring an e-business front-end, application service providers and trading exchanges. This indirect channel, referred to as "Frontstep Channels," was established in May 2000. Sales leads are generated through a combination of in-house telemarketing, leads from consulting partners, advertising, trade shows and direct calls by sales staff. The Company sells its products and services through both a direct sales force and approximately 50 business partners worldwide. The Company currently maintains 27 sales and support offices worldwide: thirteen in North America, nine in Asia Pacific and five in Europe. Symix's traditional business partners in North America target the lower end of the mid-market manufacturing sector while its business partners in Asia Pacific and Europe primarily sell independently to companies within a geographic region or country. New business partners from the Frontstep Channels group will deliver e-business suites to end-users, application service providers and trading exchanges. The Company believes that it will need to maintain and expand its relationships with its existing business partners and enter into relationships with additional business partners in order to expand the distribution of its products. There can be no assurance that current or future business partners will provide the level of expertise and quality of service required to license the Company's products successfully, that the Company will be able to maintain effective, long-term relationships with such business partners or that selected business partners will continue to meet the Company's sales needs. Further, there can be no assurance that these business partners will not market software products in competition with the Company in the future or will not otherwise reduce or discontinue their relationships with, or support of, the Company and its products. If the Company fails to maintain successfully its existing business partner relationships or to establish new relationships in the future, or if any such business partner exclusively adopts a product other than the Company's products, materially reduces its sales efforts relating to the Company's products or materially increases its support for competitive products, the Company's business, operating results and financial condition could be materially and adversely affected. 8 9 Mitsui & Co., Ltd. ("Mitsui") owns 13.3% of Symix Computer Systems (Singapore) Pte Ltd., which comprises the Company's Asia operations. Management believes that Mitsui's investment in the Company's Asia operations along with Mitsui's sponsorship with Japanese companies throughout Asia further legitimizes the Company as a leading enterprise systems vendor in the Asia Pacific region. The Company derived approximately 20% of its fiscal 2000, 22% of its fiscal 1999, and 21% of its fiscal 1998 net revenues from sales outside of North America. The amount of net revenue, operating income before amortization of intangibles, operating income and identifiable assets attributable to each of the Company's geographic market areas for fiscal 2000, fiscal 1999 and fiscal 1998 were as follows:
NORTH AMERICA ASIA/PACIFIC EUROPE ------------- ------------ ------- (IN THOUSANDS) 2000 Net Revenue........................................ $103,065 $11,902 $13,941 Operating income (loss) before amortization of intangibles from acquisitions.................... 899* (1,077) (3,376) Operating income (loss)............................ (2,088)* (1,155) (3,904) Identifiable assets................................ 77,661 7,862 8,845 1999 Net Revenue........................................ $100,950 $11,722 $16,400 Operating income (loss) before amortization of intangibles from acquisitions.................... 10,038* 797 (806) Operating income (loss)............................ 8,563* 709 (1,383) Identifiable assets................................ 70,920 8,321 11,359 1998 Net Revenue........................................ $ 77,225 $ 8,665 $11,707 Operating income (loss) before amortization of intangibles from acquisitions.................... 9,813* (584) 771 Operating income (loss)............................ 8,773* (694) 442 Identifiable assets................................ 47,778 9,392 9,212
- --------------- * Exclusive of acquisition research and development write-offs and non-recurring charges of $3,649 in fiscal 2000, $835 in fiscal 1999 and $6,503 in fiscal 1998. A significant portion of the Company's international revenue is received in currencies other than U. S. dollars and, in the past, the Company has not engaged in hedging activities. As a result, the Company is subject to risks associated with foreign exchange rate fluctuations. Due to the substantial volatility of foreign exchange rates, there can be no assurance that foreign exchange rate fluctuations will not have a material adverse effect on the Company's business, operating results or financial condition. The Company's international operations are subject to other risks inherent in international business activities, such as: - the impact of a recessionary environment in economies outside the United States; - cultural and language difficulties associated with servicing customers; - localization and translation of products for foreign countries; - difficulties in staffing and managing international operations; - difficulties in collecting accounts receivable and longer collection periods; - reduced protection for intellectual property rights in some countries; 9 10 - exchange controls; - restrictions on the repatriation of foreign earnings; - political instability; and - the impact of local economic conditions and practices. The Company's success in expanding its international business will be dependent, in part, on its ability to anticipate and effectively manage these and other risks. There can be no assurance that these and other factors will not have a material adverse effect on the Company's business, operating results or financial condition. PRODUCT DEVELOPMENT Symix devotes a significant percentage of its resources to identifying manufacturers' and distributors' needs, developing new features and enhancements to existing products and designing and developing new products. New products, updates and enhancements are developed by the Company's internal development staff. The Company's practice is to release updates and major enhancements on a regular basis. Symix works closely with manufacturers, distributors and business partners to improve and enhance its products. The market for the Company's products is characterized by rapid technological change, evolving industry standards in computer hardware and software technology, changes in customer requirements and frequent new product introductions and enhancements. The introduction of products embodying new technologies and the emergence of new industry standards can cause customers to delay their purchasing decisions and render existing products obsolete and unmarketable. The life cycles of the Company's software products are difficult to estimate. As a result, the Company's future success will depend, in part, upon its ability to continue to enhance existing products and to develop and introduce in a timely manner new products with technological developments that satisfy customer requirements and achieve market acceptance. There can be no assurance that the Company will successfully identify new product opportunities and develop and bring new products to market in a timely and cost-effective manner or that products, capabilities or technologies developed by others will not render the Company's products or technologies obsolete or noncompetitive or shorten the life cycles of the Company's products. See "Item 1. Business -- Competition." If the Company is unable to develop on a timely and cost-effective basis new software products or enhancements to existing products, or if such new products or enhancements do not achieve market acceptance, the Company's business, operating results or financial condition may be materially adversely affected. As a result of the complexities inherent in software development, in particular development for multi-platform environments, and the broad functionality and performance demanded by customers for enterprise system products, major new product enhancements and new products can require long development and testing periods before they are commercially released. The Company has on occasion experienced delays in the scheduled introduction of new and enhanced products, and future delays could have a material adverse effect on the Company's business, operating results or financial condition. Research and product development expenses, including amounts capitalized, were $21,279,000, $14,600,000, and $12,200,000 for the fiscal years ended June 30, 2000, 1999, and 1998, respectively. Capitalized software expenditures were $5,595,000, $4,400,000, and $4,300,000 for the same respective periods and were capitalized in accordance with Statement of Financial Accounting Standards No. 86. Amortization of capitalized software costs is included in cost of revenue. The Company generally retains the right to remarket specific modifications developed by its programming services group in or with future product releases. COMPETITION The market for enterprise solutions is intensely competitive, rapidly changing, increasingly fragmented with the arrival of e-business and significantly affected by new product offerings and other market activities. The Company has a large number of competitors that vary in size, computing environments and overall product scope. Within its market, the primary competition comes from independent software vendors in three distinct groups: (i) traditional enterprise software developers, including J.D. Edwards & Company, QAD, Oracle Corporation and 10 11 SAP Aktiengellschaft; (ii) large software developers focusing on more specialized point solutions such as CRM software (e.g., Siebel Systems and SalesLogix) or supply chain management (e.g., i2); and (iii) recently established software and/or service providers specializing in b2b e-business solutions including store front integration (e.g., Ironside and webMethods) and procurement (e.g., Ariba). A number of companies offer products which are similar to the Company's products and are directed at the market for enterprise software and b2b e-business solutions. Many of the Company's existing competitors, as well as a number of potential new competitors, have more established and larger marketing and sales organizations, significantly greater financial, technical and other resources and a larger installed base of customers than the Company. Other competitors leverage vertical market expertise, reputation and price as competitive advantages. There can be no assurance that competitors will not offer or develop products that are superior to the Company's products or that achieve greater market acceptance. As the market for enterprise software and b2b e-business solutions expands, other companies may enter the Company's market or increase their market presence by acquiring or entering into alliances with competitors of the Company. As a result of all these factors, competition is likely to increase substantially, which may result in price competition, loss of market share or delayed purchasing decisions. There can be no assurance that the Company will be able to compete successfully against its competitors or that the competitive pressures faced by the Company will not adversely affect its financial performance. The Company believes that it competes favorably in the following areas, which it deems to be the most important considerations for potential customers for its software products: - integration of b2b e-business solutions with traditional enterprise systems; - product functionality; - collaboration and workflow automation across the enterprise and supply chain; - rapid installations and ease of use; - competitive pricing; - corporate reputation; and - size of installed user base. PROPRIETARY TECHNOLOGY The Company's ability to compete is dependent in part upon its internally developed, proprietary intellectual property. The Company regards its products as proprietary trade secrets and confidential information. The Company relies largely upon its license agreements with customers, distribution agreements with distributors, and its own security systems, confidentiality procedures and employee agreements to maintain the trade secrecy of its products. In certain cases, the Company may seek to protect its programs, documentation and other written materials under copyright law. In addition, SYMIX and SyteLine are registered trademarks, and SyteCentre and Frontstep are trademarks of the Company. None of the Company's products is patented. There can be no assurance that the Company's means of protecting its proprietary rights in the United States or abroad will be adequate or that competitors will not independently develop similar technology. In addition, the laws of some foreign countries do not protect the Company's proprietary rights as fully as do the laws of the United States. Preventing or detecting unauthorized use of the Company's products is difficult. The Company also relies on certain other technology which it licenses from third parties, including software that is integrated with internally developed software and used in the Company's products to perform key functions. No assurance can be given that the steps taken by the Company will prevent misappropriation of its technology or that its license agreements will be enforceable. In addition, litigation may be necessary in the future to enforce the Company's intellectual property rights, to protect the Company's trade secrets, to determine the validity and scope of the proprietary rights of others or to defend against claims of infringement or invalidity. Any such litigation could result in substantial costs and diversion of resources and could have a material adverse effect on the Company's business, operating results or financial condition. 11 12 Although the Company does not believe that its products infringe the proprietary rights of third parties, there can be no assurance that infringement or invalidity claims (or claims for indemnification resulting from infringement claims) will not be asserted or prosecuted against the Company or that any such assertions or prosecutions will not materially adversely affect the Company's business, operating results or financial condition. Regardless of the validity or the successful assertion of such claims, defending against such claims could result in significant costs and diversion of resources which could have a material adverse effect on the Company's business, operating results or financial condition. In addition, the assertion of such infringement claims could result in injunctions preventing the Company from distributing certain products, which would have a material adverse effect on the Company's business, operating results and financial condition. If any claims or actions are asserted against the Company, the Company may seek to obtain a license to such intellectual property rights. There can be no assurance, however, that such a license would be available on reasonable terms or at all. The Company has in the past and may in the future resell certain software that it licenses from third parties and jointly develop software in which it will have co-ownership or cross-licensing rights. See "Item 1. Business- Products." EMPLOYEES As of June 30, 2000, the Company employed 867 persons, including 247 in North America sales and service operations, 281 in development and support, 240 in international operations outside of North America and 99 in marketing and administration. None of the Company's employees is represented by a labor union. The Company has never experienced a work stoppage and believes that its employee relations are good. The Company's success depends to a significant extent upon senior management and other key employees. The loss of one or more key employees could have a material adverse effect on the Company. The Company does not have employment agreements with its executive officers, except Stephen A. Sasser, President and Chief Executive Officer. In addition, the Company believes that its future success will depend in part on its ability to attract and retain highly skilled technical, managerial, sales, marketing, service and support personnel. Competition for such personnel in the computer software industry is intense. There can be no assurance that the Company will be successful in attracting and retaining such personnel, and the failure to do so could have a material adverse effect on the Company's business, operating results or financial condition. EXECUTIVE OFFICERS OF THE REGISTRANT The Company's executive officers are as follows:
NAME AGE POSITIONS WITH THE COMPANY ---- --- -------------------------- Lawrence J. Fox.......................... 44 Chairman of the Board Stephen A. Sasser........................ 51 President, Chief Executive Officer and Director Lawrence W. DeLeon....................... 45 Executive Vice President Symix Worldwide Field Operations Stephen A. Yount......................... 45 Executive Vice President Business Development and Channel Operations Daryll Wartluft.......................... 59 Executive Vice President Frontstep Product Group Robert D. Williams....................... 45 Vice President, Human Resources Jorge L. Lopez........................... 45 Vice President Strategic Planning Daniel P. Buettin........................ 47 Vice President of Finance, Chief Financial Officer and Secretary
Lawrence J. Fox founded Symix in 1979 as a sole proprietorship. He has held his present office as Chairman of the Board since Symix was incorporated in 1984. From 1984 to 1998 Mr. Fox also served as Chief Executive Officer of the Company. 12 13 Stephen A. Sasser has held the positions of President and Chief Executive Officer of the Company since January 1999. Mr. Sasser previously served the Company, from the time that he joined the Company in July 1995 until January 1999, as President and Chief Operating Officer. Mr. Sasser also has served as a director of the Company since July 1995. From October 1994 to June 1995, Mr. Sasser served as Vice President of International Operations for Trilogy Software, a provider of sales and marketing software. From August 1992 to October 1994, Mr. Sasser was Group Vice President of the Systems Management Division and Pacific Rim Operations of Legent Corporation, a provider of systems management software products and services ("Legent"). From April 1987 through its acquisition by Legent in 1992, Mr. Sasser served as President of the Data Center Management Division of Goal Systems International, Inc. ("Goal Systems"), which designed, developed, and marketed systems management software products. Lawrence W. DeLeon has held the position of Executive Vice President Symix Worldwide Field Operations since August 2000. Mr. DeLeon previously served the Company as Vice President, Chief Financial Officer and Secretary from the time that he joined the Company in 1995 to July 2000. From 1991 to August 1995, Mr. DeLeon served in various capacities at Legent, including Treasurer for Goal Systems, Europe, Vice President-Finance and Administration and Vice President-Central Europe. From 1988 to 1991, Mr. DeLeon was Chief Financial Officer for Thunderbird Products Corporation, a boat manufacturer. Stephen A. Yount has held the position of Executive Vice President Business Development and Channel Operations since August 2000. Mr. Yount served the Company from August 1998 to July 2000, as Vice President America's Field Operations, and from the time that he joined the Company in May 1996 until August 1998, as Vice President of America's Sales and Services. From 1995 to May 1996, he was Vice President of Sales at Tyecin Systems, a provider of client-server manufacturing software for the semi-contractor market. From 1993 to 1995, Mr. Yount served as Vice President of Sales and Services at Neuron Data, a client-server application development software company. From 1987 to 1993, he served in various senior sales positions at Legent, including Regional Vice President of Sales, Vice President of Sales and Director of Sales, Western Region. Daryll Wartluft has held the position of Executive Vice President Frontstep Product Group since August 2000. Mr. Wartluft previously served as Vice President and General Manager, SyteLine Division from the time that he joined the Company in May 1998 until July 2000. From 1995 to 1998, he was President and Chief Executive Officer and a director of Pivotpoint Inc., an ERP software and services provider. From 1994 to 1995, he served as Group Vice President of Applications Management Division of Legent. Prior to that time, he held various management positions with Group Bull Worldwide Information Systems, a provider of systems management software products and services, and International Business Machines Corporation, a provider of advanced information technology and services. Robert D. Williams joined the Company in September 1995 as Vice President-Human Resources. Prior to that time, he served as Director, Human Resources/Associate Relations of Legent from August 1992 to August 1995. From March 1990 to August 1992 he was Executive Director of Human Resources and Administrative Services of Goal Systems. Jorge L. Lopez joined the Company in November 1996 as Vice President of Corporate Development/ Strategic Planning. From 1995 to November 1996, Mr. Lopez served as Vice President of Marketing for Salesoft Inc., a provider of automated sales and marketing software. From 1989 to 1995, Mr. Lopez served as Vice President of Strategic Alliances for Avalon Software, Inc. an enterprise resource planning software and services company. Prior to that time, Mr. Lopez held various marketing and technical positions with International Business Machines Corporation, a provider of advanced information technology and services. Daniel P. Buettin joined the Company in August 2000 as Vice President Finance, Chief Financial Officer and Secretary. Mr. Buettin possesses 25 years of experience in financial leadership and management of complex business environments. Mr. Buettin served from September 1995 to August 2000 as Vice President and Chief Financial Officer of MPW Industrial Services Group, Inc., a services company headquartered in Hebron, Ohio. Prior to joining MPW, Mr. Buettin served as an executive with OHM Corporation, a services company, in Findlay, Ohio, for nine years. Mr. Buettin was previously with Arthur Anderson LLP. 13 14 The executive officers of the Company are appointed by and serve at the pleasure of the Symix Board of Directors. There are no arrangements or understandings between any officer and any other person pursuant to which the officer was so appointed. ITEM 2. PROPERTIES. The Company's corporate headquarters and principal administrative, product development, and sales and marketing operations are located in approximately 85,000 square feet of leased office and storage space in Columbus, Ohio. The lease agreement commenced in July 1991 and will expire on June 30, 2002. The lease agreement provides for an annual base rent and operating expenses of approximately $1.5 million. Additionally, the Company has 26 leased sales and support offices throughout the United States and elsewhere. ITEM 3. LEGAL PROCEEDINGS. The Company is subject to legal proceedings and claims which arise in the normal course of business. While the outcome of these matters cannot be predicted with certainty, management does not believe the outcome of any of these legal matters will have a material adverse effect on the Company's business, financial condition or results of operations. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. None PART II ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS. The Company's common shares are traded in the over-the-counter market and are quoted on the Nasdaq National Market under the symbol "SYMX." The following table sets forth the high and low sale prices for the common shares for fiscal 1999 and 2000, as reported by the Nasdaq National Market:
HIGH LOW ------ ------ Fiscal year ended June 30, 2000 First Quarter............................................. $12.38 $ 7.88 Second Quarter............................................ 18.50 9.50 Third Quarter............................................. 32.75 15.25 Fourth Quarter............................................ 20.25 8.13 Fiscal year ended June 30, 1999 First Quarter............................................. $26.38 $15.63 Second Quarter............................................ 22.63 15.25 Third Quarter............................................. 24.88 15.13 Fourth Quarter............................................ 15.88 6.50
The closing price on September 19, 2000 was $7.75. As of that date, there were approximately 208 holders of record of the common shares. The Company has never paid cash dividends on its shares. The Company expects that all future earnings will be retained to finance the Company's operations and for the growth and development of its business. Accordingly, the Company does not currently anticipate paying cash dividends on its shares in the foreseeable future. The payment of any future dividends will be subject to the discretion of the Board of Directors of the Company and will depend on the Company's results of operations, financial position and capital requirements, general business conditions, restrictions imposed by financing arrangements, if any, legal restrictions on the payment of dividends and other factors the Board of Directors deems relevant. In addition, holders of the Company's outstanding preferred shares may be entitled to receive dividends on the preferred shares prior to the 14 15 payment of dividends on the common shares, in certain cases, under the Company's Amended Articles of Incorporation, as amended. See also "Sale of Unregistered Securities" immediately below. SALE OF UNREGISTERED SECURITIES On May 10, 2000, the Company sold 566,933 Series A Convertible Participating Preferred Shares, each without par value (the "Series A Preferred Shares"), to a group of unaffiliated accredited investors, which included Fallen Angel Equity Fund, L.P. and various investors controlled by Morgan Stanley Dean Witter & Co., for $24.00 per share, or an aggregate of approximately $13.6 million in cash. The Series A Preferred Shares were not registered under the Securities Act of 1933, as amended (the "Act") in reliance upon an exemption from registration under Section 4(2) of the Act and Rule 506 promulgated by the Securities and Exchange Commission (the "Commission") under the Act. Each Series A Preferred Share is convertible by the holder, in whole or in part, at any time into two (2) common shares, subject to adjustment, at the conversion price of $12.00 per share, subject to adjustment. Each holder of the Series A Preferred Shares is entitled to one (1) vote per share held on all matters submitted to shareholders for their vote, provided that the Company has agreed to use its reasonable best efforts to cause its articles of incorporation to be amended to allow each holder of the Series A Preferred Shares to exercise the number of votes to which such holder would be entitled, as a holder of common shares, upon the conversion of the Series A Preferred Shares into such common shares. The Company intends to submit such an amendment to its shareholders for approval at its annual meeting of shareholders to be held on November 8, 2000. The Series A Preferred Shares rank prior to the common shares with respect to dividend and liquidation rights, and, in certain instances, may be entitled to receive dividends payable on the Series A Preferred Shares prior to the payment of dividends on the common shares. In connection with the sale of the Series A Preferred Shares, the Company issued to the accredited investors on May 10, 2000 warrants to purchase 453,546 common shares at an exercise price of $15.00 per share (the "Warrants"). The Warrants were issued in reliance upon an exemption from registration under Section 4(2) of the Act and Rule 506 promulgated by the Commission under the Act. The Warrants expire on May 10, 2005 and are exercisable at any time prior to their expiration. 15 16 ITEM 6. SELECTED FINANCIAL DATA. The following table summarizes certain consolidated financial data for each of the five years presented. The selected financial data presented below has been derived from, and should be read in conjunction with, the Company's audited financial statements, and the notes thereto.
YEAR ENDED JUNE 30, 2000 1999 1998 1997 1996 ------------------- -------- -------- ------- ------- ------- (IN THOUSANDS, EXCEPT PER SHARE DATA) OPERATING STATEMENT DATA: Net revenue............................ $128,908 $129,072 $97,597 $65,772 $45,759 Cost of revenue........................ 59,988 52,025 35,701 23,690 16,496 -------- -------- ------- ------- ------- Gross margin......................... 68,920 77,047 61,896 42,082 29,263 Operating expenses: Selling, general and administrative.................... 56,790 56,801 43,995 30,741 21,593 Research and product development..... 15,684 10,217 7,901 5,659 3,673 Amortization of intangibles from acquisitions...................... 3,593 2,140 1,479 610 -- Acquisition research and development write-off......................... 638 835 6,503 -- -- Non-recurring charges related to divested operations and restructurings.................... 3,011 -- -- -- 506 -------- -------- ------- ------- ------- Total operating expenses..... 79,716 69,993 59,878 37,010 25,772 -------- -------- ------- ------- ------- Operating income (loss)................ (10,796) 7,054 2,018 5,072 3,491 Other income (expense), net............ (966) 151 (178) 107 221 -------- -------- ------- ------- ------- Income (loss) before income taxes...... (11,762) 7,205 1,840 5,179 3,712 Provision (benefit) for income taxes... (1,557) 3,206 3,196 1,916 1,404 -------- -------- ------- ------- ------- Net income (loss).................... $(10,205) $ 3,999 $(1,356) $ 3,263 $ 2,308 ======== ======== ======= ======= ======= Earnings (loss) per share.............. $ (1.38) $ 0.55 $ (0.21) $ 0.54 $ 0.41 Weighted average common and common share equivalents outstanding........ 7,411 7,264 6,317 6,079 5,582 BALANCE SHEET DATA: Working capital........................ $ 19,348 $ 21,926 $13,575 $ 7,897 $ 7,538 Total assets........................... 94,368 90,600 66,382 44,252 30,463 Total long-term debt and lease obligations.......................... 3,169 5,759 2,305 530 -- Total shareholders' equity............. 36,709 42,401 31,301 23,361 17,102
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. OVERVIEW Symix is a leading global provider of integrated enterprise software solutions for mid-sized manufacturing and distribution companies and business units of larger companies. These software solutions include a comprehensive suite of integrated b2b e-business offerings that support CRM, web based procurement and supply chain management activities. The Company's financial performance for fiscal year 2000 reflects the general market conditions as customers emerged from the Year 2000 slowdown and began evaluating e-business strategies. Although realizing an average annual revenue growth of more than 40% for the three previous fiscal years, total Company revenue for the 2000 fiscal year was flat at $129 million compared with the prior year. The Company also significantly increased its development spending as it transitioned itself from a traditional ERP vendor to an enterprise 16 17 software vendor incorporating an extensive b2b e-business product suite as part of its total business system solution. Development spending for fiscal 2000, including amounts capitalized, increased 46% over the prior fiscal year. In its transition to a leading b2b e-business provider, the parent company intends to change its name subject to shareholder approval, from Symix Systems, Inc. to Frontstep, Inc., effective shortly after the 2000 annual meeting of shareholders to be held on November 8, 2000. Frontstep's vision, "the network is the business," is based on the premise that the expanding connectivity and collaboration over the Internet between buyers and suppliers is changing how business is being conducted. The Company, under the name Frontstep, plans to focus on pursuing new markets and partners and delivering the software infrastructure to enable customers to compete in this new e-commerce world. During the past three years, the Company has expanded its product offerings through internal development, partnerships with third party software vendors and acquisitions. These acquisitions included Pritsker Corporation (advanced planning and scheduling solution) in fiscal 1998, Distribution Architects International, Inc. (supply chain management and e-commerce products) in fiscal 1999, and Profit Solutions, Inc (customer relationship management software) in fiscal 2000. The Company today sells an integrated e-business suite of products including storefronts, CRM with channel management, procurement and supply chain management. Through Active Link, the Company's workflow automation and open architecture integration tool, this e-business suite of products can be offered as part of the Company's traditional core enterprise systems, SyteLine and SyteCentre, or can be integrated with third party enterprise software solutions. In fiscal 2000, the Company experienced the negative effects of the general market slowdown in industry software revenue growth as customers began postponing new technology spending and focusing on year 2000 readiness on existing systems. The Company's license fee revenue declined 14% for the fiscal year and services revenue increased 15% for the same period. The increased mix in services revenue adversely impacted gross margins which declined from 60% in fiscal 1999 to 53% in fiscal 2000. Despite the decline in revenue and lower gross margins, the Company's net research and development expenses increased 54% over fiscal 1999 levels reflecting the Company's increased investments in delivering new b2b e-business offerings to the market. The decline in gross margins and increased research and development expenses caused pre-tax operating margins, exclusive of acquired research and development write-offs and non-recurring charges, to decrease from 6% in fiscal 1999 to a negative 6% in fiscal 2000. Also in fiscal 2000, the Company generated revenues of $128.9 million and a net loss of $9.6 million, exclusive of acquired research and development write-offs. This compares to revenues of $129.0 million in fiscal 1999 and $97.6 million in fiscal 1998 and net income, exclusive of acquired research and development write-offs, of $4.8 million in fiscal 1999 and $5.1 million in fiscal 1997. NET REVENUE The Company's net revenue is derived primarily from (1) licensing Symix software and providing custom programming services; (2) providing installation, implementation, training, consulting and systems integration services; and (3) providing maintenance and support on a subscription basis. Revenue for fiscal periods 2000 and 1999 is accounted for in accordance with Statement of Position ("SOP") 97-2 on Software Revenue Recognition. Revenue for fiscal 1998 is accounted for in accordance with SOP 91-1. Net revenue decreased slightly in fiscal 2000 to $128.9 million from $129.1 million in fiscal 1999, compared to percentage increases of 32% and 48% for the years ended June 30, 1999 and 1998, respectively. The Company believes that the decline in net revenue in fiscal 2000 is due to the industry-wide trend of delays in new business system purchases caused initially by the Year 2000 market dynamics and subsequently by the shift of the ERP market to e-business solutions. The growth in fiscal 1999 and 1998 net revenue compared to previous years was the result of purchases of new software product offerings of the Company and the growth of the Company's distribution channels. Both software license fee revenue and service, maintenance and support revenue 17 18 contributed significantly to the net revenue increase in fiscal years 1999 and 1998. The net revenue mix since 1998 is shown in the table below:
FISCAL YEAR ENDED JUNE 30, -------------------------------------------------------- 2000 1999 1998 --------------- --------------- -------------- (IN THOUSANDS, EXCEPT PERCENTAGES) Software license fees..... $ 57,858 45% $ 67,423 52% $58,498 60% Service, maintenance and support................. 71,050 55% 61,649 48% 39,099 40% -------- --- -------- --- ------- --- Total........... $128,908 100% $129,072 100% $97,597 100%
Software license fee revenue decreased 14% in fiscal 2000 from fiscal 1999 compared to a 15% increase in software license fee revenue growth in fiscal 1999 from fiscal 1998. The decrease in fiscal 2000 is due to the industry-wide trend of delays in new business system purchases. The Company believes that the purchase delays were caused initially by the Year 2000 market dynamics and that the purchase delays have continued as a result of the ERP market's transformation to e-business solutions. The increase in software license fee revenue in fiscal 1999 resulted from an increased number of sales representatives and overall market acceptance of the Company's product line. The increase in software license fee revenue in fiscal 1998 was primarily the result of (i) the expanding number of products that complement the Company's core ERP software product, SyteLine, and (ii) the acquisition of Pritsker Corporation in November 1997. Service, maintenance and support revenue is derived from installation, implementation, training, consulting, systems integration and software product maintenance and support services. Service, maintenance and support revenue increased 15%, from $61.6 million in fiscal 1999 to $71.1 million in fiscal 2000, and 58%, from $39.1 million in fiscal 1998 to $61.6 million in fiscal 1999. The slower service, maintenance and support revenue growth in fiscal 2000, when compared to fiscal 1999, was primarily the result of the decrease in license activity during the year. The increase in service, maintenance and support revenue during fiscal 1999 was attributable to growth in licensed Symix software installations worldwide and the expanding product line of the Company. Service, maintenance and support revenue made up 55% of total revenue in fiscal 2000, compared to 48% and 40% in fiscal 1999 and fiscal 1998, respectively. Service, maintenance and support revenue as a percentage of total revenue increased from fiscal 1998 to fiscal 2000 due to the change in revenue mix resulting from the decrease in license fee revenue and the increase in service, maintenance and support revenue. Generally, service, maintenance and support contracts are billed annually and revenue is recognized ratably over the contract period, which is typically twelve months. Deferred revenue on the Company's balance sheet relating primarily to service, maintenance and support contracts increased from $17.2 million at June 30, 1999 to $18.2 million at June 30, 2000. Cost of Revenue Total cost of net revenue as a percentage of net revenue was 47% for the fiscal year ended June 30, 2000 compared to 40% and 37% for the fiscal years ended June 30, 1999 and 1998, respectively. Cost of software license fees includes royalties, amortization of capitalized software development costs and software delivery expenses. Cost of software license fees increased to 34% of software license fee revenue in fiscal 2000 from 27% in fiscal 1999 and 25% in fiscal 1998. The percentage increase is attributable to the increase in the rate of amortization on capitalized software expenses relative to license fee revenue. Symix began amortizing capitalized software costs related to its product initiative, SyteCentre, during the end of the 1999 fiscal year. Cost of service, maintenance and support includes the personnel and related overhead costs for implementation, training and customer support services, together with fees paid to third parties for subcontracted services. Cost of service, maintenance and support was 57% of service, maintenance and support revenue in fiscal 2000 compared to 55% in fiscal 1999 and 54% in fiscal 1998. The increase in cost of service, maintenance and support is due to the continued use of subcontractors to supplement the work performed by Company employees. In general, the use of subcontractors results in lower margins than the use of employees, but provides the Company increased flexibility in meeting customer demands. 18 19 Selling, General and Administrative Expenses Selling, general and administrative expenses consist of personnel and related overhead costs, including commissions for the sales, marketing, general and administrative activities of the Company, together with advertising and promotional costs. Selling, general and administrative expenses increased from $44.0 million in fiscal 1998 to $56.8 million in both fiscal years 1999 and 2000. Selling, general and administrative expenses as a percent of net revenue has remained consistent during the three year period, 45%, 44%, and 44% for the years ended June 30, 1998, 1999 and 2000, respectively. The increase in selling, general and administrative expenses during the past two years is largely attributable to the Company's expansion of its sales and marketing force, both domestically and internationally. Additionally, the Company's commission expense increased as a result of higher revenue. Selling, general and administrative expenses as a percentage of total revenues has declined slightly the past two years due to the relatively lower expense levels associated with service, maintenance and support revenue, which have grown as a percentage of total revenues during the last two years. Research and Development Research and development expenses include personnel and related overhead costs for product development, enhancement, upgrades, quality assurance and testing. Total research and development expenses, including amounts capitalized, were $21.3 million or 17% of net revenue for the year ended June 30, 2000, compared to $14.6 million or 11% of net revenue in fiscal 1999 and $12.2 million or 13% of net revenue in fiscal 1998. During fiscal 2000, research and development expenses increased in dollar amount and as a percentage of total revenues as the Company continued to invest heavily in its e-business applications and Internet technologies. Additionally, the increase in research and development expense is due to staff expansion relating to the Company's development of future releases of SyteLine and SyteCentre and increased development focus on interfacing with third-party software products. The Company capitalized research and development costs of $5.6 million, $4.4 million and $4.3 million for the years ended June 30, 2000, 1999 and 1998, respectively. Software development costs capitalized in a given period are dependent upon the nature and state of the development process and are recorded in accordance with Statement of Financial Accounting Standards No. 86. Upon general release of a product, related capitalized costs are amortized over three years and recorded as license fee cost of revenue. The Company incurred nonrecurring charges of approximately $638,000 in fiscal 2000, $835,000 in fiscal 1999 and $6.5 million in fiscal 1998, relating to the write-off of acquired in-process technology in conjunction with the Pritsker Corporation, Distribution Architects International, Inc. and Profit Solutions, Inc. acquisitions, respectively. Non-recurring Charges Related to Divested Operations On July 17, 2000, the Company announced that it is terminating the operations of its e-Mongoose, Inc. subsidiary. In connection with this announcement, the Company has determined that capitalized software costs associated with e-Mongoose, Inc. are not recoverable and, accordingly, at June 30, 2000, the Company has recognized an impairment charge of $1.8 million related to these unrecoverable costs. The Company has also determined that certain accounts receivable of e-Mongoose, Inc. are not collectible and, accordingly, at June 30, 2000, the Company has reserved $714,000 of uncollectible accounts receivable. In addition, effective June 21, 2000, the Company sold certain assets of its Visual Applications Software, Inc. subsidiary. The Company has recognized a $429,000 net loss in connection with the sale. The impairment charge, reserve for uncollectible accounts receivable and the loss associated with the sale of assets are included in "non-recurring charges related to divested operations." Provision for Income Taxes The effective tax rates for the years ended June 30, 2000, 1999, and 1998 were (13%), 44% and 174% respectively. The effective tax rate in fiscal 2000 differs from the expected corporate tax rate primarily due to a gain on the sale of foreign operations and a valuation allowance offset to net operating losses of certain foreign subsidiaries. In addition, the effective tax rates for fiscal years 2000, 1999 and 1998 were impacted by: 19 20 (i) acquisition research and development write-offs of $638,000, $835,000, and $6.5 million respectively, which are not deductible for income tax purposes; (ii) the amount of foreign taxable earnings in countries with higher effective tax rates; and (iii) the non-deductibility of the amortization of goodwill. QUARTERLY RESULTS The following table sets forth certain unaudited operating results for each of the eight quarters in the two year period ended June 30, 2000. This information has been prepared by the Company on the same basis as its audited, consolidated financial statements, and includes all adjustments (consisting only of normal recurring adjustments) necessary to present fairly this information when read in conjunction with the Company's audited, consolidated financial statements and the notes thereto. The Company's results of operations have fluctuated on a quarterly basis. The Company's expenses, with the principal exception of sales commissions and certain components of cost of revenue, are generally fixed and do not vary with revenue. As a result, any shortfall of actual revenue in a given quarter would adversely affect net earnings for that quarter by a significant portion of the shortfall.
THREE MONTHS ENDED -------------------------------------------------------------------------------------- JUNE 30, MAR. 31, DEC. 31, SEPT. 30, JUNE 30, MAR. 31, DEC. 31, SEPT. 30 2000 2000 1999 1999 1999 1999 1998 1998 -------- -------- -------- --------- -------- -------- -------- -------- (IN THOUSANDS, EXCEPT PER SHARE DATA) Net revenue....................... $30,989 $31,468 $34,380 $32,071 $37,755 $31,325 $33,101 $26,891 Cost of revenue................... 15,839 14,128 15,654 14,367 15,861 13,249 12,719 10,196 ------- ------- ------- ------- ------- ------- ------- ------- Gross margin.................... 15,150 17,340 18,726 17,704 21,894 18,076 20,382 16,695 Operating expenses: Selling, general and administrative................ 17,729 14,203 13,268 11,590 16,773 13,647 13,774 12,607 Research and product development................... 4,103 3,944 4,026 3,611 3,155 2,617 2,249 2,196 Amortization of intangibles from acquisitions.................. 1,130 934 764 765 564 533 557 486 Acquired research and development write-off......... -- 638 -- -- 835 -- -- -- Non-recurring charges related to divested operations........... 3,011 -- -- -- -- -- -- -- ------- ------- ------- ------- ------- ------- ------- ------- Total operating expenses............... 25,973 19,719 18,058 15,966 21,327 16,797 16,580 15,289 ------- ------- ------- ------- ------- ------- ------- ------- Operating income (loss)........... (10,823) (2,379) 668 1,738 567 1,279 3,802 1,406 Other income (expense), net....... (247) (252) (196) (271) 34 26 80 11 ------- ------- ------- ------- ------- ------- ------- ------- Income (loss) before income taxes........................... (11,070) (2,631) 472 1,467 601 1,305 3,882 1,417 Provision (benefit) for income taxes........................... (1,536) (777) 184 572 571 522 1,553 560 ------- ------- ------- ------- ------- ------- ------- ------- Net income (loss)................. $(9,534) $(1,854) $ 288 $ 895 $ 30 $ 783 $ 2,329 $ 857 ======= ======= ======= ======= ======= ======= ======= ======= Basic earnings (loss) per share... $ (1.27) $ (0.25) $ 0.04 $ 0.12 $ 0.00 $ 0.12 $ 0.35 $ 0.13 ======= ======= ======= ======= ======= ======= ======= ======= Diluted earnings (loss) per share........................... $ (1.27) $ (0.25) $ 0.04 $ 0.12 $ 0.00 $ 0.11 $ 0.32 $ 0.12 ======= ======= ======= ======= ======= ======= ======= ======= Diluted earnings (loss) per share exclusive of acquired research & development write-off........... $ (1.27) $ (0.16) $ 0.04 $ 0.12 $ 0.12 $ 0.11 $ 0.32 $ 0.12 ======= ======= ======= ======= ======= ======= ======= ======= Weighted average number of common shares outstanding.............. 7,503 7,428 7,357 7,354 6,874 6,700 6,648 6,622 Weighted average number of common shares outstanding assuming dilution........................ 7,503 7,428 7,836 7,720 7,207 7,309 7,281 7,260
LIQUIDITY AND CAPITAL RESOURCES Cash provided by operating activities increased from $5.5 million in fiscal 1999 to $5.9 million in fiscal 2000. During fiscal 1999, cash provided by operating activities were primarily provided by earnings of $4.0 million adjusted for non-cash items of $10.1 million plus an increase in deferred revenue of $4.0 million, the 20 21 sum of which, were partially offset by an increase in accounts receivable of $11.8 million. In fiscal 2000, cash provided by operating activities were primarily provided by the adjustment for non-cash items of $13.5 million plus a decrease in accounts receivable of $6.1 million, the sum of which, were partially offset by a net loss of $10.2 million plus a decrease in accounts payable and accrued expenses of $3.3 million. The Company calculates accounts receivable days sales outstanding as the ratio of the year-end accounts receivable to the sum of quarterly revenues, multiplied by the number of days in the period. Trade accounts receivable days sales outstanding were 104 days at June 30, 2000 in comparison to 110 days at June 30, 1999. The decrease in the days sales outstanding since June 30, 1999 was primarily due to strong collection efforts during the second half of fiscal 2000. For fiscal years 2000 and 1999, cash provided by operations was used primarily to fund software development costs, to purchase computer equipment and to fund acquisitions. In fiscal 2000, additional sources of cash included proceeds from the sale of Visual Applications Software, Inc. and the issuance of convertible preferred stock and warrants to purchase common stock, the sum of which, were partially offset by a pay down on the Company's line of credit. Cash at June 30, 2000 increased to $11.9 million from $5.2 million at June 30, 1999. Working capital was $19.3 million at June 30, 2000 compared to $21.9 million at June 30, 1999. The decrease in working capital during fiscal 2000 is primarily attributable to the decrease in trade accounts receivable resulting from the decline in revenue growth compounded by the increase in deferred revenue due to the increased Symix customer base and renewed service contracts. In addition to its present working capital, the Company has a $15.0 million secured revolving bank line of credit that expires in fiscal 2002. The line of credit is secured primarily by the Company's trade accounts receivable and certain other assets. As of June 30, 2000, $3.0 million was drawn under the line of credit to fund the Company's working capital needs. Also as of June 30, 2000, the Company was not in compliance with certain covenants under this agreement as a result of its reported losses for the quarter ended as of that date. The Company's bank has proposed certain amendments to the current credit facility and has provided a waiver relating to noncompliance upon execution of the amended credit facility. The noncompliance does not relate to any payment due under the credit facility. The waiver is for the period from June 30, 2000 to the date of execution of the amendment. Execution of the waiver is solely within the discretion of the Company. The Company intends to execute the waiver by November 15, 2000 if the Company is unable to obtain alternative financing that is more favorable. Over the last several months, the Company has been exploring alternative credit arrangements with its current bank and with other banks and credit institutions and has received several proposals that are similar to the proposal made by the Company's current bank. Generally, these proposed credit arrangements would provide lines of credit ranging from $15 million to $20 million for up to three years. Availability under these proposed credit arrangements would be based on qualifying accounts receivable under various formulas and will be secured by the Company's trade accounts receivable and certain other assets similar to the current credit facility. The proposals have differing financial covenants, but the Company believes that any final arrangement would have a limited number of such covenants, generally relating to maintenance of net worth. The Company's accounts receivable would be secured under all or any of the proposed arrangements. The Company expects to complete the execution of a new credit arrangement during the second quarter of the current fiscal year. Under any of the proposed arrangements, the Company anticipates that cash on hand, cash flow from operations and the bank line of credit will be sufficient to satisfy expected cash needs for the next 12 months. INFLATION AND INTEREST RATES The Company has not been significantly affected by inflation in recent years and anticipates that it will not be significantly affected by inflation in fiscal 2001. A material change in interest rates could have an impact on the Company's financial results, as the Company is presently paying a variable interest rate on its outstanding debt. 21 22 SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 CERTAIN STATEMENTS CONTAINED IN THIS ANNUAL REPORT ON FORM 10-K AND OTHER WRITTEN AND ORAL STATEMENTS MADE FROM TIME TO TIME BY THE COMPANY ARE "FORWARD-LOOKING" STATEMENTS, INCLUDING STATEMENTS REGARDING FUTURE ECONOMIC PERFORMANCE OF THE COMPANY AND THE PLANS, OBJECTIVES AND EXPECTATIONS OF THE COMPANY'S MANAGEMENT. THE WORDS "EXPECT," "ANTICIPATE," "INTEND," "PLAN," "BELIEVE," "ESTIMATE" AND SIMILAR EXPRESSIONS IDENTIFY FORWARD-LOOKING STATEMENTS. THESE STATEMENTS PROVIDE CURRENT EXPECTATIONS AND FORECASTS OF FUTURE EVENTS AND ARE SUBJECT TO CERTAIN RISKS AND UNCERTAINTIES, KNOWN AND UNKNOWN, THAT COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE REFLECTED IN THE FORWARD-LOOKING STATEMENTS. ALTHOUGH THE COMPANY BELIEVES THAT THE PLANS, OBJECTIVES AND EXPECTATIONS REFLECTED IN OR SUGGESTED BY THE FORWARD-LOOKING STATEMENTS ARE BASED UPON REASONABLE ASSUMPTIONS, NO ASSURANCE CAN BE GIVEN THAT SUCH PLANS, OBJECTIVES OR EXPECTATIONS WILL BE ACHIEVED. IN SOME CASES, INFORMATION REGARDING CERTAIN IMPORTANT FACTORS THAT COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM A FORWARD-LOOKING STATEMENT APPEAR TOGETHER WITH SUCH STATEMENT. OTHER UNCERTAINTIES AND RISKS INCLUDE, BUT ARE NOT LIMITED TO, THE COMPANY'S TRANSITION TO E-BUSINESS; THE DEMAND FOR AND MARKET ACCEPTANCE OF THE COMPANY'S PRODUCTS AND SERVICES; THE IMPACT OF COMPETITIVE PRODUCTS; THE COMPANY'S ABILITY TO MAINTAIN EFFICIENT MARKETING AND DISTRIBUTION OPERATIONS DOMESTICALLY AND INTERNATIONALLY; FUTURE WORLDWIDE POLITICAL, ECONOMIC, COMPETITIVE AND MARKET CONDITIONS; THE COMPANY'S ABILITY TO ATTRACT AND RETAIN HIGHLY SKILLED TECHNICAL, MANAGERIAL, SALES, MARKETING, SERVICE AND SUPPORT STAFF AND TO RETAIN KEY TECHNICAL AND MANAGEMENT PERSONNEL; TIMING OF PRODUCT DEVELOPMENT AND GENERAL RELEASE; EXCHANGE RATE FLUCTUATIONS; THE COMPANY'S ABILITY TO PROTECT ITS PROPRIETARY TECHNOLOGY; RISKS GENERALLY ASSOCIATED WITH NEW PRODUCT INTRODUCTION; PRODUCT PRICING; AND OTHER FACTORS DETAILED IN THIS ANNUAL REPORT ON FORM 10-K AND IN OTHER FILINGS MADE BY THE COMPANY WITH THE SECURITIES AND EXCHANGE COMMISSION. IT IS NOT POSSIBLE TO IDENTIFY OR FORESEE ALL SUCH RISKS OR UNCERTAINTIES. CONSEQUENTLY, THE FOREGOING SHOULD NOT BE CONSIDERED AN EXHAUSTIVE STATEMENT OF ALL RISKS, UNCERTAINTIES OR POTENTIALLY INACCURATE ASSUMPTIONS RELATING TO SUCH FORWARD-LOOKING STATEMENTS. THE COMPANY IS NOT OBLIGATED TO UPDATE OR REVISE THESE FORWARD-LOOKING STATEMENTS TO REFLECT NEW EVENTS OR CIRCUMSTANCES. ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK. FOREIGN EXCHANGE Symix's revenue originating outside the United States was 20% and 22% of total revenues in fiscal 2000 and fiscal 1999, respectively. In fiscal 2000, international revenues from each geographic region were: Europe 11% of total revenues and Asia Pacific 9% of total revenues. In fiscal 1999, the percentages were Europe 13% and Asia Pacific 9%. International sales are made mostly from the Company's foreign sales subsidiaries in the local countries and are typically denominated in the local currency of each country. These subsidiaries also incur most of their expenses in the local currency. Accordingly, all foreign subsidiaries use the local currency as their functional currency. The Company's international business is subject to risks typical of an international business, including, but not limited to: - differing economic conditions; - changes in political climate; - differing tax structures; - other regulations and restrictions; and - foreign exchange rate volatility. Accordingly, the Company's future results could be materially adversely impacted by changes in these or other factors. The Company's exposure to foreign exchange rate fluctuations arises in part from intercompany accounts in which cost of software, including certain development costs, incurred in the United States is charged to the 22 23 Company's foreign sales subsidiaries. These intercompany accounts are typically denominated in the functional currency of the foreign subsidiary in order to centralize foreign exchange risk with the parent company in the United States. The Company is also exposed to foreign exchange rate fluctuations as the financial results of foreign subsidiaries are translated into U.S. dollars in consolidation. As exchange rates vary, these results, when translated, may vary from expectations and adversely impact overall profitability. To date, the Company has not realized material fluctuations due to foreign exchange rates. Due to the growth of the international business, however, management is reviewing the possibility of a foreign exchange hedge program in order to minimize this particular exposure. ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA. INDEX TO FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES
PAGE ---- Report of Independent Auditors.............................. 26 Consolidated Statements of Operations -- Years ended June 30, 2000, 1999 and 1998................................... 27 Consolidated Balance Sheets -- June 30, 2000 and 1999....... 28 Consolidated Statements of Cash Flows -- Years ended June 30, 2000, 1999, and 1998.................................. 30 Consolidated Statements of Shareholders' Equity -- Years ended June 30, 2000, 1999, and 1998....................... 31 Notes to Consolidated Financial Statements -- June 30, 2000...................................................... 32 Financial statement schedule: Schedule II -- Valuation and Qualifying Accounts............ 44
All other schedules for which provision is made in the applicable accounting regulation of the Securities and Exchange Commission are not required under the related instructions or are inapplicable and therefore have been omitted. ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE. None. 23 24 PART III ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT. In accordance with general instruction G(3) of this Form 10-K, the information required by this Item and contained under the captions "Election of Directors" and "Section 16(a) Beneficial Ownership Reporting Compliance" in Symix's definitive proxy statement for its annual meeting of shareholders, to be held on November 8, 2000, to be filed with the Securities and Exchange Commission pursuant to Regulation 14A of the Securities Exchange Act of 1934 within 120 days after the end of Symix's fiscal year, is incorporated herein by this reference, except that certain information required by Item 10 with respect to executive officers of Symix is set forth in Part I hereof under "Item 1. Business -- Executive Officers of the Registrant". ITEM 11. EXECUTIVE COMPENSATION. In accordance with general instruction G(3) of this Form 10-K, the information required by this Item and contained under the captions "Compensation, Meetings and Committees of Directors" and "Executive Compensation" in Symix's definitive proxy statement for its annual meeting of shareholders, to be held on November 8, 2000, to be filed with the Securities and Exchange Commission pursuant to Regulation 14A of the Securities Exchange Act of 1934 within 120 days after the end of Symix's fiscal year, is incorporated herein by this reference. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT. In accordance with general instruction G(3) of this Form 10-K, the information required by this Item and contained under the caption "Principal Holders of Securities" in Symix's definitive proxy statement for its annual meeting of shareholders, to be held on November 8, 2000, to be filed with the Securities and Exchange Commission pursuant to Regulation 14A of the Securities Exchange Act of 1934 within 120 days after the end of Symix's fiscal year, is incorporated herein by this reference. ITEM 13. CERTAIN BENEFICIAL RELATIONSHIPS AND RELATED TRANSACTIONS. In accordance with general instruction G(3) of this Form 10-K, the information required by this Item and contained under the caption "Executive Compensation -- Certain Transaction and Relationships" in Symix's definitive proxy statement for its annual meeting of shareholders, to be held on November 8, 2000, to be filed with the Securities and Exchange Commission pursuant to Regulation 14A of the Securities Exchange Act of 1934 within 120 days after the end of Symix's fiscal year covered by this report, is incorporated herein by this reference. PART IV ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K. (a) Documents Filed as Part of This Report: 1 Financial Statements See Item 8. -- Index to Financial Statements and Financial Statement Schedules 2 Financial Statement Schedules See Item 8. -- Index to Financial Statements and Financial Statement Schedules 3 Exhibits: See Exhibit Index in this Report.
(b) Reports on Form 8-K: None. 24 25 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, on the 26th day of September, 2000. SYMIX SYSTEMS, INC. By /s/ Stephen A. Sasser ---------------------------------- Stephen A. Sasser President and Chief Executive Officer Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities indicated, on the 26th day of September, 2000.
SIGNATURE TITLE --------- ----- Lawrence J. Fox* Chairman of the Board and Director - ------------------------------------------------ Lawrence J. Fox /s/ Stephen A. Sasser President, Chief Executive Officer and Director - ------------------------------------------------ Stephen A. Sasser /s/ Lawrence W. DeLeon Executive Vice President, Symix Worldwide Field - ------------------------------------------------ Operations, Acting Principal Financial Officer and Lawrence W. DeLeon Acting Principal Accounting Officer John T. Tait* Director - ------------------------------------------------ John T. Tait Duke W. Thomas* Director - ------------------------------------------------ Duke W. Thomas Larry L. Liebert* Director - ------------------------------------------------ Larry L. Liebert James A. Rutherford* Director - ------------------------------------------------ James A. Rutherford Roger D. Blackwell* Director - ------------------------------------------------ Roger D. Blackwell Guy de Chazal* Director - ------------------------------------------------ Guy de Chazal Barry Goldsmith* Director - ------------------------------------------------ Barry Goldsmith * By Power of Attorney /s/ Lawrence W. DeLeon - ------------------------------------------------ Lawrence W. DeLeon (Attorney-in-Fact)
25 26 REPORT OF INDEPENDENT AUDITORS Board of Directors Symix Systems, Inc. We have audited the accompanying consolidated balance sheets of Symix Systems, Inc. and Subsidiaries as of June 30, 2000 and 1999, and the related consolidated statements of operations, shareholders' equity, and cash flows for each of the three years in the period ended June 30, 2000. Our audits also included the financial statement schedule listed in the Index at Item 8. These financial statements and schedule are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements and schedule based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Symix Systems, Inc. and Subsidiaries at June 30, 2000 and 1999, and the consolidated results of their operations and their cash flows for each of the three years in the period ended June 30, 2000, in conformity with accounting principles generally accepted in the United States. Also, in our opinion, the related financial statement schedule, when considered in relation to the basic financial statements taken as a whole, presents fairly in all material respects the information set forth herein. /s/ Ernst & Young LLP Columbus, Ohio July 27, 2000 26 27 CONSOLIDATED STATEMENTS OF OPERATIONS
YEAR ENDED JUNE 30, ------------------------------------- 2000 1999 1998 ---------- ---------- --------- (IN THOUSANDS, EXCEPT PER SHARE DATA) Revenue: License fees................................................ $ 57,858 $ 67,423 $58,498 Service, maintenance and support............................ 71,050 61,649 39,099 -------- -------- ------- Net revenue............................................... 128,908 129,072 97,597 Cost of revenue: License fees................................................ 19,636 18,317 14,746 Service, maintenance and support............................ 40,352 33,708 20,955 -------- -------- ------- Cost of revenue........................................... 59,988 52,025 35,701 -------- -------- ------- Gross margin.............................................. 68,920 77,047 61,896 Selling, general and administrative......................... 56,790 56,801 43,995 Research and development.................................... 15,684 10,217 7,901 Amortization of intangibles from acquisitions............... 3,593 2,140 1,479 Acquisition research and development write-off.............. 638 835 6,503 Non-recurring charges related to divested operations........ 3,011 -- -- -------- -------- ------- Total operating expenses.......................... 79,716 69,993 59,878 -------- -------- ------- Operating income (loss)................................... (10,796) 7,054 2,018 Other income (expense), net................................. (966) 151 (178) -------- -------- ------- Income (loss) before income taxes......................... (11,762) 7,205 1,840 Provision (benefit) for income taxes -- Note F.............. (1,557) 3,206 3,196 -------- -------- ------- Net income (loss)......................................... $(10,205) $ 3,999 $(1,356) ======== ======== ======= Basic EPS: Net income (loss) per share............................... $ (1.38) $ 0.60 $ (0.21) ======== ======== ======= Diluted EPS: Net income (loss) per share............................... $ (1.38) $ 0.55 $ (0.21) ======== ======== ======= Weighted average number of common shares outstanding........ 7,411 6,711 6,317 Weighted average number of common shares outstanding assuming dilution......................................... 7,411 7,264 6,317
See notes to consolidated financial statements 27 28 CONSOLIDATED BALANCE SHEETS
JUNE 30, JUNE 30, 2000 1999 --------- --------- (IN THOUSANDS, EXCEPT PER SHARE DATA) ASSETS Current assets: Cash and cash equivalents................................. $11,868 $ 5,236 Trade accounts receivable, less allowance for doubtful accounts of $2,075 at June 30, 2000 and $1,500 at June 30, 1999............................................... 36,956 46,251 Inventories............................................... 861 767 Prepaid expenses.......................................... 2,610 2,518 Other receivables......................................... 988 1,346 Income tax benefit........................................ 1,867 -- Deferred income taxes -- Note F........................... 1,510 811 ------- ------- Total current assets.............................. 56,660 56,929 Other assets: Capitalized software, net of accumulated amortization of $13,687 at June 30, 2000 and $10,833 at June 30, 1999................................................... 18,329 16,250 Intangibles, net.......................................... 9,113 7,191 Deposits and other assets................................. 2,280 2,033 ------- ------- 29,722 25,474 Equipment and improvements: Furniture and fixtures.................................... 3,568 3,101 Computer and other equipment.............................. 18,410 15,767 Leasehold improvements.................................... 1,535 1,472 ------- ------- 23,513 20,340 Less allowance for depreciation and amortization.......... 15,527 12,143 ------- ------- 7,986 8,197 ------- ------- Total assets...................................... $94,368 $90,600 ======= =======
See notes to consolidated financial statements 28 29 CONSOLIDATED BALANCE SHEETS, CONTINUED
JUNE 30, JUNE 30, 2000 1999 --------- --------- (IN THOUSANDS, EXCEPT PER SHARE DATA) LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable and accrued expenses -- Note G........... $13,613 $16,200 Deferred revenue.......................................... 18,223 17,209 Income taxes payable...................................... -- 470 Current portion of long-term obligations -- Note I........ 5,476 1,124 ------- ------- Total current liabilities......................... 37,312 35,003 Long-term obligations -- Note I............................. 169 392 Bank credit agreement -- Note E............................. 3,000 5,367 Deferred income taxes -- Note F............................. 4,167 5,417 Minority interest -- Note K................................. 2,146 2,020 Series A Convertible Participating Preferred Stock, no par value, 1,000,000 shares authorized, 566,933 shares issued and outstanding, liquidation preference $24 per share -- Note L........................................... 10,865 -- Shareholders' equity -- Note C Common stock, authorized 20,000 shares; issued 7,807 shares at June 30, 2000 and 7,654 shares at June 30, 1999; at stated capital amounts of $.01 per share...... 78 76 Capital in excess of stated value......................... 37,216 32,363 Retained earnings......................................... 3,292 13,496 Accumulated other comprehensive loss...................... (2,557) (2,214) ------- ------- 38,029 43,721 Less: Common stock in treasury: 304 shares, at cost....................................... (1,320) (1,320) ------- ------- Total shareholders' equity........................ 36,709 42,401 ------- ------- Total liabilities and shareholders' equity........ $94,368 $90,600 ======= =======
See notes to consolidated financial statements 29 30 CONSOLIDATED STATEMENTS OF CASH FLOWS
YEAR ENDED JUNE 30, -------------------------------- 2000 1999 1998 -------- -------- -------- (IN THOUSANDS) Increase (decrease) in cash Operating activities: Net income (loss)........................................... $(10,205) $ 3,999 $ (1,356) Adjustments to reconcile net income (loss) to net cash provided by operating activities: Acquisition research and development write-off............ 638 835 6,503 Depreciation and amortization............................. 11,429 8,510 6,220 Net loss on disposal of assets............................ 162 -- -- Write-off of goodwill associated with sale of Visual Applications Software, Inc.............................. 1,219 -- -- Capitalized software impairment charge.................... 1,825 -- -- Provision for losses on accounts receivable............... 575 437 353 Provision for deferred income taxes....................... (2,333) 362 572 Changes in operating assets and liabilities: Trade accounts receivable............................ 6,114 (11,829) (11,942) Prepaid expenses and other receivables............... 368 (1,344) (181) Inventory............................................ (95) (277) (133) Deposits and other assets............................ (295) (343) (1,084) Accounts payable and accrued expenses................ (3,354) 1,688 5,285 Customer deposits.................................... (88) (153) (14) Deferred revenue..................................... 1,267 3,996 2,831 Income taxes payable/refundable...................... (1,331) (407) 1,721 -------- -------- -------- Net cash provided by operating activities............ 5,896 5,474 8,775 -------- -------- -------- Investing activities: Purchase of equipment and improvements...................... (4,496) (3,624) (3,273) Additions to purchased and developed software............... (7,009) (4,871) (4,667) Proceeds from sale of subsidiary............................ 2,585 -- -- Purchase of subsidiaries, net of cash acquired.............. (2,116) (1,069) (699) -------- -------- -------- Net cash used by investing activities................ (11,036) (9,564) (8,639) -------- -------- -------- Financing activities: Proceeds from issuance of convertible preferred stock..... 10,865 -- -- Proceeds from issuance of common stock warrants........... 2,510 -- -- Proceeds from issuance of common stock and exercise of stock options........................................... 1,408 1,004 815 Additions to long-term obligations, net of payments......... (3,112) 2,204 1,152 Additions to paid in capital................................ -- -- 2,000 -------- -------- -------- Net cash provided by financing activities............ 11,671 3,208 3,967 -------- -------- -------- Effect of exchange rate changes on cash..................... 101 3 (320) -------- -------- -------- Net increase (decrease) in cash............................. 6,632 (879) 3,783 Cash at beginning of period................................. 5,236 6,115 2,332 -------- -------- -------- Cash at end of period....................................... $ 11,868 $ 5,236 $ 6,115 -------- -------- -------- Supplemental disclosure of cash flow information: Cash paid during the period for: Interest................................................ $ 782 $ 320 $ 374 -------- -------- -------- Income taxes (net of refunds)........................... 1,756 2,381 78 -------- -------- --------
See notes to consolidated financial statements 30 31 CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
ACCUMULATED CONVERTIBLE CAPITAL OTHER COMMON SHARES PREFERRED SHARES IN EXCESS OF RETAINED COMPREHENSIVE STOCK AMOUNT STOCK AMOUNT STATED VALUE EARNINGS INCOME ------ ------ ----------- ------- ------------ -------- ------------- (IN THOUSANDS) Balances at June 30, 1997.... 6,160 $62 125 $ 1,031 $13,291 $ 10,853 $ (556) Issuance of shares on exercise of stock options.................... 97 1 617 Tax benefit on stock options exercised.................. 459 Issuance of shares for employee stock purchase plan....................... 36 257 Compensatory portion of stock options granted............ 150 Issuance of shares and options related to acquisition................ 485 5 9,163 Net loss..................... (1,356) Foreign currency translation adjustments................ (1,356) Comprehensive loss........... ----- --- ---- ------- ------- -------- ------- Balances at June 30, 1998.... 6,778 68 125 1,031 23,937 9,497 (1,912) Issuance of shares on exercise of stock options.................... 75 1 516 Tax benefit on stock options exercised.................. 330 Exercise of convertible preferred shares........... 144 1 (125) (1,031) 1,341 Issuance of shares for employee stock purchase plan....................... 38 533 Compensatory portion of stock options granted............ 140 Issuance of shares related to acquisition................ 619 6 5,566 Net income................... 3,999 Foreign currency translation adjustments................ (302) Comprehensive income......... ----- --- ---- ------- ------- -------- ------- Balances at June 30, 1999.... 7,654 76 -- -- 32,363 13,496 (2,214) Issuance of shares on exercise of stock options.................... 118 2 789 Tax benefit on stock options exercised.................. 754 Issuance of shares for employee stock purchase plan....................... 35 577 Compensatory portion of stock options granted............ 220 Issuance of shares related to acquisition................ 3 Fair market value of common stock warrants issued...... 2,510 Net loss..................... (10,204) Foreign currency translation adjustment................. (343) Comprehensive loss........... ----- --- ---- ------- ------- -------- ------- Balances at June 30, 2000.... 7,807 $78 -- -- $37,216 $ 3,292 $(2,557) TOTAL TREASURY SHAREHOLDERS' STOCK EQUITY -------- ------------- (IN THOUSANDS) Balances at June 30, 1997.... $(1,320) $ 23,361 Issuance of shares on exercise of stock options.................... 618 Tax benefit on stock options exercised.................. 459 Issuance of shares for employee stock purchase plan....................... 257 Compensatory portion of stock options granted............ 150 Issuance of shares and options related to acquisition................ 9,168 Net loss..................... (1,356) Foreign currency translation adjustments................ (1,356) -------- Comprehensive loss........... (2,712) ------- -------- Balances at June 30, 1998.... (1,320) 31,301 Issuance of shares on exercise of stock options.................... 517 Tax benefit on stock options exercised.................. 330 Exercise of convertible preferred shares........... 311 Issuance of shares for employee stock purchase plan....................... 533 Compensatory portion of stock options granted............ 140 Issuance of shares related to acquisition................ 5,572 Net income................... 3,999 Foreign currency translation adjustments................ (302) -------- Comprehensive income......... 3,697 ------- -------- Balances at June 30, 1999.... (1,320) 42,401 Issuance of shares on exercise of stock options.................... 791 Tax benefit on stock options exercised.................. 754 Issuance of shares for employee stock purchase plan....................... 577 Compensatory portion of stock options granted............ 220 Issuance of shares related to acquisition................ 3 Fair market value of common stock warrants issued...... 2,510 Net loss..................... (10,204) Foreign currency translation adjustment................. (343) -------- Comprehensive loss........... (10,547) ------- -------- Balances at June 30, 2000.... $(1,320) $ 36,709
31 32 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE A -- SIGNIFICANT ACCOUNTING POLICIES Principles of Consolidation: The accompanying financial statements include the accounts of Symix Systems, Inc. ("Symix" or the "Company"), and its wholly owned subsidiaries after elimination of intercompany accounts and transactions. Organization: Symix designs, develops, markets and supports integrated enterprise software solutions for mid-market, discrete manufacturers, distributors and business units of larger companies. The Company sells a comprehensive suite of integrated business to business ("b2b") e-business offerings that support customer relationship management, web based procurement and supply chain management activities as well as the traditional "back office" requirements for manufacturing, distribution and financial management. Founded in 1979, Symix is headquartered in Columbus, Ohio, employing 867 people, with direct sales and support offices in the Americas, Europe and Asia Pacific. Use of Estimates: The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. Revenue Recognition: In October 1997, the American Institute of Certified Public Accountants ("AICPA") issued Statement Of Position ("SOP") 97-2, "Software Revenue Recognition," which provides guidance on recognizing revenue on software transactions and supersedes SOP 91-1. Further guidance was published during 1998 in SOP 98-9, "Modification of SOP 97-2, Software Revenue Recognition, With Respect to Certain Transactions." The Company adopted the provisions of SOP 97-2 effective July 1, 1998 and SOP 98-9 in the first quarter of fiscal 2000. Revenue is derived principally from the sale of internally produced software products and maintenance and support agreements from software sales. The Company licenses software generally under non-cancelable license agreements and provides product support services and periodic updates including training, installation, consulting and maintenance. License fee revenues are generally recognized when a non-cancelable license agreement has been signed, the software product has been shipped, there are no uncertainties surrounding product acceptance, the fees are fixed and determinable and collection is considered probable. For customer license agreements, which meet these recognition criteria, the portion of the fees related to software licenses will generally be recognized in the current period, while the portion of the fees related to services is recognized as the services are performed. Revenue from maintenance and support agreements is billed periodically, deferred and recognized ratably over the life of the agreements. Revenue from consulting, education and other services is recognized as the services are provided. The Company establishes allowances to provide for uncollectible trade receivables and anticipated adjustments to amounts previously billed. Capitalized Software: Capitalized software is stated at the lower of cost or net realizable value. The Company capitalizes the cost of purchased software and the qualifying internal cost of developing its software products in accordance with Statement of Financial Accounting Standards No. 86, "Accounting for the Costs of Computer Software to be Sold, Leased or Otherwise Marketed." Capitalized software costs are amortized by the straight-line method using estimated useful lives of three to five years. Amortization expense was $4,033,000, $2,980,000, and $2,115,000 for the years ended June 30, 2000, 1999 and 1998, respectively. Inventories: Inventories consist primarily of software-related products that are held for resale. The Company values inventory at the lower of cost or market. Cost is determined using the specific identification method. Equipment and Improvements: Equipment and improvements are stated on the basis of cost. Provisions for depreciation and amortization are computed by the straight-line method over the estimated lives of the related assets. Depreciation expense was $3,618,000, $3,221,000 and $2,434,000 for the years ended June 30, 2000, 1999 and 1998, respectively. 32 33 Foreign Currency Translation: The Company has determined that the functional currency of each foreign operation is the local currency. The effects of translation rate changes related to assets and liabilities located outside the United States are included as a component of other comprehensive income. Foreign currency transaction gains and losses are included in Other Income, Net on the Consolidated Statements of Operations. Income Taxes: The Company accounts for income taxes under the liability method pursuant to Statement of Financial Accounting Standards No. 109, "Accounting for Income Taxes" ("SFAS 109"). Under the liability method, deferred tax assets and liabilities are determined based on differences between the financial reporting and tax basis of assets and liabilities using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. Earnings Per Share: The Company computes earnings per share in accordance with the requirements of Statement of Financial Accounting Standards No. 128, "Earnings Per Share" ("SFAS 128"). Under SFAS 128, basic earnings per share computations are based on the weighted-average number of common shares outstanding during the period presented. Diluted earnings per share calculations reflect the assumed exercise and conversion of employee stock options, warrants and convertible preferred stock. Comprehensive Income: The Company adopted Statement of Financial Accounting Standards No. 130 "Reporting Comprehensive Income" ("SFAS 130") as of July 1, 1998. SFAS 130 requires disclosure of the components of total non-stockholder changes in equity as comprehensive income. The Company's only items that meet the definition for adjustment to arrive at comprehensive income are changes in cumulative translation adjustments. Stock-based Compensation: The Company accounts for stock compensation arrangements in accordance with APB Opinion No. 25, "Accounting for Stock Issued to Employees." The pro forma information regarding net income and earnings per share as required by Statement of Financial Accounting Standards No. 123, "Accounting for Stock-Based Compensation" ("SFAS 123") is disclosed in "Note C -- Common Stock and Stock Options". Preferred Stock: The Company's Amended Articles of Incorporation, as amended, authorize 1,000,000 shares of preferred stock, no par value. The Board of Directors is authorized to determine the rights and preferences of these shares. See Note L. Cash and Cash Equivalents: The Company considers all demand deposits and highly liquid investments with a maturity of three months or less as cash equivalents. Intangible Assets: Intangible assets consist principally of goodwill and other intangible assets resulting from acquisitions accounted for using the purchase method of accounting. The intangible assets are amortized using the straight-line method over a period of three to ten years. The amortization expense of intangible assets relating to acquired businesses was $3,593,000, $2,140,000, and $1,479,000 for the years ended June 30, 2000, 1999 and 1998, respectively. Long-lived Assets: The carrying values of long-lived assets are reviewed if the facts and circumstances suggest that they may be impaired. If this review indicates that the applicable long-lived asset will not be recoverable, as determined based on the undiscounted cash flows of the asset, the carrying value of the asset will be reduced to fair value. Reclassification: Certain reclassifications have been made to prior year amounts to conform to the 2000 presentation. Effect of New Accounting Standards: The Financial Accounting Standards Board issued Statement of Financial Accounting Standards ("SFAS") No. 133, Accounting for Derivative Instruments and Hedging Activities, in 1998 and SFAS No. 137, Accounting for Derivative Instruments and Hedging Activities -- Deferral of the Effective Date of FASB Statement No. 133, in 1999. The statements require that all derivatives be recorded as either assets or liabilities in the balance sheet and be measured at fair value. Gains or losses resulting from changes in the values of those derivatives would be accounted for depending on the use of the derivative and whether it qualifies for hedge accounting. The Company has assessed the impact of these statements on the consolidated financial statement and does not believe these statements will have a significant impact at the present 33 34 time. On March 31, 2000, the Financial Accounting Standards Board issued FASB Interpretation No. 44, Accounting for Certain Transactions Involving Stock Compensation, an interpretation of APB Opinion No. 25. The Interpretation clarifies guidance for certain issues that arose in the application of APB Opinion No. 25, Accounting for Stock Issued to Employees. The Company has assessed the impact of this Interpretation on the Company's consolidated financial statements and has determined that it will not have an impact at the present time. NOTE B -- LEASES The Company has entered into certain operating lease agreements for the rental of office facilities and computer equipment. The facility leases provide for annual rentals which are subject to escalation for increased operating costs. Amounts expensed under all operating lease agreements were: $4,822,000, $4,415,000 and $3,727,000 for the years ended June 30, 2000, 1999 and 1998, respectively. The following is a schedule of future minimum lease payments required under capital and operating leases that have initial or remaining non-cancelable lease terms in excess of one year as of June 30, 2000:
CAPITAL OPERATING FISCAL YEARS LEASE LEASE ------------ ------- --------- (IN THOUSANDS) 2001................................................... $178 $3,752 2002................................................... 87 2,493 2003................................................... 24 1,212 2004................................................... -- 835 2005 and thereafter.................................... -- 396 ---- ------ Total minimum payments...................................... 289 $8,688 ====== Less amount representing interest........................... 12 ---- Present value of future minimum lease payments.............. $277 ====
NOTE C -- COMMON STOCK AND STOCK OPTIONS The Company has a non-qualified stock option plan ("the Plan") that provides for the granting of options to officers and other key employees for common shares at purchase prices of not less than the fair market value on the date of the grant as determined by the Stock Option Committee of the Board of Directors. The maximum number of common shares which may be optioned under the Plan was 2,653,070 as of June 30, 2000. Options under the Plan generally vest over periods of up to four years and must be exercised within ten years of the date of grant. In addition, shareholder approval was obtained on November 17, 1999 for a separate non-qualified stock option plan ("the 1999 Plan"). The 1999 Plan also provides for the granting of options to officers and key employees for common shares at purchase prices of not less than the fair market value on the date of the grant as determined by the Stock Option Committee of the Board of Directors. The maximum number of common shares which may be optioned under the 1999 Plan was 600,000 as of June 30, 2000. Options under the 1999 Plan generally vest over periods of up to four years and must be exercised within ten years of the date of the grant. The Company also has a non-qualified stock option plan for Key Executives ("Key Executives Plan"). A total of 400,000 common shares are designated for issuance under the Key Executives Plan. The Stock Option Committee of the Board of Directors is authorized to set the price and terms and conditions of the options granted under the Key Executives Plan. Options under the Key Executives Plan must be exercised within ten years of the date of the grant. The Company also has a Stock Option Plan for Outside Directors ("Outside Directors Plan"). The Outside Directors Plan provides for the issuance of options for 20,000 shares of stock to each Outside Director upon his/her election to the Board of Directors. A total of 200,000 common shares may be issued under the Outside 34 35 Directors Plan. Options under the Outside Directors Plan vest immediately and must be exercised within ten years of the date of grant. Pro forma information regarding net income and earnings per share is required by SFAS 123, which also requires that the information be determined as if the Company has accounted for its employee stock options granted subsequent to December 31, 1994 under the fair value method of that statement. The fair value for these options was estimated at the date of grant using a Black-Scholes option pricing model with the following weighted-average assumptions for 2000, 1999 and 1998: risk-free interest rates of 6.5%, 6.0% and 6.5%, respectively; no dividend yield; volatility factor of the Company's common shares of 0.9, 0.5 and 0.4, respectively; and a weighted-average expected life of each option of 7 years in 2000 and 6 years for 1999 and 1998. If the Company had elected to recognize compensation cost based on the fair value of options at the grant date (which includes shares issuable under the Employee Stock Purchase Plan -- see Note D) as prescribed by SFAS 123, the following table displays what reported net income (loss) and per share amounts would have been:
PRO FORMA YEAR ENDED JUNE 30, ----------------------------- 2000 1999 1998 -------- ------ ------- (IN THOUSANDS, EXCEPT PER SHARE DATA) Net income (loss)...................................... $(11,402) $2,955 $(2,047) Net income (loss) per share............................ $ (1.54) $ 0.41 $ (0.32)
The pro forma financial effects of applying SFAS 123 may not be representative of the pro forma effects on reported results of operations for future years. Information with respect to options granted under the three Plans is as follows:
WEIGHTED- NUMBER AVERAGE PRICE OF SHARES PER SHARE --------- ------------- Outstanding at June 30, 1997................................ 1,477,750 $ 5.61 Granted..................................................... 256,630 15.29 Cancelled................................................... (18,638) 8.04 Exercised................................................... (96,207) 6.42 Outstanding at June 30, 1998................................ 1,619,535 7.17 Granted..................................................... 263,050 15.92 Cancelled................................................... (52,425) 11.81 Exercised................................................... (74,888) 6.90 Outstanding at June 30, 1999................................ 1,755,272 8.26 Granted..................................................... 377,100 9.69 Cancelled................................................... (79,150) 13.00 Exercised................................................... (117,300) 6.73 Outstanding at June 30, 2000................................ 1,935,922 $ 8.44
35 36 The following table summarizes information regarding stock options outstanding as of June 30, 2000:
OPTIONS OUTSTANDING OPTIONS EXERCISABLE ------------------------------------------------------ ----------------------------------- WEIGHTED-AVG. NUMBER OUTSTANDING REMAINING WEIGHTED-AVG. NUMBER EXERCISABLE WEIGHTED-AVG. RANGE OF EXERCISE PRICES AT 6/30/2000 CONTRACTUAL LIFE EXERCISE PRICE AT 6/30/2000 EXERCISE PRICE - ------------------------ ------------------ ---------------- -------------- ------------------ -------------- $ 3.82-$ 3.82......... 400,000 5.00 $ 3.82 400,000 $ 3.82 3.83- 5.66......... 389,500 4.25 5.02 389,500 5.02 5.67- 8.06......... 387,375 6.32 7.59 296,374 7.53 8.07- 10.69......... 414,571 9.13 9.56 33,146 10.17 10.70- 14.81......... 129,426 7.15 13.17 84,376 12.73 14.82- 18.63......... 87,250 7.76 18.31 46,313 18.29 18.64- 20.50......... 115,800 8.03 20.50 27,320 20.50 20.51- 27.78......... 12,000 8.64 22.96 2,500 22.46 $ 3.82-$27.78......... 1,935,922 6.47 $ 8.44 1,279,529 $ 6.71
The weighted-average fair value of options granted during the years ended June 30, 2000, 1999 and 1998 was $5.92, $5.39 and $4.63, respectively. At June 30, 2000, options for 1,279,529 shares were exercisable and 515,679 shares remained available for grant. NOTE D -- EMPLOYEE BENEFIT PLANS The Company has a 401(k) plan that covers substantially all employees over 21 years of age. The Company contributes to the plan based upon employee contributions and may make additional contributions at the discretion of the Board of Directors. The Company made contributions to this plan of approximately $683,000 $608,000 and $496,000, for the years ended June 30, 2000, 1999 and 1998, respectively. The Company has an employee stock purchase plan that is in accordance with Section 423 of the Internal Revenue Code whereby participants are eligible to purchase common shares of the Company during the plan year. The purchase price for a common share is determined by the Compensation Committee of the Board of Directors prior to the effective date. The purchase price may not be less than 90% of the per share fair market value of the Company's common shares on either the effective date or the option date for the offering, whichever is the lesser. Substantially, all employees are eligible to participate. NOTE E -- LINE OF CREDIT In June 1998, the Company entered into a revolving credit facility with a bank (the "Credit Facility") which, as amended and restated in May 2000, provides for a $15.0 million secured revolving line of credit that expires on the earlier of a) July 1, 2001, or b) the date the amounts borrowed become due and payable. The line of credit is secured primarily by the Company's trade accounts receivable and certain other assets. Borrowings under the credit facility bear interest at either the bank prime rate (prime rate at June 30, 2000 was 9.5%) or, at the Company's option, the LIBOR rate as adjusted for performance based pricing (LIBOR rate at June 30, 2000 was 8.6475%). The Company is required to pay a fee of .25% per year on the unused portion of the Credit Facility. Borrowings on the line of credit were $3,000,000 at June 30, 2000 and $5,367,000 at June 30, 1999. The Credit Facility contains certain covenants, which, among other things, require the Company to maintain specified financial ratios and to satisfy certain tests, including minimum net worth, maximum leverage ratio, minimum EBITDA, minimum current ratio, and limitations on future capital expenditures. At June 30, 2000, the Company was not in compliance with certain of these debt covenants. The Company's bank has proposed certain amendments to the current Credit Facility and has provided a waiver relating to noncompliance upon execution of the amended credit facility. The noncompliance does not relate to any payment due under the Credit Facility. The waiver has been granted for the period June 30, 2000 to the date of the execution of the amendment. Execution of the waiver is solely within the discretion of the Company. The Company intends to execute the waiver by November 15, 2000 if the Company is unable to obtain alternative financing that is more favorable. 36 37 NOTE F -- INCOME TAXES SFAS 109 requires recognition of deferred tax liabilities and assets for the expected future consequences of events that have been included in the financial statements or tax returns. Under this method, deferred tax liabilities and assets are determined based on the difference between the financial statement and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. Income taxes are summarized as follows:
YEAR ENDED JUNE 30, --------------------------- 2000 1999 1998 ------- ------ ------ (IN THOUSANDS) Current: Federal................................................ $ (516) $1,927 $1,949 State and local........................................ (17) 475 406 Foreign................................................ 541 582 356 ------- ------ ------ 8 2,984 2,711 Deferred: Federal................................................ (1,399) 131 412 State and local........................................ (206) 43 73 Foreign................................................ 40 48 -- ------- ------ ------ (1,565) 222 485 ------- ------ ------ $(1,557) $3,206 $3,196 ======= ====== ======
During the years ended June 30, 2000, 1999 and 1998, the Company recorded a tax benefit of approximately $754,000, $330,000 and $459,000, respectively, in connection with the exercise of stock options. The benefit, which was due to the difference in the fair market value and the exercise price of the options at the date of exercise, was recorded as an increase in capital in excess of stated value. 37 38 Significant components of the Company's deferred tax assets and liabilities as of June 30, 2000 and 1999 are as follows:
YEAR ENDED JUNE 30, -------------------- 2000 1999 -------- -------- (IN THOUSANDS) Current deferred tax asset: Allowance for doubtful accounts........................... $1,105 $ 666 Accrued liabilities....................................... 405 145 ------ ------ Total current deferred tax assets...................... $1,510 $ 811 ------ ------ Long-term deferred tax liabilities: Capitalized software...................................... $4,966 $5,683 Intangibles............................................... 1,313 917 Capitalized leases........................................ 422 433 Accrued liabilities....................................... 540 1,052 ------ ------ Total long-term deferred tax liabilities............... 7,241 8,085 ------ ------ Long-term deferred tax assets: Book over tax depreciation................................ 702 435 Domestic losses........................................... 1,938 1,696 Foreign losses............................................ 682 226 Tax credits............................................... 434 311 ------ ------ Total long-term deferred tax assets.................... 3,756 2,668 Less valuation allowance............................... (682) -- ------ ------ Net long-term deferred tax assets......................... 3,074 2,668 ------ ------ Net long-term deferred tax liabilities.................... $4,167 $5,417 ====== ======
The long-term deferred tax assets pertaining to foreign losses are net operating loss carryforwards for certain foreign subsidiaries. The Company has set a valuation allowance for the foreign net operating loss carryforwards. The Company's effective tax rate differs from the statutory U.S. federal income tax rate as follows:
YEAR ENDED JUNE 30, -------------------- 2000 1999 1998 ---- ---- ---- (IN THOUSANDS) Federal income tax statutory rate........................... (34)% 34% 34% State and local income taxes net of federal tax benefit..... (3) 4 3 Foreign operations taxed at rates different from U.S. federal statutory rate.................................... 7 6 13 Disposition of foreign operation............................ 5 -- -- Non-deductible acquisition research and development write off....................................................... 2 4 134 General business credits.................................... -- (7) (14) Non-deductible permanent differences........................ 4 3 4 Valuation allowance recorded against deferred tax assets.... 6 -- -- --- -- --- (13)% 44% 174% === == ===
The Company has domestic net operating losses for tax purposes of $490,000, $347,000, $37,000, $752,000, $1,344,000 and $2,000,000 which expire in fiscal years 2008, 2010, 2012, 2013, 2018 and 2019, respectively. 38 39 NOTE G -- ACCOUNTS PAYABLE AND ACCRUED EXPENSES Accounts payable and accrued expenses are summarized as follows:
JUNE 30, ------------------ 2000 1999 ------- ------- (IN THOUSANDS) Accounts payable............................................ $ 5,134 $ 4,685 Accrued commissions & bonus................................. 1,642 3,087 Third party royalties....................................... 2,565 3,265 Other....................................................... 4,272 5,163 ------- ------- $13,613 $16,200 ======= =======
NOTE H -- ACQUISITIONS On November 24, 1997, the Company acquired Pritsker Corporation ("Pritsker"), for $737,000 in cash and 485,000 common shares of the Company. Pritsker markets advanced planning and scheduling and simulation software to mid-market manufacturers. Pursuant to the acquisition agreement, (i) Pritsker was merged with and into a wholly-owned subsidiary of the Company incorporated in Ohio, (ii) each share of Pritsker common stock was converted into the right to receive 0.170108 common shares of the Company and (iii) each share of Pritsker preferred stock was converted into the right to receive $5.23 in cash plus accrued and unpaid dividends. Each unexercised employee stock option and outstanding warrant for Pritsker common stock was assumed by Symix and converted into the right to acquire that number of common shares of the Company to which the holder would have been entitled if such holder had exercised the option or warrant immediately prior to the merger. The transaction was accounted for as a purchase and resulted in a one-time, non-recurring charge of approximately $6.5 million relating to the write-off of acquired in-process technology of Pritsker. On June 10, 1999, the Company acquired Distribution Architects International, Inc. ("DAI") for 619,000 common shares of the Company and $813,000 in cash. DAI is a provider of supply chain management applications for distribution organizations. Pursuant to the acquisition agreement, DAI was merged with and into a wholly-owned subsidiary of the Company incorporated in Ohio, and each share of DAI common stock was converted into the right to receive .1313 common shares of the Company. Each DAI option outstanding immediately prior to the merger was canceled and terminated. The holder of each option was entitled to receive that number of Symix shares equal to $2.17 (the per share value of DAI stock as agreed to by DAI and Symix) less $1.242 (the stock option exercise price), multiplied by the number of shares of DAI covered by the option, and divided by $18.50. The transaction was accounted for as a purchase and resulted in a one-time, non-recurring charge of $835,000 relating to the write-off of acquired in-process technology of DAI. On February 9, 2000, the Company acquired Profit Solutions, Inc. ("PSI"), a Minnesota corporation and provider of Web-centric customer relationship management applications with sales, marketing, service and business intelligence functionality, for approximately $2.1 million in cash paid at closing and $5.0 million in unsecured, subordinated promissory notes to be paid by January 2, 2001. The transaction was accounted for as a purchase and resulted in a one-time, non-recurring charge of $638,000 relating to the write-off of acquired in-process technology of PSI. The following proforma information shows revenue, net income/(loss) and earnings/(loss) per share assuming the Company, Pritsker, DAI and PSI had been combined at the beginning of the period indicated. The non-recurring charges of $6.5 million, $835,000 and $638,000 are excluded from proforma net income/(loss).
TWELVE MONTHS ENDED JUNE 30, -------------------------------- 2000 1999 1998 -------- -------- -------- (IN THOUSANDS, EXCEPT PER SHARE DATA) Revenue............................................ $129,333 $140,034 $112,217 Net income (loss).................................. $(10,888) $ 2,828 $ 4,458 Earnings/(loss) per share.......................... $ (1.47) $ 0.39 $ 0.58
39 40 NOTE I -- LONG-TERM OBLIGATIONS Long-term obligations consist of the following:
YEAR ENDED JUNE 30, -------------------- 2000 1999 -------- -------- (IN THOUSANDS) PSI acquisition note payable................................ $5,000 $ -- Infomentum acquisition note payable......................... 264 -- Present value of minimum capital lease payments............. 277 263 Other....................................................... 104 -- GSI acquisition note payable................................ -- 305 ExperTeam GmbH acquisition note payable..................... -- 600 Mortgage loan payable....................................... -- 348 ------ ------ 5,645 1,516 Less current portion........................................ 5,476 1,124 ------ ------ Long-term obligation........................................ $ 169 $ 392 ====== ======
$2.5 million of the PSI acquisition note payable at June 30, 2000 was paid on July 15, 2000, the $2.5 million balance is due on January 2, 2001. NOTE J -- EARNINGS PER SHARE The Company adopted the provisions of Statement of Financial Accounting Standards No. 128, "Earnings Per Share" ("SFAS 128") during the fiscal year 1998. The following table sets forth the computation of basic and diluted earnings (loss) per share:
YEAR ENDED JUNE 30, -------------------------------------- 2000 1999 1998 ----------- --------- ---------- (IN THOUSANDS, EXCEPT PER SHARE DATA) Numerator: Net income (loss) for both basic and diluted earnings (loss) per share....................................... $(10,205) $3,999 $(1,356) Denominator: Weighted-average shares outstanding....................... 7,411 6,654 6,192 Contingently issuable shares (Visual Applications Software).............................................. n/a 57 125 Denominator for basic earnings (loss) per share........... 7,411 6,711 6,317 Effect of dilutive securities: Employee stock options.................................... n/a 553 n/a Denominator for diluted earnings (loss) per share......... 7,411 7,264 6,317 Basic earnings (loss) per share........................... $ (1.38) $ 0.60 $ (0.21) Diluted earnings (loss) per share......................... $ (1.38) $ 0.55 $ (0.21)
NOTE K-- MINORITY INTEREST In June 1998, Symix Computer Systems (Singapore) Pte. Ltd., a wholly-owned subsidiary of the Company, sold previously unissued shares of common stock (representing a 13.3% interest in that subsidiary) for $2 million. No gain or loss was recognized on the sale of the subsidiary stock. The proceeds from the sale are recorded on the accompanying balance sheet as minority interest. The Company and the minority interest investor also entered into a put option agreement which provides that during a six month period commencing September 1, 2001, the minority interest investor has the right to put its shares in the subsidiary to the Company at a formula price as provided in the put agreement. The minority interest in the subsidiary will be adjusted to its expected redemption value each year as a credit or charge to income until the put is exercised or the redemption period expires. 40 41 In September 1999, the Company formed a new subsidiary, Symix Japan Ltd., of which 15% of the initial capitalization was contributed by a minority interest investor. The investment is recorded on the accompanying balance sheet as minority interest. NOTE L -- PREFERRED STOCK Effective May 10, 2000, the Company consummated a private placement of 566,933 shares of Series A Convertible Participating Preferred Stock and warrants to purchase 453,546 common shares (the "transaction"). Net proceeds realized from the transaction were $13,375,127. The preferred shares are convertible to common shares at any time, in whole or in part, at the holder's option at an initial conversion rate of two shares of common for one share of preferred. The conversion rate is subject to adjustment on the fourth anniversary of the transaction if the average daily price of the Company's common shares, weighted by trading volume, for the forty consecutive trading days immediately preceding the fourth anniversary ("Average Weighted Price") is less than $12 per share. The adjusted conversion rate is determined by dividing $24 by the Average Weighted Price. This potential adjustment to the conversion rate represents a contingent beneficial conversion feature. Assuming the Average Weighted Price on the fourth anniversary was equal to the closing price of the Company's common shares on June 30, 2000 ($8.875), the adjusted conversion rate would be 2.7 shares of common for one share of preferred. This would result in a corresponding preferred dividend charge of approximately $2.7 million. The conversion rate is also subject to adjustment based on anti-dilution provisions. Mandatory conversion occurs if, at any time after the second anniversary of the transaction, the daily price of the Company's common shares exceeds $24 for each and every day of any period of forty consecutive trading days. The Company may, at its option, redeem all, but not less than all, of the outstanding preferred shares within thirty days after the fourth anniversary of the transaction for $30.72 per preferred share plus accumulated, but unpaid, dividends, if any. Holders of the preferred shares have a liquidation preference whereby upon voluntary or involuntary liquidation/dissolution/winding-up of the Company the preferred holders have a preference against the assets of the Company available for distribution. The liquidation preference is equal to the greater of a) $24 per preferred share outstanding plus accumulated, but unpaid, dividends, if any, or b) the amount that would be received by a holder of the number of common shares underlying the preferred shares if all the preferred shares were converted to common shares immediately prior to liquidation/dissolution/winding-up. The warrants are exercisable at $15 per share and expire five years from the date of the transaction. The exercise price is subject to adjustment on the fourth anniversary of the transaction if the Average Weighted Price is less than $15 per share. The adjusted exercise price is the greater of a) the Average Weighted Price or b) 75% of the exercise price. The exercise price is also subject to adjustment based on anti-dilution provisions. Mandatory exercise occurs if, at any time after the second anniversary of the transaction, the daily price of the Company's common shares exceeds $24 per share for each and every day in any period of forty consecutive trading days. The Company has determined that the fair value of the warrants on the date of the transaction, net of issuance costs, was $2,510,000. Under applicable securities exchange rules, the Company is required to obtain shareholder approval prior to issuing common shares if the adjusted price at the time of conversion of the preferred shares and/or exercise of the common stock warrants is less than the market price of the Company's common shares on the date of the transaction ($9.1875 per share). The Company will submit to its shareholders at the Company's annual meeting on November 8, 2000, a proposal to approve the issuance of common shares upon conversion of the preferred shares and/or exercise of the warrants, at an adjusted conversion price per share if required, which is less than the market price per common share on the date of the transaction. Because the Company had not obtained shareholder approval as of June 30, 2000, the proceeds from the issuance of the preferred shares have been classified as temporary equity. 41 42 NOTE M -- BUSINESS SEGMENT AND GEOGRAPHIC INFORMATION The Company has adopted the provisions of Statement of Financial Accounting Standards No. 131, "Disclosures about Segments of an Enterprise and Related Information" ("SFAS 131"). SFAS 131 establishes standards for the way that companies report information about operating segments, geographic areas, and major customers. The Company designs, develops, markets and supports integrated enterprise software solutions. The software was developed for mid-market, discrete manufacturers and business units of larger companies. The Company operates exclusively in this market therefore only reports on one primary segment. The amount of net revenue, operating income (loss) before amortization of intangibles and special charges, operating income (loss) and identifiable assets attributable to each of the Company's geographic areas for fiscal 2000, 1999, and 1998 were as follows:
NORTH AMERICA ASIA/PACIFIC EUROPE --------------- -------------- -------------- (IN THOUSANDS, EXCEPT PERCENTAGES) 2000 Net revenue............................ $103,065 80% $11,902 9% $13,941 11% Operating income (loss) before amortization of intangibles and special charges*..................... 899 225% (1,077) (30)% (3,376) (95%) Operating income (loss)................ (5,737) 53% (1,155) 11% (3,904) 36% Indentifiable assets................... 77,661 83% 7,862 8% 8,845 9% 1999 Net revenue............................ 100,950 78% 11,722 9% 16,400 13% Operating income (loss) before amortization of intangibles and special charges*..................... 10,038 100% 797 8% (806) (8)% Operating income (loss)................ 7,728 110% 709 10% (1,383) (20)% Indentifiable assets................... 70,920 78% 8,321 9% 11,359 13% 1998 Net revenue............................ 77,225 79% 8,665 9% 11,707 12% Operating income (loss) before amortization of intangibles and special charges*..................... 9,813 98% (584) (6)% 771 8% Operating income (loss)................ 2,270 112% (694) (34)% 442 22% Identifiable assets.................... 47,778 72% 9,392 14% 9,212 14%
- --------------- * Exclusive of acquisition research and development write-offs and non-recurring charges of $3,649 in fiscal 2000, $835 in fiscal 1999 and $6,503 in fiscal 1998. NOTE N -- COMMITMENT AND CONTINGENCIES On June 6, 2000, the Company entered into an agreement with Internet Commerce Express, Inc., an unaffiliated organization, whereby the Company agreed to loan the organization up to $1.5 million in exchange for warrants to purchase common stock of the organization. At June 30, 2000, the Company has a $500,000 note receivable from the organization carrying interest at prime rate plus one percent. The Company has committed to loan, at the option of the organization, an additional $500,000 after August 25, 2000 and an additional $500,000 after November 24, 2000. The Company is subject to claims and lawsuits in the ordinary course of its business. It is the Company's policy to vigorously defend any action brought against it, to the fullest extent, in the normal legal process. In the opinion of management, the outcome of these actions, which is not clearly determinable at the present time, are either adequately covered by insurance, or if not insured, will not, in the aggregate, have a material adverse effect upon the Company's financial position or its results of future operations. 42 43 NOTE O -- SALE OF VISUAL APPLICATIONS SOFTWARE Effective June 21, 2000, the Company sold certain assets of its Visual Applications Software, Inc. subsidiary for $2,915,000. The Company has recognized a $429,000 net loss in connection with the sale of which approximately $1.2 million includes write-off of purchase goodwill. Certain costs related to the disposition of Visual Applications Software, Inc. are included in "non-recurring charges related to divested operations" in the Consolidated Statements of Operations. NOTE P -- SUBSEQUENT EVENTS On July 17, 2000, the Company announced that it is terminating the operations of its e-Mongoose, Inc. subsidiary. In connection with this announcement, the Company has determined that capitalized software costs associated with e-Mongoose, Inc. are not recoverable and, accordingly, at June 30, 2000 the Company has recognized an impairment charge of $1,825,000 related to these unrecoverable costs. The Company has also determined that certain accounts receivable of e-Mongoose, Inc. are not collectible and, accordingly, at June 30, 2000 the Company has reserved $714,000 of uncollectible accounts receivable. The impairment charge and reserve for uncollectible accounts receivable are included in "non-recurring charges related to divested operations" in the Consolidated Statements of Operations. 43 44 SCHEDULE II VALUATION AND QUALIFYING ACCOUNTS
BALANCE AT CHARGED TO BEGINNING COSTS AND BALANCE AT END OF PERIOD EXPENSES DEDUCTIONS OF PERIOD ---------- ---------- ---------- -------------- Year ended June 30, 2000 Deducted from asset accounts: Allowance for doubtful accounts......... $1,500,000 $3,255,000 $2,680,000 $2,075,000 ---------- ---------- ---------- ---------- Year ended June 30, 1999 Deducted from asset accounts: Allowance for doubtful accounts......... 1,063,000 1,270,000 833,000 1,500,000 ---------- ---------- ---------- ---------- Year ended June 30, 1998 Deducted from asset accounts: Allowance for doubtful accounts......... 702,000 918,000 557,000 1,063,000 ---------- ---------- ---------- ----------
44 45 INDEX TO EXHIBITS
EXHIBIT NO. DESCRIPTION PAGE - ----------- ----------- ---- 3(a)(1) Amended Articles of Incorporation of Symix Incorporated herein by reference to Exhibit Systems, Inc. (as filed on February 8, 1991) 3(a)(1) to Registrant's Annual Report on Form 10-K for the fiscal year ended June 30, 1997 3(a)(2) Certificate of Amendment to the Amended Incorporated herein by reference to Exhibit Articles of Incorporation of Symix Systems, 3(a)(2) to Registrant's Annual Report on Form Inc. (as filed on July 16, 1996) 10-K for the fiscal year ended June 30, 1997 3(a)(3) Certificate of Amendment to the Amended Incorporated herein by reference to Exhibit Articles of Incorporation of Symix Systems, 3(a)(3) to Registrant's Quarterly Report on Inc., as amended (as filed with the Ohio Form 10-Q for the fiscal quarter ended March Secretary of State on May 10, 2000) 31, 2000 3(a)(4) Amended Articles of Incorporation of Symix Incorporated herein by reference to Exhibit Systems, Inc., as amended (reflecting 3(a)(4) to Registrant's Quarterly report on amendments through May 10, 2000, for purposes Form 10-Q for the fiscal quarter ended March of Securities and Exchange Commission 31, 2000 reporting compliance only) 3(b) Amended Regulations of Symix Systems, Inc. Incorporated herein by reference to Exhibit 3(b) to the Registration Statement on Form S-1 of Registrant, as filed with the Securities and Exchange Commission on February 12, 1991 (Registration No. 33-38878) 4(a)(1) Amended Articles of Incorporation of Symix Incorporated herein by reference to Exhibit Systems, Inc. (as filed on February 8, 1991) 3(a)(1) to Registrant's Annual Report on Form 10-K for the fiscal year ended June 30, 1997 4(a)(2) Certificate of Amendment to the Amended Incorporated herein by reference to Exhibit Articles of Incorporation of Symix Systems, 3(a)(2) to Registrant's Annual Report on Form Inc. (as filed on July 16, 1996) 10-K for the fiscal year ended June 30, 1997 4(a)(3) Certificate of Amendment to the Amended Incorporated herein by reference to Exhibit Articles of Incorporation of Symix Systems, 3(a)(3) to Registrant's Quarterly Report on Inc., as amended (as filed with the Ohio Form 10-Q for the fiscal quarter ended March Secretary of State on May 10, 2000) 31, 2000 4(a)(4) Amended Articles of Incorporation of Symix Incorporated herein by reference to Exhibit Systems, Inc., as amended (reflecting 3(a)(4) to Registrant's Quarterly Report on amendments through May 10, 2000, for purposes Form 10-Q for the fiscal quarter ended March of Securities and Exchange Commission 31, 2000 reporting compliance only)
45 46
EXHIBIT NO. DESCRIPTION PAGE - ----------- ----------- ---- 4(b) Amended Regulations of Symix Systems, Inc. Incorporated herein by reference to Exhibit 3(b) to the Registration Statement on Form S-1 of Registrant, as filed with the Securities and Exchange Commission on February 12, 1991 (Registration No. 33-38878) 4(c) Share Exchange Agreement, dated January 9, Incorporated herein by reference to Exhibit 1997 99 to Registrant's Current Report on Form 8-K, as filed with the Securities and Exchange Commission on January 24, 1997 4(d) Investor Rights Agreement, dated as of May Incorporated herein by reference to Exhibit 10, 2000, among Symix Systems, Inc., the 4(c) to Registrant's Quarterly Report on Form Investors identified therein and Lawrence J. 10-Q for the fiscal quarter ended March 31, Fox 2000 4(e) Amendment to Investor Rights Agreement Incorporated herein by reference to Exhibit 4(c) to Registrant's Current Report on Form 8-K, as filed with the Securities and Exchange Commission on August 30, 2000 4(f) Warrant for the Purchase of Shares of Common Incorporated herein by reference to Exhibit Stock of Symix Systems, Inc. issued to Morgan 4(d) to Registrant's Quarterly Report on Form Stanley Dean Witter Venture Partners IV, L.P. 10-Q for the fiscal quarter ended March 31, and Exhibit A, identifying other identical 2000 warrants issued to the Investors identified on Exhibit A, for the number of common shares identified on Exhibit A 10(a) Lease Agreement dated April 3, 1991 for Incorporated herein by reference to Exhibit corporate offices located at 2800 Corporate 10(c) to Registrant's Annual Report on Form Exchange Drive, Columbus, Ohio 10-K for the fiscal year ended June 30, 1991 10(b) Amendment to corporate offices lease Incorporated herein by reference to Exhibit 10(b) to Registrant's Annual Report on Form 10-K for the fiscal year ended June 30, 1998 10(c) Second Amendment to corporate offices lease Incorporated herein by reference to Exhibit 10(c) to Registrant's Annual Report on Form 10-K for the fiscal year ended June 30, 1998 10(d) Third Amendment to corporate offices lease Incorporated herein by reference to Exhibit 10(c) to Registrants' Annual Report on Form 10-K for the fiscal year ended June 30, 1994 10(e) Fourth Amendment to corporate offices lease Incorporated herein by reference to Exhibit 10(e) to Registrant's Annual Report on Form 10-K for the fiscal year ended June 30, 1998
46 47
EXHIBIT NO. DESCRIPTION PAGE - ----------- ----------- ---- 10(f) Fifth Amendment to corporate offices lease Incorporated herein by reference to Exhibit 10(f) to Registrants' Annual Report on Form 10-K for the fiscal year ended June 30, 1998 10(g) Sixth Amendment to corporate offices lease Filed herein 10(h) Eighth Amendment to corporate offices lease, Filed herein with Seventh Amendment to corporate offices lease attached as "Exhibit A" 10(i) Progress Software Application Partner Incorporated herein by reference to Exhibit Agreement dated February 8, 1995 10(e) to Registrant's Quarterly Report on Form 10-Q for fiscal quarter ended March 31, 1995 10(j) Amendment to Progress Software Application Incorporated herein by reference to Exhibit Partner Agreement dated July 1, 1997 10(h) to Registrants' Annual Report on Form 10-K for the fiscal year ended June 30, 1998. 10(k) Second Amendment to Progress Software Incorporated herein by reference to Exhibit Application Partner Agreement dated July 1, 10(i) to Registrants' Annual Report on Form 1998 10-K for the fiscal year ended June 30, 1998 10(l)* Summary of Bonus Plan Filed herein 10(m)* Symix Systems, Inc. Stock Option Plan for Incorporated herein by reference to Exhibit Outside Directors 10(i) to Registrant's Annual Report on Form 10-K for fiscal year ended June 30, 1993 10(n)* Symix Systems, Inc. Non-Qualified Stock Incorporated herein by reference to Exhibit Option Plan for Key Executives 10(a) to Registrant's Quarterly Report on Form 10-Q for fiscal quarter ended March 31, 1996 10(o)* Symix Systems, Inc. Non-Qualified Stock Incorporated herein by reference to Exhibit Option Plan for Key Employees, as amended 10(a) to Registrant's Annual Report on Form 10-K for the fiscal year ended June 30, 1993 10(p)* Symix Systems, Inc. 1999 Non-Qualified Stock Incorporated herein by reference to Exhibit Option Plan for Key Employees 10(n) to Registrant's Annual Report on Form 10-K for the fiscal year ended June 30, 1999 10(q)* Sasser Employment Agreement Incorporated herein by reference to Exhibit 10(b) to Registrant's Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 1996 10(r)* Amendment to Sasser Employment Agreement Incorporated herein by reference to Exhibit 10(p) to Registrant's Annual Report on Form 10-K for the fiscal year ended June 30, 1999
47 48
EXHIBIT NO. DESCRIPTION PAGE - ----------- ----------- ---- 10(s)* Second Amendment to Sasser Employment Incorporated herein by reference to Exhibit Agreement 10(q) to Registrant's Annual Report on Form 10-K for the fiscal year ended June 30, 1999 10(t)* Stock Option Agreement between the Company Incorporated herein by reference to Exhibit and Stephen A. Sasser dated January 17, 1996 10(c) to Registrant's Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 1996 10(u) Amended and Restated Loan Agreement, dated Filed herein May 18, 2000, by and between Symix Systems, Inc., Symix Computer Systems, Inc. and Bank One, N.A. 10(v) First Amendment to Amended and Restated Loan Filed herein Agreement 10(w) Securities Purchase Agreement, dated as of Incorporated herein by reference to Exhibit May 10, 2000, between Symix Systems, Inc. and 10(a) to Registrant's Quarterly Report on the Investors identified therein Form 10-Q for the fiscal quarter ended March 31, 2000 10(x) Investor Rights Agreement, dated as of May Incorporated herein by reference to Exhibit 10, 2000, among Symix Systems, Inc., the (4)(c) to Registrant's Quarterly Report on Investors identified therein and Lawrence J. Form 10-Q for the fiscal quarter ended March Fox 31, 2000 10(y) Amendment to Investor Rights Agreement Incorporated herein by reference to Exhibit 4(c) to Registrant's Current Report on Form 8-K, as filed with the Securities and Exchange Commission on August 30, 2000 10(z) Warrant for the Purchase of Shares of Common Incorporated herein by reference to Exhibit Stock of Symix Systems, Inc. issued to Morgan 4(d) to Registrant's Quarterly Report on Form Stanley Dean Witter Venture Partners IV, L.P. 10-Q for the fiscal quarter ended March 31, and Exhibit A identifying other identical 2000 warrants issued to the Investors identified on Exhibit A, for the number of common shares identified on Exhibit A 10(a)(a) Employee Stock Purchase Plan, as approved on Filed herein July 8, 1996 and as amended on November 11, 1998 21 Subsidiaries of the Registrant Filed herein 23 Consent of Independent Auditors Filed herein 24 Powers of Attorney Filed herein 27 Financial Data Schedule Filed herein
- --------------- * Indicates management contracts or compensatory plans or arrangements that are required to be filed as an exhibit to this Annual Report on Form 10-K for the fiscal year ended June 30, 2000. 48 EX-10.G 2 l83289aex10-g.txt EXHIBIT 10(G) 1 EXHIBIT 10(g) TO ANNUAL REPORT ON FORM 10-K FOR SYMIX SYSTEMS, INC. SIXTH LEASE AMENDMENT This Sixth Lease Amendment (the "Sixth Amendment") is made and entered into as of the latest date on which it is executed by either of the parties hereto (the "Amendment Date"), by and between Corporate Exchange Buildings IV and V Limited Partnership, an Ohio limited partnership, 383 South Third Street, Columbus, Ohio 43215 (the "Landlord") and Symix Computer Systems, Inc., an Ohio corporation, whose address is 2800 Corporate Exchange Drive, Columbus, Ohio 43231 (the "Tenant"). RECITALS A. 2600 Realty Corp. V, Landlord's predecessor in interest, and Tenant entered into a Lease Agreement dated April 3, 1991, a Start Date Agreement dated October 15, 1992, and a Lease For Storage Space dated March 16, 1992, and Landlord and Tenant entered into a First Lease Amendment dated December 1, 1993, a Start Date Agreement dated December 1, 1993, a Second Lease Amendment dated April 1, 1994, a Start Date Agreement dated April 1, 1994, a Third Lease Amendment dated July 12, 1994 (the "Third Amendment"), a Start Date Agreement dated July 12, 1994, a Fourth Lease Amendment dated November 11, 1994, and a Fifth Lease Amendment dated May 28, 1998, an (as yet unsigned but occupied) storage space lease dated January 1999 (collectively these documents are referred to herein as the "Lease"), by which Landlord leased to Tenant, and Tenant leased from Landlord, certain premises containing, approximately 76,147 rentable square feet (the "Existing Premises"), located on the lower level, first, second, third, and fourth floors of Corporate Exchange Building V, 2800 Corporate Exchange Drive, Columbus, Franklin County, Ohio (the "Building"). B. Tenant desires to lease additional office space in the Building on the terms set forth herein and to amend the Lease. IT IS, THEREFORE, agreed as follows: 1. Landlord hereby leases to Tenant and Tenant hereby leases from Landlord approximately five thousand seven hundred ninety seven (5,797) rentable square feet of office space (the "1999 Expansion Space" and collectively with the Existing Premises, the "Premises") located on the first floor of the Building consisting of approximately 2,661 rentable square feet of existing office space designated as Space A and 3,136 rentable square feet of existing office space designated as Space B. Both Space A and Space B are shown on the floor plan attached hereto as Exhibit A. 2. The term of the lease for the 1999 Expansion Space shall be as provided herein, commencing on the date Landlord notifies Tenant in writing that Space A of the 1999 Expansion Space is ready for occupancy (the "1999 Expansion Space Commencement Date"). Landlord's estimated occupancy date for Space A is projected to be November 1, 1999, and for Space B is projected to be December 1, 1999, provided that Landlord shall have no liability to Tenant if the respective spaces are not ready for occupancy on such dates. Landlord represents and warrants to Tenant that the current lease for Space B between Landlord and First Ohio Title Services, Inc. ("First Ohio") has expired by its terms on March 31, 1999 and continues on a month to month basis, with no option for renewal. First Ohio will be leasing other space from Landlord and Landlord will require First Ohio to vacate Space B as soon as its new premises is ready for occupancy. Tenant may occupy Space A upon the 1999 Expansion Space Commencement Date and Tenant may occupy Space B after the date it receives notice from Landlord that Space B is ready for occupancy (the "Space B Commencement Date"). Notwithstanding the staggered occupancy dates for Space A and Space B, the expiration dates for the lease of Space A and Space B evidenced hereby shall be coterminous with the Lease, expiring on June 30, 2001. 3. Commencing on the 1999 Expansion Space Commencement Date, Space A shall be added to, and become a part of, the Premises, such that the Premises thereafter shall be deemed to contain an aggregate of 2 approximately 78,808 rentable square feet. Commencing on the Space B Commencement Date, Space B shall be added to, and become a part of, the Premises, such that the Premises thereafter shall be deemed to contain an aggregate of approximately 81,944 rentable square feet. Tenant's prorata share of Operating Expenses and Real Property Taxes shall be computed based upon the ratio of the number of rentable square feet contained in the Premises, as expanded pursuant to this paragraph, in relation to the total number of rentable square feet of office space contained in the Building. 4. Tenant shall pay Landlord Base Rent for the Premises in advance on the first day of each calendar month, without set off or demand, beginning on the 1999 Expansion Space Commencement Date and continuing each calendar month until the expiration of the original Lease Term as follows: From the 1999 Expansion Space Commencement Date through the Space B Commencement Date, Tenant's Base Rent for the Premises shall be Sixty Five Thousand Nine Hundred One and 16/100 Dollars ($65,901.16) per month. From the Space B Commencement Date through June 30, 2001, Tenant's Base Rent for the Premises shall be Sixty Nine Thousand Seventy One and 13/100 Dollars ($69,071.13) per month. 5. Upon completion of Landlord's Work to be mutually agreed upon by Landlord and Tenant prior to the 1999 Expansion Space Commencement Date and in accordance with the Corporate Exchange Tenant Standard attached hereto as Exhibit B, Tenant accepts the 1999 Expansion Space in "AS IS" condition. By occupying each respective portion of the 1999 Expansion Space (including occupancy for Tenant's construction of its alterations and improvements). Tenant shall be deemed conclusively to have accepted the respective portion of the 1999 Expansion Space and to have acknowledged that the respective portion of the 1999 Expansion Space is in the condition required by the Lease and this Sixth Amendment. Tenant shall execute and deliver to Landlord an acceptance letter in the form attached as Exhibit C hereto no later than thirty (30) days after the Space B Commencement Date. Landlord has agreed to enter into this Sixth Lease Amendment with the expectation that Tenant will renew/extend the term of the Lease beyond the expiration of the current Lease Term. The parties acknowledge that Landlord shall be entitled to compensation if Tenant fails to so renew/extend the Lease term. Accordingly, Tenant shall provide written notice to Landlord at least one year prior to the expiration of the Lease Term whether it desires to renew the Lease as to all, but not less than all, of the Premises (as defined in this Sixth Lease Amendment). If Tenant fails to provide such notice to Landlord on or before one year prior to the expiration of the current Lease Term; or if Tenant notifies Landlord that it does not desire to renew the Lease as to the entire Premises; or if Landlord and Tenant, on or before the date which is six (6) months prior to the expiration of the current Lease Term, fail to execute an amendment to this Lease extending the term, or a new Lease providing for a lease term which commences on the day following the expiration date of the current Lease Term, then, in any such event, Tenant shall pay a premature departure fee to Landlord. Such premature departure fee shall be an amount equal to one-half of Landlord's architectural, engineering, permitting and construction costs to perform Landlord's Work with respect to the 1999 Expansion Space; provided, however, that in no event shall the premature departure fee exceed a maximum amount of Thirty Thousand Dollars ($30,000.00). The premature departure fee shall be deemed additional rent and shall be due and payable together with the last month's rent with respect to the Premises. Within sixty (60) days following occupancy by Tenant of the entire 1999 Expansion Space, Landlord shall notify Tenant of the final total costs (including all architectural costs, permit fees, construction costs and contractor's fees for overhead and profit) of construction of the 1999 Expansion Space. 6. Except as set forth in this Sixth Amendment, all provisions of the Lease shall remain unchanged and in full force and effect and shall apply to this Sixth Amendment. All terms and conditions of the Lease not specifically amended by this Sixth Amendment shall apply as if fully rewritten herein, and the rights and obligations of Tenant shall be governed and controlled by the terms and conditions of the Lease as amended hereby. Capitalized terms used herein and not otherwise defined shall have the respective meanings ascribed thereto in the Lease. 3 7. Tenant hereby certifies that no real estate broker has or will represent it concerning this Sixth Amendment and that no finder's fees have or will be earned by any third party. Tenant shall indemnify and hold Landlord harmless from any liability or expense that may arise from such claims, including reasonable attorney's fees. 8. This Sixth Amendment shall be construed, governed and enforced in accordance with the laws of the State of Ohio. 9. This Agreement and the instruments and documents contemplated hereby, and the execution and delivery hereof by Tenant, and the consummation of the transactions herein provided, do not violate any provision of the constitution or bylaws of Tenant or any agreement to which Tenant is a party or by which Tenant is bound, and constitute valid and binding obligations of Tenant enforceable against it in accordance with their respective terms. No consent or governmental approval is required in connection with the consummation of the transactions contemplated hereby. Tenant represents and warrants to Landlord that it has full right, power and authority to enter into the transactions provided for in this Sixth Lease Amendment; and that it has not, at any time, subleased, pledged, hypothecated. assigned or encumbered the Lease or in any other manner encumbered the Premises and will not do so. 4 IN WITNESS WHEREOF, Landlord has executed this Sixth Lease Amendment on the 24th day of September, 1999, and Tenant has executed this Sixth Lease Amendment on the day of September, 1999. LANDLORD: CORPORATE EXCHANGE BUILDINGS IV AND V LIMITED PARTNERSHIP WITNESSES: By: Joseph Skilken & Co., General Partner /s/ Christine Goble By: /s/ Steve Skilken - --------------------------------- ------------------------ Steve Skilken Print Name: Christine Goble President ---------------------- Date: 9/24/99 ----------------------- /s/ Thomas W. Ramage - --------------------------------- Print Name: Thomas W. Ramage ---------------------- TENANT: SYMIX COMPUTER SYSTEMS, INC. /s/ Annette L. Ford By: /s/ Lawrence J. Fox - --------------------------------- ------------------------ Lawrence J. Fox Chairman of the Board and Print Name: Annette L. Ford Chief Executive Officer --------------------- /s/ Diane M. Irwin Date: 9/20/99 - --------------------------------- ----------------- Print Name: Diane M. Irwin ---------------------- 5 NOTARIZATION FOR LANDLORD STATE OF OHIO COUNTY OF FRANKLIN On this 24th day of September, 1999, before me, a notary public in and for said County and State, personally appeared Steve Skilken, President of Joseph Skilken & Co., an Ohio Corporation and the General Partner of CORPORATE EXCHANGE BUILDINGS IV and V LIMITED PARTNERSHIP, an Ohio limited partnership, on behalf of the limited partnership, who acknowledged for and on behalf of the corporation and limited partnership that he did sign the foregoing instrument on behalf of the corporation and limited partnership. /s/ Regina R. Watson ----------------------------------- Notary Public My Commission Expires: 7/15/03 ------------ NOTARIZATION FOR CORPORATE TENANT STATE OF OHIO COUNTY OF FRANKLIN On this 20th day of September, 1999, before me, a notary public in and for said County and State, personally appeared Lawrence J. Fox, Chairman of the Board and Chief Executive Officer of Symix Computer Systems, Inc. an Ohio corporation, who represented that he is duly authorized to sign and did sign the foregoing lease amendment on behalf of the corporation. /s/ Pamela J. Redman ----------------------------------- Notary Public My Commission Expires: /s/ 12/26/00 ------------ 6 EXHIBIT A Separate from the lease amendment but referred hereto by reference. To be signed and dated by Tenant. 7 EXHIBIT B CORPORATE EXCHANGE OFFICE PARK TENANT STANDARDS Landlord agrees to perform the following Building Standard work within the Tenant space at no cost to Tenant. SPACE DESIGN: Standard floor planning layout and design including partitioning, telephone and electrical outlet locations, reflected ceiling, lighting, and switching plan, wall finish and flooring schedules, and HVAC distribution. Design work not to exceed two revisions. PARTITIONS: Interior - Ceiling height drywall partitions at a rate of 66 lineal feet per 1,000 square feet of floor space. Partitions shall be constructed of 3 5/8" steel studs with 1/2" thick gypsum board on each side. Demising - Full height drywall partitions as needed for tenant separation demising walls. Partitions shall be constructed of 3 5/8" steel studs with one layer of 5/8" thick gypsum board on each side. DOORS: Interior - 3'O" X 8'O" solid core, prefinished, mahogany doors with latch sets and wall bumpers for each suite entry. Door frames to be hollow metal painted to match adjoining wall surfaces. Door openings to be limited to one opening for each 25 lineal feet of tenant partitioning. CEILINGS: 2' X 4' X 3/4" lay--in suspended ceiling in white grid with U.S. Gypsum "Aspen II" recessed acoustical tile. Ceiling height to be 8'6". FLOOR COVERINGS: Building Standard carpeting throughout tenant and common areas. Choice of color from Building Standard selections. Base of 4" rubber at all exterior walls, columns, and partitions. Allowance-- $13.00 per square yard, installed. LIGHTING: 2' X 4' recessed energy efficient two--tube florescent light fixtures in ratio of one fixture for each 80 square feet of floor space. All fixtures to include Building Standard plastic prismatic lens. ELECTRIC SERVICE: Electric service capacity to the tenant space shall be 4 1/2 watts per square foot of floor space. Special electric equipment requiring additional service shall be at Tenant's expense. Duplex electric receptacles in a ratio of one per 125 square feet of floor space and single pole light switches at the rate of one per 250 square feet of floor space. TELEPHONE: Standard outlets for telephone service connections at a rate of one per 250 square feet of floor space. PAINTING: All wall surfaces, doorframes, convector covers, and trim will receive a prime coat and finish coat of Building Standard paint. Colors to be selected from 8 approved color schedule. Not more than one color per office suite or two colors overall. HVAC: A central Variable Air Volume system with a minimum of one VAV box and thermostat per 700 square feet of floor space. The system will provide with normal office usage, summer interior levels of 78 degrees F. at 90 degrees F. outside temperature and winter interior levels of 68 degrees F. at 0 degrees F. outside temperature. System is designed for heat loads not to exceed 3 1/2 watts of electricity per square foot of floor space in any given space or room and density not to exceed one person for each 150 square feet of floor space. BLINDS: Thinline 1" Levelor Riviera #86O Mercury venetian blinds at all windows. LIFE SUPPORT: Building Standard sprinkler heads installed in accordance with Chapter 8, National Fire Protection Code. Photoelectric smoke detection system throughout critical areas: stair towers, atrium, elevator shaft, and air ducts. Fire extinguishers per building and fire code. 9 EXHIBIT C TENANT ACCEPTANCE LETTER [Letterhead of Tenant] [Date] Corporate Exchange Buildings IV and V Limited Partnership 383 South Third Street Columbus, Ohio 43215 Attention: Steve Skilken Re: Lease dated April 3. 1991, a Lease For Storage Space dated March 16, 1992, a First Lease Amendment dated December 1, 1993, a Second Lease Amendment dated April 1, 1994, a Third Lease Amendment dated July 12, 1994, a Fourth Lease Amendment dated November 11, 1994, a Fifth Lease Amendment dated May 28, 1998, and a Sixth Lease Amendment dated _____________, 1999, at Corporate Exchange Building V, 2800 Corporate Exchange Drive, Columbus, Ohio 43231. The undersigned, as Tenant, hereby confirms the following as of _______________ 1999: 1. Tenant has accepted possession of and is currently occupying the entire Premises. 2. The commencement date for Space A, as defined in the Sixth Amendment, is _____________ 1999 and the commencement date for Space B, as defined in the Sixth Amendment, is ___________________, 1999. 3. Tenant accepts the Premises and acknowledges that the Premises are in the condition required by the Lease and all amendments thereto. 4. As of the date hereof, Landlord has fulfilled all its obligations under the Lease. 5. The Lease is in full force and effect and has not been modified, altered, or amended except pursuant to the instruments described above. 6. There are no offsets or credits against Rent or any other charge payable by Tenant under the Lease, nor has any Rent or any other charge payable by Tenant been prepaid. 7. Tenant has no notice of any prior assignment, hypothecation, or pledge of the Lease or any Rent due under the Lease. SYMIX COMPUTER SYSTEMS, INC. By: /s/ Lawrence J. Fox ------------------------------ Lawrence J. Fox Chairman of the Board and Chief Executive Officer EX-10.H 3 l83289aex10-h.txt EXHIBIT 10(H) 1 EXHIBIT 10(h) TO ANNUAL REPORT ON FORM 10-K FOR SYMIX SYSTEMS, INC. EIGHTH LEASE AGREEMENT This Eighth Lease Amendment (the "Eighth Amendment") is made and entered into as of the latest date on which it is executed by either of the parties hereto (the "Amendment Date") by and between CORPORATE EXCHANGE BUILDINGS IV AND V LIMITED PARTNERSHIP, an Ohio limited partnership, whose address is 383 South Third Street, Columbus, Ohio 43215 (the "Landlord") and SYMIX COMPUTER SYSTEMS, INC., an Ohio corporation, whose address is 2800 Corporate Exchange Drive, Columbus, Ohio 43231 (the "Tenant"). RECITALS 1. 2600 Realty Corp. V, Landlord's predecessor in interest, and Tenant entered into a Lease Agreement dated April 3, 1991 (the "Original Lease") and a Start Date Agreement dated October 15, 1992. Landlord and Tenant entered into a First Lease Amendment dated December 1, 1993, a Start Date Agreement dated December 1, 1993, a Second Lease Amendment dated April 1, 1994, a Start Date Agreement dated April 1, 1994, a Third Lease Amendment dated July 12, 1994 (the "Third Amendment"), a Start Date Agreement dated July 12, 1994, a Fourth Lease Amendment dated November 11, 1994, a Fifth Lease Amendment dated May 28, 1998, a Storage Space Lease dated September 20, 1999 (the "Storage Space Lease"), a Sixth Lease Amendment dated September 24, 1999 and a Seventh Lease Amendment effective as of April 10, 2000 (the "Original Lease, the seven (7) Amendments, the three (3) Start Date Agreements and the Storage Space Lease are referred to collectively as the "Lease"), by which Landlord leased to Tenant, and Tenant leased from Landlord, certain premises containing approximately 82,429 rentable square feet of office space (the "Office Premises") and approximately 1,505 square feet of storage space (the "Storage Space"), located on the lower level, first, second, third and fourth floors of Corporate Exchange Building V, 2800 Corporate Exchange Drive, Columbus, Franklin County, Ohio (the "Building"). 2. Tenant and Landlord desire to extend the Term, and Landlord and Tenant agree to amend the Lease as set forth herein. IT IS, THEREFORE, agreed as follows: 1. Extension of Term. The Term of the Lease is extended for one (1) year beginning July 1, 2001 and expiring June 30, 2002 (the "2002 Extended Term"). 2. Base Rent. 2.1. Office Premises. Base Rent for the Office Premises for the 2002 Extended Term shall be Sixty Thousand One Hundred Seventy-Three and 17/100 Dollars ($60,173.17) per month. Tenant shall pay Landlord Base Rent at the times and in the manner required by the Lease. 2.2. Storage Space Premises. Rent for the Storage Space for the 2002 Extended Term shall be Six Hundred Twenty-Seven and 08/100 Dollars ($627.08) per month ("Storage Space Rent"). Tenant shall pay Landlord Storage Space Rent at the times and in the manner required by the Lease. 3. Early Departure Fee. On or before June 30, 2002 Tenant shall pay to Landlord, as Additional Rent, an early departure fee of Thirty Thousand Dollars ($30,000) in accordance with Section 5 of the Sixth Lease Amendment. 4. Holding Over. If Tenant retains possession of the Office Premises, the Storage Space Premises or any part of either of them, after the expiration of the 2002 Extended Term, then the provisions of Article 8 2 of the Original Lease shall apply. In addition, if Tenant retains possession for more than thirty (30) days after the expiration of the 2002 Extended Term, then Tenant shall indemnify Landlord from and against any and all loss or liability resulting from the failure of Tenant to surrender possession of the Premises in accordance with the terms and conditions of the Lease. 5. Condition of Premises. Tenant accepts both the Office Premises and the Storage Space Premises in their "AS IS, WHERE IS, WITH ALL FAULTS" condition and acknowledges that all work required to have been performed by Landlord has been performed and that the Office Premises and the Storage Space Premises are in the condition required by the Lease. 6. Ratification. Except as set forth in this Eighth Amendment, Landlord and Tenant ratify all provisions of the Lease, including, without limitation, the Seventh Lease Amendment. A copy of the ratified Seventh Lease Amendment, which became effective April 10, 2000, is attached as Exhibit A. All provisions of the Lease shall remain unchanged and in full force and effect and shall apply to this Eighth Amendment. All terms and conditions of the Lease not specifically amended by this Eighth Amendment shall apply as if fully rewritten herein, and the rights and obligations of Tenant shall be governed and controlled by the terms and conditions of the Lease as amended hereby. Capitalized terms used herein and not otherwise defined shall have the respective meanings ascribed thereto in the Lease. 7. Brokers. Tenant hereby certifies that no real estate broker has or will represent it concerning this Eighth Amendment and that no finder's fees have or will be earned by any third party. Tenant shall indemnify and hold Landlord harmless from any liability or expense that may arise from such claims, including reasonable attorney's fees. 8. Governing Law. This Eighth Amendment shall be construed, governed and enforced in accordance with the laws of the State of Ohio. 9. Authorization of Tenant. This Eighth Amendment and the instruments and documents contemplated hereby, and the execution and delivery hereof by Tenant, and the consummation of the transactions herein provided, do not violate any provision of the constitution or bylaws of Tenant or any agreement to which Tenant is a party or by which Tenant is bound, and constitute valid and binding obligations of Tenant enforceable against it in accordance with their respective terms. No consent or governmental approval is required in connection with the consummation of the transactions contemplated hereby. Tenant represents and warrants to Landlord that it has full right, power and authority to enter into the transactions provided for in this Eighth Amendment; and that it has not, at any time, subleased, pledged, hypothecated, assigned or encumbered the Lease or in any other manner encumbered the Premises and will not do so. 3 IN WITNESS WHEREOF, the duly authorized representatives of Landlord and Tenant have executed this Eighth Amendment on the respective dates set forth below. LANDLORD: CORPORATE EXCHANGE BUILDINGS IV AND V LIMITED PARTNERSHIP, an Ohio limited partnership, by Joseph Skilken & Co., General Partner WITNESSES: /s/ Regina R. Watson By: /s/ Steve Skilken - --------------------------------- -------------------------------- Steve Skilken, President Printed Name: Regina R. Watson ------------------- Date: 8/23/00 ------------------------------ /s/ Christine Caruso - --------------------------------- Printed Name: Christine Caruso ------------------- TENANT: SYMIX COMPUTER SYSTEMS, INC., an Ohio corporation /s/ Annette L. Ford By: /s/ Lawrence W. DeLeon - --------------------------------- -------------------------------- Name: Lawrence W. DeLeon ------------------------------ Printed Name: Annette L. Ford Title: VP, CFO and Secretary -------------------- ----------------------------- /s/ Mary Mahoney Date: July 26, 2000 - --------------------------------- ------------------------------ Printed Name: Mary Mahoney -------------------- 4 NOTARIZATION FOR LANDLORD STATE OF OHIO COUNTY OF FRANKLIN, ss: On this 23rd day of August, 2000, before me, a Notary Public in and for said County and State, personally appeared Steve Skilken, President of Joseph Skilken & Co., an Ohio corporation, and the General Partner of Corporate Exchange Buildings IV and V Limited Partnership, who acknowledged that he did sign the foregoing instrument on behalf of the corporation and limited partnership. /s/ Regina R. Watson ----------------------------- Notary Public NOTARIZATION FOR CORPORATE TENANT STATE OF OHIO COUNTY OF FRANKLIN, ss: On this 26th day of July, 2000, before me, a Notary Public in and for said County and State, personally appeared Lawrence W. DeLeon, VP and CFO of Symix Computer Systems, Inc., an Ohio corporation, who represented that he did sign the foregoing lease amendment on behalf of the corporation. /s/ Rick J. Shapiro ----------------------------- Notary Public 5 EXHIBIT "A" SEVENTH LEASE AMENDMENT This Seventh Lease Amendment (the "Seventh Amendment") is made and entered into as of the latest date on which it is executed by either of the parties hereto (the "Amendment Date"), by and between Corporate Exchange IV & V Limited Partnership, an Ohio limited partnership, 383 South Third Street, Columbus, Ohio 43215 (the "Landlord") and Symix Computer Systems, Inc., an Ohio corporation whose address is 2800 Corporate Exchange Drive, Columbus, Ohio 43231 (the "Tenant"). RECITALS A. 2600 Realty Corp. V, Landlord's predecessor in interest, and Tenant entered into a Lease Agreement dated April 3,1991, a. Start Date Agreement dated October 15, 1992, and a Lease For Storage Space dated March 16, 1992, and Landlord and Tenant entered into a First Lease Amendment dated December 1, 1993, a Start Date Agreement dated December 1, 1993, a Second Lease Amendment dated April 1, 1994, a Start Date Agreement dated April 1, 1994, a Third Lease Amendment dated July 12, 1994 (the "Third Amendment"), a Start Date Agreement dated July 12, 1994, a Fourth Lease Amendment dated November 11, 1994, a Fifth Lease Amendment dated May 28, 1998, a Storage Space Lease dated October 22, 1999, a Sixth Lease Amendment dated September 24, 1999 (collectively these documents are referred to herein as the "Lease"), by which Landlord leased to Tenant, and Tenant leased from Landlord, certain premises containing approximately 81,944 rentable square feet (the "Existing Premises"), located on the lower level, first, second, third, and fourth floors of Corporate Exchange Building V, 2800 Corporate Exchange Drive, Columbus, Franklin County, Ohio (the "Building"). B. Tenant desires to lease additional office space in the Building on the terms set forth herein and to amend the Lease. IT IS, THEREFORE, agreed as follows: 1. Landlord hereby leases to Tenant and Tenant hereby leases from Landlord approximately one thousand one hundred ninety (1,990) rentable square feet of office space (the "2000 Expansion Space") located on the first floor of the Building as shown on the floor plan attached hereto as Exhibit A and more commonly known as Suite 120. 2. The Term of the lease for the 2000 Expansion Space shall commence on April 10, 2000, shall be concurrent with the Term of the Lease, and shall expire on June 30, 2001, unless sooner terminated as provided in the Lease. 3. Commencing on April 10, 2000 the 2000 Expansion Space, the Premises shall be deemed to include the 2000 Expansion Space and will contain an aggregate of approximately 83,934 rentable square feet. Tenant's pro rata share of Operating Expenses and Real Property Taxes shall be computed based upon the ratio of the number of rentable square feet contained in the Premises (excluding the 1,505 square feet of storage space) in relation to the total number of rentable square feet of office space contained in the Building (excluding the 1,505 square feet of storage space. 4. Tenant shall pay Landlord Base Rent for the Premises in advance on the first day of each calendar month, without set off or demand, as set forth in the Lease until March 31, 2000, and beginning on April 1, 2000 and continuing each calendar month until the expiration of the Term as follows: April 1, 2000 through April 30, 2000: Seventy Thousand Four Hundred Seventy Nine and 18/100 Dollars ($70,479.18) per month. May 1, 2000 through June 30, 2001: Seventy One Thousand Eighty Two and 69/100 Dollars ($71,082.69) per month. 6 5. Tenant accepts the 2000 Expansion Space in "AS IS" condition except that Landlord, at its cost will shampoo all existing carpet within the Premises. By occupying the 2000 Expansion Space (including occupancy for Tenant's construction of its alterations and improvements), Tenant shall be deemed conclusively to have accepted the 2000 Expansion Space and to have acknowledged that the 2000 Expansion Space is in the condition required by the Lease and this Amendment. Tenant shall make no alterations, additions or improvements to the Premises without the prior written consent of Landlord. Tenant shall submit a statement of planned alterations, together with detailed architectural plans, specifications, and description of materials for Landlord's approval. Tenant shall not commence any work without first (a) obtaining Landlord's written approval of Tenant's plans, specifications, and description of materials, and (b) delivering to Landlord copies of Tenant's comprehensive general liability insurance certificates naming Landlord as an additional insured. Tenant shall perform all work in strict accordance with Tenant's approved plans and specifications and with all applicable laws, orders, regulations and requirements, in compliance with such rules and regulations as Landlord may make, and shall obtain approval by all appropriate governmental or quasi-governmental agencies. Tenant shall obtain all applicable permits and authorizations before commencing work. All changes and alterations shall be made at the sole cost of Tenant, shall be performed in a good and workmanlike manner, shall not affect any structural parts of the Building, and shall not interfere with the quiet enjoyment of other tenants. Tenant at its cost shall repair any damage to the Building and/or Land caused by Tenant's alterations and shall restore them to the condition in which they were prior to the damage. Tenant shall promptly remove from the Premises and the Building all trash resulting from its work. All materials placed in the Premises or in the building by Tenant, its contractors, agents, representatives, employees, concessionaires, licenses, or invitees, and all Tenant's work at any time, shall be at Tenant's sole risk. Tenant shall indemnify Landlord, Landlord's managing agent, and anyone claiming through them from all costs and expense incurred in connections with Tenant's performance of Tenant's alterations. Tenant shall keep the Premises, the Building, and the Land free and clear of all mechanics' and/or materialman's liens resulting from work done by or for Tenant. If any mechanics' or materialman's liens are filed against the Premises or the Building as a result of or purporting to be the result of any work for or act of Tenant, Tenant shall discharge the lien within thirty (30) days by payment, or by notice and bond meeting the requirements of the Ohio Revised Code. If tenant does not discharge the lien, Landlord may pay the lien for the account of Tenant without inquiring into its validity and treat the amount of such payment as additional rent immediately due from Tenant; and/or treat Tenant's failure to discharge the lien as a default. Tenant shall indemnify and save harmless Landlord against and from all costs, liabilities, suits, penalties, claims and demands, including reasonable attorneys' fee resulting therefrom. Nothing in this Lease shall be construed as constituting the express or implied consent or request of Landlord to any contractor, subcontractor, laborer or materialman for the performance of any labor or the furnishing of any materials, fuel, machinery or supplies or any specific improvements, alterations of or repair to the Building or the Premises or any improvement thereto, nor as giving Tenant any right, power or authority to act as agent of Landlord to contract for, or to permit the performance of furnishing of any labor, materials, fuel, machinery or supplies on any basis which would entitle any person to assert and/or perfect a mechanic's lien or other claim encumbering the Building, the Premises or Landlord's interests in the Premises. Tenant shall post and maintain at the Premises any notices appropriate for the protection of the Premises from efforts by others to perfect or assert mechanic's liens or other claims in respect of the Premises. 6. Except as set forth in this Seventh Amendment, all provisions of the Lease shall remain unchanged and in full force and effect and shall apply to this Seventh Amendment. All terms and conditions of the Lease not specifically amended by this Seventh Amendment shall apply as if fully rewritten herein, and the rights and, obligations of Tenant shall be governed and controlled by the terms and conditions of the Lease as amended hereby. Capitalized terms used herein and not otherwise defined shall have the respective meanings ascribed thereto in the Lease. 7 7. Tenant hereby certifies that no real estate broker has or will represent it concerning this Seventh Amendment and that no finder's fees have or will be earned by any third party. Tenant shall indemnify and hold Landlord harmless from any liability or expense that may arise from such claims, including reasonable attorneys' fees. 8. This Seventh Amendment shall be construed, governed and enforced in accordance with the laws of the State of Ohio. 9. This Agreement and the instruments and documents contemplated hereby, and the execution and delivery hereof by Tenant, and the consummation of the transactions herein provided, do not violate any provision of the constitution or bylaws of Tenant or any agreement to which Tenant is a party or by which Tenant is bound, and constitute valid and binding obligations of Tenant enforceable against it in accordance with their respective terms. No consent or governmental approval is required in connection with the consummation of the transactions contemplated hereby. Tenant represents and warrants to Landlord that it has full right, power and authority to enter into the transactions provided for in this Seventh Lease Amendment; and that it has not, at any time, subleased, pledged, hypothecated, assigned or encumbered the Lease or in any other manner encumbered the Premises and will not do so. 8 IN WITNESS WHEREOF, Landlord has executed this Lease Termination Agreement on the ____ day of ____________, 2000, and Tenant has executed this Lease Termination Agreement on the ____ day of ______________, 2000. LANDLORD: CORPORATE EXCHANGE IV & V LIMITED PARTNERSHIP BY: JOSEPH SKILKEN & CO., GENERAL PARTNER WITNESSES: By: - ------------------------------------- --------------------------------- Steve Skilken, President Printed Name: Date: ------------------------ ------------------------------- - ------------------------------------- Printed Name: TENANT: SYMIX COMPUTER SYSTEMS, INC. By: - ------------------------------------- --------------------------------- Lawrence J. Fox Printed Name: Chairman of the Board and ------------------------ Chief Executive Officer - ------------------------------------- Date: Printed Name: ------------------------------- ------------------------ 9 NOTARIZATION FOR LANDLORD STATE OF OHIO COUNTY OF FRANKLIN On this _______ day of ________, 2000 before me, a notary public in, and for said County and State, personally appeared Steve Skilken, President of Joseph Skilken & Co., an Ohio corporation and the General Partner of Corporate Exchange IV & V Limited Partnership, an Ohio limited partnership, on behalf of the limited partnership who acknowledged for and on behalf of the corporation and limited partnership that he did sign the foregoing instrument on behalf of the corporation and limited partnership. - --------------------------------- Notary Public My Commission Expires: ----------- NOTARIZATION FOR CORPORATE TENANT STATE OF OHIO COUNTY OF FRANKLIN On this _______ day of ____________, 2000, before me, a notary public in and for said County and State, personally appeared Lawrence J. Fox, Chairman of the Board and Chief Executive Officer of Symix Computer Systems, Inc., an Ohio corporation, who represented that he is duly authorized to sign and did sign the foregoing lease on behalf of the corporation. - --------------------------------- Notary Public My Commission Expires: ----------- EX-10.L 4 l83289aex10-l.txt EXHIBIT 10(L) 1 EXHIBIT 10(l) TO ANNUAL REPORT ON FORM 10-K FOR SYMIX SYSTEMS, INC. SUMMARY OF BONUS PLAN The executive officers named in the Symix Systems, Inc. ("Symix" or the "Company") Annual Report on Form 10-K for its fiscal year ended June 30, 2000 and other management employees of Symix ("Participants") participate in compensation plans based upon the performance of Symix. Annual target bonuses are established by the Symix Compensation Committee for executive officers and by executive officers for all other Participants. Total targeted compensation is determined based on average compensation (base compensation plus bonus) levels for the industry. Under the Company's fiscal year 2000 plan (the "Plan"), a Participant can earn a bonus based upon the performance of Symix as reflected by Symix's earnings per share and revenue achievements in relation to its targeted performance. Bonuses for revenue achievement are paid quarterly based upon year-to-date performance. Quarterly eligible components are pro-rated against targeted annual objectives. Bonuses are based on formulas which provide larger bonuses for higher earnings per share and/or revenue achievement. The annual earnings per share must be at least ninety percent (90%) of target before any bonuses are earned. Variable components of the compensation plan are self-correcting to reflect over or under achievement on a quarterly basis. A maximum of 200% of the targeted bonus based on earnings per share and revenue objectives is payable under the compensation plans in the event actual performance of the Company exceeds 150% of targeted performance. In addition, individual bonus plans may contain other variable components related to management objectives, operating margins, and market or geographic revenue targets. The Company's Chief Executive Officer is not a participant in the Plan and his compensation is covered by his Employment Agreement with the Company. EX-10.U 5 l83289aex10-u.txt EXHIBIT 10(U) 1 Exhibit 10(u) to Annual Report on Form 10-K for Symix Systems, Inc. AMENDED AND RESTATED LOAN AGREEMENT ----------------------------------- THIS AMENDED AND RESTATED LOAN AGREEMENT dated as of the 18th day of May, 2000 (hereinafter called "Agreement"), by and between Symix Systems, Inc., a corporation organized and existing under the laws of the State of Ohio, located at 2800 Corporate Exchange Drive, Columbus, Ohio 43231 ("SSI"), Symix Computer Systems, Inc., a corporation organized and existing under the laws of the state of Ohio, located at 2800 Corporate Exchange Drive, Columbus, Ohio 43231 ("SCSI"), (SSI and SCSI each a "Company" and jointly and severally the "Companies"), and Bank One, NA, 100 East Broad Street, Columbus, Ohio 43271 (hereinafter called "Bank One"), WITNESSETH ---------- WHEREAS, Companies desires to obtain and continue a credit facility from Bank One in the maximum amount of Fifteen Million Dollars ($15,000,000), and, WHEREAS, Bank One is willing to continue to make said loans upon the terms and conditions hereinafter set forth; NOW, THEREFORE, the parties agree as follows: SECTION 1: CREDIT COMMITMENTS Section 1.1. Revolving Credit Commitment 1.1.1 Amount. Bank One hereby agrees to lend the Borrowers (this, and all other capitalized terms used herein, are defined in Section 7) the maximum aggregate amount of Fifteen Million Dollars ($15,000,000) in the form of revolving credit loans under the Revolving Credit Notes in the maximum collective amount of Fifteen Million Dollars ($15,000,000), minus the drawn or undrawn principal amount of any letter of credit or other independent undertaking issued by Bank One for the account of the Borrowers (the "Credit Commitment"). 1.1.2 Disbursements. The Companies shall execute and deliver to Bank One the amended and restated revolving credit note in the form of Exhibit A-1 attached hereto (the "$13,000,000 Revolving Credit Note") and the Borrowers shall execute and deliver to Bank One the revolving credit note in the form of Exhibit A-2 attached hereto (the "$2,000,000 Revolving Credit Note" and, collectively with the $13,000,000 Revolving Credit Note, the "Revolving Credit Notes"). Bank One may make disbursements to the Borrowers from time to time in principal amounts at any one time outstanding up to an amount that equals the lesser of (a) the Credit Commitment or (b) the Borrowing Base. Subject to the terms and conditions of the Agreement, the Borrowers may borrow, repay and reborrow loans under the Revolving Credit Notes from Bank One at any time or from time to time, without penalty, from the date of the Agreement until the earlier of (a) July 1, 2001 or (b) the date amounts owing hereunder or under the Revolving Credit 1 2 Notes become due and payable, whether through acceleration or any other cause. The Revolving Credit Notes mature and become due and payable on July 1, 2001. 1.1.3 Use of Proceeds. The proceeds of the Revolving Credit Notes shall be used in their entirety for working capital needs and to fund installment sales contracts from selected customers. 1.1.4 Maturity and Interest Rate. The Revolving Credit Notes will mature on July 1, 2001 and shall bear interest prior to maturity at an interest rate to be elected by the Companies or the Borrowers from either subparagraph (a) or subparagraph (b), as adjusted pursuant to subparagraph (c). (a) Prime Rate. A rate equal to the Prime Rate. Interest payable under this option shall be paid by Companies or the Borrowers on the last day of any calendar quarter in which the Companies or the Borrowers have elected the Prime Rate option to be in effect. The rate of interest shall be adjusted to reflect the change in the Prime Rate effective immediately following any change in the Prime Rate; or (b) LIBOR Rate. A rate ("LIBOR Rate") equal to two hundred (200) basis points in excess of the rate of interest at which Bank One is offered U.S. dollar deposits in the London Eurodollar Interbank Market ("LIBOR") in an amount equal to the principal amount of such Loan for the period of thirty (30) days, sixty (60) days, ninety (90) days, one hundred twenty (120) days, one hundred eighty (180) days or one year (the "Benchmark Rate") (to be elected at the option of the Companies or the Borrowers) in effect, and as quoted by Bank One by telephone to, and accepted by, the Companies or the Borrowers prior to 2:00 P.M., Ohio time, commencing on the day immediately after the election is made. In addition, the Companies or the Borrowers shall pay any LIBOR reserve costs in effect which would be incurred by Bank One with respect to LIBOR borrowings hereunder. Interest payable at the LIBOR Rate shall be paid on the earlier of (a) the last day of any calendar quarter in which the Companies or the Borrowers have elected the LIBOR Rate option to be in effect or (b) upon the maturity of the LIBOR contract. In the event the Companies or the Borrowers fail prior to or on the last day of the period so elected to elect a subsequent such period, interest shall automatically accrue thereafter at the Prime Rate option as herein set forth. The Companies may not elect an interest rate period expiring after July 1, 2001. (c) Performance Based Pricing. If, at the end of any calendar quarter, the Leverage Ratio is greater than or equal to 1.5 to 1.0, the interest rate for the succeeding calendar quarter shall be adjusted to, as appropriate, either the Prime Rate or two hundred (200) basis points in excess of the Benchmark Rate. If, at the end of any calendar quarter, the Leverage Ratio is less than 1.5 to 1.0 and equal to or greater than 1.0 to 1.0, the interest rate for the succeeding calendar quarter shall be adjusted, as appropriate, to either the Prime Rate minus twelve and one-half (12.5) basis points or one hundred seventy-five (175) basis points in excess of the 2 3 Benchmark Rate. If, at the end of any calendar quarter, the Leverage Ratio is less than 1.0 to 1.0, the interest rate for the succeeding calendar quarter shall be adjusted to, as appropriate, either the Prime Rate minus twenty-five (25) basis points or one hundred fifty (150) basis points in excess of the Benchmark Rate. For the calendar quarter commencing April 1, 2000, the interest rate shall be either the Prime Rate or 200 basis points in excess of the Benchmark Rate. 1.1.5 As consideration for the Credit Commitment, the Companies shall pay Bank One a facility fee on the daily unused portion of the Credit Commitment at a rate equal to the Applicable Rate (as defined below), per annum starting with the date this Agreement becomes effective, said fee to be computed on the basis of the actual number of days elapsed over a year of 360 days and to be payable quarterly commencing on June 30, 2000. The "Applicable Rate" for any calendar quarter means (a) one quarter percent (0.25%) if, at the end of such calendar quarter, the Leverage Ratio is greater than or equal to 1. 0 to 1.0, or (b) one-eighth percent (0.125%) if, at the end of such calendar quarter, the Leverage Ratio is less than 1.0 to 1.0. The Companies shall be entitled to cancel the Credit Commitment in whole or in part at any time by payment in full of the Revolving Credit Notes accompanied by notice to Bank One of cancellation, which notice shall be irrevocable. Section 1.2. Provisions Applicable to All Notes. 1.2.1 The Revolving Credit Notes shall hereinafter sometimes be collectively referred to hereunder as the "Notes". 1.2.2. Outstanding loans that bear the Prime Rate may be prepaid in whole at any time or in part from time to time in an amount which is a whole multiple of U.S. dollars (or such lesser amount as constitutes the entire amount outstanding) without premium or penalty. Outstanding loans that bear the LIBOR Rate may only be prepaid as provided for in this Section. The Companies or the Borrowers may not prepay or reduce LIBOR Rate loans unless the Companies or the Borrower first pay all fees, costs, penalties and premiums incurred by Bank One because of such payment or reduction. Repayment of a Loan at the LIBOR Rate upon the maturity of the LIBOR contract thereof shall not cause such LIBOR prepayment of the Revolving Credit Notes and no prepayment of the Revolving Credit Notes shall affect the Companies or the Borrowers' right to reborrow from Bank One before July 1, 2001. 1.2.3. After any Note becomes due and payable, whether at maturity, by acceleration or otherwise, the interest rate on the outstanding principal sum and accrued interest will be the Prime Rate plus two hundred (200) basis points per annum. Without any limitation upon Bank One's remedies upon an Event of Default, Bank One shall have the right to assess a late payment fee in the amount of the greater of $50.00 or 5% of the scheduled payment if a payment is at least 12 days late. 3 4 1.2.4 Interest shall be calculated on the basis of the actual number of days elapsed divided by a year of 360 days. 1.2.5. Upon the occurrence and during the continuation of any Event of Default, Bank One shall have the right to setoff against all obligations of the Companies or the Borrowers to Bank One hereunder and under the Notes, whether matured or unmatured, all funds of the Companies or the Borrowers on deposit in accounts with Bank One except for funds deposited or accounts maintained for the payment of taxes, payroll and employee contributions and any other funds or accounts in which the Companies or the Borrowers do not have a beneficial interest. 1.2.6 The Companies and the Borrowers shall make all payments on account of principal of, and interest on, the Notes, in immediately available funds to Bank One at its Main Office, Corporate Banking Division, Bank One, NA, 100 East Broad Street, Columbus, Ohio 43271-0170 as such payments become due and payable in accordance with the terms hereof and of the Notes. Section 1.3. Waiver Fee. The Companies shall pay Bank One a waiver fee of $25,000 upon the execution hereof. SECTION 2: EXECUTION AND CONDITIONS OF BORROWING The obligation of Bank One to make disbursements under the Revolving Credit Notes or to make or continue the loans to the Companies provided for hereunder shall be subject to the following conditions: 2.1 Opinion of Counsel. The Companies shall supply to Bank One on request, an opinion or opinions satisfactory to Bank One by counsel acceptable to Bank One, which shall include, but not be limited to, the following: that the Companies, the Borrowers and their Subsidiaries are duly organized and existing corporations under the laws of the jurisdictions under which they were formed; that they are qualified to do business in all states and jurisdictions where such qualification is necessary; that the execution hereof has been duly authorized by appropriate corporate action; that there is no prohibition in law, in its articles of incorporation, regulations, by-laws, formation document or in any agreement to which they are a party, which in any way restricts or prevents the execution or carrying out of this Agreement in any respect; that this Agreement has been duly executed and is the valid and binding obligation of Companies and the Borrowers; that the Notes are duly executed and represent valid and binding obligations of the Companies and the Borrowers; and that the security interest of Bank One on the Accounts is perfected. 2.2 Resolution Authorizing Execution of Loan Documents. On or prior to the date of borrowing, Companies shall furnish to Bank One certified copies of the resolutions of the board of directors or other governing bodies of the Companies, the Borrowers and the Guarantors authorizing the execution of this Agreement, the Guaranties and the Notes. 4 5 2.3. Secretary Certificates. Companies shall provide at the time of borrowing certificates of the Secretary of SSI which shall certify the names of the officers of the Companies, the Borrowers and the Guarantors authorized to sign this Agreement, the Notes, and the other documents or certificates to be delivered pursuant to this Agreement by the Companies, the Borrowers, the Guarantors or any of their officers, together with the true signatures of such officers. Bank One may conclusively rely on such certificates until it shall receive a further certificate of the Secretary of SSI canceling or amending the prior certificate and submitting the signatures of the officers named in such further certificate. 2.4 Compliance with this Agreement. At the time of the initial borrowing, the Companies and the Borrowers shall be in compliance with all of the provisions, warranties, and conditions contained in this Agreement with which they are to comply, and there shall exist no Event of Default, and no event shall exist or shall have occurred which with the lapse of time or notice or both would constitute an Event of Default. 2.5 Execution and Delivery of the Promissory Notes. The Companies and the Borrowers shall have duly and validly executed, issued and delivered the Notes to Bank One. 2.6 Execution and Delivery of Guaranty Agreements. The Guarantors shall have executed and delivered to Bank One their unlimited, unconditional guaranty agreements with respect to all indebtedness of Companies and the Borrowers to Bank One, now existing or hereafter arising, in form and substance satisfactory to Bank One. 2.7. Execution and Delivery of Security Agreements. The Companies; brightwhite solutions, inc.; e-Mongoose, Inc.; Symix Computer Systems Delaware, Inc.; Symix distribution.com, Inc.; and Frontstep, Inc. shall have executed and delivered to Bank One Security Agreements granting Bank One a perfected first priority security interest in the Accounts. SECTION 3: REPRESENTATIONS AND WARRANTIES In borrowing hereunder, the Companies and the Borrowers represent and warrant to Bank One, which representations and warranties will survive the execution and delivery of this Agreement and the Notes, that: 3.1 Organization & Authority to Execute Loan Documents. The Companies, the Borrowers and the Guarantors are corporations duly organized, validly existing and in good standing under the laws of their respective states or jurisdictions of organization and are duly qualified or licensed to conduct their activities in each jurisdiction in which the nature of such activities make such qualification necessary, and the failure so to qualify might materially and adversely affect the respective business or assets of the Companies, the Borrowers and the Guarantors; that the execution hereof has been duly authorized by appropriate corporate action; there is no prohibition, either in law, in their articles of incorporation, code of regulations or by-laws or in any agreement to which they are a 5 6 party, which in any way prohibits or would be violated by the execution and carrying out of this Agreement in any respect; this Agreement has been duly executed and the obligations created hereby are valid and binding obligations; and the Notes and guaranty agreements are also valid and binding obligations of the Companies, the Borrowers and the Guarantors, respectively. 3.2 Financial Statements. The Companies have furnished to Bank One complete, true and correct Audited Consolidated Financial Statements as of June 30, 1999 and unaudited quarterly Financial Statements for September 30, 1999; December 31, 1999 and March 31, 2000 that fairly reflect their financial condition. "Audited" shall mean Consolidated and Consolidating Financial Statements which have been audited, prepared, and certified, without qualification, by independent certified public accountants of recognized standing and acceptable to Bank One. There have been no material adverse changes in the financial or business condition or operations since the submission of any financial information to Bank One, and no material adverse changes in their financial or business condition or operations are imminent or threatened. 3.3 No Guaranties of Others' Obligations. The Companies have made no investments in, advances to or guaranties of the obligations of any Person, corporation or other entity except as disclosed in the Financial Statements referred to in Section 3.2 above or as disclosed to Bank One in writing. 3.4 Compliance with Occupational Safety & Health Act. The Companies are not in violation of any requirement of any applicable occupational safety and health act or any standard, rule or order promulgated pursuant thereto or any regulation prescribed pursuant thereto, the violation of which involves (i) the possibility of a material adverse effect on the business, operation or condition of the Companies or (ii) the ability of the Companies to perform this Agreement. 3.5 No Undisclosed Liabilities. The Companies have no liabilities, direct or contingent, except as disclosed in the Financial Statements referred to in Section 3.2 above. 3.6 No Undisclosed Subsidiaries. There exist as of the date hereof no Subsidiaries of Companies except as disclosed to Bank One in writing prior to the execution of this Agreement. 3.7 Good Title to Assets and No Undisclosed Liens. The Companies have good and marketable title to all the property and assets reflected as being owned by them in the Financial Statements referred to in Section 3.2 above, subject to no liens, other than liens reflected on said Financial Statements or said balance sheets or Permitted Liens, except property and assets disposed of since such date in the ordinary course of business. 3.8 Intellectual Property. The Domestic Companies own or possess all patents, trademarks, service marks, trade names, copyrights, permits and licenses, or rights with respect to the foregoing, necessary for the present and planned future conduct of their business, without 6 7 any known conflict with the rights of others, except as disclosed to Bank One in writing. At the date of this Agreement, there is no such patent, trademark, service mark, trade name, copyright, permit, license or charter of material importance to the conduct of the business of the Companies other than has been disclosed to Bank One in writing. 3.9 No Undisclosed Interest in the Title to Assets. None of the assets or property, the value of which is reflected in the Financial Statements referred to in Section 3.2 above, is held by the Companies as lessee or conditional vendee, or pursuant to a title retention agreement of any kind, except as set forth in said Financial Statements or balance sheets or the notes relating thereto or as disclosed to Bank One in writing. 3.10 No Undisclosed Financing Statements. No financing or continuation statement which names any of the Domestic Companies as debtor and describes a security interest in Accounts has been filed under the Uniform Commercial Code in any state or other jurisdiction except as set forth in the Financial Statements referred to above or as disclosed to Bank One in writing, and the Companies have not agreed to or consented to cause or to permit in the future (upon the happening of a contingency or otherwise) any of its property, whether now owned or hereafter acquired, to be subject to a lien, except Permitted Liens. 3.11 Leases are Valid and Enforceable. Each lease of real estate or personal property to which either of the Companies is a party as lessee is valid, binding, and enforceable by the Companies as lessee in all material respects in accordance with its terms, entitles the lessee to undisturbed possession of the real estate or personal property covered thereby during the full term thereof and no event of default thereunder or event which with the giving of notice or lapse of time or both would constitute an event of default thereunder has occurred. 3.12 Litigation. There is no action, suit or proceeding at law or in equity or any arbitration proceeding or investigation, inquiry or other proceeding by or before any court or governmental instrumentality or other agency now pending or, to the knowledge of the Companies threatened or affecting the Companies or any property or rights of the Companies nor is there any basis therefor, except such of the foregoing which, if adversely determined, would not in the aggregate have a material adverse effect on the Companies or which does not seek to enjoin the consummation of any transaction contemplated by this Agreement. No judgment, decree or order of any federal, state or municipal court, board or other governmental or administrative agency has been issued against or binds the Companies which has, or is likely to have, any material adverse effect on the business or assets or the condition, financial or otherwise, of the Companies. 3.13 Filing of Taxes. The Companies have duly filed or caused to be filed all federal, state and local tax returns which are required to be filed, and have duly paid or caused to be duly paid, all taxes as shown on said returns or on any assessment received by them, to the extent that such taxes have become due. The Companies have made provisions which 7 8 are believed by the officers of the Companies to be adequate for the payment of such taxes for the years that have not been audited by the respective tax authorities. 3.14 No Adverse Effect from Obligation of Contracts/Law. No Contractual Obligation of or Requirement of Law upon the Companies materially and adversely affects their business, properties or assets, operations or conditions (financial or otherwise), or the ability of the Companies to perform this Agreement, or any other agreement or instrument herein or therein contemplated. 3.15 No Adverse Effect from Default of Contracts/Law. The Companies are not in default under any applicable Contractual Obligation or Requirement of Law so as to affect adversely and materially the business or assets or the condition, financial or otherwise, of the Companies or the ability of the Companies to perform this Agreement, or any other agreement or instrument herein or therein contemplated. 3.16 No Default of this Agreement. There does not exist any Event of Default or any condition or circumstance which constitutes or with lapse of time or the giving of notice or both would constitute an Event of Default. 3.17 Insurance. All of the properties and operations of the Companies of a character usually insured against by Persons of established reputation engaged in the same or a similar business similarly situated are adequately insured, by financially sound and reputable insurers against loss or damage of the kinds and in the amounts customarily insured against by such Persons: and the Companies carry, with such insurers in customary amounts, such other insurance, including public and product liability insurance, as is usually carried by Persons of established reputation engaged in the same or a similar business similarly situated. 3.18 No Untrue or Misleading Statements or Omissions. Neither this Agreement nor any other agreement, instrument or certificate contemplated by or made or delivered pursuant to or in connection with this Agreement, contains any untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein not misleading. 3.19 Compliance with ERISA. The Companies are in compliance in all material respects with the applicable provisions of the Employee Retirement Income Security Act of 1974, as amended and any regulations promulgated thereunder (hereinafter referred to as "ERISA"), and no "reportable event" as such term is defined in Section 4043 of ERISA, has occurred with respect to any Plan of Companies. 3.20 Environmental. To the best of the Companies' knowledge, no release, emission, or discharge into the environment of hazardous substances, as defined under the Comprehensive Environmental Response, Compensation, and Liability Act, or hazardous waste as defined under the Solid Waste Disposal Act, or air pollutants as defined under the Clean Air Act, or toxic pollutants as defined under the Clean Air Act, or the Toxic 8 9 Substances and Control Act, have occurred or are presently occurring in excess of federally permitted releases or reportable quantities, or other concentrations, standards or limitations under the foregoing laws or under any other federal, state or local laws or regulations, in connection with any aspect of the business of the Companies or any of their Subsidiaries. Except as previously disclosed in writing to Bank One, the Companies have no knowledge of any past or existing violations of any environmental laws, ordinances, or regulations issued by any federal, state or local governmental authority and they has not received any written or oral communication or notice from any judicial or governmental entity nor is it aware of any investigation by any agency for any violation of any environmental laws, ordinances or regulations. The Companies covenant and agree that they will not permit or allow, except for use by tenants in incidental quantities in connection with their business and in accordance with all applicable laws and regulations, Pollutants (as hereinafter defined) to be incorporated into, stored upon or used on any premises in such a manner or amount as to violate any federal, state, or local statute, law, ordinance, rule, regulation, decision or order. As the term is used herein, "Pollutants" shall mean any solid, liquid, gaseous or thermal contaminant, including smoke, vapor, soot, fumes, acids, alkalis, chemicals, waste, petroleum products or by-products, asbestos, PCB'S, phosphates, lead or other heavy metals, chlorine, radon gas, "hazardous substances" as defined in the Comprehensive Environmental Response, Compensation and Liability Act as is now or hereafter amended or supplemented, and regulations adopted pursuant thereto, "hazardous waste" as defined under the Solid Waste Disposal Act, "air pollutants" as defined under the Clean Air Act, "toxic pollutants" as defined under the Clean Air Act or the Toxic Substances and Control Act or other toxic or hazardous wastes or materials. 3.21 Compliance with Federal Reserve Regs S, T, U, or X. The Companies are not engaged in the business of extending credit for the purpose of purchasing or carrying margin stock (within the meaning of Regulation U of the Board of Governors of the Federal Reserve System as it is now and may from time to time hereafter be in effect) and no part of the proceeds of any loan will be used to purchase or carry any such margin stock or to reduce or retire any indebtedness incurred for any such purpose. No part of the proceeds of the loan hereunder will be used for any purpose which violates, or which is inconsistent with the provisions of Regulations S, T, U or X of said Board of Governors. 3.22 Private Equity Funding. The Companies have received at least $13,500,000 in private equity funding, in form and substance acceptable to Bank One. SECTION 4: AFFIRMATIVE COVENANTS Until all indebtedness of Companies to Bank One has been paid: 4.1 Annual Financial Statements. The Companies shall furnish to Bank One within one hundred twenty (120) days after the close of each fiscal year their 10-K filings with the 9 10 Securities and Exchange Commission, to include annual Audited Consolidated and Consolidating Financial Statements which fairly reflect the financial condition of the Companies and their Subsidiaries. 4.2 Periodic Financial Statements. The Companies shall furnish to Bank One within forty-five (45) days after the close of each quarter of each fiscal year their 10-Q filings with the Securities and Exchange Commission, to include Consolidated and Consolidating Financial Statements which shall fairly reflect the financial condition of the Companies and their Subsidiaries and which are certified as true and correct in all material aspects by the Chief Financial Officer of SSI. In addition, the Companies shall furnish to Bank One within forty-five (45) days after the close of each quarter of each fiscal year a financial statement showing the tangible net worth and net income of the Excluded Subsidiaries for such period, and which are certified as true and correct in all material respects by the Chief Financial Officer of SSI. The Companies shall furnish to Bank One within thirty (30) days after the end of each month Consolidated and Consolidating Financial Statements which shall fairly reflect their financial condition and which are certified as true and correct in all material aspects by the Chief Financial Officer of SSI (except for certain adjustments that are made only on a quarterly basis). 4.3 No Default Certificate. The Companies' Financial Statements called for by Sections 4.1 and 4.2 must be accompanied by a certificate signed by the Chief Financial Officer of SSI stating that, except as disclosed in the certificate, (s)he has no knowledge of any Event of Default or event which, with the lapse of time or notice or both would become an Event of Default hereunder, and, the Companies will cause their independent certified public accountant to provide Bank One with a similar certificate accompanying the annual Audited Consolidating and Consolidated Financial Statements. The Chief Financial Officer of SSI shall deliver the Covenant Compliance Certificate to Bank One (in the form attached hereto as Exhibit 4.3) within 30 days of the end of each fiscal quarter. 4.4 Insurance. The Companies shall at all times: (a) Maintain adequate insurance including, but not limited to, workers' compensation upon all of its properties and operations of a character usually insured against by Persons of established reputation engaged in the same or a similar business similarly situated by financially sound and reputable insurers against loss or damage of the kinds and in the amounts customarily insured against by such Persons with Bank One named as loss payee. (b) Maintain with such insurers in customary amounts such other insurance, including public and product liability insurance as is usually carried by Persons of established reputation engaged in the same or a similar business similarly situated. (c) At the request of Bank One, furnish a statement of its insurance coverage. 10 11 (d) Maintain any other insurance as may from time to time be reasonably requested by Bank One. (e) All insurance policies shall contain a provision requiring the insurance companies to provide Bank One not less than ten days written notice prior to cancellation of any such policy. 4.5 Concurrent Payment of Other Bank One Indebtedness. The Companies shall promptly pay any amounts owing to Bank One or any BANC ONE CORPORATION affiliate on account of other indebtedness owing by the Companies from time to time during the term of this Agreement and the Notes executed hereunder. 4.6 Changes in Articles of Incorporation, Code of Regulations or By-Laws. The Companies and the Borrowers shall promptly provide Bank One with written notice of any amendments to or changes in its Articles of Incorporation, code of regulations and/or by-laws, or other similar organizational documents, including such changes as might affect the structure, condition, operation or management of the Companies and the Borrowers and the Companies' and the Borrowers' obligations to Bank One under the terms of this Agreement and shall make such amended articles, code of regulations or by-laws available for inspection by Bank One upon demand. 4.7 Payment of Taxes. The Companies shall promptly pay and discharge all taxes and assessments levied and assessed or imposed upon its property or income as well as all claims which, if unpaid, might by law become a lien or charge upon such property; provided, however, that nothing herein contained shall require the Companies to pay any such taxes, assessments or claims so long as the Companies shall in good faith contest the validity, stay the execution and enforcement thereof and reserve for the same on their financial statements if required by generally accepted accounting principles. 4.8 Compliance with Laws. The Companies will promptly comply in all substantial respects, with all applicable statutes, laws, ordinances and governmental rules, regulations and orders to which they are subject or which are applicable to its business, property and assets if noncompliance therewith would materially and adversely affect its business. 4.9 Preserve and Maintain Corporate Rights. The Companies and the Borrowers shall preserve and maintain their corporate existence, rights, franchises and privileges in the jurisdiction of their organization, and qualify and remain qualified as a foreign corporation in each jurisdiction where such qualification is necessary, except such jurisdictions, if any, where the failure to preserve and maintain their corporate existence, rights, franchises and privileges, or qualify or remain qualified will not have a material adverse effect on the business or property of the Companies or the Borrowers. 4.10 Payment of Legal Costs. The Companies will pay all out-of-pocket expenses of Bank One in connection with the collection and enforcement of this Agreement, the Notes and other agreements and documents contemplated herein. The Companies shall, upon 11 12 request, promptly reimburse Bank One for all amounts expended, advanced or incurred by Bank One to satisfy any obligation of the Companies under this Agreement and other agreements and documents contemplated herein, or in the collection and enforcement of the Notes and Bank One's rights under this Agreement including all court costs, reasonable attorney's fees, fees of auditors and accountants and investigation expenses reasonably incurred by Bank One in connection with such collection and enforcement, together with interest at the post-maturity rate set forth herein on such amount from the date of written demand by Bank One for reimbursement until the date Bank One is actually reimbursed. 4.11 Maintain and Preserve Assets. The Companies shall use reasonable efforts in good faith to maintain and preserve in good working order and condition, ordinary wear and tear excepted, all of the Companies' properties necessary for the conduct of their business, if failure to maintain and preserve such properties would over a substantial period of time materially and adversely affect the Companies. 4.12 ERISA Reports. The Companies will promptly furnish to Bank One (i) if requested by Bank One, promptly after the filing thereof with the United States Secretary of Labor or the Pension Benefit Guaranty Corporation, copies of each annual and other report with respect to each Plan or any other trust created thereunder, and (ii) immediately upon becoming aware of the occurrence of any "reportable event" as such term is defined in Section 4043 of ERISA, or of any "prohibited transaction" as such term is defined in Section 4975 of the Internal Revenue Code of 1986, as amended, in connection with any Plan or any trust created thereunder, a written notice signed by the Chief Financial Officer of SSI specifying the nature thereof, what action the Companies are taking or propose to take with respect thereto and, when known, any action taken by the Internal Revenue Service with respect thereto. The Companies will fund all current service pension liabilities as they are incurred under the provisions of all Plans from time to time in effect for the benefit of employees of Companies, and comply with all applicable provisions of ERISA. 4.13 Notification of Certain Adverse Events. The Companies shall promptly notify Bank One if the Companies learns of the occurrence of (a) any event which constitutes an Event of Default, together with a detailed statement by a responsible officer of the Companies of the steps being taken to cure the effect of such Event of Default; or (b) the receipt of any notice or the taking of any other action by the holder of any promissory note, debenture or other evidence of indebtedness of the Companies or of any security (as defined in the Securities Act of 1933, as amended) of the Companies with respect to a claim of default, together with a detailed statement by a responsible officer of the Companies specifying the notice given or other action taken by such holder and the nature of the claimed default and what action the Companies are taking or propose to take with respect thereto; or (c) any legal, judicial or regulatory proceedings affecting the Companies or any of the properties of the Companies in which the amount involved is material and is not covered by insurance or which, if adversely determined would have a material adverse effect; or 12 13 (d) any dispute between the Companies and any governmental or regulatory body or any other Person which, if adversely determined would have a material adverse effect. 4.14 Notice of the Existence of Pollutants. If the Companies or any Subsidiary should commence the use, treatment, transportation, generation, storage or disposal of any Pollutants in hazardous quantities in its operations, the Companies shall immediately notify Bank One of the commencement of such activity with respect to each such Pollutant. Companies shall cause any Pollutants which are now or may hereafter be used or generated in the operations of the Companies or any Subsidiary in hazardous quantities to be accounted for and disposed of in compliance with all applicable federal, state, and local laws and regulations. The Companies will notify Bank One immediately upon obtaining knowledge that: (a) any premises are the subject of an environmental investigation by any federal, state or local governmental agency having jurisdiction over the regulation of any Pollutants, the purpose of which investigation is to quantify the levels of Pollutants located on such premises, or (b) The Companies or any Subsidiary has been named or is threatened to be named as a party responsible for the possible contamination of any real property or ground water with Pollutants, including, but not limited to the contamination of past and present waste disposal sites. If the Companies or any Subsidiary are notified of any event described at items (a) or (b) above, the Companies shall immediately engage or cause the Subsidiary to engage a firm or firms of engineers or environmental consultants appropriately qualified to determine as quickly as practical the extent of contamination and the potential financial liability of the Companies or the Subsidiary with respect thereto, and Bank One shall be provided with a copy of any report prepared by such firm or by any governmental agency as to such matters as soon as any such report becomes available to the Companies. The selection of any engineers or environmental consultants engaged pursuant to the requirements of this Section shall be subject to the approval of Bank One, which approval shall not be unreasonably withheld. 4.15 Inspection of Books and Records. Upon request by Bank One, the Companies shall make available for inspection to duly authorized representatives of Bank One any of their books and records, and shall furnish to Bank One any information regarding their business affairs and financial condition including copies of any contracts entered into by Companies within a reasonable time after receipt of written request therefor. 4.16 Inspection of Property. The Companies shall make available for inspection to duly authorized representatives of Bank One any of their property and assets for the purpose of ascertaining that the covenants and conditions of this Agreement are being complied with. 13 14 4.17 Information Provided to Others. The Companies shall furnish to Bank One, promptly after the sending or filing thereof, copies of all proxy statements, financial statements, and reports which the Companies send to their stockholders, and copies of all regular, periodic, and special reports, and all registration statements which the Companies file with the Securities and Exchange Commission or any governmental authority which may be substituted therefor, or with any national securities exchange, including, but not limited to, annual 10-K reports and quarterly 10-Q reports. 4.18 Accounts Receivable Reporting. SCSI will furnish to Bank One as soon as practicable after the end of each calendar month, and in any event within 10 days thereafter, a summary Accounts aging report in a format acceptable to Bank One and a Borrowing Base Certificate for such month. From time to time, SCSI shall be required to deliver detailed aging schedules, trial balances, test verifications of Accounts and other reports reasonably requested by Bank One. The Companies shall assist Bank One in the completion (at a cost of $5,000 to the Companies) of a field audit of the Accounts by July 31, 2000. 4.19 Retention of Certain Officers. The Companies shall retain the services of Stephen A. Sasser and Lawrence W. DeLeon, or persons of similar experience and reputation to serve in such office. 4.20 Pledge of Intercompany Note. The Companies shall cause each Non-Obligor Subsidiary (except Symix Computer Systems (Malaysia) Sdn Bhd.) to execute an intercompany promissory note that evidences all borrowings that such Non-Obligor Subsidiaries make from the Companies of funds borrowed under the $13,000,000 Revolving Credit Note, and the Companies shall deliver such intercompany promissory note to Bank One as security for the amounts due hereunder and under the Revolving Credit Notes. SECTION 5: NEGATIVE COVENANTS Except with the prior written consent of Bank One: 5.1 Encumbering Assets. The Companies and their Subsidiaries shall not create, incur, assume or permit to continue any mortgage, pledge, encumbrance, lien or charge of any kind upon or security interest in any of their or any Subsidiary's property or assets, whether now owned or hereafter acquired, except (a) the Pledge Agreement contemplated hereby (as set forth in Section 6.3 of the Third Amendment to Loan Agreement dated June 1, 1998), (b) purchase money liens for fixed assets not to exceed an aggregate amount of Three Million Dollars ($3,000,000), and (c) Permitted Liens as defined herein. The Companies and Subsidiaries shall not grant a "negative pledge" of assets, exemplified by the preceding sentence, to any Person other than Bank One. 5.2 Debt. The Companies and their Subsidiaries shall not create, incur, assume or suffer to exist any Funded Debt or Current Debt except (a) debt represented by the Notes, (b) other indebtedness to Bank One, (c) purchase money debt for fixed assets that shall not exceed 14 15 an aggregate of Three Million Dollars ($3,000,000), (d) unsecured indebtedness to trade creditors arising out of the ordinary course of business and (e) indebtedness incurred by Symix (U.K.) Ltd. pursuant to an overdraft facility provided by Barclays Bank PLC in an amount not to exceed (pound)100,000; provided however, that Bank One consents to the acquisition of Profit Solutions, Inc., which will cause the issuance of subordinated debt thereunder in an amount not to exceed $5,000,000. 5.3 Guaranty of Others' Debts. Companies and Subsidiaries shall not assume, guarantee, endorse, contingently agree to purchase or otherwise become liable upon the obligation of any Person, provided, however, that the Companies may guarantee, endorse, or otherwise become liable upon the obligations of Subsidiaries (a) to the extent the Subsidiaries have incurred debt permitted by Section 5.2(c) of this Agreement, (b) to the extent the Subsidiaries have entered into leases of real property with annual payments not to exceed $250,000 and (c) regarding indebtedness incurred by Symix (U.K.) Ltd. pursuant to an overdraft facility provided by Barclays Bank PLC in an amount not to exceed (pound)100,000 principal and (pound)20,000 interest and expenses. 5.4 Merger or Consolidation. The Companies and Subsidiaries shall not merge or consolidate, or purchase or otherwise acquire all or substantially all of the assets or stock of any class of, or any partnership or joint venture interest in any other Person, except for (a) any such merger or consolidation of the Companies with a Subsidiary or a merger of a Subsidiary with a Subsidiary (as long as such merger does not cause a Guarantor to be merged into a Subsidiary that is not a Guarantor or a Borrower), or (b) any such purchase or other acquisition by the Companies of the assets or stock of any Subsidiary, (c) any such merger or consolidation with or purchase or other acquisition of any Person that operates any business that is a Core Business in which the amount paid, when combined with the liabilities assumed, is less than One Million Dollars ($1,000,000) for such single transaction or causes the aggregate such amount in any fiscal year to be less than Two Million Dollars ($2,000,000) and for which the Companies have presented a covenant compliance certificate to Bank One that demonstrates compliance with Sections 5.9, 5.10, 5.11 and 5.12 hereof on a pro forma basis; provided, however, that Bank One consents to the acquisition of Profit Solutions, Inc. 5.5 Transfer of Substantial Portion of Assets. The Companies and Subsidiaries shall not liquidate or sell, lease, transfer or otherwise dispose of all or a substantial part of its assets other than in the ordinary course of business without prior written approval of Bank One which shall not be unreasonably withheld; provided however, that Bank One consents to the sale/leaseback of the office building by Symix distribution.com, Inc. that expires no later than December 31, 2000 for no more than $15,000 per month. 5.6 Creation of New Subsidiaries. The Companies and Subsidiaries shall not incorporate, create, acquire, form, establish or fund any Subsidiary unless Bank One shall immediately be notified in writing of the creation or acquisition of such Subsidiary and such Subsidiary shall immediately execute such documents as Bank One deems necessary for Subsidiary to guarantee upon all indebtedness outstanding hereunder; provided, 15 16 however, that Symix Computer Systems (Malaysia), Inc., Symix Systems (Ontario), Inc., Visual Applications Software, Inc. and Symix Computer Systems (New Zealand), Inc. and any Subsidiary created after January 31, 1998 (collectively, the "Excluded Subsidiaries") shall not be required to sign guaranties until the tangible net worth of such entity exceeds $250,000; provided, further, however, that Symix (France), NA shall not be required to sign a guaranty. 5.7 Discounting Notes/Accounts. The Domestic Companies and Subsidiaries shall not discount or sell any of their notes or Accounts; provided, however, that Accounts other than Accounts of Domestic Companies may, in the normal course of business, be discounted or sold by the Companies. 5.8 Sale/Leaseback Transactions. The Companies and Subsidiaries shall not enter into any arrangement with any bank, insurance company or other lender or investor providing for the leasing by the Companies or Subsidiaries of real or personal property which has been or is to be sold or transferred by the Companies or Subsidiaries to such lender or investor; provided however, that Bank One consents to the sale/leaseback of the office building by Symix distribution.com, Inc. 5.9 Minimum Net Worth. The Companies shall not permit the Minimum Net Worth (as defined below) to be less than: Fiscal Quarter Ended Minimum Amount of Tangible Net Worth June 30, 2000 $23,000,000 September 30, 2000 $23,000,000 December 31, 2000 $23,250,000 March 31, 2001 $24,500,000 June 30, 2001 $27,000,000
"Minimum Net Worth" means the consolidated stockholders' equity of the Companies reflected on the Consolidated and Consolidating Financial Statements of the Companies. 5.10 Leverage Ratio. The Companies shall not permit the Leverage Ratio to exceed 2.00 to 1.00 during the term of this Agreement.. 5.11 Minimum EBITDA. The Companies shall not permit Minimum EBITDA (as defined below) to be less than: Fiscal Quarter Ended Minimum EBITDA June 30, 2000 $ 175,000 September 30, 2000 ($2,300,000) December 31, 2000 $1,875,000 March 31, 2001 $1,750,000 June 30, 2001 $3,875,000
16 17 "Minimum EBITDA" means the Consolidated net operating income (or loss) of the Companies plus depreciation and amortization of intangibles plus amortization of capitalized software expense minus additional capitalized software calculated for the then-current reporting quarter. 5.12 Current Ratio. The Companies shall not permit the Consolidated Current Ratio to be less than 1.50 to 1.00, calculated as of the end of each fiscal quarter for the then-current reporting quarter. 5.13 Funding. The Companies shall not use the proceeds of the Revolving Credit Notes to fund any Non-Obligor Subsidiary acquisitions or non-operational purposes or obligations other than operating cash flow of such Non-Obligor Subsidiary. The Companies shall not (and shall not permit any Subsidiary to) loan or otherwise advance funds to Symix Computer Systems (Malaysia) Sdn Bhd. in an amount to exceed $200,000 in the aggregate outstanding at any time. 5.14 Royalty Agreements. The form of royalty agreement in place between the Companies and each of the Subsidiaries is attached hereto as Exhibit 5.14. The Companies shall not materially change, amend or modify this royalty agreement or any term thereof without the prior written consent of Bank One. After the occurrence of an Event of Default hereunder, the Companies shall enforce each royalty agreement to require payment to be made by each Subsidiary, as long as the Subsidiary has positive net worth, calculated without intercompany liabilities. 5.15 Capital Expenditures. The Companies and the Subsidiaries will not incur capital expenditures in excess of $2,000,000 per fiscal quarter; provided, however, if the Companies and Subsidiaries incur less than $2,000,000 in capital expenditures in any fiscal quarter, the Companies and Subsidiaries can incur capital expenditures in excess of $2,000,000 in subsequent fiscal quarters to the extent of any such shortfall; provided, further, however, that the capital expenditures in fiscal year 2001 shall in no event exceed $5,200,000. SECTION 6: EVENTS OF DEFAULT AND REMEDIES If any of the following events ("Events of Default") shall occur and be continuing: A. The Companies or the Borrowers shall default in the payment of any installment of the principal of the Notes when and as the same shall become due and payable, whether at the due date thereof or at a date fixed for prepayment or by acceleration or otherwise, provided such default shall continue for a period of ten (10) calendar days; provided, that the ten (10) day grace period shall not apply in the Event of Default of payment upon the stated maturity of the Notes; B. The Companies or the Borrowers shall default in the payment of interest on the Notes, when and as the same shall become due and payable, whether at the due 17 18 date thereof or at a date fixed for prepayment or by acceleration or otherwise; provided that such default shall continue for a period of ten (10) calendar days; C. The Companies or the Borrowers shall default with regard to any payment of principal or interest on or the performance or observance of any covenant, condition or agreement of any other instrument of indebtedness executed by the Companies or the Borrowers; D. Any representation or warranty made by the Companies or the Borrowers in this Agreement or in connection with the loans hereunder, or in any report, certificate, financial statement or other agreement, document or instrument furnished in connection with this Agreement or the loans hereunder shall prove to be false or misleading in any material respect; E. The Companies shall fail to observe or perform any covenant, condition or agreement in Section 5 of the Agreement; provided that such failure shall continue unremedied for a period of twenty (20) days after written notice thereof; F. The Companies shall fail to observe or perform any covenant, condition or agreement to be observed or performed pursuant to the terms of this Agreement (excluding Section 5); provided that such default shall continue unremedied for thirty (30) days after written notice thereof is sent by Bank One to the Companies, including a description thereof; G. The Companies shall fail to observe or perform any covenant, condition or agreement in the Notes; H. An event of default under any guaranty or similar agreement (including the Security Agreements referred to in Section 2.8) executed in connection with the loans hereunder shall occur and be continuing; I. Final judgment for the payment of money in excess of One Million Five Hundred Thousand Dollars ($1,500,000) shall be rendered against the Companies or any Subsidiary and the same shall remain undischarged for a period of thirty (30) consecutive days during which the execution shall not be effectively stayed; J. The Companies or any Subsidiary shall (i) apply for or consent to the appointment of a receiver, trustee or liquidator for them or for any of their property, (ii) admit in writing their inability to pay their debts as they mature, (iii) make a general assignment for the benefit of creditors, (iv) be adjudicated a bankrupt or insolvent, or (v) file a voluntary petition in bankruptcy, or a petition or an answer seeking reorganization or an arrangement with creditors to take advantage of any bankruptcy, reorganization, insolvency, readjustment of debt, dissolution or liquidation law or statute, or an answer admitting the material allegations of a petition filed against them in any proceeding under any such law or if corporate 18 19 action shall be taken by the Companies or any Subsidiary for the purpose of effecting any of the foregoing; K. An order, judgment or decree shall be entered without the application, approval or consent of the Companies or any Subsidiary by any court of competent jurisdiction, approving a petition seeking reorganization of the Companies or any Subsidiary or appointing a receiver, trustee or liquidator of the Companies or any Subsidiary or of all or a substantial part of the assets thereof, and such order, judgment or decree shall continue unstayed and in effect for any period of forty-five (45) days; then upon the occurrence of any such Event of Default specified in subdivisions A, B, C, D, E, F, G, H, I and K of this Section, Bank One shall have the option to cease disbursements under the Revolving Credit Notes and/or to terminate its commitment to lend and to declare all amounts due under the Notes to be immediately due and payable both as to principal and interest. Automatically upon the occurrence of any of the events specified in subdivision J of this Section, Bank One's commitment to lend shall terminate and all amounts due under the Notes shall become immediately due and payable. The Notes shall then become immediately due and payable without presentment, demand, protest, or notice of any kind, all of which are hereby expressly waived, anything contained herein or in the Notes to the contrary notwithstanding. It is understood that the remedies of Bank One hereunder shall be cumulative in nature rather than exclusive and that the failure of Bank One to exercise its rights upon an Event of Default by the Companies hereunder shall not be deemed to be a waiver by Bank One of that Event of Default or any of its rights hereunder. BANK ONE SHALL NOT BE REQUIRED, AS A CONDITION TO THE LIABILITY OF ANY OF THE COMPANIES, TO RESORT TO, ENFORCE OR EXHAUST ANY OF ITS REMEDIES AGAINST ANY OTHER OF THE COMPANIES OR TO RESORT TO, ENFORCE OR EXHAUST ANY OF ITS REMEDIES AGAINST ANY PROPERTY WHICH MAY AT ANY TIME BE GIVEN OR HELD AS SECURITY FOR THE NOTES OR UPON WHICH BANK ONE OBTAINS A LIEN FOR REPAYMENT OF THE NOTES. When any indebtedness of the Companies to Bank One becomes due, by acceleration or otherwise, Bank One shall have the right, without notice to the Companies, any party claiming under the Companies, or any other party, such notice being hereby expressly waived, and without regard to the adequacy or value of the collateral or the solvency or insolvency of the Companies, to the appointment of a receiver by a court of competent jurisdiction chosen solely by Bank One, upon application at any time, whether prior to or after a judgment has been obtained against Companies, to take possession of the business of the Companies together with its books and records, to maintain or to liquidate said business, to collect the proceeds of the collateral and apply the net proceeds to any indebtedness of the Companies to Bank One. The Companies consents to jurisdiction and venue for the appointment of such receiver by such court and agrees that any receiver so appointed may take possession of the business of the Companies, together with the collateral in any other jurisdiction in which the collateral may be located. 19 20 SECTION 7: DEFINITIONS For purposes of this Agreement, the following terms shall have the following meaning. All accounting terms not specifically defined herein shall have the meanings of such terms as used in accordance with generally accepted accounting principles in the United States applied on a consistent basis: "$13,000,000 Revolving Credit Note" and the "$2,000,000 Revolving Credit Note" are defined in Section 1.1.2. "Account" means and includes all accounts (whether or not earned by performance), contract rights, chattel paper, instruments, documents, general intangibles (including, without limitation, tax refunds and tax refund claims) and all other forms of obligations owing to either of the Companies, whether secured or unsecured, whether now existing or hereafter created, by account debtors whose principal place of business is the United States of America, and all guaranties and other security therefor, all merchandise returned to or repossessed by either of the Companies, and all rights of stoppage in transit and all other rights and remedies of an unpaid vendor, lienor or secured party. "Agreement" is defined in the preamble. "Audited" is defined in Section 3.2. "Bank One" is defined in the preamble. "Benchmark Rate" is defined in Section 1. 1.4. "Borrowers" means the Companies, Symix Systems Ontario, Inc., an Ontario corporation and Visual Applications Software, Inc., an Ontario corporation, or any successor corporations. "Borrowing Base" means the Net Value of Eligible Accounts. "Borrowing Base Certificate" means a certificate, in the form required by Bank One, signed by a duly authorized officer of the Companies, that computes the Borrowing Base, together with any memo of returns and credits, remittance report, schedule of Accounts and such other supporting documents and materials which Bank One, in its sole discretion, may require to be delivered with such certificate. "Business Day" shall mean any day other than a Saturday, a Sunday, and other legal holidays on which the principal office of Bank One is closed. "Companies" and "Company" are defined in the preamble. 20 21 "Consolidated Tangible Net Worth" shall mean the Consolidated net worth of the Companies (after eliminating all inter-Companies accounts), less all Consolidated Intangible Assets of the Companies. Net worth shall be determined in accordance with generally accepted accounting principles applied on a consistent basis; provided, however, that Consolidated Tangible Net Worth shall include no appraisal surplus of any type or description. "Consolidating", "Consolidated" and "Consolidated and Consolidating" shall include the Companies and all Subsidiaries and shall mean, in reference to financial statements and reports, any covenants, representations, warranties, or agreements of the Companies under this Agreement, or definitions in this Section, that the same are prepared or determined in accordance with generally accepted accounting principles applied on a consistent basis, but eliminating all inter-Companies transactions on any consolidated statements or reports. "Contractual Obligation" shall mean for the Companies any obligation, covenant, representation, warranty or condition contained in any evidence of indebtedness or any agreement or instrument under or pursuant to which any evidence of indebtedness has been issued, or any other material agreement, instrument or guaranty, to which the Companies is a party or by which the Companies or any of its assets or properties are bound. "Core Business" shall mean the ownership, marketing, distribution, licensing and maintenance of software and related products, the rendering of related professional services and training with respect to such software and products and business incidental thereto. "Credit Commitment" is defined in Section 1.1.1. "Current Assets" and "Current Liabilities" shall mean the current assets and current liabilities of the companies, all determined in accordance with generally accepted accounting principles applied on a consistent basis; provided, however, that "Current Assets" shall exclude all prepaid items and "Current Liabilities" shall include all deferred revenue and the current portion of deferred taxes. "Current Debt" shall mean any obligation for borrowed money (and any negotiable instruments and drafts accepted representing extensions of credit whether or not representing obligations for borrowed money) payable on demand or within a period of one (1) year from the date of the creation thereof. "Current Ratio" shall mean the ratio of Current Assets to Current Liabilities. "Debt" shall mean for the Companies: 21 22 (i) any indebtedness for borrowed money which the Companies directly or indirectly created, incurred, assumed, endorsed (other than for collection in the ordinary course of business), discounted with recourse or in respect of which Companies is otherwise directly or indirectly liable including, without limitation, indebtedness in effect guaranteed by the Companies through any agreement (contingent or otherwise) to purchase, repurchase or otherwise acquire such indebtedness or any security therefore, or to provide funds for the payment or discharge of such indebtedness or any liability of the obligor of such indebtedness (whether in the form of loans, advances, stock purchases, capital contributions or otherwise) or to maintain the solvency or other financial condition of the obligor of such indebtedness, or to make payment for any products, materials or supplies or for any transportation or service regardless of the nondelivery or nonfurnishing thereof, in any such case if the purpose or intent of such agreement is to provide assurance that such indebtedness will be paid or discharged, or that any agreement relating thereto will be complied with, or that the holders of such indebtedness will be protected against loss in respect thereof, (ii) any indebtedness, whether or not for borrowed money, which the Companies has incurred, assumed, guaranteed or with respect to which the Companies has become directly or indirectly liable (including, without limitation, through any agreement of the character referred to in clause (i) hereto and which represents or has been incurred to finance the purchase price of any property or business, whether by purchase, consolidation, merger or otherwise), (iii) any indebtedness, whether or not for borrowed money, which is secured by any mortgage, pledge, security interest, lien or conditional sale or other title retention agreement existing on any property owned or held by the Companies subject thereto, whether or not the Companies has any personal liability for such indebtedness. "Domestic Company" means the Companies; Symix distribution.com, Inc.; Symix Computer Systems Delaware, Inc.; e-Mongoose, Inc.; Frontstep, Inc. and brightwhite solutions, inc. "ERISA" is defined in Section 3.19. "Event of Default" shall mean any of the events specified in Section 6 provided that there has been satisfied any requirements in connection with such event for the giving of notice, or the lapse of time, or the happening of any further condition, event or act, and "Default" shall mean any of such events, whether or not any such requirement has been satisfied. "Eligible Account" means each Account of a Domestic Company which, at the time of determination, meets all the following qualifications: (a) such Domestic Company has lawful and absolute title to such Account, and such Account is not subject to any lien 22 23 charge or encumbrance ("Lien") whatsoever; (b) such Domestic Company has the full unqualified right to grant a Lien in such Account to Bank One; (c) the Account is evidenced by an invoice issued to the proper account debtor (a "Customer") and is not evidenced by any instrument or chattel paper; (d) the Account arose from the sale of goods or services by such Domestic Company in the ordinary course of business, which goods or services have been shipped or delivered to the Customer under such Account; and such sale was an absolute sale and not on consignment, approval or a sale-and-return basis; (e) no notice of the bankruptcy, receivership, reorganization or insolvency of the Customer has been received by such Domestic Company; (f) the Account is a valid, legally enforceable obligation of the Customer, and is not subject to any dispute, offset, counterclaim, or other defense on the part of such Customer; (g) the terms of the Account require payment no more than 120 days from the date an invoice is issued and the Account is less than 121 days past due; (h) the Customer on the Account is not (1) the United States of America or any foreign government, or any department, agency or instrumentality thereof (unless such Domestic Company and Bank One shall have fully complied with the Assignment of Claims Act of 1940, as amended, or any other applicable law governing government Accounts, with respect to such Account), (2) SCSI, or any affiliated company or Subsidiary, (3) located outside the United States, or (4) indebted to SCSI or any affiliated company or Subsidiary in an amount, which when added to all other amounts then owed to SCSI by any affiliate of such Customer, exceeds 50% of the amount of all then outstanding Eligible Accounts; (i) such Domestic Company is not indebted to the Customer on the Account (or any affiliate of such Customer) for any goods provided or services rendered to such Domestic Company; (j) the Account is not owing by any Customer with 50% or more of the value of its outstanding Accounts not qualifying as Eligible Accounts; (k) the Account is an Account representing all or part of the sales price of merchandise, insurance and service within the meaning of Section 3(c)(5) of the Investment Company Act of 1940, as amended; (l) a purchase of the Account would constitute a "current transaction" within the meaning of Section 3(a)(3) of the Securities Act of 1933, as amended; and (m) the Account is denominated and payable only in United States dollars in the United States. "Financial Statements" shall mean for any period a balance sheet as of the close of the period, an operating statement for the period including detailed expense schedules, a statement of changes in cash flows and a reconciliation of retained earnings, all prepared in accordance with generally accepted accounting principles applied on a consistent basis without exception. "Excluded Subsidiaries" is defined in Section 5.6. "Funded Debt" shall mean any Debt of the Companies, payable more than one (1) year from the date of the creation thereof, which under generally accepted accounting principles is shown on the balance sheet as a liability, and shall include all capitalized lease obligations of every type and description. "Guarantors" shall mean Symix distribution.com, Inc.; Symix Computer Systems (Canada), Inc.; Symix (UK) Ltd.; Symix Computer Systems (UK) Ltd.; Symix Systems 23 24 B.V.; Symix Computer Systems Delaware, Inc.; e-Mongoose, Inc.; Frontstep, Inc.; brightwhite solutions, inc.; and Symix Computer Systems (Mexico) S. De R.L. De C.V. "Intangible Assets" shall mean the aggregate amount of all goodwill, patents, trademarks, franchises, licenses, excess of cost over book value of assets acquired, deferred expenses of any type or description, appraisal surplus and any other assets classified as intangible assets under generally accepted accounting principles, which are carried as assets on the Financial Statements of Companies. "Leverage Ratio" shall mean the ratio of Total Consolidated Liabilities to Consolidated Tangible Net Worth. "LIBOR" is defined in Section 1.1.4. "LIBOR Rate" is defined in Sections 1.1.4 and 1.2.4. "Loan" means a borrowing made at the Prime Rate or the LIBOR Rate. "Net Value of Eligible Accounts" means (a) 75% of the lower of the book value or collectible value of Eligible Accounts, as reflected in the Borrower's books in accordance with GAAP, net of all credits, discounts and allowances (including all unissued credits in the form of a competitive allowance or otherwise). "Non-Obligor Subsidiary" means Symix Asia Company Ltd., Symix Computer Systems (Hong Kong) Ltd., Symix Computer Systems (Singapore) Pte. Ltd., Symix Computer Systems (Australia) Pty. Ltd., Symix Computer Systems (Malaysia) Sdn Bhd., Symix New Zealand, Ltd., Symix Italia, S.r.l. and any other Subsidiary created after January 31, 1998 that does not have a tangible net worth in excess of $250,000. "Notes" is defined in Section 1.2.l. "Permitted Liens" shall mean: (i) Liens securing taxes, assessments, fees or other governmental charges or levies, or the claims of materialmen, mechanics, carriers, warehousemen, landlords, and other similar Persons; (ii) Liens incurred or deposits made in the ordinary course of business (a) in connection with workman's compensation, unemployment insurance, social security and other similar laws, or (b) to secure the performance of bids, tenders, sales, contracts, public or statutory obligations, customs, appeal and performance bonds, or (c) other similar obligations not incurred in connection with the borrowing of money, the obtaining of advances, or the payment of the deferred purchase price of property; 24 25 (iii) Reservations, exceptions, encroachments, easements, rights of way, covenants, conditions, restrictions, leases and other similar title exceptions or encumbrances affecting real property, provided they do not in the aggregate materially detract from the value of such proper-ties or materially interfere with their use in the ordinary conduct of Companies' business; and (iv) Liens in favor of Bank One. "Person" shall mean and include an individual, sole proprietorship, trust, limited liability company, partnership, corporation, unincorporated organization and a government or any department or agency thereof. "Plan" shall mean any plan, benefit or program of benefits or perquisites which has been or is being currently provided to one or more employees or which may in the future be established, maintained, or contributed to by the Companies (or in which the Companies or any of its employees participate, which provides benefits to employees or former employees of the Companies), including any "employee benefit plan" as defined in ERISA, any payroll practice or personnel policy, and any system of governmental or other benefits to the costs of which the Companies contributes by any means. "Pollutants" is defined in Section 3.20. "Prime Rate" shall mean the rate announced by Bank One from time to time as its Prime Rate, which rate may not be the lowest or best rate offered by Bank One. "Requirement of Law" shall mean for the Companies, any term, condition, or provision of any law, rule, judgment, regulation, order, writ, injunction or decree of any court or government, domestic or foreign, or any ruling of any arbitrator to which Companies are a party or by which the Companies or any of their assets or property are bound or affected or from which the Companies derive benefits, and if the Companies are a corporation, their charter documents, code of regulations and by-laws. "Revolving Credit Note" is defined in Section 1.1.2. "SSI" is defined in the preamble. "SSCI" is defined in the preamble. "Subsidiary" shall mean any corporation fifty-one percent (51%) or more of the voting stock of which is directly or indirectly controlled by the Companies. "Total Consolidated Liabilities" shall mean all Consolidated liabilities of the Companies (after eliminating all intercompanies accounts), except any non-current provision for 25 26 deferred federal income taxes, all determined in accordance with generally accepted accounting principles applied on a consistent basis. SECTION: 8 MISCELLANEOUS 8.1 Successors and Assigns. All covenants, representations, warranties and agreements in this Agreement made by or on behalf of the parties hereto shall bind and inure to the benefit of the respective successors and assigns of the parties hereto whether so expressed or not, provided that the Companies' rights under this Agreement shall not be assignable without the prior written consent of Bank One. 8.2 Notice. Notice shall be deemed to have been properly given to Companies when deposited in the United States mail, registered or certified, postage prepaid, and addressed to Symix Systems, Inc., Attn: Chief Financial Officer at 2800 Corporate Exchange Drive, Columbus, Ohio 43231 whether or not the same is actually received by Companies. Any communication to Bank One shall be deemed properly given if similarly mailed to the address of its Main Office, Corporate Banking Division at 100 East Broad Street, Columbus, Ohio 43271. Such addresses may be changed upon giving notice to the other party as provided herein. 8.3 Waiver. No delay on the part of Bank One in exercising any right, power or privilege granted hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such right, power or privilege preclude any other or further exercise thereof. The rights and remedies herein expressly specified, are cumulative and not exclusive of any other rights and remedies which Bank One would otherwise have. 8.4 Duration. This Agreement and all covenants, agreements, representations and warranties made herein and in the various certificates delivered pursuant hereto shall survive the making of the loan(s) by Bank One, the execution and delivery to Bank One by the Companies of the Notes, and payment of the Notes. 8.5 Governing Law and Jurisdiction. This Agreement shall in all respects be interpreted in accordance with and enforceable under the laws of the State of Ohio. In event of a dispute hereunder, Companies irrevocably submit to the jurisdiction of the courts of competent jurisdiction in Franklin County, Ohio, and hereby waives any objection to the laying of venue in such courts, including but not limited to any claim that any action or proceeding brought in such court has been brought in an inconvenient forum. This Section 8.5 shall not prevent Bank One from taking whatever steps or actions are necessary to enforce its rights under this Agreement in any other jurisdiction. 8.6 Credit Information. Companies authorizes Bank One to exchange Bank One deposit, credit and borrowing information about Companies with third parties. 8.7 Amendments. Notwithstanding any provision to the contrary contained herein, any term of this Agreement may be amended by consent of the parties; provided that no 26 27 amendment, modification or waiver of any provision of this Agreement or of the Notes shall be effective unless the same shall be in writing and signed by Companies and Bank One. 8.8 Severability. In the event that any one or more of the provisions contained in this Agreement or in the Notes shall, for any reason, be held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other provision of this Agreement or the Notes. 8.9 Captions. Section captions used in this Agreement are for convenience only and shall not affect the construction of this Agreement. 8.10 Illegality. Notwithstanding any other provision in this Agreement, in the event that it becomes unlawful for Bank One to honor its obligation to make or maintain loan(s) hereunder, then Bank One shall promptly notify the Companies thereof and Bank One's obligation to make or maintain loan(s) hereunder shall be suspended until such time as Bank One may again make and maintain such affected loan(s) and the Companies shall, upon the request of Bank One on the date specified, prepay any of such loan(s) then outstanding together with accrued interest and any other amounts due under the Notes and this Agreement. 8.11 Entire Agreement. This Agreement together with all other documents executed in connection with this Agreement constitute the ONLY agreement and understanding between Bank One and Companies and supersede any and all prior agreements and understandings, oral or written, relating to this Agreement and all other documents executed in connection with this Agreement. Companies acknowledge that they have not relied on any oral promises or representations by Bank One other than those set forth in this Agreement and all other documents executed in connection with this Agreement. 27 28 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their respective duly authorized officers as of the day and year first above written. Bank One, NA By: /s/ Michael R. Zaksheske --------------------------------------------- Michael R. Zaksheske, its Vice President Date: 5/18/00 Symix Systems, Inc. By: /s/ Lawrence W. DeLeon ---------------------------------------- Lawrence W. DeLeon, its Vice President, Chief Financial Officer and Secretary Date: 5/18/00 Symix Computer Systems, Inc. By: /s/ Lawrence W. DeLeon ---------------------------------------- Lawrence W. DeLeon, its Vice President, Chief Financial Officer and Secretary Date: 5/18/00 28 29 EXHIBIT A-1 SECOND AMENDED AND RESTATED REVOLVING CREDIT NOTE ================================================================================ $13,000,000 Columbus, Ohio May 18, 2000 ================================================================================ On or before July 1, 2001, for value received, the undersigned, SYMIX SYSTEMS, INC., an Ohio corporation and SYMIX COMPUTER SYSTEMS, INC., an Ohio corporation (individually, a "Company" and, collectively, the "Companies") hereby jointly and severally promise to pay to the order of Bank One, NA, a national association (the "Bank") or its assigns, as further provided herein, the principal amount of Thirteen Million Dollars ($13,000,000) or, if such principal is less, the aggregate unpaid principal amount of all loans made by the Bank to the Companies pursuant to the Credit Commitment under the Agreement referred to in Section 1 hereof, together with interest on the unpaid principal balance from time to time outstanding hereunder until paid in full at the rates determined in accordance with the provisions of Section 1.1.4 of the Agreement, payable as set forth in the Agreement. Both principal and interest are payable in federal funds or other immediately available money of the United States of America at the Main Office of the Bank, 100 East Broad Street, Columbus, Ohio 43271-0170. This Second Amended and Restated Revolving Credit Note amends and restates in its entirety the Amended and Restated Revolving Credit Note issued to the Bank by the Companies dated June 1, 1998, the Amended and Restated Revolving Credit Note issued to the Bank by the Companies dated March 4, 1998, the Amended and Restated Revolving Credit Note issued to the Bank by the Companies dated August 13, 1997 and the Revolving Credit Note issued to the Bank by the Companies dated May 20, 1996. SECTION 1. LOAN AGREEMENT. This Second Amended and Restated Revolving Credit Note is the $13,000,000 Revolving Credit Note referred to in the Amended and Restated Loan Agreement dated as of the date hereof (the "Agreement") between the Companies and the Bank, as the same may be amended, modified or supplemented from time to time, which Agreement, as amended, is incorporated by reference herein. All capitalized terms used herein shall have the same meanings as are assigned to such terms in the Agreement. This Second Amended and Restated Revolving Credit Note is entitled to the benefits of and is subject to the terms, conditions and provisions of the Agreement. The Agreement, among other things, contains provisions for acceleration of the maturity hereof upon the happening of certain stated events, and also for repayments and reborrowings on account of the principal hereof prior to maturity upon the terms, conditions and provisions specified. SECTION 2. WAIVER OF PRESENTMENT. The Companies hereby waive presentment, demand, notice, protest, notice of protest, notice of dishonor and all other demands and notices in connection with the delivery, acceptance, performance and enforcement of this Second Amended and Restated Revolving Credit Note. 29 30 SECTION 3. CONFESSION OF JUDGMENT. The Companies hereby authorize any attorney at law to appear for the Companies, in an action on this Second Amended and Restated Revolving Credit Note, at any time after the same becomes due, as herein provided, in any court of record in or of the State of Ohio, or elsewhere, to waive the issuing and service of process against the Companies and to confess judgment in favor of the holder of this Second Amended and Restated Revolving Credit Note against the Companies for the amount that may be due, with interest at the rate herein mentioned and costs of suit, and to waive and release all errors in said proceedings and judgment, and all petitions in error, and right of appeal from the judgment rendered. No judgment against one Company shall impair the Bank's right to receive a confession of judgment against the remaining Company. SECTION 4. WAIVER OF JURY TRIAL. THE BANK AND THE COMPANIES HEREBY VOLUNTARILY, IRREVOCABLY AND UNCONDITIONALLY WAIVE ANY RIGHT TO HAVE A JURY PARTICIPATE IN RESOLVING ANY DISPUTE, WHETHER SOUNDING IN CONTRACT, TORT, OR OTHERWISE, BETWEEN THE BANK AND THE COMPANIES ARISING OUT OF, IN CONNECTION WITH, RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED BETWEEN THE COMPANIES AND THE BANK IN CONNECTION WITH ANY LOAN DOCUMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH OR THEREWITH OR THE TRANSACTIONS RELATED HERETO OR THERETO. THIS PROVISION IS A MATERIAL INDUCEMENT TO THE BANK TO ENTER INTO THE FINANCING TRANSACTIONS WITH THE COMPANIES. IT SHALL NOT IN ANY WAY AFFECT, WAIVE, LIMIT, AMEND OR MODIFY THE BANK'S ABILITY TO PURSUE ITS REMEDIES INCLUDING, BUT NOT LIMITED TO, ANY CONFESSION OF JUDGMENT OR COGNOVIT PROVISION CONTAINED HEREIN OR IN ANY OTHER DOCUMENT RELATED HERETO. SECTION 5. NATURE OF OBLIGATIONS. The obligations of the Companies hereunder (the "Obligations") are joint and several and a separate action or actions may be brought and prosecuted against either Company regardless of whether any action is brought against the other Company or whether the other Company is joined in any such action(s). The Companies may be sued together or either of them may be sued separately without first, contemporaneously or subsequently, suing the other. The Bank may compromise with either of the Companies for less than all of the amounts owing hereunder and under the Loan Documents and release either of the Companies from all further liability to the Bank for the amounts owing hereunder and under the Agreement all without impairing the rights of the Bank to demand and collect the balance of the amounts owing hereunder and under the Agreement from the other Company not so sued or released. There shall be no duty or obligation of the Bank to exhaust any remedy in law or in equity against either Company before bringing suit or instituting proceedings of any kind against the other Company. The Companies and all sureties, endorsers and guarantors of this Second Amended and Restated Revolving Credit Note (a) waive demand, presentment for payment, notice of nonpayment, protest, notice of protest and all other notices, filing of suit and diligence in collecting this Second Amended and Restated Revolving Credit Note, (b) agree to any release of any party primarily or secondarily liable thereon, and (c) consent to any extension or postponement of time of payment of this Second Amended and Restated Revolving Credit Note and to any other indulgence with respect hereto without notice thereof to any of them. 30 31 The Obligations hereunder are irrevocable and may only be discharged by the full and timely payment of the amounts owing by the Companies hereunder and thereunder and will not be discharged, released, altered or modified by any other action or omission of any Person, on any one or more occasions, including, without limitation (a) the amendment, modification or waiver of the Agreement or any performance due hereunder or thereunder, (b) the impairment, grant, exchange, release, surrender or disposal of any collateral, (c) the release or discharge of a Company's Obligations, (d) the existence or assertion by either Company of any personal defense to its obligations including, without limitation, bankruptcy, (e) the exercise, pursuit or waiver of any right or remedy that the Bank may have at any time, (f) the Bank's failure to give notice to either Company of the occurrence of any default in the Company's performance hereunder or under the Agreement, (g) the taking or omission to take any action hereunder or under the Agreement, (h) the Bank's release or discharge of any guaranty or accommodation with respect to the Obligations, (i) the impossibility or illegality of performance by the Companies or (j) any change in the corporate organization of the Bank. If either Company at any time shall pay any sums on account of any Obligation or take any other action in performance of any Obligation, such Company shall be subrogated to the rights, powers, privileges and remedies of the Bank in respect of such Obligation; provided that all such rights of subrogation and all claims and indebtedness arising therefrom shall be, and the Company hereby agrees that the same are, and shall be at all times, in all respects subordinate and junior to the Banks claims for all the Obligations, and provided, further, that the Company hereby agrees that it shall not seek to exercise any such rights of subrogation, reimbursement, exoneration, or indemnity whatsoever or any rights of recourse to any security for any of the Obligations unless or until all the Obligations shall have been indefeasibly paid in full. The waivers, representations, warranties, covenants and agreements contained in this paragraph are for the benefit of and may be enforced by the Bank and such Company and their respective successors and assigns, including without limitation any trustee in bankruptcy of such Company. 31 32 The undersigned executed this Second Amended and Restated Revolving Credit Note as of the day and year first set forth above. - -------------------------------------------------------------------------------- WARNING - BY SIGNING THIS PAPER YOU GIVE UP YOUR RIGHT TO NOTICE AND COURT TRIAL. IF YOU DO NOT PAY ON TIME A COURT JUDGMENT MAY BE TAKEN AGAINST YOU WITHOUT YOUR PRIOR KNOWLEDGE AND THE POWERS OF A COURT CAN BE USED TO COLLECT FROM YOU REGARDLESS OF ANY CLAIMS YOU MAY HAVE AGAINST THE CREDITOR WHETHER FOR RETURNED GOODS, FAULTY GOODS, FAILURE ON HIS PART TO COMPLY WITH THE AGREEMENT, OR ANY OTHER CAUSE. - -------------------------------------------------------------------------------- SYMIX COMPUTER SYSTEMS, INC. SYMIX SYSTEMS, INC. By: /s/ Lawrence W. DeLeon By: /s/ Lawrence W. DeLeon ------------------------------------------- ------------------------------------------- Name: Lawrence W. DeLeon Name: Lawrence W. DeLeon Its: Vice President, Chief Financial Officer Its: Vice President, Chief Financial Officer and Secretary and Secretary
32 33 EXHIBIT A-2 AMENDED AND RESTATED REVOLVING CREDIT NOTE ================================================================================ $2,000,000 Columbus, Ohio May 18, 2000 ================================================================================ On or before July 1, 2001, for value received, the undersigned, SYMIX SYSTEMS, INC., an Ohio corporation ("SSI"), SYMIX COMPUTER SYSTEMS, INC., an Ohio corporation ("SCSI"), SYMIX SYSTEMS ONTARIO, INC., an Ontario corporation ("SSO") and VISUAL APPLICATIONS SOFTWARE, INC., an Ontario corporation ("VAS") (individually, a "Borrower" and, collectively, the "Borrowers") hereby promise to pay to the order of Bank One, NA, a national association (the "Bank") or its assigns, as further provided herein, the principal amount of Two Million Dollars ($2,000,000) or, if such principal is less, the aggregate unpaid principal amount of all loans made by the Bank to the Borrowers pursuant to the Credit Commitment less any amounts loaned to SSI and SCSI (the "Companies") under the $13,000,000 Second Amended and Restated Revolving Credit Note dated as of the date hereof under the Agreement referred to in Section 1 hereof, together with interest on the unpaid principal balance from time to time outstanding hereunder until paid in full at the rates determined in accordance with the provisions of Section 1.1.4 of the Agreement, payable as set forth in the Agreement. Both principal and interest are payable in federal funds or other immediately available money of the United States of America at the Main Office of the Bank, 100 East Broad Street, Columbus, Ohio 43271-0170. Proceeds from borrowings under this Amended and Restated Revolving Credit Note are to be used solely to fund the operations of SSO and VAS, whether borrowed by VAS, SSO or the Companies. This Amended and Restated Revolving Credit Note amends and restates in its entirety the Revolving Credit Note dated as of June 1, 1998 issued by the Borrowers to the Bank. SECTION 1. LOAN AGREEMENT. This Amended and Restated Revolving Credit Note is the $2,000,000 Revolving Credit Note referred to in the Amended and Restated Loan Agreement dated as of the date hereof (the "Agreement") between the Companies and the Bank, as the same may be amended, modified or supplemented from time to time, which Agreement, as amended, is incorporated by reference herein. All capitalized terms used herein shall have the same meanings as are assigned to such terms in the Agreement. This Amended and Restated Revolving Credit Note is entitled to the benefits of and is subject to the terms, conditions and provisions of the Agreement. The Agreement, among other things, contains provisions for acceleration of the maturity hereof upon the happening of certain stated events, and also for repayments and reborrowings on account of the principal hereof prior to maturity upon the terms, conditions and provisions specified. SECTION 2. WAIVER OF PRESENTMENT. The Borrowers hereby waive presentment, demand, notice, protest, notice of protest, notice of dishonor and all other demands and notices in connection with the delivery, acceptance, performance and enforcement of this Amended and Restated Revolving Credit Note. 33 34 SECTION 3. CONFESSION OF JUDGMENT. The Borrowers hereby authorize any attorney at law to appear for the Borrowers, in an action on this Amended and Restated Revolving Credit Note, at any time after the same becomes due, as herein provided, in any court of record in or of the State of Ohio, or elsewhere, to waive the issuing and service of process against the Borrowers and to confess judgment in favor of the holder of this Amended and Restated Revolving Credit Note against the Borrowers for the amount that may be due, with interest at the rate herein mentioned and costs of suit, and to waive and release all errors in said proceedings and judgment, and all petitions in error, and right of appeal from the judgment rendered. No judgment against one Borrower shall impair the Bank's right to receive a confession of judgment against any of the remaining Borrowers. SECTION 4. WAIVER OF JURY TRIAL. THE BANK AND THE BORROWERS HEREBY VOLUNTARILY, IRREVOCABLY AND UNCONDITIONALLY WAIVE ANY RIGHT TO HAVE A JURY PARTICIPATE IN RESOLVING ANY DISPUTE, WHETHER SOUNDING IN CONTRACT, TORT, OR OTHERWISE, BETWEEN THE BANK AND THE BORROWERS ARISING OUT OF, IN CONNECTION WITH, RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED BETWEEN THE BORROWERS AND THE BANK IN CONNECTION WITH ANY LOAN DOCUMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH OR THEREWITH OR THE TRANSACTIONS RELATED HERETO OR THERETO. THIS PROVISION IS A MATERIAL INDUCEMENT TO THE BANK TO ENTER INTO THE FINANCING TRANSACTIONS WITH THE BORROWERS. IT SHALL NOT IN ANY WAY AFFECT, WAIVE, LIMIT, AMEND OR MODIFY THE BANK'S ABILITY TO PURSUE ITS REMEDIES INCLUDING, BUT NOT LIMITED TO, ANY CONFESSION OF JUDGMENT OR COGNOVIT PROVISION CONTAINED HEREIN OR IN ANY OTHER DOCUMENT RELATED HERETO. SECTION 5. NATURE OF OBLIGATIONS. The obligations of the Borrowers hereunder (the "Obligations") are joint and several and a separate action or actions may be brought and prosecuted against any Borrower regardless of whether any action is brought against any other Borrower or whether the other Borrower is joined in any such action(s). The Borrowers may be sued together or either of them may be sued separately without first, contemporaneously or subsequently, suing the other. The Bank may compromise with any of the Borrowers for less than all of the amounts owing hereunder and under the Loan Documents and release any of the Borrowers from all further liability to the Bank for the amounts owing hereunder and under the Agreement all without impairing the rights of the Bank to demand and collect the balance of the amounts owing hereunder and under the Agreement from any other Borrower not so sued or released. There shall be no duty or obligation of the Bank to exhaust any remedy in law or in equity against any Borrower before bringing suit or instituting proceedings of any kind against any other Borrower. The Borrowers and all sureties, endorsers and guarantors of this Amended and Restated Revolving Credit Note (a) waive demand, presentment for payment, notice of nonpayment, protest, notice of protest and all other notices, filing of suit and diligence in collecting this Amended and Restated Revolving Credit Note, (b) agree to any release of any party primarily or secondarily liable thereon, and (c) consent to any extension or postponement 34 35 of time of payment of this Amended and Restated Revolving Credit Note and to any other indulgence with respect hereto without notice thereof to any of them. The Obligations hereunder are irrevocable and may only be discharged by the full and timely payment of the amounts owing by the Borrowers hereunder and thereunder and will not be discharged, released, altered or modified by any other action or omission of any Person, on any one or more occasions, including, without limitation (a) the amendment, modification or waiver of the Agreement or any performance due hereunder or thereunder, (b) the impairment, grant, exchange, release, surrender or disposal of any collateral, (c) the release or discharge of a Borrower's Obligations, (d) the existence or assertion by any Borrower of any personal defense to its obligations including, without limitation, bankruptcy, (e) the exercise, pursuit or waiver of any right or remedy that the Bank may have at any time, (f) the Bank's failure to give notice to any Borrower of the occurrence of any default in any Borrower's performance hereunder or under the Agreement, (g) the taking or omission to take any action hereunder or under the Agreement, (h) the Bank's release or discharge of any guaranty or accommodation with respect to the Obligations, (i) the impossibility or illegality of performance by the Borrowers or (j) any change in the corporate organization of the Bank. If any Borrower at any time shall pay any sums on account of any Obligation or take any other action in performance of any Obligation, such Borrower shall be subrogated to the rights, powers, privileges and remedies of the Bank in respect of such Obligation; provided that all such rights of subrogation and all claims and indebtedness arising therefrom shall be, and the Borrower hereby agrees that the same are, and shall be at all times, in all respects subordinate and junior to the Banks claims for all the Obligations, and provided, further, that the Borrower hereby agrees that it shall not seek to exercise any such rights of subrogation, reimbursement, exoneration, or indemnity whatsoever or any rights of recourse to any security for any of the Obligations unless or until all the Obligations shall have been indefeasibly paid in full. The waivers, representations, warranties, covenants and agreements contained in this paragraph are for the benefit of and may be enforced by the Bank and such Borrower and their respective successors and assigns, including without limitation any trustee in bankruptcy of such Borrower. 35 36 The undersigned executed this Amended and Restated Revolving Credit Note as of the day and year first set forth above. SYMIX SYSTEMS ONTARIO, INC. VISUAL APPLICATIONS SOFTWARE, INC. By: /s/ Lawrence W. DeLeon By: /s/ Lawrence W. DeLeon ------------------------------------------- ------------------------------------------- Name: Lawrence W. DeLeon Name: Lawrence W. DeLeon Its: Vice President, Chief Financial Officer Its: Vice President, Chief Financial Officer and Secretary and Secretary
- -------------------------------------------------------------------------------- WARNING - BY SIGNING THIS PAPER YOU GIVE UP YOUR RIGHT TO NOTICE AND COURT TRIAL. IF YOU DO NOT PAY ON TIME A COURT JUDGMENT MAY BE TAKEN AGAINST YOU WITHOUT YOUR PRIOR KNOWLEDGE AND THE POWERS OF A COURT CAN BE USED TO COLLECT FROM YOU REGARDLESS OF ANY CLAIMS YOU MAY HAVE AGAINST THE CREDITOR WHETHER FOR RETURNED GOODS, FAULTY GOODS, FAILURE ON HIS PART TO COMPLY WITH THE AGREEMENT, OR ANY OTHER CAUSE. - -------------------------------------------------------------------------------- SYMIX COMPUTER SYSTEMS, INC. SYMIX SYSTEMS, INC. By: /s/ Lawrence W. DeLeon By: /s/ Lawrence W. DeLeon ------------------------------------------- ------------------------------------------- Name: Lawrence W. DeLeon Name: Lawrence W. DeLeon Its: Vice President, Chief Financial Officer Its: Vice President, Chief Financial Officer and Secretary and Secretary
36 37 EXHIBIT 4.3 COVENANT COMPLIANCE CERTIFICATE ------------------------------- The undersigned, Symix Systems, Inc. and Symix Computer Systems, Inc., Ohio corporations (the "Companies"), in connection with the granting of certain loans by Bank One, NA and pursuant to a certain Loan Agreement dated May 18, 2000, as amended and restated, hereby certifies to Bank One, NA the following as of the date hereof: PERIOD ENDING: ----------------------------------- SECTION 5.9 - CONSOLIDATED TANGIBLE NET WORTH: The Consolidated Tangible Net Worth of the Companies is $________________, which is not less than the following: a) $23,000,000 from June 30, 2000 to September 29, 2000 b) $23,000,000 from September 30, 2000 to December 30, 2000 c) $23,250,000 from December 31, 2000 to March 30, 2001 d) $24,500,000 from March 31, 2001 to June 29, 2001 e) $27,000,000 from June 30, 2001 and thereafter Consolidated Tangible Net Worth is calculated as follows: Consolidated Net Worth $ Less: Intangibles $ Less: Capitalized Software $ Less: Goodwill $ ------------------- Consolidated Tangible Net Worth $ SECTION 5.10 - LEVERAGE RATIO: The Consolidated Leverage Ratio of the Companies is __________, which does not exceed the 2.00 to 1.00 from June 30, 2000 and thereafter Leverage Ratio is calculated as follows: 1) Total Consolidated Liabilities $_____________ Divided by 2) Consolidated Tangible Net Worth $_____________ SECTION 5.11 - MINIMUM EBITDA: The Minimum EBITDA for the fiscal quarter of the Companies is $______________, which is greater than the following : a) $ 175,000 for the fiscal quarter ending June 30, 2000 b) ($2,300,000) for the fiscal quarter ending September 30, 2000 c) $ 1,875,000 for the fiscal quarter ending December 31, 2000 d) $ 1,750,000 for the fiscal quarter ending March 31, 2001 e) $ 3,875,000 for the fiscal quarter ending June 30, 2001 37 38 The Minimum EBITDA for the fiscal quarter is calculated as follows: Net Income after tax $ Plus: Depreciation $ Plus: Amortization of Intangibles $ Plus: Amortization of Capitalized Software Expense $ Minus: Capitalized Software $________ Minimum EBITDA for the quarter SECTION 5.12 - CURRENT RATIO: The Consolidated Current Ratio of the Companies is ______________, which is not less than 1.50 to 1.00 from June 30, 2000 and thereafter. Current Ratio is calculated as follows: 1) Current Assets less all prepaid expenses $________________ Divided by 2) Current Liabilities which include all deferred revenues $________________ and the current portion of deferred taxes.
SECTION 5.15 - CAPITAL EXPENDITURES: The Capital Expenditures of the Companies for the fiscal quarter is $______________ and for the fiscal year ending June 30 2001, total Capital Expenditures of the Companies is $_____________, both of which comply to the following: The Companies and the Subsidiaries will not incur capital expenditures in excess of $2,000,000 per fiscal quarter; provided, however, if the Companies and Subsidiaries incur less than $2,000,000 in capital expenditures in any fiscal quarter, the Companies and Subsidiaries can incur capital expenditures in excess of $2,000,000 in subsequent fiscal quarters to the extent of any such shortfall; provided, further, however, that the capital expenditures in fiscal year 2001 shall in no event exceed $5,200,000. SYMIX SYSTEMS, INC. SYMIX COMPUTER SYSTEMS, INC. By: By: ------------------------------------------- ------------------------------------------- Name: Lawrence W. DeLeon Name: Lawrence W. DeLeon Its: Vice President, Chief Financial Officer Its: Vice President, Chief Financial Officer and Secretary and Secretary
38 39 EXHIBIT 5.14 FORM OF ROYALTY AGREEMENT The Form of Royalty Agreement referred to in Section 5.14 of the Amended and Restated Loan Agreement has been omitted and will be furnished to the Securities and Exchange Commission upon request. 39 EX-10.V 6 l83289aex10-v.txt EXHIBIT 10(V) 1 Exhibit 10(v) to Annual Report on Form 10-K for Symix Systems, Inc. FIRST AMENDMENT TO AMENDED AND RESTATED LOAN AGREEMENT AMONG SYMIX SYSTEMS, INC. and SYMIX COMPUTER SYSTEMS, INC. AND BANK ONE, NA THIS FIRST AMENDMENT ("First Amendment") is executed June 27, 2000, between SYMIX SYSTEMS, INC., an Ohio corporation ("SSI") and SYMIX COMPUTER SYSTEMS, INC., an Ohio corporation ("SCSI" and, collectively with SSI, the "Companies") and BANK ONE, NA, a national association ("Bank One"). WITNESSETH: WHEREAS, the Companies and Bank One, parties to that certain Amended and Restated Loan Agreement dated as of May 18, 2000 (the "Agreement"), have agreed to amend the Agreement on the terms and conditions hereinafter set forth. Terms not otherwise defined herein are used as defined in the Agreement as amended hereby; WHEREAS, the Companies desire to sell the assets of one of their subsidiaries, extend the completion date of a required field audit and limit the amount of investments they can make in third parties. NOW, THEREFORE, the Companies and Bank One hereby agree as follows: SECTION 1. AMENDMENT OF THE AGREEMENT. The Agreement is, effective the date hereof, hereby amended as follows: 1.1. Section 4.18 shall be amended and restated in its entirety as follows: 4.18 Accounts Receivable Reporting. SCSI will furnish to Bank One as soon as practicable after the end of each calendar month, and in any event within 10 days thereafter, a summary Accounts aging report in a format acceptable to Bank One and a Borrowing Base Certificate for such month. From time to time, SCSI shall be required to deliver detailed aging schedules, trial balances, test verifications of Accounts and other reports reasonably requested by Bank One. The Companies shall assist Bank One in the completion (at a cost of $5,000 to the Companies) of a field audit of the Accounts by August 31, 2000. 1.2. A new Section 5.16 shall be added to the Agreement as follows: 5.16. Investments. The Companies and the Borrowers will not make or permit to remain outstanding any Investments (as defined below) except (a) operating deposit accounts with Bank One and (b) Permitted 2 Investments (as defined below). "Investment" in any Person means: (a) the acquisition (whether for cash, property, services or securities or otherwise) of capital stock, bonds, notes, debentures, partnership or other ownership interests or other securities of such Person; and (b) any deposit with, or advance, loan or other extension of credit to, such Person (other than any such advance, loan or other extension of credit having a term not exceeding 90 days representing the purchase price of inventory or supplies purchased in the ordinary course of business), but specifically excluding guarantees. "Permitted Investments" means any Investment of the Companies and the Borrowers in any of the following instruments: (a) marketable direct obligations issued or unconditionally Guaranteed by the United States Government or issued by any agency or instrumentality thereof and backed by the full faith and credit of the United States, in each case maturing within 270 days from the date of acquisition thereof; (b) marketable general obligations issued by any state of the United States of America or any political subdivision of any such state or any public instrumentality thereof maturing within 270 days from the date of acquisition thereof, having one of the two highest ratings generally obtainable from Standard & Poor's Corporation (or its successor) or Moody's Investors Service, Inc. (or its successor); (c) commercial paper maturing within 270 days from the date of acquisition thereof and, at the time of acquisition, rated A-1 (or the equivalent) or better by Standard & Poor's Corporation (or its successor) or P-1 (or the equivalent) or better by Moody's Investors Service, Inc. (or its successor); (d) operating deposit accounts, deposits maturing on demand or certificates of deposit or bankers' acceptances maturing on demand or within 270 days from the date of acquisition thereof issued by Bank One or any other commercial bank organized under the laws of the United States or any state thereof or the District of Columbia having a combined capital, surplus and undivided profits of at least $250,000,000; (e) repurchase obligations issued by Bank One or any other bank described in clause (c) above with respect to obligations described in clause (a) above, (f) zero coupon bonds issued or unconditionally guaranteed by the United States Government or issued by any agency or instrumentality thereof and backed by the full faith and credit of the United States; (g) any Investment owned by the Company as of the date of this Agreement; (h) Investments in third Persons in an aggregate amount not to exceed $2,000,000; (i) loans and advances to officers and directors of the Companies or any Subsidiaries (or employees thereof provided such loans and advances are approved by an officer of one of the Companies) for travel, entertainment and relocation expenses in the ordinary course of business; (j) loans and advances to and Investments in Subsidiaries; (k) Investments in notes and other securities received in settlement of overdue debts and accounts payable in the ordinary course of business and for amounts which are not, individually or in the aggregate, material to the Companies and the Borrowers taken as a whole; and (l) the renewal of any Investment owned by the Companies or the Borrowers as of the date of this Agreement on similar terms. 2 3 1.3. Bank One hereby consents to the sale of the assets of Visual Applications Software, Inc., an Ontario corporation ("VAS") by the Companies and hereby agrees that the term "Borrowers" in the Agreement shall be amended and restated in its entirety as follows: "Borrowers" means the Companies and Symix Systems Ontario, Inc., an Ontario corporation or any successor corporations. 1.4. In Section 7, the term "Guarantors" shall be deleted and replaced in its entirety as follows: "Guarantors" shall mean Symix Computer Systems (Canada), Inc.; Symix (UK) Ltd.; Symix Computer Systems (UK) Ltd; Symix Systems B.V.; Symix Computer Systems Delaware, Inc.; e-Mongoose, Inc.; Frontstep, Inc.; brightwhite solutions, inc.; and Symix Computer Systems (Mexico) S. DeR.L. De C.V. SECTION 2. GOVERNING LAW. This First Amendment shall be governed by and construed in accordance with the laws of the State of Ohio. SECTION 3. COSTS AND EXPENSES. All fees, costs or expenses, including reasonable fees and expenses of outside legal counsel, incurred by Bank One in connection with either the preparation, administration, amendment, modification or enforcement of this First Amendment shall be paid by the Companies on request. SECTION 4. COUNTERPARTS. This First Amendment may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which when taken together shall constitute one and the same agreement. SECTION 5. CONFESSION OF JUDGMENT. Each Company hereby authorizes any attorney at law to appear for the Company, in an action on this First Amendment, at any time after the same becomes due, as herein provided, in any court of record in or of the State of Ohio, or elsewhere, to waive the issuing and service of process against the Company and to confess judgment in favor of the holder of this First Amendment or the party entitled to the benefits of this First Amendment against the Company for the amount that may be due, with interest at the rate herein mentioned and costs of suit, and to waive and release all errors in said proceedings and judgment, and all petitions in error, and right of appeal from the judgment rendered. No judgment against one Company shall preclude Bank One from taking a confessed judgment against the other Company. 3 4 SECTION 6. CONDITIONS PRECEDENT. Simultaneously with the execution hereof, Bank One shall receive all of the following, each dated the date hereof, in form and substance satisfactory to Bank One: 6.1. [Intentionally Omitted} 6.2. The Borrowers shall execute the revised $2,000,000 Revolving Credit Note attached hereto as Exhibit A-2(2). 6.3. Such other documents as Bank One may, in its reasonable discretion, so require. SECTION 7. REAFFIRMATION OF REPRESENTATIONS AND WARRANTIES; NO DEFAULTS. The Companies hereby expressly acknowledge and confirm that the representations and warranties of the Company set forth in Section 3 of the Agreement are true and accurate on this date with the same effect as if made on and as of this date; that no financial condition or circumstance exists which would inevitably result in the occurrence of an Event of Default under Section 6 of the Agreement; and that no event has occurred or no condition exists which constitutes, or with the running of time or the giving of notice would constitute an Event of Default under Section 6 of the Agreement. SECTION 8. REAFFIRMATION OF DOCUMENTS. Except as herein expressly modified, the parties hereto ratify and confirm all of the terms, conditions, warranties and covenants of the Agreement, and all security agreements, pledge agreements, mortgage deeds, assignments, subordination agreements, or other instruments or documents executed in connection with the Agreement, including provisions for the payment of the Notes pursuant to the terms of the Agreement. This First Amendment does not constitute the extinguishment of any obligation or indebtedness previously incurred, nor does it in any manner affect or impair any security interest granted to Bank One, all of such security interests to be continued in full force and effect until the indebtedness described herein is fully satisfied. 4 5 The Companies have executed this First Amendment as of the date first above written. SYMIX SYSTEMS, INC. SYMIX COMPUTER SYSTEMS, INC. By: /s/ Lawrence W. DeLeon By: /s/ Lawrence W. DeLeon ------------------------------------------- --------------------------------------------- Name: Lawrence W. DeLeon Name: Lawrence W. DeLeon Its: Vice President, Chief Financial Officer Its: Vice President, Chief Financial Officer and Secretary and Secretary
- -------------------------------------------------------------------------------- WARNING - BY SIGNING THIS PAPER YOU GIVE UP YOUR RIGHT TO NOTICE AND COURT TRIAL. IF YOU DO NOT PAY ON TIME A COURT JUDGMENT MAY BE TAKEN AGAINST YOU WITHOUT YOUR PRIOR KNOWLEDGE AND THE POWERS OF A COURT CAN BE USED TO COLLECT FROM YOU REGARDLESS OF ANY CLAIMS YOU MAY HAVE AGAINST THE CREDITOR WHETHER FOR RETURNED GOODS, FAULTY GOODS, FAILURE ON HIS PART TO COMPLY WITH THE AGREEMENT, OR ANY OTHER CAUSE. - -------------------------------------------------------------------------------- BANK ONE, NA By: /s/ Michael R. Zaksheske -------------------------- Name: Michael R. Zaksheske Its: Vice President 5 6 EXHIBIT A-2(2) SECOND AMENDED AND RESTATED REVOLVING CREDIT NOTE ================================================================================ $2,000,000 Columbus, Ohio June 27, 2000 ================================================================================ On or before July 1, 2001, for value received, the undersigned, SYMIX SYSTEMS, INC., an Ohio corporation ("SSI"), SYMIX COMPUTER SYSTEMS, INC., an Ohio corporation ("SCSI") and SYMIX SYSTEMS ONTARIO, INC., an Ontario corporation ("SSO") (individually, a "Borrower" and, collectively, the "Borrowers") hereby promise to pay to the order of Bank One, NA, a national association (the "Bank") or its assigns, as further provided herein, the principal amount of Two Million Dollars ($2,000,000) or, if such principal is less, the aggregate unpaid principal amount of all loans made by the Bank to the Borrowers pursuant to the Credit Commitment less any amounts loaned to SSI and SCSI (the "Companies") under the $13,000,000 Second Amended and Restated Revolving Credit Note dated as of May 18, 2000 under the Agreement referred to in Section 1 hereof, together with interest on the unpaid principal balance from time to time outstanding hereunder until paid in full at the rates determined in accordance with the provisions of Section 1.1.4 of the Agreement, payable as set forth in the Agreement. Both principal and interest are payable in federal funds or other immediately available money of the United States of America at the Main Office of the Bank, 100 East Broad Street, Columbus, Ohio 43271-0170. Proceeds from borrowings under this Amended and Restated Revolving Credit Note are to be used solely to fund the operations of SSO and VAS, whether borrowed by VAS, SSO or the Companies. This Second Amended and Restated Revolving Credit Note amends and restates in its entirety the Amended and Restated Revolving Credit Note dated as of May 18, 2000 issued by the Borrowers to the Bank. SECTION 1. LOAN AGREEMENT. This Second Amended and Restated Revolving Credit Note is the $2,000,000 Revolving Credit Note referred to in the Amended and Restated Loan Agreement dated as of the date hereof (the "Agreement") between the Companies and the Bank, as the same may be amended, modified or supplemented from time to time, which Agreement, as amended, is incorporated by reference herein. All capitalized terms used herein shall have the same meanings as are assigned to such terms in the Agreement. This Second Amended and Restated Revolving Credit Note is entitled to the benefits of and is subject to the terms, conditions and provisions of the Agreement. The Agreement, among other things, contains provisions for acceleration of the maturity hereof upon the happening of certain stated events, and also for repayments and reborrowings on account of the principal hereof prior to maturity upon the terms, conditions and provisions specified. SECTION 2. WAIVER OF PRESENTMENT. The Borrowers hereby waive presentment, demand, notice, protest, notice of protest, notice of dishonor and all other demands and notices in connection with the delivery, acceptance, performance and enforcement of this Second Amended and Restated Revolving Credit Note. 6 7 SECTION 3. CONFESSION OF JUDGMENT. The Borrowers hereby authorize any attorney at law to appear for the Borrowers, in an action on this Second Amended and Restated Revolving Credit Note, at any time after the same becomes due, as herein provided, in any court of record in or of the State of Ohio, or elsewhere, to waive the issuing and service of process against the Borrowers and to confess judgment in favor of the holder of this Second Amended and Restated Revolving Credit Note against the Borrowers for the amount that may be due, with interest at the rate herein mentioned and costs of suit, and to waive and release all errors in said proceedings and judgment, and all petitions in error, and right of appeal from the judgment rendered. No judgment against one Borrower shall impair the Bank's right to receive a confession of judgment against any of the remaining Borrowers. SECTION 4. WAIVER OF JURY TRIAL. THE BANK AND THE BORROWERS HEREBY VOLUNTARILY, IRREVOCABLY AND UNCONDITIONALLY WAIVE ANY RIGHT TO HAVE A JURY PARTICIPATE IN RESOLVING ANY DISPUTE, WHETHER SOUNDING IN CONTRACT, TORT, OR OTHERWISE, BETWEEN THE BANK AND THE BORROWERS ARISING OUT OF, IN CONNECTION WITH, RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED BETWEEN THE BORROWERS AND THE BANK IN CONNECTION WITH ANY LOAN DOCUMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH OR THEREWITH OR THE TRANSACTIONS RELATED HERETO OR THERETO. THIS PROVISION IS A MATERIAL INDUCEMENT TO THE BANK TO ENTER INTO THE FINANCING TRANSACTIONS WITH THE BORROWERS. IT SHALL NOT IN ANY WAY AFFECT, WAIVE, LIMIT, AMEND OR MODIFY THE BANK'S ABILITY TO PURSUE ITS REMEDIES INCLUDING, BUT NOT LIMITED TO, ANY CONFESSION OF JUDGMENT OR COGNOVIT PROVISION CONTAINED HEREIN OR IN ANY OTHER DOCUMENT RELATED HERETO. SECTION 5. NATURE OF OBLIGATIONS. The obligations of the Borrowers hereunder (the "Obligations") are joint and several and a separate action or actions may be brought and prosecuted against any Borrower regardless of whether any action is brought against any other Borrower or whether the other Borrower is joined in any such action(s). The Borrowers may be sued together or either of them may be sued separately without first, contemporaneously or subsequently, suing the other. The Bank may compromise with any of the Borrowers for less than all of the amounts owing hereunder and under the Loan Documents and release any of the Borrowers from all further liability to the Bank for the amounts owing hereunder and under the Agreement all without impairing the rights of the Bank to demand and collect the balance of the amounts owing hereunder and under the Agreement from any other Borrower not so sued or released. There shall be no duty or obligation of the Bank to exhaust any remedy in law or in equity against any Borrower before bringing suit or instituting proceedings of any kind against any other Borrower. The Borrowers and all sureties, endorsers and guarantors of this Second Amended and Restated Revolving Credit Note (a) waive demand, presentment for payment, notice of nonpayment, protest, notice of protest and all other notices, filing of suit and diligence in collecting this Second Amended and Restated Revolving Credit Note, (b) agree to any release of any party primarily or secondarily liable thereon, and (c) consent to any extension or postponement of time of payment of this Second Amended and Restated Revolving Credit Note and to any other indulgence with respect hereto without notice thereof to any of them. 7 8 The Obligations hereunder are irrevocable and may only be discharged by the full and timely payment of the amounts owing by the Borrowers hereunder and thereunder and will not be discharged, released, altered or modified by any other action or omission of any Person, on any one or more occasions, including, without limitation (a) the amendment, modification or waiver of the Agreement or any performance due hereunder or thereunder, (b) the impairment, grant, exchange, release, surrender or disposal of any collateral, (c) the release or discharge of a Borrower's Obligations, (d) the existence or assertion by any Borrower of any personal defense to its obligations including, without limitation, bankruptcy, (e) the exercise, pursuit or waiver of any right or remedy that the Bank may have at any time, (f) the Bank's failure to give notice to any Borrower of the occurrence of any default in any Borrower's performance hereunder or under the Agreement, (g) the taking or omission to take any action hereunder or under the Agreement, (h) the Bank's release or discharge of any guaranty or accommodation with respect to the Obligations, (i) the impossibility or illegality of performance by the Borrowers or (j) any change in the corporate organization of the Bank. If any Borrower at any time shall pay any sums on account of any Obligation or take any other action in performance of any Obligation, such Borrower shall be subrogated to the rights, powers, privileges and remedies of the Bank in respect of such Obligation; provided that all such rights of subrogation and all claims and indebtedness arising therefrom shall be, and the Borrower hereby agrees that the same are, and shall be at all times, in all respects subordinate and junior to the Banks claims for all the Obligations, and provided, further, that the Borrower hereby agrees that it shall not seek to exercise any such rights of subrogation, reimbursement, exoneration, or indemnity whatsoever or any rights of recourse to any security for any of the Obligations unless or until all the Obligations shall have been indefeasibly paid in full. The waivers, representations, warranties, covenants and agreements contained in this paragraph are for the benefit of and may be enforced by the Bank and such Borrower and their respective successors and assigns, including without limitation any trustee in bankruptcy of such Borrower. 8 9 The undersigned executed this Second Amended and Restated Revolving Credit Note as of the day and year first set forth above. SYMIX SYSTEMS ONTARIO, INC. By: /s/ Lawrence W. DeLeon Name: Lawrence W. DeLeon ---------------------------------------- Its: Vice President, Chief Financial Officer and Secretary - -------------------------------------------------------------------------------- WARNING - BY SIGNING THIS PAPER YOU GIVE UP YOUR RIGHT TO NOTICE AND COURT TRIAL. IF YOU DO NOT PAY ON TIME A COURT JUDGMENT MAY BE TAKEN AGAINST YOU WITHOUT YOUR PRIOR KNOWLEDGE AND THE POWERS OF A COURT CAN BE USED TO COLLECT FROM YOU REGARDLESS OF ANY CLAIMS YOU MAY HAVE AGAINST THE CREDITOR WHETHER FOR RETURNED GOODS, FAULTY GOODS, FAILURE ON HIS PART TO COMPLY WITH THE AGREEMENT, OR ANY OTHER CAUSE. - -------------------------------------------------------------------------------- SYMIX COMPUTER SYSTEMS, INC. SYMIX SYSTEMS, INC. By: /s/ Lawrence W. DeLeon By: /s/ Lawrence W. DeLeon ----------------------------------------- ------------------------------------------ Name: Lawrence W. DeLeon Name: Lawrence W. DeLeon Its: Vice President, Chief Financial Officer Its: Vice President, Chief Financial Officer and Secretary and Secretary
9 EX-10.A.A 7 l83289aex10-a_a.txt EXHIBIT 10(A)(A) 1 Exhibit 10(a)(a) to Annual Report on Form 10-K for Symix Systems, Inc. SYMIX SYSTEMS, INC. EMPLOYEE STOCK PURCHASE PLAN 1. PURPOSE OF THE PLAN. The purpose of the Symix Systems, Inc. Employee Stock Purchase Plan (the "Plan") is to provide eligible employees of Symix Systems, Inc. (the "Company") and/or its subsidiaries with an opportunity to acquire an equity interest in the Company through the purchase of common shares of the Company ("Common Shares"), and thus develop an incentive to remain with the Company and/or its subsidiaries, and to provide a means for employees to share in the future success of the Company. The proceeds from the Plan will provide additional capital for the Company, which will be used for general corporate purposes. It is the intention of the Company to have the Plan qualify as an "employee stock purchase plan" under Section 423 of the Internal Revenue Code of 1986, as amended (the "Code"), and the Plan is to be construed accordingly. 2. ADMINISTRATION. The Plan shall be administered by the Compensation Committee (the "Committee") consisting of not less than three members who shall be appointed by, and shall serve at the pleasure of, the Board of Directors of the Company. Each member of the Committee must be an outside director of the Company and shall not be eligible to participate in the Plan. Subject to express provisions of the Plan and to such instructions and limitations as the Board of Directors of the Company may establish from time to time, the Committee shall have the authority to prescribe, amend and rescind rules and regulations relating to the Plan. The Committee may interpret the Plan and may correct any defect or supply any omission or reconcile any inconsistency in the Plan to the extent necessary for the effective operation of the plan. Any determination, decision or action taken by the Committee on the matters referred to in this paragraph shall be conclusive. The Committee may delegate any portion of its authority to administer the Plan on a day-to-day basis to such officers of the Company as it may deem appropriate; provided that any discretionary decisions with respect to participation in the Plan by any executive officers or other persons subject to Section 16 of the Securities Exchange Act may be made only by the Committee. 3. EFFECTIVENESS OF THE PLAN. The Plan shall become effective on March 1, 1996. 4. SHARES SUBJECT TO THE PLAN. Subject to adjustment as provided in Paragraph 17 herein, not more than 100,000 Common Shares of the Company shall be offered under the Plan. The Common Shares subject to the Plan may be authorized and unissued Common Shares or previously issued Common Shares acquired by the Company and held as treasury shares. 2 5. OFFERINGS UNDER THE PLAN. After the Plan has become effective, one or more "Offerings", as determined by the Committee, may be made to eligible employees to purchase Common Shares subject to the Plan. The Offerings may be consecutive or concurrent as determined by the Committee. With respect to each Offering, the Committee shall specify an Offering Period and the maximum number of Common Shares that may be purchased under the Offering. The Offering Period shall not exceed twelve (12) months. Common Shares not sold under one Offering may be offered again in any subsequent Offering. The first business day of the month designated by the Committee as the start of the Offering Period applicable to an Offering shall be the "Effective Date" of such Offering under the Plan. 6. ELIGIBILITY. Subject to the terms of this Plan, any employee of the Company (and any employee of any subsidiary of the Company which from time to time may be designated by the Committee for inclusion in an Offering under the Plan under Paragraph 20 hereof) who is employed by the Company at the Effective Date of an Offering, and who is or will be customarily employed for more than twenty (20) hours per week and for more than five (5) months per year, may participate in Offerings under the Plan, with the exception that all 5% shareholder employees and all directors and officers of the Company are not eligible to participate in the Offerings under the Plan. For purposes of the Plan, a "5% shareholder employee" is an employee of the Company or a subsidiary of the Company who owns greater than 5% of the total combined voting power or value of all classes of shares of the Company or a subsidiary of the Company. Nothing contained herein and no rules and regulations prescribed by the Committee shall permit or deny participation in any Offering contrary to the requirements of the Code (including, without limitation, Sections 423(b)(3), 423(b)(4) and 423(b)(8) thereof). Nothing contained herein and no rules and regulations prescribed by the Committee shall permit any employee to be granted an Option under the Plan: (a) If, immediately after such Option is granted, such employee would own, and/or hold outstanding options or rights to purchase, shares of the Company or of any subsidiary of the Company possessing five percent (5%) or more of the total combined voting power or value of all classes of shares of the Company or such subsidiary; or (b) Which permits an employee's rights to purchase Common Shares under all employee stock purchase plans of the Company and of its subsidiaries to accrue at a rate which exceeds Twenty-Five Thousand Dollars ($25,000.00) of fair market value of Common Shares (determined as of the date such right is granted) for each calendar year in which such right is outstanding at any time. For the purpose of clause 6(a) above, the provisions of Section 424(d) of the Code shall apply in determining the stock ownership of each employee. For the purpose of Clause 3 (b) above, the provisions of Section 423(b)(8) of the Code shall apply in determining whether an employee's Options and other rights are permitted to accrue at a rate in excess of the permitted rate. 7. PARTICIPATION IN OFFERINGS. Except as may be otherwise provided for herein, each employee who is eligible for and elects to participate in an Offering shall be granted Options for as many full Common Shares as he may elect to purchase during that Offering, to be paid by payroll deductions during such period; provided, however, that the amount elected must be in whole dollars or percentages, the minimum deductions of an employee shall not be at a rate less than Twenty Dollars ($20.00) per month and the maximum deductions shall not be at a rate exceeding ten percent (10%) of the base salary of an employee. Subject to this Paragraph 7, all such eligible employees shall be granted the same rights and privileges under each such Offering. The "Annual Enrollment Date" for any Offering shall be the Effective Date. In order to participate in the Offering an eligible employee must enroll by completing and forwarding (i) an "Enrollment/Change Form" to the Committee at least twenty (20) days prior to the Annual Enrollment Date and (ii) an "Authorization for Payroll Deductions" form to the appropriate payroll location at least twenty (20) days prior to the Annual Enrollment Date for the Offering; provided, however, that an eligible employee hired during the twenty (20) day period prior to the Annual Enrollment Date may participate in the Plan by filing an Enrollment/Change Form and Authorization for Payroll Deductions form on or before such Annual Enrollment Date. Notwithstanding any provision contained herein, for the initial Annual Enrollment Date for the Plan, the Enrollment/Change Form and the Authorization for Payroll Deductions form must be completed and forwarded prior to March 9, 1996, unless extended by the officers of the Company. The Authorization for Payroll Deductions form will authorize a regular payroll deduction from that employee's compensation during the Offering Period applicable to that Offering, commencing with the Annual Enrollment Date following timely receipt of such authorization. Payroll deductions may not be retroactive. The amounts withheld through such payroll deductions shall be credited to each Participant's cash account (the "Cash Account"). The withholdings for each calendar month from compensation of a Participant shall be made on a date or dates specified by the Company (the "payroll deduction date(s)"). Such amounts will be delivered to a custodian for the Plan selected by the Company (the "Custodian") and held pending the purchase of Common Shares as described in Paragraph 10 hereof. Subject to the other limitations of this Paragraph 7, a Participant may, by written notice to the Company at least twenty (20) days prior to any payroll deduction date, increase or decrease the amount of his payroll deduction as of such payroll deduction date; provided, however, that a Participant's payroll deduction may be changed only twice during any Offering. Notwithstanding the foregoing, a Participant may by written notice to the Company at least twenty (20) days prior to any payroll deduction date discontinue payroll 4 deductions as of such payroll deduction date. Payroll deductions may not thereafter be resumed until the next Annual Enrollment Date. A Participant may withdraw from the Offering entirely at any time prior to the Option Date (as defined in Paragraph 8) for the Offering by delivering a "Withdrawal Notice" to the Company. If such notice is received by the Company at least twenty (20) business days prior to the Option Date, the Participant's Cash Account balance will not be used to purchase Common Shares on the Option Date. Instead, the Cash Account balance will be refunded to the Participant. The Participant will not be eligible to re-enroll in that Offering, but may resume participation on the Annual Enrollment Date for the next Offering. In addition, the Committee may impose such other restrictions on the right to withdraw from Offerings as it may deem appropriate. 8. GRANT OF OPTIONS. Options to purchase Common Shares shall be granted to Participants who elect to participate in an Offering. Such Options may be exercised on the last business day of the Offering (each such last business day is referred to herein as an "Option Date"). The number of Common Shares subject to Options on each Option Date shall not exceed the number of shares authorized for issuance during the applicable Offering. Options granted for each Offering shall terminate following the close of business on the Option Date for the Offering to the extent such Options are not exercised on such Option Date. 9. INTEREST ON CASH ACCOUNTS. The payroll deductions and other funds held in Participants' Cash Accounts shall bear interest at a rate as may be agreed upon by the Company and the Custodian. 10. PURCHASE PRICE AND EXERCISE OF OPTIONS. The purchase price for a Common Share under each Offering shall be determined by the Committee prior to the Effective Date of each Offering and shall be stated as a percentage of the fair market value of a Common Share on either the Option Date or the Effective Date, whichever is the lesser, but the purchase price shall not be less than the lesser of ninety percent (90%) of the per share fair market value of the Common Shares as of the Effective Date for the Offering or ninety percent (90%) of the per share fair market value of the Common Shares as of the Option Date for the Offering. The fair market value of a Common Share on any date shall be the closing price per share of the Common Shares on the NASDAQ National Market System or on any national stock exchange on such date or, if no such sales of Common Shares are made on such date, on the next preceding date on which sales of Common Shares were made on NASDAQ or on any national stock exchange. Each Option shall be exercised on the Option Date with respect to such Option. Each Participant automatically and without any act on his part will be deemed to have exercised an Option on each Option Date to the extent that the amount in his Cash Account on such Option Date is sufficient to purchase whole Common Shares on the Option Date. Fractional Common Shares will not be issued under the Plan. Any 5 remaining amount credited to a Participant's Cash Account which is not sufficient to purchase a whole Common Share shall remain in such Participant's Cash Account for use in the next Offering unless withdrawn by the Participant. The Company shall deliver to the Custodian as soon as practicable after each Option Date a certificate for the total number of whole Common Shares purchased by all Participants on such Option Date. If the aggregate Cash Account balances of all Participants on any Option Date exceeds the amount required to purchase all of the Common Shares subject to Options on that Option Date, then the Option Shares (as defined in Paragraph 18 hereof), shall be allocated as provided in Paragraph 18 hereof. The Custodian shall establish and maintain a separate share account for each Participant (a "Share Account"), which shall be credited with the number of whole Common Shares purchased on each Option Date by each Participant. A Participant may withdraw the Common Shares credited to his Share Account on a first-in-first-out basis by written notice to the Custodian at least twenty (20) days prior to an Annual Enrollment Date. A Participant may withdraw all or a portion of the Common Shares which were credited to his Share Account on or prior to the Option Date immediately preceding such Annual Enrollment Date. A Participant will be charged a fee by the Custodian for each such withdrawal. The amount of such fee shall be as agreed from time to time by the Custodian and the Company. The initial fee shall be $5.00 per withdrawal. The Custodian shall deliver to such Participant a share certificate issued in his name for the number of whole Common Shares he wishes to withdraw from his Share Account. At least annually, there shall be delivered to each Participant a statement of his Share Account showing the number of Common Shares purchased during the preceding twelve months (or lesser period of existence of the Offering), the Option prices paid for the Common Shares, the dates of purchase of the Common Shares, and the amount to be included in the ordinary income of the Participant at such time as the Common Shares are sold, as prescribed by Section 423(c) of the Code. Society National Bank, N.A. shall be the initial Custodian. The Company may remove any Custodian, and any Custodian may resign, upon 60 days' notice in writing to the other party, as the case may be. Any successor Custodian shall be appointed by the Company. The Company shall pay all fees and costs of the Custodian as agreed between the Company and the Custodian from time to time, except for the withdrawal fees payable by Participants as described above. The Company may, at any time after the end of an Offering Period, close the Cash Accounts of employees not participating in another Offering under the Plan, in which case any balance in such Cash Accounts which constitutes the Participants' payroll deductions will be refunded to the employees. Any balance remaining in the Cash Account of a Participant after the end of an Offering Period shall remain in the Participant's Cash Account for use in the next Offering. The Company may, at any time after the end of an Offering Period, close the Share Accounts related to such Offering, in which case the Custodian shall deliver to 6 each Participant in that Offering a share certificate issued in his name for the number of whole Common Shares credited to his Share Account, without charging a withdrawal fee. 11. REGISTRATION OF CERTIFICATES. Common Shares withdrawn by Participants will be registered, and share certificates therefor will be issued, only in the name of the Participant. 12. RIGHTS AS SHAREHOLDERS. With respect to Common Shares subject to an Option, pending exercise of such Option, the Participant shall not be deemed to be a shareholder and shall not have any of the rights or privileges of a shareholder. A Participant who has exercised an Option shall have the rights and privileges of a shareholder immediately following such exercise. 13. USE OF PLAN FUNDS. Subject to Paragraph 10 hereof, all amounts received by the Company upon exercise of Options granted under the Plan may be used for any corporate purpose or purposes of the Company. 14. TERMINATION OF EMPLOYMENT. If the employment of a Participant terminates for any reason, including death, disability, retirement or other cause, his participation in the Plan automatically and without any act on his part shall terminate as of the date of termination of his employment. As soon as practicable following the Participant's termination of employment, the Company shall refund to such Participant (or beneficiary, in the case of the Participant's death) any and all amount in his Cash Account and the Custodian shall deliver to such Participant a share certificate issued in his name for the number of whole Common Shares credited to his Share Account through prior Offerings. 15. RESTRICTION UPON ASSIGNMENT. Options granted to a Participant under the Plan shall not be transferable (including pledge or hypothecation), and shall be exercisable during the Participant's lifetime only by the Participant. The Company shall not recognize and shall be under no duty to recognize assignment or purported assignment by a Participant of his Options or of any rights under his Options. 16. GOVERNMENT REGULATIONS. The Company's obligation to issue, sell or deliver any Common Shares under this Plan is subject to all applicable laws and regulations and to the approval of any governmental or regulatory authority required in connection with the issuance, sale or delivery of such Common Shares. The Company shall not be required to issue, sell or deliver any Common Shares under this Plan prior to (a) the approval of such Common Shares for quotation on NASDAQ as National Market Systems Securities or for listing on any national stock exchange, and (b) the completion of any registration or other qualification of such Common Shares under any state or Federal law or any ruling or regulation of any governmental or regulatory authority which the Company in its sole discretion shall determine to be necessary or advisable. 17. ADJUSTMENT OF SHARES UPON CHANGES IN CAPITALIZATION. Notwithstanding any other provision of the Plan, in the event of any change in the outstanding Common Shares, by reason of a dividend payable in Common Shares, recapitalization, merger, 7 consolidation, split-up, combination or exchange of shares, or the like, appropriate adjustments shall be made to the aggregate number and class of shares subject to the Plan, the number and class of shares subject to outstanding subscription rights, the purchase price per share (in the case of shares subject to outstanding subscription rights), and the number and class of shares which may be subscribed to by any one employee, and such other adjustments shall be made as may be deemed equitable by the Committee. 18. PROPORTIONATE DISTRIBUTION. If the aggregate Cash Account balances of all Participants on any Option Date exceeds the amount required to purchase all of the Common Shares subject to Options on that Option Date ("Option Shares"), then the Option Shares shall be allocated pro rata among the Participants in the proportion that the number of Option Shares bears to the number of Common Shares that could have been purchased with such aggregate amount available, if an unlimited number of Common Shares were available for purchase; provided, however, that no reduction shall prohibit any employee participating in that Offering from purchasing at least five (5) full Common Shares during the course of the Offering. Any balances remaining in Participants' Cash Accounts due to over subscription will remain in the Participants' Cash Accounts for use in the next Offering unless withdrawn by the Participant. 19. DIVIDEND REINVESTMENT. All cash dividends paid, if any, with respect to the Common Shares credited to a Participant's Share Account shall be added to the Participant's Cash Account and thereby shall be applied to exercise Options to purchase whole Common Shares on the Option Date next succeeding the date such cash dividends are paid by the Company. An election to leave Common Shares with the Custodian shall constitute an election to apply the cash dividends with respect to such shares to the exercise of Options hereunder. Common Shares so purchased shall be applied to the shares credited to each Participant's Share Account. 20. DESIGNATION OF SUBSIDIARIES FOR INCLUSION IN OFFERINGS. At any time and from time to time the Committee may designate for inclusion in an Offering under the Plan any corporation which, on the Effective Date of that Offering, is a subsidiary (as defined in Section 424(f) of the Code) of the Company. 21. AMENDMENT OF THE PLAN. To the extent permitted by law, the Committee may at any time and from time to time make such changes in the Plan and additions to it as the Committee deems advisable; provided, however, that, except as provided in Paragraphs 17, 18 and 20 hereof, and except with respect to changes or additions in order to make the Plan comply with Section 423 of the Code, the Committee may not make any changes or additions which would adversely affect subscription rights or Options previously granted under the Plan and may not, without approval of the shareholders of the Company, make any changes or additions which would (a) increase the aggregate number of Common Shares subject to the Plan or which may be subscribed to by an employee, (b) decrease the minimum purchase price for a Common Share, or (c) change any of the provisions of the Plan relating to eligibility for participation in Offerings. 8 22. DURATION AND TERMINATION OF THE PLAN. The Plan shall terminate upon the earlier to occur of the following two events: (a) The purchase by employees of all of the Common Shares subject to the Plan; or (b) The termination of the Plan by the Board of Directors of the Company. In addition, if the Plan is not approved by the Company's Shareholders prior to December 30, 1996, the Plan will automatically terminate, and each Participant will receive a refund of the amounts credited to his Cash Account. No termination of the Plan shall affect Options or subscription rights previously granted under this Plan. EX-21 8 l83289aex21.txt EXHIBIT 21 1 EXHIBIT 21 TO ANNUAL REPORT ON FORM 10-K FOR SYMIX SYSTEMS, INC. SUBSIDIARIES OF REGISTRANT SUBSIDIARIES OF REGISTRANT --------------------------
NAME JURISDICTION % OWNERSHIP Symix Computer Systems, Inc. Ohio 100 Symix Systems, B.V. The Netherlands 100 Symix France, SA France 100 Frontstep, Inc. Minnesota 100 Symix Computer Systems Delaware, Inc. Delaware 100 e-Mongoose, Inc. Ohio 100
SUBSIDIARIES OF FRONSTEP, INC. ------------------------------
brightwhite solutions, inc. Ohio 96
SUBSIDIARIES OF SYMIX COMPUTER SYSTEMS DELAWARE, INC. -----------------------------------------------------
Systems by MICA (Ireland) Ltd. Ireland 100 D.A. Distribution (U.K.) United Kingdom 100
2 SUBSIDIARIES OF SYMIX COMPUTER SYSTEMS, INC. --------------------------------------------
Symix Computer Systems (Canada) Inc. Canada 100 Symix Computer Systems (UK) Ltd. The United Kingdom 100 Symix Computer Systems (Singapore) Pte. Ltd. Singapore 86.7 Symix Computer Systems (Mexico) S. De R.L. De C.V. Mexico 100 Symix Japan Ltd. Japan 85 Symic Computer Systems (Shanghai) Co. Ltd. China 100
SUBSIDIARIES OF SYMIX SYSTEMS, B.V. -----------------------------------
Symix (U.K.) Ltd. The United Kingdom 100 Symix Systems GmbH Germany 100 Symix Italia S.r.l. Italy 95*
* Remaining 5% owned by Symix Systems, Inc. SUBSIDIARIES OF SYMIX SYSTEMS (SINGAPORE) PTE. LTD. ---------------------------------------------------
Symix Asia Company Limited Thailand 100 Symix Computer Systems (Hong Kong) Limited Hong Kong 100 Symix Computer Systems (Australia) Pty. Ltd. Australia 100 Symix New Zealand, Limited New Zealand 100 Symix Computer Systems (Malaysia) Sdn., Bhd. Malaysia 100
EX-23 9 l83289aex23.txt EXHIBIT 23 1 EXHIBIT 23 TO ANNUAL REPORT ON FORM 10-K FOR SYMIX SYSTEMS, INC. CONSENT OF INDEPENDENT AUDITORS We consent to the incorporation by reference in the Registration Statements (Forms S-8 No. 33-40546, No. 33-45416, No. 33-73014, No. 33-73016, No. 333-660, No. 333-10631, No. 333-10633, No. 333-43947 and No. 333-91811, and Form S-3 No. 333-42894) of Symix Systems, Inc. of our report dated July 27, 2000, with respect to the consolidated financial statements and the financial statement schedule included in this Annual Report (Form 10-K) of Symix Systems, Inc. /s/ Ernst & Young LLP September 22, 2000 EX-24 10 l83289aex24.txt EXHIBIT 24 1 EXHIBIT 24 TO ANNUAL REPORT ON FORM 10-K FOR SYMIX SYSTEMS, INC. POWER OF ATTORNEY KNOWN ALL MEN BY THESE PRESENTS, that the undersigned officer and/or director of Symix Systems, Inc., an Ohio corporation which is about to file with the Securities and Exchange Commission, under the provisions of the Securities Exchange Act of 1934, as amended, an Annual Report on Form 10-K for the fiscal year ended June 30, 2000, hereby constitutes and appoints Stephen A. Sasser, Lawrence W. DeLeon and Daniel P. Buettin and each of them, his true and lawful attorneys-in-fact and agents with full power of substitution and resubstitution, for him and in his name, place and stead in any and all capacities, to sign such Annual Report on Form 10-K, and to file the same with all exhibits and financial statements and schedules thereto, and other documents in connection therewith, including any amendment thereto, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents or any of them or their or his substitute or substitutes may lawfully do or cause to be done by virtue hereof. IN WITNESS WHEREOF, the undersigned has hereunder set his hand this 15th day of August, 2000. /s/ Lawrence J. Fox ----------------------------------- Lawrence J. Fox Chairman of the Board Director 2 POWER OF ATTORNEY KNOWN ALL MEN BY THESE PRESENTS, that the undersigned officer and/or director of Symix Systems, Inc., an Ohio corporation which is about to file with the Securities and Exchange Commission, under the provisions of the Securities Exchange Act of 1934, as amended, an Annual Report on Form 10-K for the fiscal year ended June 30, 2000, hereby constitutes and appoints Daniel P. Buettin and Lawrence W. DeLeon, and each of them, his true and lawful attorneys-in-fact and agents with full power of substitution and resubstitution, for him and in his name, place and stead in any and all capacities, to sign such Annual Report on Form 10-K, and to file the same with all exhibits and financial statements and schedules thereto, and other documents in connection therewith, including any amendment thereto, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents or any of them or their or his substitute or substitutes may lawfully do or cause to be done by virtue hereof. IN WITNESS WHEREOF, the undersigned has hereunder set his hand this 15th day of August, 2000. /s/ Stephen A. Sasser ---------------------------------- Stephen A. Sasser President, Chief Executive Officer and Director 3 POWER OF ATTORNEY KNOWN ALL MEN BY THESE PRESENTS, that the undersigned officer and/or director of Symix Systems, Inc., an Ohio corporation which is about to file with the Securities and Exchange Commission, under the provisions of the Securities Exchange Act of 1934, as amended, an Annual Report on Form 10-K for the fiscal year ended June 30, 2000, hereby constitutes and appoints Stephen A. Sasser and Daniel P. Buettin and each of them, his true and lawful attorneys-in-fact and agents with full power of substitution and resubstitution, for him and in his name, place and stead in any and all capacities, to sign such Annual Report on Form 10-K, and to file the same with all exhibits and financial statements and schedules thereto, and other documents in connection therewith, including any amendment thereto, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents or any of them or their or his substitute or substitutes may lawfully do or cause to be done by virtue hereof. IN WITNESS WHEREOF, the undersigned has hereunder set his hand this 15th day of August, 2000. /s/ Lawrence W. DeLeon ----------------------------------- Lawrence W. DeLeon Executive Vice President Symix Worldwide Field Operations 4 POWER OF ATTORNEY KNOWN ALL MEN BY THESE PRESENTS, that the undersigned officer and/or director of Symix Systems, Inc., an Ohio corporation which is about to file with the Securities and Exchange Commission, under the provisions of the Securities Exchange Act of 1934, as amended, an Annual Report on Form 10-K for the fiscal year ended June 30, 2000, hereby constitutes and appoints Stephen A. Sasser, Lawrence W. DeLeon and Daniel P. Buettin and each of them, his true and lawful attorneys-in-fact and agents with full power of substitution and resubstitution, for him and in his name, place and stead in any and all capacities, to sign such Annual Report on Form 10-K, and to file the same with all exhibits and financial statements and schedules thereto, and other documents in connection therewith, including any amendment thereto, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents or any of them or their or his substitute or substitutes may lawfully do or cause to be done by virtue hereof. IN WITNESS WHEREOF, the undersigned has hereunder set his hand this 15th day of August, 2000. /s/ John T. Tait ----------------------------------- John T. Tait Director 5 POWER OF ATTORNEY KNOWN ALL MEN BY THESE PRESENTS, that the undersigned officer and/or director of Symix Systems, Inc., an Ohio corporation which is about to file with the Securities and Exchange Commission, under the provisions of the Securities Exchange Act of 1934, as amended, an Annual Report on Form 10-K for the fiscal year ended June 30, 2000, hereby constitutes and appoints Stephen A. Sasser, Lawrence W. DeLeon and Daniel P. Buettin and each of them, his true and lawful attorneys-in-fact and agents with full power of substitution and resubstitution, for him and in his name, place and stead in any and all capacities, to sign such Annual Report on Form 10-K, and to file the same with all exhibits and financial statements and schedules thereto, and other documents in connection therewith, including any amendment thereto, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents or any of them or their or his substitute or substitutes may lawfully do or cause to be done by virtue hereof. IN WITNESS WHEREOF, the undersigned has hereunder set his hand this 15th day of August, 2000. /s/ Duke W. Thomas ----------------------------------- Duke W. Thomas Director 6 POWER OF ATTORNEY KNOWN ALL MEN BY THESE PRESENTS, that the undersigned officer and/or director of Symix Systems, Inc., an Ohio corporation which is about to file with the Securities and Exchange Commission, under the provisions of the Securities Exchange Act of 1934, as amended, an Annual Report on Form 10-K for the fiscal year ended June 30, 2000, hereby constitutes and appoints Stephen A. Sasser, Lawrence W. DeLeon and Daniel P. Buettin and each of them, his true and lawful attorneys-in-fact and agents with full power of substitution and resubstitution, for him and in his name, place and stead in any and all capacities, to sign such Annual Report on Form 10-K, and to file the same with all exhibits and financial statements and schedules thereto, and other documents in connection therewith, including any amendment thereto, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents or any of them or their or his substitute or substitutes may lawfully do or cause to be done by virtue hereof. IN WITNESS WHEREOF, the undersigned has hereunder set his hand this 15th day of August, 2000. /s/ Larry L. Liebert ----------------------------------- Larry L. Liebert Director 7 POWER OF ATTORNEY KNOWN ALL MEN BY THESE PRESENTS, that the undersigned officer and/or director of Symix Systems, Inc., an Ohio corporation which is about to file with the Securities and Exchange Commission, under the provisions of the Securities Exchange Act of 1934, as amended, an Annual Report on Form 10-K for the fiscal year ended June 30, 2000, hereby constitutes and appoints Stephen A. Sasser, Lawrence W. DeLeon and Daniel P. Buettin and each of them, his true and lawful attorneys-in-fact and agents with full power of substitution and resubstitution, for him and in his name, place and stead in any and all capacities, to sign such Annual Report on Form 10-K, and to file the same with all exhibits and financial statements and schedules thereto, and other documents in connection therewith, including any amendment thereto, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents or any of them or their or his substitute or substitutes may lawfully do or cause to be done by virtue hereof. IN WITNESS WHEREOF, the undersigned has hereunder set his hand this 15th day of August, 2000. /s/ James A. Rutherford ----------------------------------- James A. Rutherford Director 8 POWER OF ATTORNEY KNOWN ALL MEN BY THESE PRESENTS, that the undersigned officer and/or director of Symix Systems, Inc., an Ohio corporation which is about to file with the Securities and Exchange Commission, under the provisions of the Securities Exchange Act of 1934, as amended, an Annual Report on Form 10-K for the fiscal year ended June 30, 2000, hereby constitutes and appoints Stephen A. Sasser, Lawrence W. DeLeon and Daniel P. Buettin and each of them, his true and lawful attorneys-in-fact and agents with full power of substitution and resubstitution, for him and in his name, place and stead in any and all capacities, to sign such Annual Report on Form 10-K, and to file the same with all exhibits and financial statements and schedules thereto, and other documents in connection therewith, including any amendment thereto, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents or any of them or their or his substitute or substitutes may lawfully do or cause to be done by virtue hereof. IN WITNESS WHEREOF, the undersigned has hereunder set his hand this 10th day of August, 2000. /s/ Roger D. Blackwell ----------------------------------- Roger D. Blackwell Director 9 POWER OF ATTORNEY KNOWN ALL MEN BY THESE PRESENTS, that the undersigned officer and/or director of Symix Systems, Inc., an Ohio corporation which is about to file with the Securities and Exchange Commission, under the provisions of the Securities Exchange Act of 1934, as amended, an Annual Report on Form 10-K for the fiscal year ended June 30, 2000, hereby constitutes and appoints Stephen A. Sasser, Lawrence W. DeLeon and Daniel P. Buettin and each of them, his true and lawful attorneys-in-fact and agents with full power of substitution and resubstitution, for him and in his name, place and stead in any and all capacities, to sign such Annual Report on Form 10-K, and to file the same with all exhibits and financial statements and schedules thereto, and other documents in connection therewith, including any amendment thereto, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents or any of them or their or his substitute or substitutes may lawfully do or cause to be done by virtue hereof. IN WITNESS WHEREOF, the undersigned has hereunder set his hand this 15th day of August, 2000. /s/ Guy de Chazal ----------------------------------- Guy de Chazal Director 10 POWER OF ATTORNEY KNOWN ALL MEN BY THESE PRESENTS, that the undersigned officer and/or director of Symix Systems, Inc., an Ohio corporation which is about to file with the Securities and Exchange Commission, under the provisions of the Securities Exchange Act of 1934, as amended, an Annual Report on Form 10-K for the fiscal year ended June 30, 2000, hereby constitutes and appoints Stephen A. Sasser, Lawrence W. DeLeon and Daniel P. Buettin and each of them, his true and lawful attorneys-in-fact and agents with full power of substitution and resubstitution, for him and in his name, place and stead in any and all capacities, to sign such Annual Report on Form 10-K, and to file the same with all exhibits and financial statements and schedules thereto, and other documents in connection therewith, including any amendment thereto, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents or any of them or their or his substitute or substitutes may lawfully do or cause to be done by virtue hereof. IN WITNESS WHEREOF, the undersigned has hereunder set his hand this 15th day of August, 2000. /s/ Barry Goldsmith ----------------------------------- Barry Goldsmith Director EX-27 11 l83289aex27.txt EXHIBIT 27
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CONSOLIDATED BALANCE SHEETS AND CONSOLIDATED STATEMENTS OF OPERATIONS IN THE ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED JUNE 30, 2000 FOR SYMIX SYSTEMS, INC. AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 YEAR JUN-30-2000 JUL-01-1999 JUN-30-2000 11,868 0 39,031 2,075 861 56,660 23,513 15,527 94,368 37,312 0 0 10,865 78 36,631 94,368 57,858 128,908 19,636 59,988 79,716 575 781 (11,762) (1,557) (10,205) 0 0 0 (10,205) (1.38) (1.38)
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