<PAGE>
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(MARK ONE)
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1997
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.
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(Exact name of registrant as specified in its charter)
Ohio 31-1083175
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(State or other jurisdiction of (IRS Employer Identification Number)
incorporation or organization)
2800 Corporate Exchange Drive
Columbus, Ohio 43231
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(Address of principal executive offices)
(Zip Code)
(614) 523-7000
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(Registrant's telephone number, including area code)
N/A
---
(Former name, former address and former fiscal year, if changed
since last report)
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
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The number of common shares, without par value, of the registrant
outstanding as of November 10, 1997 was 5,857,556.
Exhibit Index on Page 16
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PART I -- FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
INDEX
Consolidated Balance Sheets
September 30, 1997 (unaudited)
June 30, 1997 Page 3
Consolidated Statements of Operations (unaudited)
Three Months Ended September 30, 1997 and 1996 Page 5
Consolidated Statements of Cash Flows (unaudited)
Three Months Ended September 30, 1997 and 1996 Page 6
Notes to Consolidated Financial Statements (unaudited) Page 8
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SYMIX SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands)
September 30, June 30,
1997 1997
------------- --------
(unaudited)
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 1,838 $ 2,332
Trade accounts receivable, less allowance
for doubtful accounts of $807 at
September 30, 1997 and $702 at June 30, 1997 21,824 21,689
Inventories 384 356
Prepaid expenses 1,325 1,162
Other receivables 369 300
Deferred income taxes 471 311
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TOTAL CURRENT ASSETS 26,211 26,150
OTHER ASSETS
Purchased and developed software, net of
accumulated amortization of $6,594 at
September 30, 1997 and $6,106 at June 30, 1997 7,329 6,551
Deferred income taxes 147 171
Intangibles, net 4,489 4,779
Deposits and other assets 909 877
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12,874 12,378
EQUIPMENT AND IMPROVEMENTS
Furniture and fixtures 2,495 2,436
Computer and other equipment 10,915 10,423
Leasehold improvements 1,191 1,288
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14,601 14,147
Less allowance for depreciation and amortization 8,878 8,423
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5,723 5,724
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TOTAL ASSETS $44,808 $44,252
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See notes to consolidated financial statements
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SYMIX SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (Continued)
(In thousands)
September 30, June 30,
1997 1997
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(unaudited)
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable and accrued expenses $ 5,634 $ 7,423
Customer deposits 129 307
Deferred revenue 9,813 9,685
Income taxes payable 46 63
Current portion of long term obligations 702 775
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TOTAL CURRENT LIABILITIES 16,324 18,253
LONG-TERM OBLIGATIONS 305 530
BANK CREDIT AGREEMENT 2,066 --
DEFERRED INCOME TAXES 2,541 2,108
SHAREHOLDERS' EQUITY
Common stock, authorized 20,000 shares; issued
6,162 shares at September 30, 1997, and
6,160 at June 30, 1997; at stated capital
amounts of $.01 per share 62 62
Convertible preferred stock of subsidiary 1,031 1,031
Capital in excess of stated value 13,299 13,291
Retained earnings 11,385 10,853
Cumulative translation adjustment (885) (556)
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24,892 24,681
Less: Cost of common shares in treasury,
304 shares at September 30, 1997
and June 30, 1997, at cost (1,320) (1,320)
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TOTAL SHAREHOLDERS' EQUITY 23,572 23,361
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TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY
$44,808 $44,252
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See notes to consolidated financial statements
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SYMIX SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(unaudited)
Three Months Ended
September 30,
--------------------
1997 1996
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License fees $ 9,549 $ 5,884
Service and support 8,016 6,806
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Net revenue 17,565 12,690
License fees 2,712 1,952
Service and support 4,179 3,186
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Cost of revenue 6,891 5,138
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Gross Margin 10,674 7,552
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Selling, general and administrative 7,741 5,960
Research and development 2,034 1,100
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Total operating expenses 9,775 7,060
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Operating income 899 492
Interest and other income (expense), net (50) 72
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Income before income taxes 849 564
Provision for income taxes 317 217
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Net income $ 532 $ 347
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Earnings per share $ 0.08 $ 0.06
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Weighted average number of common and common
equivalent shares outstanding 6,926 5,989
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See notes to consolidated financial statements
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SYMIX SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(unaudited)
Three Months Ended
September 30,
-------------------
1997 1996
---- ----
Increase (decrease) in cash
OPERATING ACTIVITIES
Net income $ 532 $ 347
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 1,349 973
Provision for losses on accounts receivable 105 (50)
Provision for deferred income taxes 294 10
Changes in operating assets and liabilities:
Trade accounts receivable (513) 301
Prepaid expenses and other receivables (238) (278)
Inventory (28) (30)
Deposits (51) (472)
Accounts payable and accrued expenses (1,659) (1,293)
Customer deposits (341) (16)
Deferred revenue 201 1,123
Income taxes payable/refundable (5) (389)
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NET CASH (USED) PROVIDED BY
OPERATING ACTIVITIES (354) 226
See notes to consolidated financial statements
<PAGE>
SYMIX SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
(In thousands)
(unaudited)
Three Months Ended
September 30,
--------------------
1997 1996
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Increase (decrease) in cash
INVESTING ACTIVITIES
Purchase of equipment and improvements $ (628) $ (987)
Additions to purchased and developed software (1,284) (719)
Purchase of subsidiaries, net of cash acquired -- (1,028)
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NET CASH USED BY
INVESTING ACTIVITIES (1,912) (2,734)
FINANCING ACTIVITIES
Proceeds from issuance of common
stock and exercise of stock options 6 58
Additions to long-term obligations, net of payments 1,767 446
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NET CASH PROVIDED
BY FINANCING ACTIVITIES 1,773 504
Effect of exchange rate changes on cash (1) (53)
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Net change in cash (494) (2,057)
Cash at beginning of period 2,332 6,774
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CASH AT END OF PERIOD $ 1,838 $ 4,717
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See notes to consolidated financial statements
<PAGE>
SYMIX SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
Note A -- Accounting Policies and Presentation
The accompanying consolidated financial statements are unaudited;
however, the information contained herein reflects all adjustments which are,
in the opinion of management, necessary for a fair statement of the results
of operations for the interim periods. All adjustments made were of a normal
recurring nature. These interim results of operations are not necessarily
indicative of the results to be expected for a full year.
The notes to the consolidated financial statements contained in the Symix
Systems, Inc. and Subsidiaries' (the "Company") June 30, 1997 Annual Report
to Shareholders should be read in conjunction with these financial
statements. Certain reclassifications have been made to conform prior quarter
amounts to the current quarter presentation.
Recently, Statement of Position 97-2, "Software Revenue Recognition" (SOP
97-2) was issued by the Accounting Standards Executive Committee. SOP 97-2
is effective for transactions entered into in fiscal years beginning after
December 15, 1997. Accordingly the Company will adopt SOP 97-2 beginning in
fiscal 1999. At this time the Company does not anticipate that SOP 97-2 will
have a material impact on their results.
Note B -- Acquisitions
During the first quarter of fiscal 1997, the Company acquired in two
separate transactions companies in France and Australia for an aggregate of
$2.0 million. The cash paid for the acquisitions was $940,000, with the
remaining balance of $1.06 million being payable over three years. Both
companies are manufacturing software specialists that will serve as sales,
service and support operations for the Company in France and Australia. The
acquisitions were accounted for using purchase accounting with results
included since the date of acquisition. Acquisition costs exceeded the fair
value of the net assets acquired by approximately $2.3 million which is being
amortized over five years.
On January 9, 1997, the Company acquired an Ontario, Canada corporation
called Visual Applications Software, Inc. ("VAS") for $1.0 million (Canadian)
in cash, and 250,000 Class A Preference Shares (the "Class A Shares") and
500,000 Class B Preference Shares (the "Class B Shares") of a subsidiary of
the Company. The Class B Shares are redeemable by the holder for $1.00
(Canadian) per share. In connection with the acquisition, the Company also
entered into a Share Exchange Agreement with the former stockholders of VAS
which provides for a one for one exchange of the Class A Shares for common
shares of the Company. VAS designs and markets a field service software
product. The acquisition was accounted for using purchase accounting with
results included since the date of acquisition. Acquisition costs exceeded
the fair value of the net assets acquired by approximately $3.2 million which
is being amortized over five years.
The Company has entered into a definitive agreement to acquire Pritsker
Corporation ("Pritsker"), which markets advanced planning and scheduling and
simulation software to mid-market manufacturers. Pursuant to this agreement,
(i) Pritsker will be merged with and into a wholly-owned subsidiary of the
Company, (ii) each share of Pritsker common stock will be converted into the
right to receive 0.170108 common share of the Company and (iii) each share of
Pritsker preferred stock will be converted into the right to receive $5.23
plus accrued and unpaid dividends. Each unexercised option and warrant for
Pritsker common stock will be 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 exercised the option or warrant
immediately prior to the merger. If approved by the Pritsker shareholders, it
is expected that the merger will be consummated on November 21, 1997. In
connection with the merger, it is currently estimated that the Company will
incur a nonrecurring charge of approximately $6.4 million relating to the
write-off of acquired in-process technology of Pritsker, which will occur in
the quarter in which the merger is completed. A Registration Statement on
Form S-4 covering the Symix common shares to be issued in the merger has been
filed with the Securities and Exchange Commission and became effective on
November 10, 1997.
Note C -- Earnings Per Share
In February 1997, the Financial Accounting Standards Board issued
Statement No. 128, "Earnings Per Share" (SFAS 128). SFAS 128 requires
adoption for periods ending after December 15, 1997. Until that time, the
Company is required to continue calculating earnings per share
<PAGE>
(EPS) in accordance with Accounting Principles Board Opinion No. 15. The
following is provided for information purposes and displays the Company's
earnings per share data as calculated under the provisions of SFAS 128:
Basic EPS Diluted EPS
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Three months ended September 30, 1997 $0.09 $0.08
Note D -- Recent Developments
On November 7, 1997, Symix filed a Registration Statement on Form S-1
with the Securities and Exchange Commission for an underwritten public
offering of 1,900,000 Symix common shares, including 200,000 shares being
offered by shareholders, which Registration Statement has not yet become
effective.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
REVENUE
Net revenue for Symix Systems, Inc. (the "Company" or "Symix") 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 all periods presented is
accounted for in accordance with AICPA Statement of Position 91-1 on Software
Revenue Recognition.
Net revenue was $17.6 million for the three months ended September 30,
1997, an increase of 38% from the same quarter of the previous year. Both
software license fee revenue and service and support revenue contributed to
the net revenue increase, with software license fee revenue increasing 62%
and service and support revenue increasing 18% compared to the same period
last year.
Each of the Company's three major geographic markets: North America,
Europe and Asia Pacific, contributed to the software license fee revenue
growth. North America was a major contributor to the revenue performance due
to an increased number of sales representatives and improved productivity of
the Company's U.S. direct sales force. The Company reorganized the North
American sales channel during the prior fiscal year by hiring new sales
management and the Company believes these changes have resulted in a more
productive sales force. International software license fee revenue
represented approximately 25% of net revenue. The increase in software
license fee revenue was primarily attributable to continuing market
acceptance of the Company's core enterprise resource planning product,
SyteLine-TM-, and the expansion of its product line. Since the first quarter
of the prior fiscal year, the Company has introduced new products
complementing SyteLine-TM-, including SytePower-TM- (released December 1996),
SyteGuide-TM- (released June 1997), SyteSelect-TM- (released September 1997)
and FieldPro-TM- (acquired in January 1997).
Service and support revenue is comprised of installation,
implementation, training, consulting, systems integration and software
product maintenance and support. Service and support revenue increased 18%
during the quarter ended September 30, 1997 to $8.0 million compared to the
same period last year. Service and support revenue grew as a result of the
growing customer base. During fiscal 1997, the Company reorganized its
services organization and began expanding third party alliances and utilizing
business partners as third party service subcontractors to help support
customer implementations. These third party alliances and the use of business
partners as third party service subcontractors contributed to the rate of
growth of service and support revenue being less than that of software
license fee revenue. The Company continues to hire new services employees and
subcontractors to support the growth in software license fee sales.
<PAGE>
COST OF REVENUE
Total cost of revenue as a percentage of net revenue was 39% for the
quarter ended September 30, 1997, compared to 40% for the quarter ended
September 30, 1996. Improved software license fee margins were partially
offset by lower service and support margins.
Cost of software license fee includes royalties, amortization of
capitalized software development costs and software delivery expenses. Cost
of software license fee decreased to 28% of software license fee revenue for
the quarter ended September 30, 1997 from 33% for the same time last year.
The improved software license fee gross margin is attributable to the
increase in the software license fee volume relative to the rate of
amortization on capitalized software.
Cost of services 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
and support increased to $4.2 million for the quarter ended September 30, 1997
(or 52% of service and support revenue) from $3.2 million (or 47% of service
and support revenue) for the same quarter last year. Service and support
gross margin decreased as the Company continued to add to the service and
support staff to ensure proper customer service with the expanding product
line and customer base. Partially offsetting these lower margins was the
increase in service renewals due to these same expansions.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSE
Selling, general and administrative expense consists 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
expense increased 30% for the first quarter of fiscal 1998 compared to the
same quarter last year, but as a percentage of revenue decreased to 44% for
the quarter ended September 30, 1997 from 47% for the quarter ended September
30, 1996. The increase in selling, general and administrative expense was
attributable to an increase in sales force, expansion of the distribution
channels and commissions relating to increased sales. The improvement in
selling, general and administrative expense as a percentage of net revenue
was primarily due to the improved productivity of the North American sales
channel.
RESEARCH AND DEVELOPMENT
Research and development expense includes personnel and related overhead
costs for product development, enhancements, upgrades, quality assurance and
testing. Research and development expenditures, including amounts
capitalized for the three months ended September 30, 1997 were $3.3 million
compared to $1.8 million for the same period last year. The Company
capitalized research and development costs of $1.3 million for the quarter
ended September 30, 1997, compared to $.7 million for the comparable period
last year. As a percentage of revenue, net of capitalized software
development cost, research and development expense increased to 12% for the
period ended September 30, 1997 from 9% a year ago. The increase in research
and development expenditures is the result of investments in the expanding
product offerings as well
<PAGE>
as a new release of the Company's core enterprise resource planning product
- -- SyteLine-TM- version 3.0.
PROVISION FOR INCOME TAXES
The effective tax rates for the quarters ended September 30, 1997, and
1996 were 37% and 38% respectively. The reduced effective tax rate is
primarily due to the amount of foreign taxable earnings in countries with
lower effective rates, thereby reducing the Company's overall tax rate.
LIQUIDITY AND CAPITAL RESOURCES
Cash used by operations was ($0.4) million for the quarter ended
September 30, 1997, compared to $0.2 million of cash provided by operations a
year ago. The increase in net income for the current quarter was offset by
the increase in trade accounts receivable and the decrease in payables
related to year end payments. Trade accounts receivable days sales
outstanding was 105 days at September 30, 1997 compared to 93 days at
September 30, 1996. An increase in installment payments on software license
fees from new customers (particularly on large deals) contributed to the
increase in days sales outstanding. For both periods presented, the Company
invested in software development and computer equipment. Last year the
Company also invested in acquisitions. During the quarter ended September
30, 1997, the Company met its cash needs from cash on hand and borrowings
under its unsecured line of credit. Cash at September 30, 1997 decreased to
$1.8 million from $4.7 million at September 30, 1996.
Working capital of $10.0 million increased $2.1 million over the
June 30, 1997 year end level of $7.9 million. The Company has a $6.0 million
unsecured line of credit with a bank, which the Company accessed for $2.1
million during the quarter ended September 30, 1997. It is expected that the
Company's continued expansion of its operations and products will result in
additional requirements for cash in the future.
RECENT DEVELOPMENTS
The Company has entered into a definitive agreement to acquire Pritsker
Corporation ("Pritsker"), which markets advanced planning and scheduling and
simulation software to mid-market manufacturers. Pursuant to this agreement,
(i) Pritsker will be merged with and into a wholly-owned subsidiary of the
Company, (ii) each share of Pritsker common stock will be converted into the
right to receive 0.170108 common share of the Company and (iii) each share of
Pritsker preferred stock will be converted into the right to receive $5.23
plus accrued and unpaid dividends. Each unexercised option and warrant for
Pritsker common stock will be 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 exercised the option or warrant
immediately prior to the merger. If approved by the Pritsker shareholders,
it is expected that the merger will be consummated on November 21, 1997. In
connection with the merger, it is currently estimated that the Company will
incur a nonrecurring charge of approximately $6.4
<PAGE>
million relating to the write-off of acquired in-process technology of
Pritsker, which will occur in the quarter in which the merger is completed.
A Registration Statement on Form S-4 covering the Symix common shares to be
issued in the merger has been filed with the Securities and Exchange
Commission and became effective on November 10, 1997.
On November 7, 1997, Symix filed a Registration Statement on Form S-1
with the Securities and Exchange Commission for an underwritten public
offering of 1,900,000 Symix common shares, including 200,000 shares being
offered by shareholders, which Registration Statement has not yet become
effective.
SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT
OF 1995: IN ADDITION TO HISTORICAL INFORMATION, THIS QUARTERLY REPORT ON
FORM 10-Q CONTAINS "FORWARD-LOOKING STATEMENTS", INCLUDING INFORMATION
REGARDING FUTURE ECONOMIC PERFORMANCE AND PLANS AND OBJECTIVES OF MANAGEMENT,
WHICH ARE SUBJECT TO CERTAIN RISKS AND UNCERTAINTIES THAT COULD CAUSE ACTUAL
RESULTS TO DIFFER MATERIALLY FROM THOSE REFLECTED IN THE FORWARD-LOOKING
STATEMENTS. SUCH UNCERTAINTIES AND RISKS INCLUDE, BUT ARE NOT LIMITED TO,
PRODUCT DEMAND AND MARKET ACCEPTANCE; THE IMPACT OF COMPETITIVE PRODUCTS; THE
COMPANY'S ABILITY TO MAINTAIN EFFICIENT MARKETING AND DISTRIBUTION OPERATIONS
WITH RESPECT TO NEW PRODUCTS; THE COMPANY'S ABILITY TO INTEGRATE PRITSKER
INTO ITS CURRENT BUSINESS IN A TIMELY MANNER OR TO PROFITABLY MARKET AND
DISTRIBUTE PRITSKER'S PRODUCT LINES AFTER COMPLETION OF THE ACQUISITION;
FUTURE ECONOMIC, COMPETITIVE AND MARKET CONDITIONS; THE COMPANY'S ABILITY TO
RETAIN KEY TECHNICAL AND MANAGEMENT PERSONNEL; TIMING OF PRODUCT DEVELOPMENT;
PRODUCT PRICING AND OTHER FACTORS DETAILED IN THIS QUARTERLY REPORT ON FORM
10-Q AND IN OTHER FILINGS MADE BY THE COMPANY WITH THE SECURITIES AND
EXCHANGE COMMISSION.
Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
The disclosures required under this Part I, Item 3 are omitted
pursuant to the General Instructions to Item 305 of Regulation S-K, because
this Quarterly Report on Form 10-Q, for the quarter ended September 30, 1997,
does not contain financial statements for fiscal years ended after June 15,
1998.
<PAGE>
PART II -- OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
None
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS.
None
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
None
ITEM 5. OTHER INFORMATION.
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
a) See Index to Exhibits on page 16
b) Reports on Form 8-K.
None
<PAGE>
Pursuant to the requirements 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.
SYMIX SYSTEMS, INC.
Date: November 14, 1997 /s/ Lawrence W. DeLeon
---------------------------
Lawrence W. DeLeon,
Duly Authorized Officer and
Principal Financial Officer
<PAGE>
INDEX TO EXHIBITS
Exhibit No. Description Page
- ----------- ----------- ----
2 Agreement of Merger dated as of Incorporated herein by
October 2, 1997, among Pritsker reference to Appendix I to
Corporation, Symix the Proxy Statement/
Systems, Inc. and SSI Prospectus in Part I of the
Acquisition Corp. Registration Statement on
Form S-4 filed October 27,
1997 (Registration No.
333-38809)*
3(a)(1) Amended Articles of Incorporated herein by
Incorporation of Symix Systems, reference to Exhibit 3(a)(1)
Inc. (as filed with the Ohio to the Annual Report on Form
Secretary of State on 10-K for the fiscal year
February 8, 1991) ended June 30, 1997
3(a)(2) Certificate of Amendment to the Incorporated herein by
Amended Articles of reference to Exhibit 3(a)(2)
Incorporation of Symix Systems, to the Annual Report on Form
Inc. (as filed with the Ohio 10-K for the fiscal year
Secretary of State on July 16, ended June 30, 1997
1996)
3(a)(3) Amended Articles of Incorporated herein by
Incorporation of Symix Systems, reference to Exhibit 3(a)(3)
Inc. (reflecting amendments to the Annual Report on Form
through July 16, 1996, for 10-K for the fiscal year
purposes of SEC reporting ended June 30, 1997
compliance only)
3(b) Amended Regulations of Symix Incorporated herein by
Systems, Inc. reference to Exhibit 3(b) to
the Registration Statement on
Form S-1 of Registrant filed
on February 12, 1991
(Registration No. 33-38878)
4(a)(1) Amended Articles of Incorporated herein by
Incorporation of Symix Systems, reference to Exhibit 3(a)(1)
Inc. (as filed with the Ohio to the Annual Report on Form
Secretary of State on February 10-K for the fiscal year
8, 1991) ended June 30, 1997
4(a)(2) Certificate of Amendment to the Incorporated herein by
Amended Articles of reference to Exhibit 3(a)(2)
Incorporation of Symix Systems, to the Annual Report on Form
Inc. (as filed with the Ohio 10-K for the fiscal year
Secretary of State on July 16, ended June 30, 1997
1996)
<PAGE>
Exhibit No. Description Page
- ----------- ----------- ----
4(a)(3) Amended Articles of Incorporated herein by
Incorporation of Symix Systems, reference to Exhibit 3(a)(3)
Inc. (reflecting amendments to the Annual Report on Form
through July 16, 1996, for 10-K for the fiscal year
purposes of SEC reporting ended June 30, 1997
compliance only)
4(b) Amended Regulations of Symix Incorporated herein by
Systems, Inc. reference to Exhibit 3(b) to
the Registration Statement on
Form S-1 of Registrant filed
February 12, 1991
(Registration No. 33-38878)
10(a)(1) Loan Agreement by and between Page 18
Symix Systems, Inc., Symix
Computer Systems, Inc. and Bank
One, Columbus, N.A., dated as of
the 20th day of May, 1996
10(a)(2) First Amendment to Loan Page 48
Agreement by and between Symix
Systems, Inc., Symix Computer
Systems, Inc. and Bank One, N.A.
10(b) Agreement of Merger dated as of Incorporated herein by
October 2, 1997, among Pritsker reference to Appendix I to
Corporation, Symix Systems, Inc. the Proxy Statement/
and SSI Acquisition Corp. Prospectus in Part I of the
Registration Statement on
Form S-4 filed October 27,
1997 (Registration
No. 333-38809)*
27 Financial Data Schedule Page 62
*The registrant has omitted all schedules from the Agreement of Merger, as
filed with the SEC and incorporated into this Quarterly Report on Form 10-Q.
The schedules are identified in the "List of Schedules" of the Agreement of
Merger. The registrant will provide the SEC with a copy of any schedule upon
request.
<PAGE>
EXHIBIT 10(a)(1)
Loan Agreement by and between
Symix Systems, Inc., Symix
Computer Systems, Inc. and
Bank One, Columbus, N.A.,
dated as of the 20th day of May, 1996
<PAGE>
LOAN AGREEMENT
THIS AGREEMENT dated as of the 20th day of May, 1996 (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,
Columbus, N.A., 100 East Broad Street, Columbus, Ohio 43271, (hereinafter
called "Bank One"),
WITNESSETH
WHEREAS, Companies desires to obtain a credit facility from Bank One in the
maximum amount of Six Million Dollars ($6,000,000), and,
WHEREAS, Bank One is willing 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 Companies the maximum aggregate
amount of Six Million Dollars ($6,000,000) (the "Credit Commitment").
This Credit Commitment shall be available to Companies in the form of a
revolving credit loan in the maximum amount of Six Million Dollars
($6,000,000) 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 Companies, with an option to convert the balance to a
term loan, subject to the terms and conditions hereinafter set forth.
1.1.2 DISBURSEMENTS. Companies shall execute and deliver to Bank One a
promissory note in the form of Exhibit "A" attached hereto (hereinafter
referred to as the "Revolving Credit Note"). Disbursements on the
Revolving Credit Note shall be made by Bank One upon Companies' request.
Companies shall have the right to pay all or any part of the outstanding
principal balance on the Revolving Credit Note at any time without
penalty and Companies may then reborrow such amounts. Provided only,
however, that at no time may the principal balance outstanding under the
Revolving Credit Note exceed the Credit Commitment.
1.1.3 USE OF PROCEEDS. The proceeds of the Revolving Credit Note shall be
used in their entirety for working capital needs and to fund installment
sales contracts from selected customers.
<PAGE>
1.1.4 MATURITY AND INTEREST RATE. The Revolving Credit Note will mature on
April 30, 1998 and shall bear interest prior to maturity at an interest
rate to be elected by the Companies from one of the following:
(a) PRIME RATE. A rate equal to the Prime Rate. Interest payable
under this option shall be paid by Companies on the last day of
any calendar quarter in which the Companies 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 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) in effect, and as
quoted by Bank One by telephone to, and accepted by, the
Companies prior to 2:00 P.M., Ohio time, commencing on the day
the election is made. In addition, the Companies 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 last day of any
calendar quarter in which the Companies have elected the LIBOR
Rate option to be in effect. In the event the Companies 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
April 30, 1998. If a LIBOR Rate loan is paid before the
expiration of its period, as elected by Companies above, then
upon notice thereof by Bank One to the Companies, the
Companies shall prepay the principal amount of the loan plus
an interest amount calculated from the beginning of the
interest period to the date of prepayment at the Prime Rate.
(c) LEVERAGE BASED PRICING. If, at the end of any calendar
quarter, the Leverage Ratio is less 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 minus
One-eighth of one percent (0.125%) or one hundred seventy-five
(175) basis points in excess of the Benchmark Rate. If, at
the end of any calendar quarter, the Leverage Ratio is less
than or equal to 1.0 to 1.0, the interest rate for the
succeeding calendar quarter shall be adjusted to, as
appropriate, either the Prime Rate minus One-fourth of one
percent (0.250%) or one hundred fifty (150) basis points in
excess of the Benchmark Rate.
1.1.5 FACILITY FEE. As consideration for the Credit Commitment, the
Companies shall pay Bank One a facility fee on the daily average
unused portion of the Credit commitment at a rate equal to one-eighth
percent (1/8%) per annum starting with the date this Agreement
<PAGE>
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 29, 1996. The Companies shall be
entitled to cancel the Credit Commitment in whole or in part at any
time by exercising the term loan conversion option, or by payment in
full of the Revolving Credit Note accompanied by notice to Bank One
of cancellation, which notice shall be irrevocable.
SECTION 1.2. TERM LOAN CONVERSION OPTION.
1.2.1 CONVERSION TO A TERM NOTE. Subject to the limitations provided
herein, and provided that no Event of Default has occurred and is
continuing, Companies may at any time on or before April 30, 1998
convert a maximum amount not to exceed Six Million Dollars
($6,000,000.00) owing under the Revolving Credit Note into a term
promissory note (hereinafter referred to as the "Term Note"). Such
Term Note shall be executed by Companies and delivered to Bank One in
the form of Exhibit "B" attached hereto. Upon execution and delivery
of the Term Note, Bank One's obligation to make further loan
disbursements to Companies under the Revolving Credit Note shall
cease.
1.2.2 USE OF PROCEEDS. The proceeds of the Term Note shall be used in
their entirety to repay indebtedness owing under the Revolving Credit
Note.
1.2.3 PRINCIPAL PAYMENTS. Principal payments on the Term Note shall be
made to Bank One in consecutive equal quarterly installments each in
an amount equal to one-twentieth of the face amount of the Term Note,
beginning June 30, 1998 and continuing on the last day of each
succeeding calendar quarter until April 30, 2003, when any remaining
principal balance shall be due and payable.
1.2.4 MATURITY AND INTEREST RATE. The Term Note will mature on April 30,
2003 and shall bear interest prior to maturity at an interest rate to
be elected by the Companies from one of the following:
(a) PRIME RATE. A rate equal to the Prime Rate. Interest payable
under this option shall be paid by Companies on the last day
of any calendar quarter in which the Companies 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 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) in effect, and as
quoted by Bank One by telephone to, and accepted by, the
Companies prior to 2:00 P.M., Ohio time, commencing on the day
the election is made. In addition,
<PAGE>
the Companies shall pay any LIBOR reserve costs in effect which
would be incurred by Bank One. Interest payable at the LIBOR
Rate shall be paid on the last day of any calendar quarter in
which the Companies have elected the LIBOR Rate option to be in
effect. In the event the Companies 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 April 30, 2003. If a LIBOR
Rate loan is paid before the expiration of its period, as elected
by Companies above, then upon notice thereof by Bank One to
the Companies, the Companies shall prepay the principal amount
of the loan plus an interest amount calculated from the
beginning of the interest period to the date of prepayment at
the Prime Rate.
(c) LEVERAGE BASED PRICING. If, at the end-of any calendar quarter,
the Leverage Ratio is less 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 minus
One-eighth of one percent (0.125%) or one hundred seventy-five
(175) basis points in excess of the Benchmark Rate. If, at
the end of any calendar quarter, the Leverage Ratio is less
than or equal to 1.0 to 1.0, the interest rate for the
succeeding calendar quarter shall be adjusted to, as
appropriate, either the Prime Rate minus One-fourth of one
percent (0.250%) or one hundred fifty (150) basis points in
excess of the Benchmark Rate.
SECTION 1.3. PROVISIONS APPLICABLE TO ALL NOTES.
1.3.1 PROMISSORY NOTES DEFINED. The Revolving Credit Note and the Term
Note shall hereinafter sometimes be collectively referred to
hereunder as the "Notes".
1.3.2 PREPAYMENT. Companies may at any time make prepayments upon the
Notes without penalty. In the case of the Term Note, any prepayments
shall be applied to the latest maturing installment(s) of the Term
Note.
1.3.3 DEFAULT RATE. 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 percent (2%) 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 in the event of a default in
payment that remains uncured for a period of at least 12 days.
1.3.4 BASIS. Interest shall be calculated on the basis of the actual
number of days elapsed divided by a year of 360 days.
1.3.5 SETOFF. 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 to Bank One
<PAGE>
hereunder and under the Notes, whether matured or unmatured, all funds
of the Companies 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
Companies does not have a beneficial interest.
1.3.6 ADDRESS WHERE PAYMENTS ARE TO BE MADE. Companies 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, Columbus, N.A., 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 2 EXECUTION AND CONDITIONS OF BORROWING
The obligation of Bank One to make disbursements under the Revolving Credit
Note 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. Companies shall supply to Bank One on or prior to
the date of borrowing, 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 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; that the Notes are duly
executed and represent valid and binding obligations of the Companies.
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
Companies and Guarantors authorizing the execution of this Agreement and
the Notes.
2.3 INCUMBENCY CERTIFICATE. Companies shall provide at the time of borrowing
certificates of the Secretary of SSI which shall certify the names of the
officers of Companies and Guarantors authorized to sign this Agreement,
the Notes, and the other documents or certificates to be delivered
pursuant to this Agreement by Companies, 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 cancelling or amending the
prior certificate and submitting the signatures of the officers named in
such further certificate.
<PAGE>
2.4 COMPLIANCE WITH THIS AGREEMENT. At the time of the initial borrowing,
Companies 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 Default as hereinafter specified, 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. Companies shall have
duly and validly executed, issued and delivered the Notes to Bank One.
2.6 EXECUTION AND DELIVERY OF GUARANTY AGREEMENTS. Guarantors shall have
executed and delivered to Bank One their unlimited, unconditional
guaranty agreements with respect to all indebtedness of Companies to Bank
One, now existing or hereafter arising, in form and substance
satisfactory to Bank One.
SECTION 3 REPRESENTATIONS AND WARRANTIES
In borrowing hereunder, Companies 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. Companies and
Guarantors are corporations duly organized, validly existing and in
good standing under the laws of their respective states of
incorporation 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 and 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 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 Companies and Guarantors, respectively.
3.2 FINANCIAL STATEMENTS. Companies have furnished to Bank One complete,
true and correct Audited Consolidated Financial Statements as of
June 30, 1995 which 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 their 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.
<PAGE>
3.3 NO GUARANTIES OF OTHERS' OBLIGATIONS. 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. 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 Companies or (ii) the ability of Companies to
perform this Agreement.
3.5 NO UNDISCLOSED LIABILITIES. 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. 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 POSSESS NECESSARY PATENTS, TRADEMARKS & LICENSES. 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 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 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 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 Companies as debtor 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 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.
<PAGE>
3.11 LEASES ARE VALID AND ENFORCEABLE. Each lease of real estate or personal
property to which Companies are 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 NO LAWSUITS OR JUDGMENTS. Other than as disclosed on Exhibit 3.12 hereto,
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 Companies threatened or affecting
Companies or any property or rights of 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 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 Companies which
has, or is likely to have, any material adverse effect on the business or
assets or the condition, financial or otherwise, of Companies.
3.13 FILING AND PAYMENT OF TAXES. 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. Companies have made provisions which are
believed by the officers of 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 Companies materially and
adversely affects their business, properties or assets, operations or
conditions (financial or otherwise), or the ability of 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. 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 Companies or the ability of
Companies to perform this Agreement, or any other agreement or instrument
herein or therein contemplated.
<PAGE>
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 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 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. 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 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 Clear Air Act, or the Toxic
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.
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,
<PAGE>
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. 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.
SECTION 4 AFFIRMATIVE COVENANTS
Until all indebtedness of Companies to Bank One has been paid:
4.1 ANNUAL FINANCIAL STATEMENTS. 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 Securities and Exchange Commission, to include annual
Audited Consolidated Financial Statements which fairly reflect the
financial condition of the Companies.
4.2 PERIODIC FINANCIAL STATEMENTS. 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 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.
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 if an annual audit, review, or compilation is
required by the above paragraph(s), Companies will cause their independent
certified public accountant to provide Bank One with a similar certificate
and such certificate must accompany the audit, review, or compilation.
<PAGE>
4.4 INSURANCE. 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.
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. Companies shall
promptly pay any amounts owing to Bank One or any BANC ONE CORPORATION
affiliate on account of other indebtedness owing by Companies from time to
time during the term of this Agreement and the Notes executed hereunder.
4.6 CHANGES IN ARTICLES OF INC., CODE OF REGS OR BY-LAWS. Companies 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
Companies and Companies' 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. 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 Companies to pay any such taxes, assessments or
claims so long as Companies shall in good faith contest the validity and
stay the execution and enforcement thereof.
4.8 COMPLIANCE WITH LAWS. Companies will promptly comply in all substantial
respects, with all applicable statutes, laws, ordinances and governmental
rules, regulations and orders to
<PAGE>
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. Companies shall preserve and
maintain their corporate existence, rights, franchises and privileges in
the jurisdiction which it shall select, 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 Companies.
4.10 PAYMENT OF LEGAL COSTS. 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. Companies shall, upon request, promptly reimburse Bank One for
all amounts expended, advanced or incurred by Bank One to satisfy any
obligation of 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. 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 Companies' properties necessary
for the conduct of its 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. 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. 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. Companies shall promptly notify
Bank One if Companies learns of the occurrence of (i) any event which
constitutes a Default, together
<PAGE>
with a detailed statement by a responsible officer of Companies of the
steps being taken to cure the effect of such Default; or (ii) 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 Companies
or of any security (as defined in the Securities Act of 1933, as amended)
of Companies with respect to a claim of default, together with a detailed
statement by a responsible officer of Companies specifying the notice given
or other action taken by such holder and the nature of the claimed default
and what action Companies are taking or propose to take with respect
thereto; or (iii) any legal, judicial or regulatory proceedings affecting
Companies or any of the properties of 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 (iv) any dispute
between 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,
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. Companies will notify
Bank One immediately upon obtaining knowledge that:
(i) 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 quality the levels of Pollutants located on such premises, or
(ii) 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 (i) or (ii) above, 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.
<PAGE>
4.15 INSPECTION BOOKS AND RECORDS. Upon request by Bank One, 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. 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 arc being complied with.
4.17 INFORMATION PROVIDED TO OTHERS. 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.
SECTION 5 NEGATIVE COVENANTS
Except with the prior written consent of Bank One:
5.1 ENCUMBERING ASSETS. Companies 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 (i) purchase money
liens for fixed assets not to exceed an aggregate amount of Three Million
Dollars ($3,000,000), and (ii) Permitted Liens as defined herein;
5.2 INCURRING OTHER DEBT. Companies and Subsidiaries shall not create, incur,
assume or suffer to exist any Funded Debt or Current Debt except: (1) debt
represented by the Notes; (2) other indebtedness to Bank One; (3) purchase
money debt for fixed assets which shall not exceed an aggregate amount of
Three Million Dollars ($3,000,000); and (4) unsecured indebtedness to
trade creditors arising out of the ordinary course of Companies' and
Subsidiaries' business;
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 Companies
may guarantee, endorse, or otherwise become liable upon the obligations of
Subsidiaries to the extent Subsidiaries have incurred debt permitted by
Section 5.2 (3) of this Agreement and to the extent of leases for real
property with annual payments not to exceed $ 100,000.00.
5.4 MERGER OR CONSOLIDATION. 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
<PAGE>
merger or consolidation of the Companies with a Subsidiary, (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 Five Million Dollars ($5,000,000.00) for such single
transaction or causes the aggregate such amount in any fiscal year to be
less than Ten Million Dollars ($10,000,000.00);
5.5 TRANSFER OF SUBSTANTIAL PORTION OF ASSETS. 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.
5.6 CREATION OF NEW SUBSIDIARIES. Companies and Subsidiaries shall not
incorporate, create, form, establish or fund any Subsidiary unless Bank
One shall immediately be notified in writing of the creation 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;
5.7 DISPOSING OF NOTES/ACCOUNTS RECEIVABLE. Companies and Subsidiaries shall
not discount or sell any of their notes or accounts receivables, except in
the normal course of business relating to installment receivables
transactions not to exceed Two Million Dollars ($2,000,000.00) in any
fiscal year;
5.8 SALE/LEASEBACK TRANSACTIONS. Companies and Subsidiaries shall not enter
into any arrangement with any bank, insurance company or other lender or
investor providing for the leasing by Companies or Subsidiaries of real or
personal property which has been or is to be sold or transferred by
Companies or Subsidiaries to such lender or investor;
5.9 AMOUNT OF CONSOLIDATED TANGIBLE NET WORTH. Companies shall not permit
Consolidated Tangible Net Worth to be less than Nine Million Dollars
($9,000,000);
5.10 LEVERAGE RATIO. Companies shall not permit the Consolidated Leverage
Ratio to exceed the ratio of 2.00 to 1.00;
5.11 DEBT SERVICE COVERAGE RATIO. Companies shall not permit for any period of
four consecutive quarters, the Consolidated Debt Service Coverage Ratio to
be less than 1.00 to 1.00.
5.12 CURRENT RATIO. Companies shall not permit the Consolidated Current Ratio
to be less than 1.4 to 1.00.
<PAGE>
SECTION 6 EVENTS OF DEFAULT AND REMEDIES
If any of the following events ("Events of Default") shall occur and be
continuing:
A. Companies 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 often (10) calendar days, PROVIDED,
HOWEVER, 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. Companies shall default in the payment of interest on 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 often
(10) calendar days;
C. Companies 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 Companies;
D. Any representation or warranty made by Companies 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. Companies shall fail to observe or perform any covenant, condition or
agreement in Section 5 of the Agreement; (provided such failure shall
continue unremedied for a period of twenty (20) days after written
notice thereof);
F. 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 such default shall continue
unremedied for thirty (30) days (after written notice, which notice
shall include a description of the Event of Default thereof to the
Companies by Bank One);
G. Companies shall fail to observe or perform and covenant, condition or
agreement in the Notes;
H. An event of default under any guaranty or similar agreement 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
Companies or any
<PAGE>
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. 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 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 Companies or any Subsidiary by
any court of competent jurisdiction, approving a petition seeking
reorganization of Companies or any Subsidiary or appointing a
receiver, trustee or liquidator of Companies or any Subsidiary or of
all or a substantial part of the assets thereto, 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, J and K of this Section, Bank One
shall have the option to cease disbursements under the Revolving Credit
Note 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 a
Default by 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 Companies to Bank
<PAGE>
One becomes due, by acceleration or otherwise, Bank One shall have the
right, without notice to Companies, any party claiming under 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 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 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 Companies to Bank One. 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.
SECTION 8 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:
"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 Sections 1.1.4 and 1.2.4.
"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.
"Consolidated Tangible Net Worth" shall mean the Consolidated net worth of
Companies (after eliminating all inter-Companies accounts), less all
Consolidated Intangible Assets of 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 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.
<PAGE>
"Contractual Obligation" shall mean for 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 Companies is a party or by
which 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 prepaid expenses in excess of Five Hundred
Thousand Dollars ($500,000.00) shall not be considered a current asset for
purposes of this Agreement.
"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 (l) year from the date of the creation
thereof.
"Current Ratio" shall mean the ratio of Current Assets to Current
Liabilities.
"Debt" shall mean for Companies:
(i) any indebtedness for borrowed money which 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 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
<PAGE>
that the holders of such indebtedness will be protected against
loss in respect thereof,
(ii) any indebtedness, whether or not for borrowed money, which
Companies has incurred, assumed, guaranteed or with respect to
which Companies has become directly or indirectly liable
(including, without limitation, through any agreement of the
character referred to in clause (i) hereof) 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 Companies subject thereto, whether
or not Companies has any personal liability for such
indebtedness.
"Debt Service Coverage Ratio" shall mean [net income after tax +
depreciation and amortization + interest expense - capitalized software]
to [current maturities of long term debt + interest expense] all
determined in accordance with generally accepted accounting principles
applied on a consistent basis.
"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.
"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.
"Funded Debt" shall mean any Debt of Companies as defined in this section,
payable more than one (l) 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 Computer Systems (Canada), Inc., Symix
Computer Systems (UK) Ltd., Symix Asia Company Ltd., Symix Computer
Systems (Hong Kong) Ltd., Symix Computer Systems (Singapore) Pte. Ltd.,
Symix Computer Systems (Australia) Pty. Ltd., 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
<PAGE>
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 Rate" is defined in Sections 1.1.4 and 1.2.4.
"Notes" is defined in Section 1.3.1.
"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;
(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 properties 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,
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
Companies (or in which Companies or any of its employees participate,
which provides benefits to employees or former employees of 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 Companies contributes by any means.
<PAGE>
"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 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 Companies or
any of their assets or property are bound or affected or from which
Companies derive benefits, and if Companies are a corporation, their
charter documents, code of regulations and by-laws.
"Revolving Credit Note" is defined in Section 1.1.2.
"Subsidiary" shall mean any corporation fifty-one percent (51%) or more of
the voting stock of which is controlled by Companies.
"Term Note" is defined in Section 1.2.1.
"Total Consolidated Liabilities" shall mean all Consolidated liabilities
of the Companies (after eliminating all inter-Companies accounts), except
any non-current provision for deferred federal income taxes, all
determined in accordance with generally accepted accounting principles
applied on a consistent basis.
SECTION 9 MISCELLANEOUS
9.1 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's rights under this Agreement shall not be assignable
without the prior written consent of Bank One.
9.2 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.
9.3 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.
<PAGE>
9.4 DURATION. This Agreement and all covenants, agreements, representations
and warranties made herein, including but not limited to Section 1.4.1,
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 Companies of the Notes, and payment of the Notes.
9.5 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 9.5 shall not prevent Bank One from taking whatever
steps or actions are necessary to enforce its rights under this Agreement
in any other jurisdiction.
9.6 CREDIT INFORMATION. Companies authorizes Bank One to exchange Bank One
deposit, credit and borrowing information about Companies with third
parties.
9.7 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 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.
9.8 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.
9.9 CAPTIONS. Section captions used in this Agreement are for convenience
only and shall not affect the construction of this Agreement.
9.10 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.
9.11 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
<PAGE>
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
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, Columbus, N.A.
By: /s/ Kimberly C. Currie
------------------------------------------
Kimberley C. Currie, Its Vice President
Date: May 20, 1996
----------------------------------------
Symix Systems, Inc.
By: /s/ Lawrence W. DeLeon
------------------------------------------
Lawrence W. DeLeon, Its Vice President,
Chief Financial Officer and Secretary
Date: May 20, 1996
----------------------------------------
Symix Computer Systems, Inc.
By: /s/ Lawrence W. DeLeon
------------------------------------------
Lawrence W. DeLeon, Its Vice President,
Chief Financial Officer and Secretary
Date: May 20, 1996
----------------------------------------
<PAGE>
EXHIBIT "A"
REVOLVING CREDIT NOTE
$6,000,000.00 Columbus, Ohio ___________, 1996
On or before April 30, 1998, for value received, the undersigned promises to
pay to the order of Bank One, Columbus, N.A. (hereinafter called "Bank One")
the sum of Six Million Dollars ($6,000,000.00) or such lesser portion thereof
as may from time to time be disbursed to, or for the benefit of the
undersigned, with interest (computed on the basis of the actual number of days
elapsed divided by a year of 360 days) before maturity on the balance from time
to time remaining unpaid at a rate as provided in the Loan Agreement dated as
of May ___, 1996 between the undersigned and Bank One (the "Loan Agreement").
Interest shall be computed and payable quarterly beginning on June 30, 1996 and
continuing thereafter on the last day of each calendar quarter, and quarterly
until the maturity hereof. Both principal and interest are payable in lawful
money of the United States at the Main Office, Corporate Banking Division, Bank
One, Columbus, N.A., 100 East Broad Street, Columbus, Ohio 43271-0170.
The undersigned authorize(s) any Attorney-at-Law to appear for the undersigned
in an action on this promissory 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 undersigned,
and to confess judgment in favor of the legal holder of this promissory note
against the undersigned, for the amount that may be due, with interest at the
rate therein mentioned and cost 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.
This promissory note evidences a borrowing under and is entitled to the
benefits of the Loan Agreement. The principal may become due or may be
declared forthwith due and payable in the manner and upon the terms and
conditions and with the effect provided in the Loan Agreement.
THE UNDERSIGNED, TO THE EXTENT PERMITTED BY LAW, WAIVES ANY RIGHT TO HAVE A
JURY PARTICIPATE IN RESOLVING ANY DISPUTE, WHETHER SOUNDING IN CONTRACT, TORT,
OR OTHERWISE, BETWEEN BANK ONE AND THE UNDERSIGNED ARISING OUT OF, IN
CONNECTION WITH, RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED
BETWEEN THE UNDERSIGNED AND BANK ONE IN CONNECTION WITH THIS PROMISSORY NOTE,
THE LOAN AGREEMENT, OR ANY OTHER AGREEMENT OR DOCUMENT EXECUTED OR DELIVERED IN
CONNECTION HEREWITH OR THE TRANSACTIONS RELATED HERETO. THIS WAIVER SHALL NOT
IN ANY WAY AFFECT, WAIVE, LIMIT, AMEND OR MODIFY BANK ONE'S ABILITY TO PURSUE
REMEDIES PURSUANT TO ANY CONFESSION OF JUDGMENT OR COGNOVIT PROVISION CONTAINED
IN THIS PROMISSORY NOTE OR ANY OTHER DOCUMENT RELATED HERETO.
<PAGE>
- -------------------------------------------------------------------------------
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 Systems, Inc.
By:
-------------------------------------------
Lawrence W. DeLeon, Its Vice President,
Chief Financial Officer and Secretary
Date:
-----------------------------------------
Symix Computer Systems, Inc.
By:
-------------------------------------------
Lawrence W. DeLeon, Its Vice President,
Chief Financial Officer and Secretary
Date:
-----------------------------------------
<PAGE>
EXHIBIT "B"
TERM NOTE
$________________ Columbus, Ohio __________, 199__
FOR VALUE RECEIVED, the undersigned promises to pay to the order of BANK ONE,
COLUMBUS, NA (hereinafter called "Bank One") the sum of _______________________
Dollars ($_______________), with interest (computed on the basis of the actual
number of days elapsed divided by a year of 360 days) before maturity on the
balance from time to time remaining unpaid at a rate as provided in the Loan
Agreement dated as of May ____, 1996 between the undersigned and Bank One (the
"Loan Agreement"). Interest shall be payable on _____________, 199__ and
quarterly intervals thereafter. Both principal and interest are payable in
lawful money of the United States at the Main Office, Corporate Banking
Division, Bank One, Columbus, N.A., 100 East Broad Street, Columbus, Ohio 43271-
0170.
The principal hereof shall be payable in consecutive quarterly installments of
______________ Dollars ($______________) each, the first of which shall be due
on June 30, 1998, and continuing on the same day of each succeeding calendar
quarter thereafter until April 30, 2003, at which time any remaining balance of
principal, together with all interest accrued thereon, shall be due and
payable.
The undersigned hereby authorize(s) any Attorney-at-Law to appear for the
undersigned, in an action on this promissory 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
undersigned and to confess judgment in favor of the legal holder of this
promissory note against the undersigned 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.
This promissory note evidences a borrowing under and is entitled to the
benefits of the Loan Agreement. The principal may become due or may be
declared forthwith due and payable in the manner and upon the terms and
conditions and with the effect provided in the Loan Agreement.
THE UNDERSIGNED, TO THE EXTENT PERMITTED BY LAW, WAIVES ANY RIGHT TO HAVE A
JURY PARTICIPATE IN RESOLVING ANY DISPUTE, WHETHER SOUNDING IN CONTRACT, TORT,
OR OTHERWISE, BETWEEN BANK ONE AND THE UNDERSIGNED ARISING OUT OF, IN
CONNECTION WITH, RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED
BETWEEN THE UNDERSIGNED AND BANK ONE IN CONNECTION WITH THIS PROMISSORY NOTE,
THE LOAN AGREEMENT, OR ANY OTHER AGREEMENT OR DOCUMENT EXECUTED OR DELIVERED IN
CONNECTION HEREWITH OR THE TRANSACTIONS RELATED HERETO. THIS WAIVER SHALL NOT
IN ANY WAY AFFECT, WAIVE, LIMIT, AMEND OR MODIFY BANK ONE'S ABILITY TO PURSUE
REMEDIES PURSUANT TO ANY
<PAGE>
CONFESSION OF JUDGMENT OR COGNOVIT PROVISION CONTAINED
IN THIS PROMISSORY NOTE OR ANY OTHER DOCUMENT RELATED HERETO.
- -------------------------------------------------------------------------------
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 Systems, Inc.
By:
-------------------------------------------
Lawrence W. DeLeon, Its Vice President,
Chief Financial Officer and Secretary
Date:
-----------------------------------------
Symix Computer Systems, Inc.
By:
-------------------------------------------
Lawrence W. DeLeon, Its Vice President,
Chief Financial Officer and Secretary
Date:
-----------------------------------------
<PAGE>
EXHIBIT 3.12
On June 22, 1995, Symix Systems, Inc. (the "Company") filed an action
in the Court of Common Pleas of Franklin County, Ohio (Case No. 95CVH06-4279)
against O. Kent LaRoque, III, and Jeffrey M. Fisher, the former President and
former Senior Vice President, respectively of the Company. The claims asserted
in this litigation arise out of and relate primarily to the termination of
LaRoque's employment, with, and the resignation of Fisher from, the Company.
Specifically, in the pending action, the Company sought and has been granted
summary judgment in the amount of $59,255 on a promissory note executed by
LaRoque. The Company also seeks a declaration that (i) LaRoque was terminated
for just cause and that, as a result, he is not entitled to any additional
relief under the terms of his former employment agreement, and (ii) the Company
is not bound by an "Employment Severance Plan" allegedly entered into between
Fisher and LaRoque prior to termination of their employment with the Company.
The Company seeks a further declaration that if it is held liable to Fisher
under the terms of the alleged Employment Severance Plan, the Company is
entitled to be indemnified by LaRoque for such liability. Also the Company has
asserted a claim of conspiracy against Fisher and LaRoque with respect to the
execution of the alleged Employment Severance Plan and a claim for breach of
fiduciary duties against Fisher as a result of his execution and non-disclosure
of the alleged Employment Severance Plan. LaRoque has filed counterclaims
seeking compensatory damages in excess of $2.3 million against the Company for
breach of oral agreements to provide benefits, abuse of process, defamation and
libel, and breach of his stock option agreements. Fisher has filed
counterclaims seeking compensatory damages in excess of $2 million against the
Company for breach of the alleged Employment Severance Plan, defamation and
libel, and breach of his stock option agreements.
On April 18, 1996, the Common Pleas Court granted LaRoque and Fisher
leave to amend their counterclaims in the Common Pleas Court action to include,
inter alia, the claims for defamation and libel and to seek punitive damages in
excess of $1 million against the Company.
On the same date that the company filed its action in the Court of
Common Pleas of Franklin County, Ohio, LaRoque and Fisher filed an action
against the Company in the United States District Court for the Southern
District of Ohio, Eastern Division, styled as O. KENT LAROQUE, III V. SYMIX
SYSTEMS, INC. (Case No. 2-95-CV632). The claims asserted in the District Court
litigation are similar to the claims asserted in the Common Pleas Court case.
Because the District Court litigation involved the same or similar claims as
the Common Pleas Court litigation, the District Court litigation has been
stayed pending resolution of the Common Pleas Court case.
Management of the Company believes that the claims and counterclaims
asserted by LaRoque and Fisher in the aforementioned actions are without merit.
<PAGE>
EXHIBIT 10(a)(2)
First Amendment to Loan Agreement
by and between Symix Systems, Inc.,
Symix Computer Systems, Inc.
and Bank One, N.A.
<PAGE>
FIRST AMENDMENT TO LOAN AGREEMENT
THIS FIRST AMENDMENT TO LOAN AGREEMENT ("First Amendment") is made and entered
into as of _____________________, 1997, 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, successor by merger to Bank One, Columbus, N.A.,
100 East Broad Street, Columbus, Ohio 43271 (hereinafter called "Bank One").
WITNESSETH:
WHEREAS, Companies and Bank entered into a Loan Agreement dated as of May 20,
1996, pursuant to which Companies obtained a Credit Commitment from Bank in the
maximum aggregate amount of Six Million Dollars ($6,000,000.00) (the
"Agreement"); and
WHEREAS, Companies and Bank have agreed to amend the Agreement in order, among
other things, to extend the maturity of the Credit Commitment upon the terms and
conditions hereinafter set forth;
NOW, THEREFORE, the parties agree as follows:
A. Section 1.1.1 of the Agreement is hereby deleted in its entirety and
replaced with the following:
1.1.1 AMOUNT. Bank One hereby agrees to lend Companies the maximum
aggregate amount of Six Million Dollars ($6,000,000) (the "Credit
Commitment"). This Credit Commitment shall be available to
Companies in the form of a revolving credit loan in the maximum
amount of Six Million Dollars ($6,000,000) 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
Companies (provided, however, that neither that certain letter of
credit issued August 5, 1996 in the amount of $1,013,916.50
expiring November 23, 1999 nor that certain letter of credit
issued January 9, 1997 in the amount of $370,370.37 expiring
February 3, 1998 shall be subtracted from the maximum amount to
determine availability), with an option to convert the balance to
a term loan, subject to the terms and conditions hereinafter set
forth.
B. Section 1.1.2 of the Agreement is hereby deleted in its entirety and
replaced with the following:
1.1.2 DISBURSEMENTS. Companies shall execute and deliver to Bank One a
promissory note in the form of Exhibit "A-2" attached hereto
(hereinafter referred to as the
<PAGE>
"Revolving Credit Note"). Disbursements on the Revolving Credit
Note shall be made by Bank One upon Companies' request.
Companies shall have the right to pay all or any part of the
outstanding principal balance on the Revolving Credit Note at
any time without penalty and Companies may then reborrow such
amounts. Provided only, however, that at no time may the
principal balance outstanding under the Revolving Credit Note
exceed the Credit Commitment.
C. Section 1.1.4 of the Agreement is hereby deleted in its entirety and
replaced with the following:
1.1.4 MATURITY AND INTEREST RATE. The Revolving Credit Note will
mature on October 31, 1999 and shall bear interest prior to
maturity at an interest rate to be elected by the Companies from
one of the following:
(a) PRIME RATE. A rate equal to the Prime Rate. Interest
payable under this option shall be paid by Companies on the last
day of any calendar quarter in which the Companies 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 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
eight (180) days or one year (the "Benchmark Rate") (to be
elected at the option of the Companies) in effect, and as quoted
by Bank One by telephone to, and accepted by, the Companies prior
to 2:00 P.M., Ohio time, commencing on the day the election is
made. In addition, the Companies 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 last day of any calendar quarter in
which the Companies have elected the LIBOR Rate option to be in
effect. In the event the Companies 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 October 31, 1999. If a LIBOR
Rate loan is paid before the expiration of its period, as elected
by Companies above, then upon notice thereof by Bank One to the
Companies, the Companies shall prepay the principal amount of the
loan plus an interest amount calculated from the beginning of the
interest period to the date of prepayment at the Prime Rate.
(c) LEVERAGE BASED PRICING. If, at the end of any calendar
quarter, the Leverage Ratio is less 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 minus One-eight
of one percent (0.125%) or one hundred seventy-five (175)
<PAGE>
basis points in excess of the Benchmark Rate. If, at the end of
any calendar quarter, the Leverage Ratio is less than or equal to
1.0 to 1.0, the interest rate for the succeeding calendar quarter
shall be adjusted to, as appropriate, either the Prime Rate minus
One-fourth of one percent (0.250%) or one hundred fifty (150)
basis points in excess of the Benchmark Rate.
D. Section 1.2.1 of the Agreement is hereby deleted in its entirety and
replaced with the following:
1.2.1 CONVERSION TO A TERM NOTE. Subject to the limitations provided
herein, and provided that no Event of Default has occurred and is
continuing, Companies may at any time on or before October 31,
1999 convert a maximum amount not to exceed Six Million Dollars
($6,000,000.00) owing under the Revolving Credit Note into a term
promissory note (hereinafter referred to as the "Term Note").
Such Term Note shall be executed by Companies and delivered to
Bank One in the form of Exhibit "B-2" attached hereto. Upon
execution and delivery of the Term Note, Bank One's obligation to
make further loan disbursements to Companies under the Revolving
Credit Note shall cease.
E. Section 1.2.3 of the Agreement is hereby deleted in its entirety and
replaced with the following:
1.2.3 PRINCIPAL PAYMENTS. Principal payments on the Term Note shall be
made to Bank One in consecutive equal quarterly installments each
in an amount equal to one-twentieth of the face amount of the
Term Note, beginning December 31, 1999 and continuing on the last
day of each succeeding calendar quarter until October 31, 2004,
when any remaining principal balance shall be due and payable.
F. Section 1.2.4 of the Agreement is hereby deleted in its entirety and
replaced with the following:
1.2.4 MATURITY AND INTEREST RATE. The Term Note will mature on
October 31, 2004 and shall bear interest prior to maturity at an
interest rate to be elected by the Companies from one of the
following:
(a) PRIME RATE. A rate equal to the Prime Rate. Interest
payable under this option shall be paid by Companies on the last
day of any calendar quarter in which the Companies 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 in an amount equal to the principal amount of
such Loan for the period of thirty (30) days, sixty (60) days,
ninety (90)
<PAGE>
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) in effect, and as quoted by Bank One
by telephone to, and accepted by, the Companies prior to 2:00
P.M., Ohio time, commencing on the day the election is made.
In addition, the Companies shall pay any LIBOR reserve costs in
effect which would be incurred by Bank One. Interest payable
at the LIBOR Rate shall be paid on the last day of any calendar
quarter in which the Companies have elected the LIBOR Rate
option to be in effect. In the event the Companies 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
October 31, 2004. If a LIBOR Rate loan is paid before the
expiration of its period, as elected by Companies above, then
upon notice thereof by Bank One to the Companies, the Companies
shall prepay the principal amount of the loan plus an interest
amount calculated from the beginning of the interest period to
the date of prepayment at the Prime Rate.
(c) LEVERAGE BASED PRICING. If, at the end of any calendar
quarter, the Leverage Ratio is less 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
minus One-eighth of one percent (0.125%) or one hundred
seventy-five (175) basis points in excess of the Benchmark
Rate. If, at the end of any calendar quarter, the Leverage
Ratio is less than or equal to 1.0 to 1.0, the interest rate
for the succeeding calendar quarter shall be adjusted to, as
appropriate, either the Prime Rate minus One-fourth of one
percent (0.250%) or one hundred fifty (150) basis points in
excess of the Benchmark Rate.
G. Section 5.12 of the Agreement is hereby deleted in its entirety and
replaced with the following:
5.12 CURRENT RATIO. Companies shall not permit the Consolidated Current
Ratio to be less than 2.50 to 1.00.
H. The definition of "Current Assets" and "Current Liabilities" in Section 8
of the Agreement is hereby deleted in its entirety and replaced with the
following:
"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 prepaid expenses in excess of Five Hundred Thousand
Dollars ($500,000.00) shall not be considered a current asset for purposes
of this Agreement; and provided further, however, that deferred revenues
shall not be considered a current liability for purposes of this Agreement.
<PAGE>
I. The definition of "Guarantors" in Section 8 of the Agreement is hereby
deleted in its entirety and replaced with the following:
"Guarantors" shall mean Symix Computer Systems (Canada), Inc., Symix
Computer Systems (U.K.) Limited, Symix (U.K.) Limited, Symix Asia Company
Limited, Symix Computer Systems (Hong Kong) Ltd., Symix Computer Systems
(Singapore) Pte. Ltd., Symix Computer Systems (Australia) Pty Ltd, Symix
Computer Systems (Mexico) S. De R.L. De C.V. and Symix Systems, B.V.
J. Exhibit "A" to the Agreement is hereby replaced by Exhibit "A-2" attached
hereto. Exhibit "B" to the Agreement is hereby replaced by Exhibit "B-2"
attached hereto. Companies shall execute and deliver to Bank an Amended and
Restated Revolving Credit Note in the form of Exhibit "A-2". Companies shall
execute and deliver to Bank an Amended and Restated Revolving Credit Note in the
form of Exhibit "B-2".
I. This First Amendment is a revision only and not a novation, and except as
specifically modified by the terms and conditions of this First Amendment, all
of the terms and conditions of the Agreement remain in full force and effect.
THE PARTIES HAVE HEREUNTO SET THEIR HANDS and caused this First Amendment to be
duly executed by their respective duly-authorized officers on the day and year
set forth below.
Bank One, NA
By:
---------------------------------
Its
------------------------------
Date:
-------------------------------
Symix Systems, Inc.
By: /s/ Lawrence W. DeLeon
----------------------------------------
Lawrence W. DeLeon, Its Vice President,
Chief Financial Officer and Secretary
Date:
--------------------------------------
Symix Computer Systems, Inc.
<PAGE>
By: /s/ Lawrence W. DeLeon
----------------------------------------
Lawrence W. DeLeon, Its Vice President,
Chief Financial Officer and Secretary
Date:
--------------------------------------
<PAGE>
ACKNOWLEDGMENT AND AGREEMENT BY GUARANTORS
The foregoing First Amendment to Loan Agreement is hereby acknowledged and
agreed to by the undersigned guarantors of the Notes, confirming the continuing
validity of their respective guaranty agreements. This Acknowledgment may be
executed and delivered in any number of counterparts, all of which, taken
together, shall constitute one and the same instrument, and any of the parties
hereto may execute this Acknowledgment by signing any such counterpart.
Symix Computer Systems (Canada), Inc.
By:/s/ Lawrence J. Fox
-----------------------------------
Lawrence J. Fox, Chairman
Date:
---------------------------------
Symix Computer Systems (U.K.) Limited
By:/s/ Lawrence J. Fox
-----------------------------------
Lawrence J. Fox, Director
Date:
---------------------------------
And By:/s/ Lawrence W. DeLeon
-------------------------------
Lawrence W. DeLeon, Secretary
Date:
---------------------------------
Symix (U.K.) Limited
By:/s/ Lawrence J. Fox
-----------------------------------
Lawrence J. Fox, Director
Date:
---------------------------------
And By:/s/ Stephen A. Sasser
-------------------------------
Stephen A. Sasser, Secretary
Date:
---------------------------------
<PAGE>
Symix Asia Company Limited
By:
-----------------------------------
Mr. Simon Gainsford, Director
Date:
-----------------------------------
And By:/s/ Lawrence Walter DeLeon
------------------------------------
Mr. Lawrence Walter DeLeon, Director
Date:
-----------------------------------
Symix Computer Systems (Hong Kong) Ltd.
By:
--------------------------------------------
------------------, Secretary, for and on
behalf of B. & McK. Nominees Limited in its
capacity as Secretary
Date:
-----------------------------------
And By:/s/ Lawrence W. DeLeon
-----------------------------------
Lawrence W. DeLeon, Secretary
Date:
-------------------------------------
Symix Computer Systems (Singapore) Pte. Ltd.
By:/s/ Lawrence J. Fox
-----------------------------------
Lawrence J. Fox, Director
Date:
-----------------------------------
And By:/s/ Lawrence W. DeLeon
-----------------------------------
Lawrence W. DeLeon, Director
Date:
-----------------------------------
<PAGE>
Symix Computer Systems (Australia) Pty Ltd.
By:/s/ Lawrence J. Fox
-----------------------------------
Lawrence J. Fox, Director
Date:
-----------------------------------
And By:/s/ Lawrence W. DeLeon
-----------------------------------
Lawrence W. DeLeon, Secretary
Date:
-----------------------------------
Symix Computer Systems (Mexico) S. De R.L. De C.V.
By:/s/ Stephen A. Sasser
-----------------------------------
Stephen A. Sasser, Director
Date:
-----------------------------------
And By:/s/ Lawrence W. DeLeon
-----------------------------------
Lawrence W. DeLeon, Director
Date:
-----------------------------------
Symix Systems, B.V.
By:/s/ Stephen A. Sasser
-------------------------------------
Stephen A. Sasser, Managing Director
Date:
-----------------------------------
<PAGE>
Exhibit "A-2"
AMENDED AND RESTATED REVOLVING CREDIT NOTE
$6,000,000.00 Columbus, Ohio __________, 1997
On or before October 31, 1999, for value received, the undersigned promises to
pay to the order of Bank One, NA (hereinafter called "Bank One") the sum of Six
Million Dollars ($6,000,000.00) or such lesser portion thereof as may from time
to time be disbursed to, or for the benefit of the undersigned, with interest
(computed on the basis of the actual number of days elapsed divided by a year of
360 days) before maturity on the balance from time to time remaining unpaid at a
rate as provided in the Loan Agreement dated as of May 20, 1996 between the
undersigned and Bank One, as amended from time to time (the "Loan Agreement").
Interest shall be computed and payable quarterly beginning on June 30, 1996 and
continuing thereafter on the last day of each calendar quarter, and quarterly
until the maturity hereof. Both principal and interest are payable in lawful
money of the United States at the Main Office, Corporate Banking Division, Bank
One, NA, 100 East Broad Street, Columbus, Ohio 43271-0170.
The undersigned authorize(s) any Attorney-at-Law to appear for the undersigned
in an action on this promissory 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 undersigned,
and to confess judgment in favor of the legal holder of this promissory note
against the undersigned, for the amount that may be due, with interest at the
rate therein mentioned and cost 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.
This promissory note evidences a borrowing under and is entitled to the benefits
of the Loan Agreement. The principal may become due or may be declared
forthwith due and payable in the manner and upon the terms and conditions and
with the effect provided in the Loan Agreement.
THE UNDERSIGNED, TO THE EXTENT PERMITTED BY LAW, WAIVES ANY RIGHT TO HAVE A JURY
PARTICIPATE IN RESOLVING ANY DISPUTE, WHETHER SOUNDING IN CONTRACT, TORT, OR
OTHERWISE, BETWEEN BANK ONE AND THE UNDERSIGNED ARISING OUT OF, IN CONNECTION
WITH, RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED BETWEEN THE
UNDERSIGNED AND BANK ONE IN CONNECTION WITH THIS PROMISSORY NOTE, THE LOAN
AGREEMENT, OR ANY OTHER AGREEMENT OR DOCUMENT EXECUTED OR DELIVERED IN
CONNECTION HEREWITH OR THE TRANSACTIONS RELATED HERETO. THIS WAIVER SHALL NOT
IN ANY WAY AFFECT, WAIVE, LIMIT, AMEND OR MODIFY BANK ONE'S ABILITY TO PURSUE
REMEDIES PURSUANT TO ANY CONFESSION OF JUDGMENT OR COGNOVIT PROVISION CONTAINED
IN THIS PROMISSORY NOTE OR ANY OTHER DOCUMENT RELATED HERETO.
<PAGE>
- --------------------------------------------------------------------------------
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 Systems, Inc.
By:
---------------------------------------
Lawrence W. DeLeon, Its Vice President,
Chief Financial Officer and Secretary
Date:
-----------------------------------
Symix Computer Systems, Inc.
By:
---------------------------------------
Lawrence W. DeLeon, Its Vice President,
Chief Financial Officer and Secretary
Date:
-------------------------------------
<PAGE>
Exhibit "B-2"
AMENDED AND RESTATED TERM NOTE
$___________ Columbus, Ohio _________, 199_
FOR VALUE RECEIVED, the undersigned promises to pay to the order of Bank One, NA
(hereinafter called "Bank One") the sum of _________________________________
Dollars ($______________), with interest (computed on the basis of the actual
number of days elapsed divided by a year of 360 days) before maturity on the
balance from time to time remaining unpaid at a rate as provided in the Loan
Agreement dated as of May 20, 1996 between the undersigned and Bank One, as
amended from time to time (the "Loan Agreement"). Interest shall be payable on
_________________, 199__ and quarterly intervals thereafter. Both principal and
interest are payable in lawful money of the United States at the Main Office,
Corporate Banking Division, Bank One, NA, 100 East Broad Street, Columbus, Ohio
43271-0170.
The principal hereof shall be payable in consecutive quarterly installments of
_________________ Dollars ($_____________) each, the first of which shall be due
on December 31, 1999, and continuing on the same day of each succeeding calendar
quarter thereafter until October 31, 2004, at which time any remaining balance
of principal, together with all interest accrued thereon, shall be due and
payable.
The undersigned hereby authorize(s) any Attorney-at-Law to appear for the
undersigned, in an action on this promissory 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
undersigned and to confess judgment in favor of the legal holder of this
promissory note against the undersigned 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.
This promissory note evidences a borrowing under and is entitled to the benefits
of the Loan Agreement. The principal may become due or may be declared
forthwith due and payable in the manner and upon the terms and conditions and
with the effect provided in the Loan Agreement.
THE UNDERSIGNED, TO THE EXTENT PERMITTED BY LAW, WAIVES ANY RIGHT TO HAVE A JURY
PARTICIPATE IN RESOLVING ANY DISPUTE, WHETHER SOUNDING IN CONTRACT, TORT, OR
OTHERWISE, BETWEEN BANK ONE AND THE UNDERSIGNED ARISING OUT OF, IN CONNECTION
WITH, RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED BETWEEN THE
UNDERSIGNED AND BANK ONE IN CONNECTION WITH THIS PROMISSORY NOTE, THE LOAN
AGREEMENT, OR ANY OTHER AGREEMENT OR DOCUMENT EXECUTED OR DELIVERED IN
CONNECTION HEREWITH OR THE TRANSACTIONS RELATED HERETO. THIS WAIVER SHALL NOT
IN ANY WAY AFFECT, WAIVE, LIMIT, AMEND OR MODIFY BANK ONE'S ABILITY TO PURSUE
REMEDIES PURSUANT TO ANY
<PAGE>
CONFESSION OF JUDGMENT OR COGNOVIT PROVISION CONTAINED IN THIS PROMISSORY
NOTE OR ANY OTHER DOCUMENT RELATED HERETO.
- --------------------------------------------------------------------------------
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 Systems, Inc.
By:
----------------------------------------
Lawrence W. DeLeon, Its Vice President,
Chief Financial Officer and Secretary
Date:
---------------------------------------
Symix Computer Systems, Inc.
By:
-----------------------------------------
Lawrence W. DeLeon, Its Vice President,
Chief Financial Officer and Secretary
Date:
---------------------------------------
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
THE CONSOLIDATED BALANCE SHEETS AND CONSOLIDATED STATEMENTS OF OPERATIONS
IN THE QUARTERLY REPORT ON FORM 10-Q FOR THE QUARTER ENDED SEPTEMBER 30,
1997 FOR SYMIX SYSTEMS, INC. AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1998
<PERIOD-START> JUL-01-1997
<PERIOD-END> SEP-30-1997
<CASH> 1,838
<SECURITIES> 0
<RECEIVABLES> 22,631
<ALLOWANCES> 807
<INVENTORY> 384
<CURRENT-ASSETS> 26,211
<PP&E> 14,601
<DEPRECIATION> 8,878
<TOTAL-ASSETS> 44,808
<CURRENT-LIABILITIES> 16,324
<BONDS> 0
0
1,031
<COMMON> 62
<OTHER-SE> 22,479
<TOTAL-LIABILITY-AND-EQUITY> 44,808
<SALES> 9,549
<TOTAL-REVENUES> 17,565
<CGS> 2,712
<TOTAL-COSTS> 6,891
<OTHER-EXPENSES> 9,775
<LOSS-PROVISION> 105
<INTEREST-EXPENSE> 50
<INCOME-PRETAX> 849
<INCOME-TAX> 317
<INCOME-CONTINUING> 532
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 532
<EPS-PRIMARY> 0.08
<EPS-DILUTED> 0.08
</TABLE>
