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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the fiscal year ended June 30, 1998.
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
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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 (I.R.S. Employer
incorporation or organization) Identification No.)
2800 Corporate Exchange Drive
Columbus, Ohio 43231
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (614) 523-7000
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Securities registered pursuant to section 12(b) of the Act:
NONE
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Securities registered pursuant to Section 12(g) of the Act:
Common Shares No-Par Value
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Title of Class
Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes X No
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Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K (Section 229.405 of this chapter) is not contained
herein, and will not be contained, to the best of registrant's knowledge, in
definitive proxy or information statements incorporated by reference in Part
III of this Form 10-K or any amendment to this Form 10-K. [ ]
The aggregate market value of the voting and non-voting common equity held by
non-affiliates of the registrant at September 22, 1998 was $75,335,545.
The number of common shares outstanding at September 22, 1998 was 6,507,054.
Documents Incorporated by Reference:
(1) The Registrant's Definitive Proxy Statement for its Annual
Meeting of Shareholders to be held on November 11, 1998 is
incorporated by reference into Part III of this Annual Report on
Form 10-K.
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PART I
ITEM 1. BUSINESS
GENERAL
Symix Systems, Inc. ("Symix" or the "Company") designs, develops,
markets and supports a fully integrated manufacturing, planning and financial
software solution that addresses the Enterprise Resource Planning ("ERP")
requirements of mid-market discrete manufacturers and individual
manufacturing sites of larger manufacturers. Historically, manufacturers have
implemented ERP systems to achieve improvements in manufacturing operations
and related cost reductions. Today, manufacturers increasingly face global
competition, the challenges of managing multinational and multi-site
operations and more demanding customer service requirements. In response to
this complex business environment, manufacturers have begun to focus on
customer interaction, which requires further integrating customer
requirements into the overall fulfillment cycle. Business software solutions
not only must deliver the operational improvements of traditional ERP, but
also must provide capabilities to enhance customer interaction and improve
revenue performance. Mid-market manufacturers generally are constrained by
limited financial and technological resources; nevertheless, they require ERP
solutions that offer a high degree of flexibility and functionality and can
integrate customers with business processes. Through its Customer
Synchronized Resource Planning ("CSRP") approach, the Company delivers to
mid-market manufacturers a cost-effective ERP solution that facilitates a
shift in focus from manufacturing-centric planning to customer-centric
planning.
Traditional ERP Systems enable the collection, management and
integration of data concerning component procurement, inventory management,
manufacturing control, distribution, financial and other functions to improve
manufacturing efficiency. CSRP incorporates and extends traditional ERP
functionality to integrate customer requirements into manufacturers' core
business processes. The Company's primary ERP product, SyteLine, improves
manufacturers' performance with respect to customer service, planning and
materials management, production management and enterprise administration.
SyteLine operates across a wide range of hardware platforms using the Windows
NT and UNIX operating systems. In addition, Symix offers complementary
software capabilities including: configuration, which integrates the customer
with the order process to increase the quality of complex product orders;
field service, which improves the quality and efficient delivery of field
service and support; advanced planning and scheduling, which allows
manufacturers to optimize scheduling of production operations to improve
customer satisfaction and on-time delivery while reducing the manufacturers'
and their customers' inventory carrying costs; electronic commerce and web
enabled communication capabilities, which facilitate communication between
businesses and their customers and suppliers; on-line analytical processing,
which aids in decision-making by providing comprehensive analysis of
operational data stored by SyteLine; and enterprise process documentation,
which speeds the implementation of ERP systems and facilitates the execution
of ISO 9000 quality initiatives. The Company's CSRP approach provides highly
integrated, client-focused, software solutions that address the critical
business needs of mid-market manufacturers.
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Symix offers a wide range of services, including project management,
implementation, product education, technical consulting, programming
services, system integration and maintenance and support. Symix works with
consulting firms and third party vendors to deliver integrated CSRP
solutions. The Company has focused its products and services on the following
vertical markets: industrial equipment, fabricated metals, furniture and
fixtures, electronics, containers and packaging, and industrial.
The Company has more than 3,300 customer sites, which it services and
supports through a worldwide network of 26 offices in 13 countries.
Symix was incorporated under the laws of the State of Ohio in 1984.
The Company's principal executive offices are located at 2800 Corporate
Exchange Drive, Columbus, Ohio 43231, and its telephone number is (614)
523-7000.
INDUSTRY BACKGROUND
Manufacturers are increasingly subject to global competitive
pressures. At the same time, customer requirements are becoming increasingly
complex. Manufacturers must manage larger product portfolios, shorten product
development and delivery cycles, reduce inventory levels, respond to
customers' customization demands and implement complex multinational
manufacturing and distribution strategies. In response, manufacturers have
turned to business process reengineering and to ERP solutions to improve
operational efficiency and to manage resources across the enterprise.
According to Advanced Manufacturing Research, the worldwide ERP software
marketplace will grow to approximately $14.8 billion in 1998 from an
estimated $9.6 billion in 1997. Market growth through the year 2000 is
estimated to exceed 30% per year.
Traditional ERP systems enable the collection, management and
integration of data concerning component procurement, inventory management,
manufacturing control, distribution, finance and other functions with the
goal of improving the efficiency of manufacturing production. Increasingly,
manufacturers look for functionality and flexibility beyond the scope of
traditional ERP systems and seek to manage the collection and integration of
all information that flows to and from customers, suppliers and business
partners.
Mid-market manufacturers are impacted by the increasingly dynamic and
competitive manufacturing environment and must address their needs for
functionality and flexibility with limited staff and technical and financial
resources. Such manufacturers require an affordable ERP system that
incorporates broad functionality, is easy to install and maintain and can be
rapidly deployed. The ERP system is the most important application system for
the mid-market manufacturer, but the operational efficiencies gained from a
traditional ERP system alone are no longer sufficient to maintain a
competitive advantage. Mid-market manufacturers' ability to synchronize
individual customer preferences with their production and planning systems
will be critical to their success.
As mid-market manufacturers expand their focus from the traditional
ERP goal of improving operational efficiency to the goal of identifying and
assessing customer needs and preferences and incorporating such information
into the resource planning decision, the
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requirements placed on their ERP systems will increase. Mid-market
manufacturers must evolve from a manufacturing-centric business model that
focuses solely on improving operational efficiency to a customer-centric
business model that incorporates customer needs into the order fulfillment
process.
THE SYMIX SOLUTION
Symix designs, develops, markets and supports a fully integrated
manufacturing, planning and financial software solution that addresses the
ERP requirements of mid-market manufacturers. Symix's CSRP approach creates a
competitive advantage for manufacturers by integrating all aspects of their
operations to satisfy customers' demands. The CSRP approach enhances and
extends ERP and integrates customers into manufacturers' core planning and
delivery processes by aligning customer requirements with manufacturers'
sales, marketing, engineering, manufacturing and customer service resources.
The Company combines its core ERP system, SyteLine, with
complementary products to deliver CSRP solutions. Symix delivers a
combination of technology, functionality and services to enable manufacturers
to implement rapidly a solution that integrates customer needs and
requirements into manufacturers' business planning and execution systems. The
Company believes its approach results in enhanced customer relationships,
increased productivity, improved operating efficiency and lower total cost of
ownership. The benefits to manufacturers using the Symix solution include the
following:
IMPROVED CUSTOMER RELATIONSHIPS. CSRP integrates customer requirements
with manufacturers' sales, marketing, engineering, manufacturing and customer
service information, resulting in more accurate planning and scheduling
decisions, rapid response times, better on-time deliveries, improved order
fulfillment and improved field service delivery, thereby providing greater
customer satisfaction.
REDUCED TOTAL COST OF OWNERSHIP. The Company's solutions are designed to
minimize the total cost of implementing, operating and maintaining ERP
systems and to maximize operating efficiency. Symix's software runs on
standard hardware platforms, providing users with the flexibility to leverage
existing technology systems and to optimize system configurations. The
modular design of the Company's software allows manufacturers to implement
systems quickly and easily and provides the flexibility to add additional
functionality or change business process models as customer needs and
business requirements change.
REDUCED TIME TO BENEFIT. The Company believes its ability to implement
its software solution rapidly and reduce manufacturers' time to benefit is a
key competitive advantage. The Company reduces implementation time in three
ways. First, Symix employs a structured implementation methodology that
separates the solution implementation process into distinct and manageable
phases, ensuring coordination throughout the implementation process. Second,
the Company's proprietary business process modeling tool enables customers to
map the appropriate systems and procedures necessary to increase the speed of
the deployment process. Third, Symix maintains strategic relationships with
numerous business partners, which enable the Company to provide a
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solution that addresses manufacturers' software, hardware and MIS needs in an
integrated fashion with minimal customer disruption.
STRATEGY
The Company's objective is to be a leading provider of CSRP solutions
to mid-market discrete manufacturers. The key components of the Company's
strategy include:
EXPAND CSRP SOLUTIONS. The Company believes its CSRP approach affords
manufacturers unique competitive advantages by enabling them to drive
business processes with real-time customer information. Implementing a CSRP
solution increases product accuracy, decreases delivery times and improves
operational efficiency. More importantly, CSRP provides the infrastructure to
create customized solutions that improve customer satisfaction. The Company
is committed to continuing its CSRP approach.
STRENGTHEN MID-MARKET LEADERSHIP POSITION. The Company believes that it
is a leading provider of ERP solutions to mid-market manufacturers and that
its CSRP solutions strengthen its market position. The Company has more than
3,300 customer sites, which it services and supports through a worldwide
network of 26 offices in 13 countries. The Company intends to leverage its
technology and customer base to enhance its leadership position in its
targeted vertical markets and to pursue new vertical markets in which it has
expertise.
EMBRACE SIMPLE AND EASY TO USE TECHNOLOGY. The Company's CSRP approach
emphasizes the commitment to a simple but powerful technology solution
through Microsoft and Progress Software. The use of technology tools from
Microsoft and Progress standardizes and simplifies integration efforts and
avoids the costly maintenance of internally supported proprietary development
tools. The Company will continue to concentrate its development resources on
these technology platforms.
PURSUE STRATEGIC PARTNERSHIPS. The Company will continue to provide the
tools, techniques, methodologies and other elements required to simplify the
task of implementing and supporting software solutions. Symix intends to
pursue this strategy through alliances with industry leading partners and/or
acquisitions of new technology.
EXPAND MARKET PENETRATION THROUGH CONSULTING PARTNERS. The development of
existing and new partnerships with major regional accounting and consulting
firms is an important tool in the generation of sales leads for the Company.
Symix has formed alliances with consulting partners, including Arthur
Andersen LLP, Deloitte & Touche LLP and Grant Thornton LLP, to promote the
Company's products. The Company believes that these and other new alliances
will continue to provide access to key decision makers in the Company's
target markets.
PRODUCTS
Symix's core ERP product is SyteLine. SyteLine is the Company's
client/server-based product that was rearchitected and developed from earlier
versions of Symix ERP solutions. SyteLine encompasses all of the functionality
of earlier versions of Symix ERP solutions, but also
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provides full client/server and graphical user interface ("GUI") features,
multi-site capabilities and enhanced international financial reporting.
SyteLine targets make-to-order, high configuration manufacturing of
industrial products in five key vertical markets; industrial equipment,
fabricated metals, furniture and fixtures, containers and packaging, and
industrial electronics.
The preferred operating system environment for SyteLine is Windows
NT, although it is compatible with UNIX. The Company's development efforts
are focused on developing products for the Windows NT environment. As a
result, the Company's future success depends upon the adoption of Windows NT
as an operating system environment and SQL Server as the reference database
by mid-size discrete manufacturers for mission critical applications. Delays
in the widespread adoption of Windows NT by the Company's target customers
may adversely affect the Company's business, operating results or financial
condition.
In addition to SyteLine, the Company offers complementary software
products, including SyteAPS, an advanced planning and scheduling product
allowing optimization of production scheduling and on-time delivery;
SyteSelect, a rules-based order configurator that enhances the speed and
accuracy of complex order fulfillment; SytePower, a data analysis tool that
provides the capability to distill business intelligence from data
warehouses; SyteGuide, a business process modeling and flow charting tool
that enables quality systems implementation and ISO 9000 compliance; SyteEDI
and SyteWeb, electronic commerce software applications designed to deliver
customer and supplier-focused business-to-business communications solutions;
and SyteService, a field service management software product that is
integrated with SyteLine. SyteService is based on Symix's stand-alone
FieldPro product. FieldPro enables field service organizations to schedule
and dispatch field service technicians, maintain warranty and service history
and update purchasing and inventory records. FieldPro is specifically
targeted at high technology and office equipment service organizations.
The complementary software products such as SyteService, SyteSelect
and SyteAPS are written in C++ programming language, operate in a Microsoft
Windows NT operating environment, and use SQL Server as a database.
The core ERP product SyteLine is written in PROGRESS, a proprietary
fourth-generation programming language licensed from Progress Software
Corporation ("PSC"). PROGRESS provides manufacturers with reporting and
development tools that have significant flexibility. The Company receives
revenues from the resale of PROGRESS and pays royalties to PSC. Symix also
offers other PSC products, including PROGRESS 4GL tools and Relational
Database Management System ("RDBMS").
The Company depends on the availability of PROGRESS for license to
its customer base and the acceptance of PROGRESS by its customers. The
Company has entered into a non-exclusive application partnership agreement
with PSC pursuant to which the Company is authorized to market and distribute
PROGRESS in connection with sales of the Company's products. Under the terms
of the agreement, the Company bears primary responsibility for assisting
customers in developing applications with PROGRESS and agrees to provide
appropriate support to PROGRESS customers. The current agreement between the
Company and PSC may be terminated by either party upon ninety (90) days'
written notice of its intention
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to terminate to the other party. In addition, the agreement may be terminated
immediately by either party if a material breach of the agreement by the
other party continues after thirty (30) days' written notice.
The Company has in the past and may in the future experience product
release delays because of delays in the release of PROGRESS products or
product enhancements. Any such delays could have a material adverse effect on
the Company's business, operating results and financial condition.
The failure of PSC to continue its relationship with the Company or
to develop, support or enhance PROGRESS in a manner competitive with
enhancements of other present or future programming languages, the
unavailability of PROGRESS licenses, the loss of market acceptance of
PROGRESS and its associated relational database management system among
mid-range discrete manufacturers, or the Company's inability to migrate its
software to other languages on a timely basis if PROGRESS were no longer to
be available could have a material adverse effect on the Company's business,
operating results and financial condition.
SYTELINE. SyteLine supports manufacturers' core business processes. The
functional components of the application package include the following:
CUSTOMER SERVICE. Customer service applications enable manufacturers to
estimate, configure and accept orders accurately and rapidly. The estimating
capabilities help manufacturers standardize all customer quoting activity,
access such information on-line and generate reports for analysis and
customer reporting. Customer service applications enable manufacturers to
perform extensive pricing and sales analysis and to handle on-line most
customer inquiries such as product availability, order status, receivable
status or discounts.
PLANNING AND MATERIALS MANAGEMENT. Planning and materials management
applications enable manufacturers to plan capacity and material availability
for each manufacturing site, including conversion of customer orders into
bills of material and job routings, management of plant capacity to meet
anticipated demand while minimizing expedited orders, timely incorporation of
changes from customers and product engineers and inventory management to
reduce carrying costs while managing material availability for scheduled
productions.
PRODUCTION MANAGEMENT. Production management applications enable
manufacturers to select three manufacturing production control methods to
match the level of control and diversity desired: work orders, production
scheduling and just-in-time production management. These three production
environments can be maintained simultaneously, providing a manufacturer with
flexibility to mix and match different production methods. For example, a
manufacturer may select production scheduling as the production method for
the final assembly and just-in-time production management for the
subassemblies.
ENTERPRISE ADMINISTRATION. The enterprise administration financial
management tools are tightly integrated with production operations and
capture the required transactions in a form that supports flexible analysis
across all business locations. The system provides various costing
alternatives, including work order costing and period-based costing, and
allows for actual and
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standard cost analysis. Through enhanced multi-currency capabilities, the
financial tools provide flexible consolidation modeling and analysis for
multinational manufacturers.
Substantially all of the Company's net revenues are derived from the
sale of its core ERP product SyteLine and complementary products and
services. As a result, the Company's success depends upon continued market
acceptance of SyteLine by mid-range discrete manufacturers as well as the
Company's ability to develop new versions of SyteLine and to develop or
acquire complementary products or product lines to meet the needs of new and
existing customers.
COMPLEMENTARY PRODUCTS. The Company sells complementary products that
expand the breadth of functionality of the Symix ERP products. These products
have been developed by Symix internally and in coordination with third party
software vendors.
SYTEAPS. SyteAPS is an advanced planning and scheduling system that develops
realistic and synchronized productions plans and schedules that
simultaneously consider the multiple constraints and limitations of the
production environment. The fully integrated version of SyteAPS with SyteLine
is scheduled to be available by the end of the calendar year 1998.
SYTESELECT. SyteSelect is an interactive product configuration software
application that was specially designed for and integrated with SyteLine.
SyteSelect was developed in conjunction with Trilogy Development Group, a
provider of client/server sales and marketing software. SyteSelect provides
manufacturers with the ability to configure, estimate, order and price
complex products and services. Once the order and product are configured, the
data is sent to production where bills of material and job routing
instructions are automatically generated. SyteSelect is written in the C++
programming language and operates in a Windows NT operating environment.
SyteSelect was released in September 1997.
SYTEPOWER. SytePower is a data analysis product utilizing Online Analytical
Processing tools from Cognos Corporation, an industry leader in business
intelligence software tools. SytePower is an interactive, graphical data
access and analysis solution that provides manufacturers a flexible,
multi-dimensional view of business and operating data stored in SyteLine.
SytePower was released in December 1996.
SYTEGUIDE. SyteGuide is an internally developed business process modeling
tool that provides custom enterprise modeling to speed ERP deployment and to
provide a base for business process improvement initiatives such as ISO 9000.
SyteGuide, which is comprised of a comprehensive set of implementation
focused programs, resources and tools, was released in June 1997.
SYTEEDI. SyteEDI is an electronic commerce software application product that
delivers customer and supplier focused business-to-business communication
solutions for SyteLine customers. SyteEDI was developed in conjunction with
Sterling Commerce, Inc., an industry leader in electronic commerce solutions.
SyteEDI is integrated with SyteLine and was released in September 1997.
SYTESERVICE. SyteService is a service management application software that
supports manufacturers' service businesses more efficiently and profitably
through manpower scheduling,
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contract management, remote field service communications and inventory and
purchasing tracking. SyteService is based on the Company's stand-alone
FieldPro product, which is scheduled to be fully integrated with SyteLine by
the end of calendar year 1998. SyteService is written in the C++ programming
language and operates in a Windows NT operating environment.
FIELDPRO. FieldPro is a service management application software product
that supports the manufacturer's service business more efficiently and
profitably through manpower scheduling, contract management, remote field
service communications and inventory and purchasing tracking. FieldPro is
written in the C++ programming language, operates in a Windows NT environment
and utilizes the Microsoft SQL Server database. FieldPro was acquired by
Symix as a result of its acquisition of Visual Applications Software, Inc. in
January 1997. FieldPro is marketed and sold under a separate and stand-alone
business unit within Symix, the CIT Division. The CIT Division focuses on
selling FieldPro to high technology and office equipment service operations.
As of June 30, 1998, there were 32 employees in the CIT Division.
FACTOR. FACTOR is a finite capacity scheduling system designed to
interface with ERP and shop floor data collection systems.
SIMULATION. Simulation software allows managers and engineers to predict the
effects of recommended changes to manufacturing and other systems before they
are implemented. The Company's simulation products include FACTOR/AIM, a
manufacturing-oriented simulation system, and AweSim, a general purpose
simulation system.
OTHER PRODUCTS. Other products include Automated Data Collection and the
Computer Aided Design Interface, which interface with SyteLine. The Automated
Data Collection interface incorporates bar code technology to record movement
of items from the plant floor, track receipt or shipment of items, perform
cycle counting and generate physical inventories. To assist manufacturers
using computer aided design, the Company offers its Computer Aided Design
Interface, which provides bi-directional import and export capabilities.
ECC INITIATIVE. In July, 1998, the Company announced its planned early
1999 launch of a new ERP product line serving repetitive manufacturing of
consumer products. Currently in the beta process, this new initiative, which
is referred to as "ECC", will target three new vertical markets: (i)
electronics, (ii) consumer durable and packaged goods, and (iii) computers
and related peripherals. This new suite of products is being developed
separately from SyteLine and is not a replacement for SyteLine. The ECC
initiative will support repetitive manufacturers' core business processes
including customer service, planning and materials management, production
management and financial management.
The new ECC products are written in the C++ programming language,
operate in a Windows NT operating environment, and use only Microsoft tools
and SQL Server data base. The new ECC products will be integrated with the
complementary CSRP products to SyteLine, including advanced planning and
scheduling, configuration and field services.
The planned launch of the new ECC products in early 1999 will be
limited to North America with international distribution anticipated in the
second half of calendar year 1999. The
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ECC initiative utilizes the same complementary CSRP products supporting
SyteLine. Therefore, development efforts are not duplicated for these CSRP
products in order to support two primary product lines.
The Company is committed to continue to develop and support both
SyteLine and the new ECC products. However, the release of the new ECC
products may trigger customer concerns about the Company's future commitment
to SyteLine. No assurance can be given that the release of the new ECC
products will not adversely affect the sales or sales cycles for SyteLine
and/or the other CSRP complementary products to SyteLine.
SERVICES AND SUPPORT
The Company offers a full range of services that allow its customers
to maximize the benefits of the Company's software products, including
project management, implementation, product education, technical consulting,
programming services, system integration and maintenance and support. The
Company's services are priced separately, and fees for its services generally
are not included in the price for its software product. Fees for maintenance
and support services generally are billed 12 months in advance while all
remaining consulting, education and programming services generally are billed
as incurred.
The Company considers its ability to implement its software solution
rapidly a key competitive factor. The Company's professional services
organization, which employs approximately 80 consultants and managers, uses a
structured implementation methodology known as "RAPID FOCUS," which divides a
customer's implementation into distinct phases: planning and installation,
education and business system simulations, development of operating
procedures, conversion planning, end-user training and cutover and post
implementation evaluation. The Company offers both on-site and classroom
training. Classroom training is available in nine different Company
facilities throughout the world.
In addition to the consultants employed directly by the Company,
customers can receive consulting services from the Company's approximately 50
business partners. The Company also has actively established relationships
with consulting firms to provide additional support in project management,
implementation and system integration services for customers. The Company
views these relationships as an important source of future leads for
prospective customers.
Although the Company attempts to minimize customization of its
software products, the Company does provide professional programming services
to modify its software products to address specific customer requirements.
These modifications may include designing and programming complete
applications or integrating the Company's software products with legacy
systems.
Maintenance and support services are available to all customers using
an active release of the Company's software products. Maintenance and support
services include product enhancements and updates, free upgrades to new
versions, telephone support during extended business hours, full-time
emergency support and access to the Company's customer support module on the
Company's home page on the Internet. The price for maintenance and support
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services is based on a percentage of the list price of the Company's software
product at the time the license is purchased. Fees for maintenance and
support services are billed 12 months in advance, and revenue is deferred and
recognized ratably over the term of the maintenance and support agreement.
SALES AND DISTRIBUTION
The Company currently licenses SyteLine based on a license fee for
each concurrent session or concurrent execution of its software products. The
Company receives additional license fee revenue whenever a customer increases
the number of concurrent sessions, usually as a result of the growth of the
customer's business or expansion to other sites. SyteLine uses an encrypted
key that allows the customer to use only the number of concurrent sessions
for which the customer has received a license.
The Company principally sells and supports its products and services
through a direct sales and marketing force. The Company has made significant
expenditures in recent years to expand its direct sales and marketing force,
primarily outside the United States, and plans to continue such expansion.
The Company's future success will depend in part upon the effectiveness of
its direct sales and marketing force and the ability of the Company to
continue to attract, integrate, train, motivate and retain new sales and
marketing personnel. Competition for sales and marketing personnel in the
software industry is intense. In addition, there can be no assurance that the
Company's direct sales and marketing organization will be able to compete
successfully against the sales and marketing operations of many of the
Company's current and potential competitors. If the Company is unable to
develop and manage its direct sales and marketing force effectively, the
Company's business, operating results and financial condition could be
materially and adversely affected.
Sales leads are generated through a combination of in-house
telemarketing, leads from consulting partners, advertising, trade shows and
direct calls by sales staff. The Company sells its products and services
through both a direct sales force and approximately 50 business partners
worldwide. The Company currently maintains 26 sales and support offices
worldwide: twelve in North America, nine in Asia Pacific and five in Europe.
Symix's business partners in North America target the lower end of the
mid-market manufacturing sector while its business partners in Asia Pacific
and Europe primarily sell independently to companies within a geographic
region or country.
The operations of two former business partners in Australia and the
Netherlands were acquired by the Company in 1996 and converted to sales and
distribution subsidiaries. The Company also completed the acquisition of a
French company in 1996, which now is a sales and distribution subsidiary of
the Company. The French subsidiary currently has existing customers who use a
French localized version of a manufacturing software product that is no
longer being enhanced by the software vendor. The French subsidiary is
targeting existing and new customers with a localized version of SyteLine.
The Company will need to maintain and expand its relationships with
its existing business partners and enter into relationships with additional
business partners in order to expand the
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distribution of its products. There can be no assurance that current or
future business partners will provide the level of expertise and quality of
service required to license the Company's products successfully, that the
Company will be able to maintain effective, long-term relationships with such
business partners or that selected business partners will continue to meet
the Company's sales needs. Further, there can be no assurance that these
business partners will not market software products in competition with the
Company in the future or will not otherwise reduce or discontinue their
relationships with, or support of, the Company and its products. If the
Company fails to maintain successfully its existing business partner
relationships or to establish new relationships in the future, or if any such
business partner exclusively adopts a product other than the Company's
products, materially reduces its sales efforts relating to the Company's
products or materially increases its support for competitive products, the
Company's business, operating results and financial condition could be
materially and adversely affected.
In addition to business partners and third party consultants,
hardware vendors continue to be an important source of sales leads. The
Company has entered into cooperative marketing programs with International
Business Machines Corporation and Data General Corporation and has informal
marketing relationships with other hardware vendors such as Hewlett-Packard
Company. The Company has responsibility for providing support for its
software to its customers under each agreement, and the various hardware
vendors are responsible for their products.
In June, 1998, Mitsui & Co., Ltd. ("Mitsui"), the distributor of
Symix products in Japan, acquired 13.3% of the ownership interest in the
Company's Asia distribution operations for $2.0 million through the purchase
of shares of Symix Computer Systems (Singapore) Pte. Ltd. ("Symix
Singapore"). In connection with and prior to such investment, all of the
outstanding shares of the Symix subsidiaries in Australia, New Zealand,
Thailand, Hong Kong and Malaysia were transferred to Symix Singapore.
Consequently, Mitsui currently owns 13.3% of the outstanding shares of Symix
Singapore, with Symix owning the remaining 86.7%. Management believes that
Mitsui's investment in Symix's Asia distribution operations along with
Mitsui's increased sales support to Japanese companies throughout Asia will
further legitimize Symix as a leading ERP vendor in the Asia Pacific region.
The Company believes that its international sales in years prior to
fiscal 1997 were not significant. With new subsidiaries in France, Australia
and the Netherlands, and with continued growth in key areas such as Japan,
China and Singapore, the Company believes international sales will account
for an increasing percentage of its total sales over the next several years.
The Company derived approximately 21% of its fiscal 1998, and approximately
25% of its fiscal 1997, net revenues from sales outside of North America.
The amount of net revenue, operating income and identifiable assets
attributable to each of the Company's geographic areas for fiscal 1998 and
fiscal 1997 were as follows:
<PAGE>
<TABLE>
<CAPTION>
NORTH ASIA/PACIFIC EUROPE
AMERICA ----------- ------
-------
(IN THOUSANDS)
1998
<S> <C> <C> <C>
Net revenue............... $77,225 $8,665 $11,707
Operating income.......... 8,773* (694) 442
Identifiable assets....... 47,778 9,392 9,212
1997
Net revenue............... $49,388 $8,259 $8,124
Operating income.......... 4,035 410 627
Identifiable assets....... 32,531 5,766 5,955
</TABLE>
*Exclusive of $6.5 million acquisition research and development write-off.
The Company expects to continue to expand its existing international
operations and to enter additional international markets, which will require
significant management attention and financial resources. Historically, the
Company's international operations have been characterized by lower operating
margins during the period in which marketing and distribution channels were
being developed. Costs associated with international expansion include the
establishment of additional foreign offices, the hiring of additional
personnel, the localization and marketing of its products for particular
foreign markets and the development of relationships with international
service providers. If international revenue is not adequate to offset the
expense of expanding foreign operations, the Company's business, operating
results or financial condition could be materially adversely affected.
A significant portion of the Company's international revenue is
received in currencies other than U. S. dollars and, in the past, the Company
has not engaged in hedging activities. As a result, the Company is subject to
risks associated with foreign exchange rate fluctuations. Due to the
substantial volatility of foreign exchange rates, there can be no assurance
that foreign exchange rate fluctuations will not have a material adverse
effect on the Company's business, operating results or financial condition.
The Company's international operations are subject to other risks
inherent in international business activities, such as the impact of
recessionary environment in economies outside the United States, cultural and
language difficulties associated with servicing customers, localization and
translation of products for foreign countries, difficulties in staffing and
managing international operations, difficulties in collecting accounts
receivable and longer collection periods, reduced protection for intellectual
property rights in some countries, exchange controls, restrictions on the
repatriation of foreign earnings, political instability, trade restrictions,
tariff changes and the impact of local economic conditions and practices. The
Company's success in expanding its international business will be dependent,
in part, on its ability to anticipate and effectively manage these and other
risks. There can be no assurance that these and other factors will not have a
material adverse effect on the Company's business, operating results or
financial condition.
13
<PAGE>
PRODUCT DEVELOPMENT
Symix devotes a significant percentage of its resources to
identifying manufacturers' needs, developing new features and enhancements to
existing products and designing and developing new products. New products,
updates and enhancements are developed by the Company's internal development
staff. The Company's practice is to release updates and major enhancements on
a regular basis. Symix works closely with manufacturers and business partners
to improve and enhance its products.
The market for the Company's products is characterized by rapid
technological change, evolving industry standards in computer hardware and
software technology, changes in customer requirements and frequent new
product introductions and enhancements. The introduction of products
embodying new technologies and the emergence of new industry standards can
cause customers to delay their purchasing decisions and render existing
products obsolete and unmarketable. The life cycles of the Company's software
products are difficult to estimate. As a result, the Company's future success
will depend, in part, upon its ability to continue to enhance existing
products and to develop and introduce in a timely manner new products with
technological developments that satisfy customer requirements and achieve
market acceptance. There can be no assurance that the Company will
successfully identify new product opportunities and develop and bring new
products to market in a timely and cost-effective manner or that products,
capabilities or technologies developed by others will not render the
Company's products or technologies obsolete or noncompetitive or shorten the
life cycles of the Company's products. See "Business--Competition." If the
Company is unable to develop on a timely and cost-effective basis new
software products or enhancements to existing products, or if such new
products or enhancements do not achieve market acceptance, the Company's
business, operating results and financial condition may be materially
adversely affected.
As a result of the complexities inherent in software development, and
in particular development for multi-platform environments, and the broad
functionality and performance demanded by customers for ERP products, major
new product enhancements and new products can require long development and
testing periods before they are commercially released. The Company has on
occasion experienced delays in the scheduled introduction of new and enhanced
products, and future delays could have a material adverse effect on the
Company's business, operating results and financial condition.
Research and product development expenses, including amounts
capitalized were $12,200,000, $8,759,000 and $5,963,000 for the fiscal years
ended June 30, 1998, 1997 and 1996, respectively. Capitalized software
expenditures were $3,600,000, $3,100,000, and $2,290,000 for the same
respective periods and were capitalized in accordance with the Statement of
Financial Accounting Standards No. 86. Amortization of capitalized software
costs is included in cost of revenue. The Company generally retains the
right to remarket specific modifications developed by its programming
services group in or with future product releases.
As of June 30, 1998, capitalized software expenditures relating to
the ECC initiative were $4.3 million. Amortization of these expenditures will
begin upon the launch of the new ECC products, currently planned for early,
1999.
14
<PAGE>
COMPETITION
The market for ERP software is intensely competitive, rapidly
changing and significantly affected by new product offerings and other market
activities. The Company has a large number of competitors that vary in size,
computing environments and overall product scope. Within its market, the
primary competition comes from independent software vendors in two distinct
groups: (i) large system developers who are moving into the Company's market,
including Baan Company, N.V., J.D. Edwards & Company, Oracle Corporation and
SAP Aktiengellschaft, and (ii) traditional mid-market competitors, including
DataWorks Corporation, Effective Management Systems, Inc., Fourth Shift
Corporation and QAD, Inc.
A number of companies offer products which are similar to the
Company's products and are directed at the market for ERP systems for
mid-market manufacturers. Many of the Company's existing competitors, as well
as a number of potential new competitors, have more established and larger
marketing and sales organizations, significantly greater financial, technical
and other resources and a larger installed base of customers than the
Company. Other competitors leverage vertical market expertise, reputation and
price as competitive advantages. There can be no assurance that competitors
will not offer or develop products that are superior to the Company's
products or that achieve greater market acceptance.
Several large companies which develop management information software
applications for large multinational manufacturers are beginning to market to
mid-market manufacturers targeted by the Company or otherwise develop
applications that compete in the Company's markets. As the market for ERP
software solutions expands, other companies may enter the Company's market or
increase their market presence by acquiring or entering into alliances with
competitors of the Company. As a result of all these factors, competition is
likely to increase substantially, which may result in price competition, loss
of market share or delayed purchasing decisions. There can be no assurance
that the Company will be able to compete successfully against its competitors
or that the competitive pressures faced by the Company will not adversely
affect its financial performance.
The Company believes that the most important considerations for
potential customers for its software products are product functionality, open
systems and client/server technology, ease of use and graphical interface,
rapid installations, competitive pricing, corporate reputation, reliability
and quality of technical support, documentation and education and size of
installed user base. The Company further believes that it competes favorably
in these areas.
PROPRIETARY TECHNOLOGY
The Company's ability to compete is dependent in part upon its
internally developed, proprietary intellectual property. The Company regards
its products as proprietary trade secrets and confidential information. The
Company relies largely upon its license agreements with customers;
distribution agreements with distributors; and its own security systems,
confidentiality procedures and employee agreements to maintain the trade
secrecy of its products. The Company seeks to protect its programs,
documentation and other written materials under copyright law. In
15
<PAGE>
addition, SYMIX, SyteLine, SytePower and Pritsker are registered trademarks
and SyteAPS, SyteSelect, SyteService, SyteGuide, FieldPro, SyteWeb and
SyteEDI are trademarks of the Company. None of the Company's products is
patented.
There can be no assurance that the Company's means of protecting its
proprietary rights in the United States or abroad will be adequate or that
competitors will not independently develop similar technology. In addition,
the laws of some foreign countries do not protect the Company's proprietary
rights as fully as do the laws of the United States. Preventing or detecting
unauthorized use of the Company's products is difficult. The Company also
relies on certain other technology which it licenses from third parties,
including software that is integrated with internally developed software and
used in the Company's products to perform key functions. No assurance can be
given that the steps taken by the Company will prevent misappropriation of
its technology or that its license agreements will be enforceable. In
addition, litigation may be necessary in the future to enforce the Company's
intellectual property rights, to protect the Company's trade secrets, to
determine the validity and scope of the proprietary rights of others or to
defend against claims of infringement or invalidity. Any such litigation
could result in substantial costs and diversion of resources and could have a
material adverse effect on the Company's business, operating results or
financial condition.
Although the Company does not believe that its products infringe the
proprietary rights of third parties, there can be no assurance that
infringement or invalidity claims (or claims for indemnification resulting
from infringement claims) will not be asserted or prosecuted against the
Company or that any such assertions or prosecutions will not materially
adversely affect the Company's business, operating results or financial
condition. Regardless of the validity or the successful assertion of such
claims, defending against such claims could result in significant costs and
diversion of resources with respect to the defense thereof, which could have
a material adverse effect on the Company's business, operating results or
financial condition. In addition, the assertion of such infringement claims
could result in injunctions preventing the Company from distributing certain
products, which would have a material adverse effect on the Company's
business, operating results and financial condition. If any claims or actions
are asserted against the Company, the Company may seek to obtain a license to
such intellectual property rights. There can be no assurance, however, that
such a license would be available on reasonable terms or at all.
The Company has in the past and may in the future resell certain
software that it licenses from third parties and jointly develop software in
which it will have co-ownership or cross-licensing rights. See
"Business-Products."
EMPLOYEES
As of June 30, 1998, the Company employed 623 persons, including 171
in North American sales and service operations, 211 in development and
support, 162 in international operations outside of North America and 79 in
marketing and administration. None of the Company's employees is represented
by a labor union. The Company has never experienced a work stoppage and
believes that its employee relations are good.
16
<PAGE>
The Company's success depends to a significant extent upon senior
management and other key employees. The loss of one or more key employees
could have a material adverse effect on the Company. The Company does not
have employment agreements with its executive officers, except Stephen A.
Sasser, President and Chief Operating Officer, and does not maintain key man
life insurance on its executive officers. In addition, the Company believes
that its future success will depend in part on its ability to attract and
retain highly skilled technical, managerial, sales, marketing, service and
support personnel. Competition for such personnel in the computer software
industry is intense. There can be no assurance that the Company will be
successful in attracting and retaining such personnel, and the failure to do
so could have a material adverse effect on the Company's business, operating
results or financial condition.
YEAR 2000 COMPLIANCE
The Company faces "Year 2000 compliance" issues similar to those faced
by other companies in the information technology industry. Year 2000 compliance
issues typically arise with respect to computer software systems and programs
that use only two digits, rather than four digits, to represent a particular
year. Consequently, these systems and programs may not process dates beyond
the year 1999 and may result in miscalculations or system failures. Year 2000
compliance problems also may arise in embedded systems, such as environmental
system controls, elevators and other products that use microprocessors or
computer chips.
The Company's current product and service offerings, including those
products developed and supported by third party software vendors, have been
designed to be Year 2000 compliant. New products also are being designed by
the Company to be Year 2000 compliant. The Company's existing contracts with
active customers (e.g., customers with effective maintenance and support
agreements with the Company) cover recent software products that are Year
2000 compliant or for which a Year 2000 ready upgrade is available, or do not
expressly obligate the Company to furnish an updated release that is Year
2000 compliant. The Company has communicated with its customers regarding
Year 2000 compliance, notifying them of the availability of upgraded or new
releases of the Company's products which are Year 2000 compliant for certain
older software products released by the Company which may still be in use by
them. In certain cases, the Company has warranted that the Company's current
software product offerings are Year 2000 ready when specifically requested by
the customer. Although the software products currently offered by the Company
have been tested for Year 2000 readiness, any failure of the Company's
software products to perform, including the failure to process dates beyond
the year 2000, could have a material adverse effect on the Company's
business, financial condition and results of operations.
The Company is in the process of assessing the Year 2000 readiness of
selected third parties, including key suppliers, subcontractors, business
partners and customers. To the extent that the Company uses third party
products or technology in its computer software products, the Company has
obtained confirmation of Year 2000 compliance from such third party providers.
A failure of one or more of such suppliers, subcontractors, business partners
or customers to sufficiently address their Year 2000 compliance issues could
adversely affect the Company's business, financial condition and results of
operations.
17
<PAGE>
The Company also is in the process of reviewing its internal computer
information system and non-computer systems, such as telecommunications
equipment, building elevators, etc., which contain embedded computer
technology, to determine whether such systems are Year 2000 compliant. Most
of the embedded systems on which the Company relies in its daily operations
are owned and managed by the lessors of the facilities in which the Company's
operations are located, or by agents of such lessors. Although the Company's
review of its internal computer information system and non-computer systems
is not expected to be completed until March, 1999, the Company presently
believes that such systems are Year 2000 compliant. The Company is less
certain of the Year 2000 readiness of third parties who provide external
services, such as public utilities, which could adversely impact the
Company's operations. For example, the failure or interruption of electrical
services would disrupt the Company's ability to communicate with its
customers, suppliers, business partners and others. The Company does not
anticipate any material costs associated with Year 2000 compliance relating
to its internal computer information system or non-computer systems.
All costs related to Year 2000 issues are being expensed by the
Company. The Company does not expect that the total costs of evaluation and
compliance with the Company's Year 2000 issues will be material.
SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
IN ADDITION TO HISTORICAL INFORMATION, THIS ANNUAL REPORT ON FORM
10-K 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. IN
SOME CASES, INFORMATION REGARDING CERTAIN IMPORTANT FACTORS THAT COULD CAUSE
ACTUAL RESULTS TO DIFFER MATERIALLY FROM A FORWARD-LOOKING STATEMENT APPEAR
TOGETHER WITH SUCH STATEMENT. OTHER UNCERTAINTIES AND RISKS INCLUDE, BUT ARE
NOT LIMITED TO, DEMAND FOR AND MARKET ACCEPTANCE OF THE COMPANY'S PRODUCTS;
THE IMPACT OF COMPETITIVE PRODUCTS; THE COMPANY'S ABILITY TO MAINTAIN EFFICIENT
MARKETING AND DISTRIBUTION OPERATIONS DOMESTICALLY AND INTERNATIONALLY; FUTURE
WORLDWIDE ECONOMIC, COMPETITIVE AND MARKET CONDITIONS; THE COMPANY'S ABILITY TO
ATTRACT AND RETAIN HIGHLY SKILLED TECHNICAL, MANAGERIAL, SALES, MARKETING,
SERVICE AND SUPPORT STAFF AND TO RETAIN KEY TECHNICAL AND MANAGEMENT PERSONNEL;
TIMING OF PRODUCT DEVELOPMENT AND GENERAL RELEASE; THE COMPANY'S ABILITY TO
SUCCESSFULLY RESOLVE ANY YEAR 2000 ISSUES; PRODUCT PRICING AND OTHER FACTORS
DETAILED IN THIS ANNUAL REPORT ON FORM 10-K AND IN OTHER FILINGS MADE BY THE
COMPANY WITH THE SECURITIES AND EXCHANGE COMMISSION.
18
<PAGE>
EXECUTIVE OFFICERS OF THE REGISTRANT
The Company's executive officers are as follows:
<TABLE>
<CAPTION>
NAME AGE POSITIONS WITH THE COMPANY
- ---- --- --------------------------
<S> <C> <C>
Lawrence J. Fox............... 42 Chairman of the Board and Chief Executive Officer
Stephen A. Sasser............. 49 President, Chief Operating Officer and a Director
Stephen A. Yount.............. 43 Vice President of America's Field Operations
Lawrence W. DeLeon............ 43 Vice President, Chief Financial Officer and Secretary
Otto E. Offereins............. 52 Vice President, General Manager of APS and ECC
Division
Daryll Wartluft............... 57 Vice President, General Manager of SyteLine Division
Robert D. Williams............ 43 Vice President of Human Resources
Catherine K. DeRosa........... 37 Vice President of Marketing
Jorge L. Lopez................ 43 Vice President of Corporate Development/Strategic
Planning
</TABLE>
LAWRENCE J. FOX founded Symix in 1979 as a sole proprietorship. He
has held his present offices since Symix was incorporated in 1984.
STEPHEN A. SASSER joined the Company in July 1995 as President and
Chief Operating Officer. He has served as a director of the Company since
July 1995. From October 1994 to June 1995, Mr. Sasser served as Vice
President of International Operations for Trilogy Development Group, a
provider of sales and marketing software. From August 1992 to October 1994,
Mr. Sasser was Group Vice President of the Systems Management Division and
Pacific Rim Operations of Legent Corporation, a provider of systems
management software products and services ("Legent"). From April 1987 through
its acquisition by Legent in 1992, Mr. Sasser served as President of the Data
Center Management Division of Goal Systems International, Inc. ("Goal
Systems"), which designed, developed, and marketed systems management
software products.
STEPHEN A. YOUNT joined the Company in May 1996 as Vice President of
America's Sales and Services. In August, 1998 he was elected as Vice
President of America's Field Operations. From 1995 to May 1996, he was Vice
President of Sales at Tyecin Systems, a provider of client-server
manufacturing software for the semi-contractor market. From 1993 to 1995, Mr.
Yount served as Vice President of Sales and Services at Neuron Data, a
client-server application development software company. From 1987 to 1993, he
served in various senior sales positions at Legent, including Regional Vice
President of Sales, Vice President of Sales and Director of Sales, Western
Region.
LAWRENCE W. DELEON joined Symix in August 1995 as Vice President,
Chief Financial Officer and Secretary. From 1991 to August 1995, Mr. DeLeon
served in various capacities at Legent, including Treasurer for Goal Systems,
Europe Vice President-Finance and Administration
19
<PAGE>
and Vice President-Central Europe. From 1988 to 1991, Mr. DeLeon was Chief
Financial Officer for Thunderbird Products Corporation, a boat manufacturer.
OTTO E. OFFEREINS joined the Company in September 1995 as Vice
President of Development and Support. In April, 1998 Mr. Offereins assumed
the new role of Vice President, General Manager APS and ECC Division. He was
Vice President and General Manager of Client Product Server Division of
Legent from July 1994 to August 1995. From July 1992 to July 1994, Mr.
Offereins served as Vice President of Support and Development for the Systems
Management Division of Legent. From March 1991 to July 1992, he served as
Vice President of Development and Support-Research and Development Division
of Legent. Prior to March 1991, he was Executive Vice President of Operations
for Syntelligence Corporation, a software company specializing in financial
risk assessment.
DARYLL WARTLUFT joined the Company in May, 1998 as Vice President,
General Manager SyteLine Division. From August 1995 to April 1998, he was
President and Chief Executive Officer and a director of Pivotpoint Inc., an
ERP software and services provider. From April 1994 to August 1995, he served
as Group Vice President of Applications Management Division of Legent. Prior
to that time, he held various management positions with Group Bull Worldwide
Information Systems, a provider of systems management software products and
services, and International Business Machines Corporation.
ROBERT D. WILLIAMS joined the Company in September, 1995 as Vice
President of Human Resources. Prior to that time, he served as Director,
Human Resources/Associate Relations of Legent from August 1992 to August
1995. From March 1990 to August 1992 he was Executive Director of Human
Resources and Administrative Services of Goal Systems.
CATHERINE K. DEROSA joined the Company as Director of Product
Marketing in August 1994. She has served the Company in the position of Vice
President of Marketing since January 1996. Prior to joining Symix and from
1992 to August 1994, Ms. DeRosa served as an independent consultant to
several major technology companies in the Silicon Valley. From 1989 to 1992,
Ms. DeRosa served as a Senior Consultant with Price Waterhouse, a major
accounting and consulting firm. She also has held a variety of positions with
Micro Card Technologies, Inc., an electronic components manufacturer and
Texas Instruments Inc., a leader in semi-conductors and electronics. Ms.
DeRosa is a Certified Public Accountant and received a masters in business
administration degree from the Harvard Business School.
JORGE L. LOPEZ joined the Company in November 1996 as Vice President
of Corporate Development/Strategic Planning. From 1995 to November 1996, Mr.
Lopez served as Vice President of Marketing for Salesoft Inc., a provider of
automated sales and marketing software. From 1989 to 1995, Mr. Lopez served
as Vice President of Strategic Alliances for Avalon Software, Inc. an
enterprise resource planning software and services company. Prior to that
time, Mr. Lopez held various marketing and technical positions with
International Business Machines Corporation.
20
<PAGE>
The executive officers of the Company are appointed by and serve at
the pleasure of the Symix Board of Directors. There are no arrangements or
understandings between any officer and any other person pursuant to which the
officer was so appointed.
ITEM 2. PROPERTIES
The Company's corporate headquarters and principal administrative,
product development, and sales and marketing operations are located in
approximately 75,000 square feet of leased office space in Columbus, Ohio. The
lease agreement commenced in July 1991 and will expire on June 30, 2001. The
lease agreement provides for an annual base rent of approximately $1.2 million.
Additionally, the Company has 25 leased sales and support offices throughout the
United States and elsewhere.
ITEM 3. LEGAL PROCEEDINGS
The Company is subject to legal proceedings and claims which arise in
the normal course of business. While the outcome of these matters cannot be
predicted with certainty, management does not believe the outcome of any of
these legal matters will have a material adverse effect on the Company's
business, financial condition or results of operations.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
21
<PAGE>
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The Company's Common Shares are traded in the over-the-counter market
and are quoted on the Nasdaq National Market under the symbol "SYMX." The
following table sets forth the high and low sale prices for the Common Shares
for fiscal 1997 and 1998, as reported by the Nasdaq National Market.
<TABLE>
<CAPTION>
HIGH LOW
---- ---
<S> <C> <C>
Fiscal year ended June 30, 1998
First Quarter...................................................... $21.00 $10.75
Second Quarter..................................................... 19.00 14.00
Third Quarter...................................................... 19.38 14.00
Fourth Quarter..................................................... 22.88 18.13
Fiscal year ended June 30, 1997
First Quarter...................................................... $ 8.50 $ 7.25
Second Quarter..................................................... 8.63 7.38
Third Quarter...................................................... 10.88 7.88
Fourth Quarter..................................................... 12.38 8.00
</TABLE>
The closing price on June 30, 1998 was $20.63. As of June 30, 1998,
there were approximately 128 holders of record of the Common Shares, and the
Company believes that there are more than 2,000 beneficial shareholders.
The Company has never paid cash dividends on its Common Shares. The
Company expects that all future earnings will be retained to finance the
Company's operations and for the growth and development of its business.
Accordingly, the Company does not currently anticipate paying cash dividends
on its Common Shares in the foreseeable future. The payment of any future
dividends will be subject to the discretion of the Board of Directors of the
Company and will depend on the Company's results of operations, financial
position and capital requirements, general business conditions, restrictions
imposed by financing arrangements, if any, legal restrictions on the payment
of dividends and other factors the Board of Directors deems relevant.
22
<PAGE>
ITEM 6. SELECTED FINANCIAL DATA.
The following table summarizes certain consolidated financial data for
each of the five years presented. The selected financial data presented below
has been derived from, and should be read in conjunction with, the Company's
audited financial statements, and the notes thereto.
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30, 1998 1997 1996 1995 1994
------------------- ---- ---- ---- ---- ----
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
OPERATING STATEMENT DATA:
Net revenue.......................... $97,597 $65,772 $45,759 $42,828 $35,486
Cost of revenue...................... 35,701 23,690 16,496 15,672 12,917
-------- ------- ------- ------- -------
Gross margin...................... 61,896 42,082 29,263 27,156 22,569
Operating expenses
Selling, general, and
administrative.................. 45,474 31,351 21,593 24,774 19,188
Research and product development.. 7,901 5,659 3,673 3,744 2,589
Restructuring and other unusual
charges......................... -- -- 506 -- --
Acquired research and development
write-off....................... 6,503 -- -- -- --
-------- ------- ------- ------- -------
Total operating expenses.......... 59,878 37,010 25,772 28,518 21,777
-------- ------- ------- ------- -------
Operating income (loss).............. 2,018 5,072 3,491 (1,362) 792
Other income (expense), net.......... (178) 107 221 314 122
-------- ------- ------- ------- -------
Income (loss) before income taxes.... 1,840 5,179 3,712 (1,048) 914
Provision (benefit) for income taxes. 3,196 1,916 1,404 (410) 330
-------- ------- ------- ------- -------
Net income (loss)................. ($1,356) $3,263 $2,308 $(638) $584
-------- ------- ------- ------- -------
-------- ------- ------- ------- -------
Earnings (loss) per share(1)......... ($0.21) $0.54 $0.41 $(0.12) $0.10
Weighted average common and common
share equivalents outstanding..... 6,317 6,079 5,582 5,424 5,585
BALANCE SHEET DATA:
Working capital...................... $13,575 $7,897 $7,538 $6,363 $9,466
Total assets......................... 66,382 44,252 30,463 26,069 24,473
Total long-term debt and lease
obligations....................... 2,305 530 -- 138 335
Total shareholders' equity........... 31,301 23,361 17,102 14,508 15,641
</TABLE>
- --------------------------------------------------------------------------------
(1) Where appropriate, all share data and references in this report have been
adjusted for the 2-for-1 share split, effected in the form of a share
distribution of one share for each share outstanding to shareholders of record
on September 10, 1996. In addition, share data has been restated to conform with
the provisions of FASB Statement 128 for all years presented.
23
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS.
OVERVIEW
Symix is a global provider of open, client/server manufacturing software
for mid-range discrete manufacturers. Symix designs, develops, markets and
supports a fully integrated manufacturing, planning and financial software
system that addresses the ERP requirements of manufacturers. Following the
fiscal 1995 year-end in which the Company incurred its first loss since becoming
publicly traded in 1991, the Company hired a new president, Stephen A. Sasser,
who implemented several changes in order to restore the Company to
profitability. The new president reorganized the executive management staff by
hiring several key executives and promoting certain employees into executive
positions. Recognizing the strong foundation of the Company's core products and
large customer base, the new management team refocused the Company's investments
in development, marketing and promotional activities into supporting its
traditional vertical markets within the mid-range discrete manufacturing market.
The Company also restructured its sales channels by hiring new sales management
in North America and Europe, revising sales compensation programs and
reorganizing the services organization to align more directly with the sales
organization.
The Company also focused its efforts on building the international
distribution channels through acquisitions and converting independent
distributors to direct sales and services operations. The Company converted
distributors in Australia, New Zealand and the Netherlands to subsidiary
operations, and the Company acquired a French sales and distribution operation.
During the fourth quarter of fiscal 1998, the Company opened a new office in
Italy and acquired a minority interest in an independent distributor based in
China. Revenue from foreign operations accounted for approximately 21% of total
revenue in fiscal 1998, compared to 25% in fiscal 1997 and 13% in fiscal 1996.
The decline in the percentage of revenue from foreign operations from fiscal
1997 to fiscal 1998 was the result of a general slowdown in the Asian economies
combined with a strong performance in North America. The significant increase in
revenue from foreign operations from fiscal 1996 to fiscal 1997 resulted
primarily from the conversion of distributor operations and acquisitions. Prior
thereto, the Company sold its products to its international distributors at a
discount from U.S. list prices. Since conversion, Symix has been able to
increase its international revenues by recognizing the full sale price on
products sold internationally and by providing services and support directly to
customers.
During the fourth quarter of fiscal 1996, Symix introduced SyteLine, a
client/server version of its core ERP product with a graphical user interface.
SyteLine represents a large majority of new product sales to customers. In
addition to SyteLine, the Company released and sold complementary products for
data analysis (SytePower), product configuration (SyteSelect) and product
implementation (SyteGuide) during the second half of fiscal 1997 that provided
expanded features and functionality and enhanced sales of SyteLine. The Company
also purchased a Canadian company, Visual Applications Software, Inc. ("VAS"),
in January, 1997 that develops and distributes an application software product,
FieldPro, which provides field service and warranty tracking capabilities for
manufacturers and service organizations of computer and office equipment
distributors. FieldPro is being marketed and distributed as a stand-alone
product under
24
<PAGE>
a newly established business operating unit within Symix, the Customer
Integrated Technologies Division ("CIT Division").
In November, 1997, Symix continued its expansion of product offerings
by acquiring Pritsker Corporation, which markets advanced planning and
scheduling and simulation software to mid-market manufacturers. The Company
incurred a nonrecurring charge of approximately $6.5 million in the quarter
ending December 31, 1997, relating to the write-off of acquired in-process
technology of Pritsker. Also during fiscal 1998, Symix introduced two new
complementary products to SyteLine: electronic commerce (SyteEDI) and
internet tools (SyteWeb).
In fiscal 1998 the Company generated record revenues of $97.6 million
and net income of $5.1 million, exclusive of a non-recurring charge related to
the Pritsker acquisition.
NET REVENUE
The Company's net revenue is derived primarily from (1) licensing
Symix software and providing custom programming services; (2) providing
installation, implementation, training, consulting and systems integration
services; and (3) providing maintenance and support on a subscription basis.
Revenue for all periods presented is accounted for in accordance with AICPA
Statement of Position 91-1 on Software Revenue Recognition.
Net revenue increased 48% to $97.6 million in fiscal 1998, compared
to increases of 44% and 7% for the years ended June 30, 1997 and 1996,
respectively. The strong growth in fiscal 1998 and fiscal 1997 net revenue
compared to previous years was the result of new software product offerings
and the reorganized international distribution channel. Both software license
fee revenue and service, maintenance and support revenue contributed
significantly to the net revenue increase in fiscals 1998 and 1997. The
revenue mix since 1996 is shown in the table below:
Revenue Mix
<TABLE>
<CAPTION>
Year ended June 30
-----------------------------------------------
1998 1997 1996
---- ---- ----
(IN THOUSANDS, EXCEPT PERCENTAGES)
<S> <C> <C> <C> <C> <C> <C>
License fees.......................... $58,498 60% $36,477 55% $24,682 54%
Service, maintenance and support...... 39,099 40% 29,295 45% 21,077 46%
------- --- ------- --- ------- ---
Total................................. $97,597 100% $65,772 100% $45,759 100%
</TABLE>
Software license fee revenue increased 60% in fiscal 1998 compared to
a 48% software license fee revenue growth in fiscal 1997. The increase in
software revenue in fiscal 1998 was primarily the result of (1) the expanding
number of products that complement the Company's core ERP software product,
SyteLine, and (2) the acquisition of Pritsker in November, 1997, which
contributed approximately $3.4 million in software license fee revenue in
fiscal 1998. The increase in software license fee revenue in fiscal 1997 was
primarily the result of (1) revenue
25
<PAGE>
from the Company's new client server ERP software product, SyteLine, which
was released in March 1996, and (2) a reorganized international distribution
channel.
Service, maintenance and support revenue is derived from installation,
implementation, training, consulting, systems integration and software product
maintenance and support services. Service, maintenance and support revenue
increased 33% in fiscal 1998 to $39.1 million from $29.3 million in fiscal 1997
and $21.1 million in fiscal 1996. The continued increase in service, maintenance
and support revenue is attributable to growth in licensed Symix installations
worldwide and the reorganization of Symix's service organization through the
conversion of the international distributors and internal expansion. Services
revenue made up 40% of total revenue in fiscal 1998, compared to 45% and 46% in
fiscal 1997 and fiscal 1996, respectively. Services revenue as a percentage of
total revenue declined from fiscal 1997 to fiscal 1998 due to the accelerating
software license fee revenue growth and the Company's planned increase in
outsourcing certain services to support new installations. Generally,
maintenance and support contracts are billed annually and revenue is recognized
ratably over the contract period, which is typically twelve months. Deferred
revenue on the Company's balance sheet relating primarily to maintenance and
support contracts increased from $9.7 million at June 30, 1997 to $13.2 million
at June 30, 1998.
COST OF REVENUE
Total cost of net revenue as a percentage of net revenue was 37% for
the year ended June 30, 1998 compared to 36% for each of the years ended
June 30, 1997 and 1996.
Cost of software license fees include royalties, amortization of
capitalized software development costs and software delivery expenses. Cost
of software license fees decreased to 25% of software license fee revenue in
fiscal 1998 from 27% in fiscal 1997 and 28% in fiscal 1996. The decrease is
the result of the increased volume of software license fee sales. Partially
offsetting the improved software license fee margins was an increase in
third-party royalties relating to the new complementary products for SyteLine
released during the year.
Cost of service, maintenance and support includes the personnel and
related overhead costs for implementation, training and customer support
services, together with fees paid to third parties for subcontracted
services. Cost of service, maintenance and support was 54% of service and
support revenue in fiscal 1998 compared to 48% in fiscal 1997 and 46% in
fiscal 1996. The increase in cost of services in fiscal 1998 was a
combination of higher than expected mix of consulting services as a percent
to total services revenue and the continued expansion of using subcontractors
to supplement the work performed by Company employees. In general, the use of
subcontractors results in lower margins than employees but provides the
Company increased flexibility in meeting customer demands. The small increase
in cost of service, maintenance and support as a percentage of related
revenue in fiscal 1997 compared to the prior fiscal year was the result of
increased costs relating to the hiring of experienced service personnel to
support new system installations. In addition, lower margins in the
developing international distribution channels also contributed to the
increase in the cost percentage. Partially offsetting these lower margins was
the increase in installations and corresponding service renewals, from which
the Company was able to realize improved margins.
26
<PAGE>
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
Selling, general and administrative expenses consist of personnel and
related overhead costs, including commissions, for the sales, marketing, general
and administrative activities of the Company, together with advertising and
promotional costs. Selling, general and administrative expenses increased 45% in
both fiscal 1998 and 1997. Selling, general and administrative expenses as a
percent of net revenue were 47%, 48% and 47% for the years ended June 30, 1998,
1997 and 1996, respectively. The increase in expenses as a percent of revenue in
fiscal 1997 was the result of significant increases in marketing and
promotional activities and expanding international sales. This increase was
partially offset by improved productivity of the North American sales channel.
RESEARCH AND PRODUCT DEVELOPMENT
Research and development expenses include personnel and related
overhead costs for product development, enhancement, upgrades, quality
assurance and testing. Total research and product development expenses,
including amounts capitalized, were $12.2 million or 13% of net revenue for
the year ended June 30, 1998, compared to $8.8 million or 13% of net revenue
in fiscal 1997 and $6.0 million or 13% of net revenue in fiscal 1996. The
Company capitalized research and development costs of $4.3 million,
$3.1 million and $2.3 million for the years ended June 30, 1998, 1997 and 1996,
respectively. Software development costs capitalized in a given period are
dependent upon the nature and state of the development process and are
recorded in accordance with Statement of Financial Accounting Standards No. 86.
Upon general release of a product, related capitalized costs are amortized
over three years and recorded as license fee cost of revenue. In addition to
the $2.3 million of software development costs capitalized in fiscal 1996, the
Company capitalized $1.0 million relating to the purchase of existing
technology.
The Company incurred a nonrecurring charge of approximately $6.5 million
relating to the write-off of acquired in-process technology in conjunction with
the Pristker acquisition.
The increase in overall research and product development expense is due
to staff expansion relating to the Company's development of future releases of
SyteLine, increased development focus on interfacing with third-party software
products and research involving new technologies and products.
PROVISION FOR INCOME TAXES
The effective tax rates for the years ended June 30, 1998, 1997 and 1996
were 174%, 37% and 38%, respectively. The increased effective tax rate in fiscal
1998 was primarily due to the $6.5 million acquisition research and development
write-off which was not deductible for income tax purposes. The reduced
effective tax rate in fiscal 1997 compared to the previous year was primarily
due to the amount of foreign taxable earnings in countries with considerably
lower effective rates, thereby reducing the Company's overall tax rate.
27
<PAGE>
QUARTERLY RESULTS
The following table sets forth certain unaudited operating results for
each of the eight quarters in the two year period ended June 30, 1998. This
information has been prepared by the Company on the same basis as its audited,
consolidated financial statements, and includes all adjustments (consisting only
of normal recurring adjustments) necessary to present fairly this information
when read in conjunction with the Company's audited, consolidated financial
statements and the notes thereto.
The Company's results of operations have fluctuated on a quarterly
basis. The Company's expenses, with the principal exception of sales commissions
and certain components of cost of revenue, are generally fixed and do not vary
with revenue. As a result, because the Company's plans and commitments of
resources are in advance of its planned revenue level, any shortfall of actual
revenue in a given quarter would adversely affect net earnings for that quarter
by a significant portion of the shortfall.
<TABLE>
<CAPTION>
THREE MONTHS ENDED
------------------
JUNE 30, MAR. 31, DEC. 31, SEPT. 30, JUNE 30, MAR. 31, DEC. 31, SEPT. 30,
1998 1998 1997 1997 1997 1997 1996 1996
-------- -------- -------- --------- -------- -------- -------- ---------
(In thousands, except per share date)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net revenue........... $31,692 $24,322 $24,017 $17,565 $21,187 $15,358 $16,537 $12,690
Cost of revenue....... 11,122 9,151 8,537 6,891 7,097 5,405 6,050 5,138
------- ------- ------- ------- ------- ------- ------- -------
Gross margin....... 20,570 15,171 15,480 10,674 14,090 9,953 10,487 7,552
Operating expenses
Selling, general, and
administrative... 14,395 12,204 11,133 7,741 9,953 7,994 7,444 5,960
Research and
product
development...... 2,287 1,870 1,709 2,034 1,705 1,501 1,353 1,100
Acquired research
and development
write-off........ 6,503
------- ------- ------- ------- ------- ------- ------- -------
Total operating
expenses......... 16,682 14,074 19,345 9,775 11,658 9,495 8,797 7,060
------- ------- ------- ------- ------- ------- ------- -------
Operating income
(loss).... 3,888 1,097 (3,865) 899 2,432 458 1,690 492
Other income
(expense), net..... (46) (67) (16) (50) (16) 18 33 72
------- ------- ------- ------- ------- ------- ------- -------
28
<PAGE>
THREE MONTHS ENDED
------------------
JUNE 30, MAR. 31, DEC. 31, SEPT. 30, JUNE 30, MAR. 31, DEC. 31, SEPT. 30,
1998 1998 1997 1997 1997 1997 1996 1996
-------- -------- -------- --------- -------- -------- -------- ---------
(In thousands, except per share date)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Income (loss) before
income taxes....... 3,842 1,030 (3,881) 849 2,416 476 1,723 564
------- ------- ------- ------- ------- ------- ------- -------
------- ------- ------- ------- ------- ------- ------- -------
Provision for
income taxes....... 1,486 389 1,004 317 865 183 651 217
------- ------- ------- ------- ------- ------- ------- -------
------- ------- ------- ------- ------- ------- ------- -------
Net income (loss)..... $2,356 $641 $(4,885) $532 $1,551 $293 $1,072 $347
Basic earnings (loss)
per share $0.36 $0.10 $(0.79) $0.09 $0.26 $0.05 $0.19 $0.06
------- ------- ------- ------- ------- ------- ------- -------
------- ------- ------- ------- ------- ------- ------- -------
Diluted earnings
(loss) per share... $0.33 $0.09 $(0.79) $0.08 $0.24 $0.05 $0.18 $0.06
Diluted earnings per
share exclusive of
acquired R&D
write-off.......... $0.33 $0.09 $0.24 $0.08 $0.24 $0.05 $0.18 $0.06
Weighted average
number of common
shares outstanding. 6,586 6,519 6,179 5,982 5,976 5,930 5,582 5,525
Weighted average
number of common
shares outstanding
assuming dilution.. 7,222 7,115 6,179 6,567 6,332 6,345 5,858 5,780
Weighted average
number of common
shares outstanding
assuming dilution
and exclusive of
acquired R&D
write-off......... 7,222 7,115 6,783 6,567 6,332 6,345 5,858 5,780
</TABLE>
- -----------------------
Note: Share data has been restated to conform with the provisions of FASB
Statement 128.
29
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
Cash provided by operations increased to $8.8 million in fiscal 1998
from $2.5 million in fiscal 1997 and $6.9 million in fiscal 1996. Cash
provided by an increase in earnings in fiscal 1998, excluding the acquired
research and development write-off, was offset by an increase in trade
accounts receivable. Trade accounts receivable days sales outstanding were 97
days at June 30, 1998 in comparison to 95 days and 76 days at June 30, 1997
and 1996, respectively. For all three years presented, cash provided by
operations was used primarily to fund software development costs and to
purchase computer equipment. In 1997 and 1996, cash provided by operations
also was used in connection with the Company's acquisition activities. In
fiscal 1998, the Company received $2.0 million cash from Mitsui & Co., Ltd.
in exchange for a 13.3% minority equity interest in Symix Singapore, the
Company's Asia distribution operation. Cash at June 30, 1998 increased to
$6.1 million from $2.3 million at June 30, 1997 and $6.8 million at
June 30, 1996.
Working capital was $13.6 million at June 30, 1998 compared to $7.9
million at June 30, 1997. The increase in working capital in fiscal 1998 and
1997 is primarily attributable to the increase in trade accounts receivable
resulting from revenue growth and increase in days sales outstanding. For
both fiscal 1998 and fiscal 1997, the increase in current assets was
partially offset by the increase in deferred revenue due to the expanded
Symix customer base and renewed service contracts.
In addition to its present working capital, the Company has a
$15.0 million unsecured revolving bank line of credit that expires in
fiscal 2001. As of June 30, 1998, $2.0 million was drawn under the line of
credit to fund the Company's working capital needs. The Company anticipates that
the cash on hand, cash flow from operations and the bank line of credit will be
sufficient to satisfy the Company's expected cash needs for the next 12 months.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
Not applicable.
30
<PAGE>
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
INDEX TO FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES
<TABLE>
<CAPTION>
Page
<S> <C>
Report of Independent Auditors..................................... 34
Consolidated Statements of Operations - Years ended
June 30, 1998, 1997, and 1996...................................... 35
Consolidated Balance Sheets - June 30, 1998 and 1997............... 36
Consolidated Statements of Cash Flows - Years ended
June 30, 1998, 1997, and 1996...................................... 38
Consolidated Statements of Shareholders' Equity - Years
ended June 30, 1998, 1997, and 1996................................ 40
Notes to Consolidated Financial Statements -
June 30, 1998...................................................... 41
Financial statement schedule:
Schedule II - Valuation and Qualifying Accounts.................... 52
</TABLE>
All other schedules for which provision is made in the applicable
accounting regulation of the Securities and Exchange Commission are not
required under the related instructions or are inapplicable, and therefore
have been omitted.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL
DISCLOSURE.
None.
PART III
In accordance with general instruction G(3), the information required by
Items 10, 11, 12 and 13 is hereby incorporated herein by reference from the
Company's definitive proxy statement for its annual meeting of shareholders
to be held on November 11, 1998, which is expected to be filed with the
Securities and Exchange Commission pursuant to Regulation 14A of the
Securities Exchange Act of 1934 within 120 days after the end of the
Company's fiscal year covered by this report, except that certain information
required by Item 10 with respect to executive officers of the Company is set
forth in Part I hereof under "Item 1. Business--Executive Officers of the
Registrant".
31
<PAGE>
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.
<TABLE>
<CAPTION>
<S> <C>
(a) Documents Filed as Part of This Report:
1 Financial Statements
See Item 8.--Index to Financial Statements and Financial Statement Schedules
2 Financial Statement Schedules
See Item 8.--Index to Financial Statements and Financial Statement Schedules
3 Exhibits:
See Exhibit Index of this Report.
(b) REPORTS ON FORM 8-K:
None.
</TABLE>
32
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized, on the 28th day
of September, 1998.
SYMIX SYSTEMS, INC.
By /s/ Lawrence W. DeLeon
----------------------------------------
Lawrence W. DeLeon
Vice President, Chief Financial Officer and
Secretary
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities indicated, on the 28th day of
September, 1998.
<TABLE>
<CAPTION>
Signature Title
--------- -----
<S> <C>
/s/ Lawrence J. Fox* Chairman of the Board, Chief Executive
- ----------------------------- Officer and Director
Lawrence J. Fox
/s/ Stephen A. Sasser* President and Chief Operating Officer
- ----------------------------- and Director
Stephen A. Sasser
/s/ Lawrence W. DeLeon Vice President, Chief Financial Officer
- ----------------------------- and Secretary
Lawrence W. DeLeon
/s/ John T. Tait* Director
- -----------------------------
John T. Tait
/s/ Duke W. Thomas* Director
- -----------------------------
Duke W. Thomas
/s/ Larry L. Liebert* Director
- -----------------------------
Larry L. Liebert
/s/ James A. Rutherford * Director
- -----------------------------
James A. Rutherford
- -----------------------------
* By Power of Attorney
/s/ Lawrence W. DeLeon
- -----------------------------
Lawrence W. DeLeon (Attorney-in-Fact)
</TABLE>
33
<PAGE>
REPORT OF INDEPENDENT AUDITORS
Board of Directors
Symix Systems, Inc.
We have audited the accompanying consolidated balance sheets of Symix
Systems, Inc. and Subsidiaries as of June 30, 1998 and 1997, and the related
consolidated statements of operations, shareholders' equity, and cash flows
for each of the three years in the period ended June 30, 1998. Our audits
also included the financial statement schedule listed in the Index at Item 8.
These financial statements and schedule are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements and schedule based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the consolidated financial position of
Symix Systems, Inc. and Subsidiaries at June 30, 1998 and 1997, and the
consolidated results of their operations and their cash flows for each of the
three years in the period ended June 30, 1998, in conformity with generally
accepted accounting principles. Also, in our opinion, the related financial
statement schedule, when considered in relation to the basic financial
statements taken as a whole, presents fairly in all material respects the
information set forth therein.
Columbus, Ohio
July 21, 1998
34
<PAGE>
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Year Ended June 30,
-----------------------------------
1998 1997 1996
---- ---- ----
(In thousands, except per share data)
<S> <C> <C> <C>
License fees $58,498 $36,477 $24,682
Service, maintenance and support 39,099 29,295 21,077
- -----------------------------------------------------------------------------------------------------
Net revenue 97,597 65,772 45,759
License fees 14,746 9,721 6,840
Service, maintenance and support 20,955 13,969 9,656
- -----------------------------------------------------------------------------------------------------
Cost of revenue 35,701 23,690 16,496
- -----------------------------------------------------------------------------------------------------
Gross margin 61,896 42,082 29,263
Selling, general, and administrative 45,474 31,351 21,593
Research and product development 7,901 5,659 3,673
Acquisition research and development
write-off 6,503 -- --
Restructuring and other unusual charges - Note G -- -- 506
- -----------------------------------------------------------------------------------------------------
Total operating expenses 59,878 37,010 25,772
- -----------------------------------------------------------------------------------------------------
Operating income 2,018 5,072 3,491
Other income (expense), net (178) 107 221
- -----------------------------------------------------------------------------------------------------
Income before income taxes 1,840 5,179 3,712
Provision for income taxes - Note F 3,196 1,916 1,404
- -----------------------------------------------------------------------------------------------------
Net Income (loss) ($1,356) $3,263 $2,308
- -----------------------------------------------------------------------------------------------------
Basic EPS:
Net income (loss) per share ($0.21) $0.57 $0.42
- -----------------------------------------------------------------------------------------------------
Diluted EPS:
Net income (loss) per share ($0.21) $0.54 $0.41
- -----------------------------------------------------------------------------------------------------
Weighted average number of common
shares outstanding 6,317 5,753 5,477
- -----------------------------------------------------------------------------------------------------
Weighted average number of common
shares outstanding assuming dilution 6,317 6,079 5,582
- -----------------------------------------------------------------------------------------------------
</TABLE>
See notes to consolidated financial statements.
35
<PAGE>
<TABLE>
<CAPTION>
CONSOLIDATED BALANCE SHEETS
June 30, June 30,
1998 1997
-------- --------
(In thousands)
Assets
<S> <C> <C>
Current assets:
Cash and cash equivalents $6,115 $2,332
Trade accounts receivable, less allowance for doubtful
accounts of $1,063 in 1998 and $702 in 1997 32,925 21,689
Inventories 489 356
Prepaid expenses 1,346 1,162
Other receivables 427 300
Deferred income taxes - Note F 573 311
- ------------------------------------------------------------------------------------------
Total current assets 41,875 26,150
- ------------------------------------------------------------------------------------------
Other assets:
Capitalized software, net of accumulated amortization
of $8,164 in 1998 and $6,106 in 1997 11,012 6,551
Deferred income taxes - Note F 180 171
Intangibles, net 5,091 4,779
Deposits and other assets 1,725 877
- ------------------------------------------------------------------------------------------
18,008 12,378
- ------------------------------------------------------------------------------------------
Equipment and improvements:
Furniture and fixtures 2,880 2,436
Computer and other equipment 11,573 10,423
Leasehold improvements 1,262 1,288
-------- --------
15,715 14,147
Less allowance for depreciation and amortization 9,216 8,423
- ------------------------------------------------------------------------------------------
6,499 5,724
- ------------------------------------------------------------------------------------------
Total assets $66,382 $44,252
- ------------------------------------------------------------------------------------------
</TABLE>
36
<PAGE>
CONSOLIDATED BALANCE SHEETS, CONTINUED
<TABLE>
<CAPTION> June 30, June 30,
1998 1997
-------- --------
(In thousands except
per share data)
<S> <C> <C>
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable and accrued expenses - Note H $13,276 $7,423
Customer deposits 288 307
Deferred revenue 13,155 9,685
Income tax payable 1,304 63
Current portion of long-term obligations - Note J 277 775
- ---------------------------------------------------------------------------------------
Total current liabilities 28,300 18,253
Long-term obligations - Note J 305 530
Bank credit agreement - Note E 2,000 --
Deferred income taxes - Note F 2,476 2,108
Minority Interest - Note L 2,000
Shareholders' equity - Note C
Common stock, authorized 20,000 shares; issued
6,778 shares at June 30, 1998, and 6,160 shares at
June 30, 1997, at stated capital amounts
of $.01 per share 68 62
Preferred stock, authorized 1,000 shares; none issued
and outstanding -- --
Convertible preferred stock of subsidiary - Note I 1,031 1,031
Capital in excess of stated value 23,937 13,291
Retained earnings 9,497 10,853
Cumulative translation adjustment (1,912) (556)
- ---------------------------------------------------------------------------------------
32,621 24,681
Less: Common stock in treasury: 304 shares in 1998
and 1997, at cost 1,320 1,320
- ---------------------------------------------------------------------------------------
Total shareholders' equity 31,301 23,361
- ---------------------------------------------------------------------------------------
Total liabilities and shareholders' equity $66,382 $44,252
- ---------------------------------------------------------------------------------------
</TABLE>
See notes to consolidated financial statements.
37
<PAGE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION> Year Ended June 30,
-----------------------------------
1998 1997 1996
---- ---- ----
(in thousands)
<S> <C> <C> <C>
Increase (decrease) in cash
Operating Activities
Net income (loss) ($1,356) $3,263 $2,308
Adjustments to reconcile net income (loss)
to net cash provided by operating activities:
Acquisition research and development write-off 6,503 -- --
Depreciation and amortization 6,220 4,593 3,064
Provision for losses (recoveries) on
accounts receivable 353 261 (100)
Provision for deferred income taxes 572 1,417 433
Changes in operating assets and liabilities:
Trade accounts receivable (11,942) (9,151) (467)
Prepaid expenses and other receivables (181) (474) (190)
Inventories (133) (45) (40)
Deposits and other assets (1,084) (611) 80
Accounts payable and accrued expenses 5,285 157 1,255
Customer deposits (14) 57 (428)
Deferred revenues 2,831 3,216 215
Income taxes payable/refundable 1,721 (165) 755
- ------------------------------------------------------------------------------------------------
Net cash provided by
operating activities 8,775 2,518 6,885
- ------------------------------------------------------------------------------------------------
Investing Activities
Net purchases of equipment and improvements (3,273) (2,649) (1,463)
Additions to purchased and capitalized software (4,667) (3,637) (3,290)
Purchase of subsidiaries, net of cash acquired (699) (1,191) --
- ------------------------------------------------------------------------------------------------
Net cash used by
investing activities (8,639) (7,477) (4,753)
- ------------------------------------------------------------------------------------------------
Financing Activities
Proceeds from issuance of shares on exercise
of stock options 815 806 371
Additions to long-term obligations, net of payments 1,152 (151) (197)
Additions to paid in capital 2,000 -- --
- ------------------------------------------------------------------------------------------------
Net cash provided by
financing activities 3,967 655 174
- ------------------------------------------------------------------------------------------------
Effect of exchange rate changes on cash (320) (138) (30)
Net increase (decrease) in cash 3,783 (4,442) 2,276
Cash and cash equivalents at beginning
of period 2,332 6,774 4,498
- ------------------------------------------------------------------------------------------------
Cash and cash equivalents at
end of period $6,115 $2,332 $6,774
- ------------------------------------------------------------------------------------------------
38
<PAGE>
Supplemental disclosure of cash
flow information:
Cash paid during the period for:
Interest $374 $8 $49
Income taxes (net of refunds) 78 639 189
- ------------------------------------------------------------------------------------------------
</TABLE>
See notes to consolidated financial statements.
39
<PAGE>
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
Convertible Capital in
Common Stock Preferred Stock Excess of Cumulative
------------ --------------- Stated Retained Translation Treasury
Shares Amount Shares Amount Value Earnings Adjustment Stock
------ ------ ------ ------ ----- -------- ----------- --------
(In thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balances at June 30, 1995 5,750 $58 $10,614 $5,282 ($126) ($1,320)
Issuance of shares on exercise
of stock options 76 306
Tax benefit on stock options
exercised 65
Equity adjustment from foreign
currency translation (85)
Net income 2,308
- ------------------------------------------------------------------------------------------------------------------
Balances at June 30, 1996 5,826 58 10,985 7,590 (211) (1,320)
Issuance of shares on exercise
of stock options 182 2 662
Tax benefit on stock options
exercised 322
Equity adjustment from foreign
currency translation (345)
Issuance of convertible
preferred shares of subsidiary 250 $2,062
Exercise of convertible
preferred shares 125 1 (125) (1,031) 1,030
Issuance of shares for employee
stock purchase plan 27 1 142
Compensatory portion of
stock options granted 150
Net income 3,263
- ------------------------------------------------------------------------------------------------------------------
Balances at June 30, 1997 6,160 62 125 1,031 13,291 10,853 (556) (1,320)
Issuance of shares on exercise
of stock options 97 1 617
Tax benefit on stock options
exercised 459
Equity adjustment from foreign
currency translation (1,356)
Issuance of shares for employee
stock purchase plan 36 257
Compensatory portion of
stock options granted 150
Issuance of shares and options
related to acquisition 485 5 9,163
Net loss (1,356)
- ------------------------------------------------------------------------------------------------------------------
Balances at June 30, 1998 6,778 $68 125 $1,031 $23,937 $9,497 ($1,912) ($1,320)
</TABLE>
See notes to consolidated financial
statements.
40
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE A - SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION: The accompanying financial statements include
the accounts of Symix Systems, Inc., and its majority owned subsidiaries
after elimination of intercompany accounts and transactions.
ORGANIZATION: Symix Systems, Inc. designs, develops, markets and supports a
fully integrated manufacturing, planning and financial software system. The
software was developed for make-to-order and mixed-mode production
manufacturers. Among the key industries which use the Symix applications are
industrial equipment, fabricated metals, electronics, furniture/fixtures and
container packaging. Founded in 1979, Symix is headquartered in Columbus,
Ohio, employing more than 623 people, with direct sales and support offices
in the Americas, Europe, and Asia Pacific.
USE OF ESTIMATES: The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make
estimates and assumptions that affect the amounts reported in the financial
statements and accompanying notes. Actual results could differ from those
estimates.
REVENUE RECOGNITION: Revenue for all periods presented is accounted for in
accordance with AICPA Statement of Position 91-1, "Software Revenue
Recognition." Revenue is derived principally from the sale of internally
produced software products and short-term maintenance and support agreements
from software sales. Revenue from software license fees is generally
recognized upon shipment of product to the customer. Revenue from maintenance
and support agreements is billed periodically, deferred, and recognized
ratably over the life of the agreements. Revenue from consulting, education,
and other services is recognized as the services are provided.
On October 27, 1998 the Accounting Standards Executive Committee issued
Statement of Position 97-2 "Software Revenue Recognition"(SOP 97-2). 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. The Company is studying the provisions of SOP 97-2, but does not
anticipate that it will have a material impact on its operating results.
The Company establishes allowances to provide for uncollectible trade
receivables and anticipated adjustments to amounts previously billed.
CAPITALIZED SOFTWARE: Capitalized software is stated at the lower of cost or
net realizable value. The Company capitalizes the cost of purchased software
and the qualifying internal cost of developing its software products in
accordance with Statement of Financial Accounting Standards No. 86,
"Accounting for the Costs of Computer Software to be Sold, Leased or
Otherwise Marketed." Capitalized software costs are amortized by the
straight-line method using estimated useful lives of three to five years.
Amortization expense was $2,115,000, $1,795,000, and $1,161,000 for the years
ended June 30, 1998, 1997 and 1996, respectively.
41
<PAGE>
INVENTORIES: Inventories consist primarily of software-related products that
are held for resale. The Company values inventory at the lower of cost or
market. Cost is determined using the specific identification method.
EQUIPMENT AND IMPROVEMENTS: Equipment and improvements are stated on the
basis of cost. Provisions for depreciation and amortization are computed by
the straight-line method over the estimated lives of the related assets.
Depreciation expense was $2,434,000, $1,952,000, and $1,895,000 for the years
ended June 30, 1998, 1997 and 1996, respectively.
FOREIGN OPERATIONS: The Company's international operations constitute 21%,
25%, and 13% of consolidated net revenue for the years ended June 30, 1998,
1997, and 1996 respectively. International operations accounted for 28%
(Europe 14% and Asia Pacific 14%) and 26% (Europe 13% and Asia Pacific 13%),
of consolidated identifiable assets as of June 30, 1998 and 1997,
respectively.
FOREIGN CURRENCY TRANSLATION: Assets and liabilities of foreign subsidiaries
are translated into U.S. dollars at year-end rates of exchange. Revenues and
expenses are translated at the average exchange rates for the periods and
capital accounts have been translated using historic rates. The resulting
translation adjustments are recorded as an adjustment to shareholders' equity.
INCOME TAXES: The Company accounts for income taxes under the liability
method pursuant to Statement of Financial Accounting Standards No. 109,
"Accounting for Income Taxes" (SFAS 109). Under the liability method,
deferred tax assets and liabilities are determined based on differences
between the financial reporting and tax basis of assets and liabilities using
the enacted tax rates and laws that will be in effect when the differences
are expected to reverse.
EARNINGS PER SHARE: In 1997, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 128, "Earnings Per Share."
Statement 128 replaced the previously reported primary and fully diluted
earnings per share with basic and diluted earnings per share. Unlike primary
earnings per share, basic earnings per share excludes any dilutive effects of
options. Diluted earnings per share is very similar to the previously
reported fully diluted earnings per share. All earnings per share amounts for
all periods have been presented, and where necessary, restated to conform to
the Statement 128 requirements.
STOCK-BASED COMPENSATION: The Company accounts for stock compensation
arrangements in accordance with APB Opinion No. 25, "Accounting for Stock
Issued to Employees." The pro forma information regarding net income and
earnings per share as required by Statement of Financial Accounting Standards
No. 123, "Accounting for Stock-Based Compensation" (SFAS No. 123) is
disclosed in "Note C - Common Stock and Stock Options".
PREFERRED STOCK: The Company's Articles of Incorporation authorize 1,000,000
shares of preferred stock at no par value. The Board of Directors will
determine the rights and preferences of these shares. Presently, no preferred
shares are issued and outstanding.
CASH AND CASH EQUIVALENTS: The Company considers all demand deposits and
highly liquid investments with a maturity of three months or less as cash
equivalents.
42
<PAGE>
INTANGIBLE ASSETS: Intangible assets consist principally of goodwill and
other intangible assets resulting from acquisitions accounted for using the
purchase method of accounting. The intangible assets are amortized using the
straight-line method over five years. The accumulated amortization of
intangible assets relating to acquired businesses was $1,479,000 and $608,000
at June 30, 1998 and 1997, respectively.
RECLASSIFICATION: Certain reclassifications have been made to conform to the
1998 presentation.
NOTE B - LEASES
The Company has entered into certain operating lease agreements for the
rental of office facilities and computer equipment. The facility leases
provide for annual rentals which are subject to escalation for increased
operating costs.
Amounts expensed under all operating lease agreements were: $3,727,000,
$2,702,000, and $1,884,000 for the years ended June 30, 1998, 1997 and 1996,
respectively.
The following is a schedule of future minimum lease payments required under
the operating leases that have initial or remaining noncancelable lease terms
in excess of one year as of June 30, 1998:
Fiscal Year
-----------
(In thousands)
1999 $3,160
2000 2,543
2001 1,955
2002 404
2003 and thereafter 321
------
Total minimum payments $8,383
------
NOTE C - COMMON STOCK AND STOCK OPTIONS
On July 8, 1996, shareholder approval was obtained to amend the Company's
Amended Articles of Incorporation to increase its authorized shares from
6,000,000 to 21,000,000, of which 20,000,000 are common shares and 1,000,000
are preferred shares.
The Company has a non-qualified stock option plan ("the Plan") that provides
for the granting of options to officers and other key employees for shares of
common stock at purchase prices of not less than the fair market value on the
date of the grant as determined by the Board of Directors. The maximum number
of common shares which may be optioned under the Plan was 2,653,070 as of
June 30, 1998. Options under the Plan generally vest over periods of up to
four years and must be exercised within ten years of the date of grant.
The Company also has a non-qualified stock option plan for Key Executives
("Key Executives Plan"). A total of 400,000 shares of common stock are
designated for issuance under the Key Executives Plan. The Compensation
Committee of the Board of Directors is authorized to set the price and terms
and conditions of the options granted under the Key Executives Plan. Options
under the Key Executives Plan must be exercised within ten years of the date
of the grant.
43
<PAGE>
The Company also has a Stock Option Plan for Outside Directors ("Outside
Directors Plan"). The Outside Directors Plan provides for the issuance of
options for 20,000 shares of stock to each Outside Director upon his/her
election to the Board of Directors. A total of 200,000 shares of common stock
may be issued under the Outside Directors Plan. Options under the Outside
Directors Plan vest immediately and must be exercised within ten years of the
date of grant.
Pro forma information regarding net income and earnings per share is required
by SFAS No. 123, which also requires that the information be determined as if
the Company has accounted for its employee stock options granted subsequent
to December 31, 1994 under the fair value method of that Statement. The fair
value for these options was estimated at the date of grant using a
Black-Scholes option pricing model with the following weighted-average
assumptions for 1997 and 1998: risk-free interest rate of 6.50%; no dividend
yield; volatility factor of the Company's common stock of 0.4; and a
weighted-average expected life of each option of 6 years.
If the Company had elected to recognize compensation cost based on the fair
value of options at the grant date (which includes shares issuable under the
Employee Stock Purchase Plan--see Note D) as prescribed by SFAS No. 123, the
following displays what reported net income and per share amounts would have
been:
44
<PAGE>
<TABLE>
<CAPTION>
Pro Forma
Year Ended June 30, 1998 1997
- ----------------------------------------------------------------------
(In thousands, except per share data)
<S> <C> <C>
Net income (loss)...................... ($2,047) $2,848
Net income (loss) per share............ ($.32) $0.47
</TABLE>
The pro forma financial effects of applying SFAS No. 123 may not be
representative of the pro forma effects on reported results of operations for
future years.
Information with respect to options granted under the three Plans is as
follows:
<TABLE>
<CAPTION>
Weighted-
Average
Number of Price
Shares Per Share
--------- ---------
<S> <C> <C>
Outstanding at June 30, 1995 758,988 $4.92
Granted 813,000 4.82
Canceled (176,438) 4.79
Exercised (77,648) 6.18
Outstanding at June 30, 1996 1,317,902 4.72
Granted 361,750 7.89
Canceled (20,000) 5.42
Exercised (181,902) 3.44
Outstanding at June 30, 1997 1,477,750 5.61
Granted 256,630 15.29
Canceled (18,638) 8.04
Exercised (96,207) 6.42
Outstanding at June 30, 1998 1,619,535 $7.17
</TABLE>
The weighted-average fair value of options granted during the year ended
June 30, 1998 and 1997 was $4.63 and $2.78, respectively. The
weighted-average remaining contractual life of those options is 8 years. At
June 30, 1998, options for 736,061 shares were exercisable, and 424,254
shares remained available for grant.
NOTE D - EMPLOYEE BENEFIT PLANS
The Company has a 401(k) plan that covers substantially all employees over
21 years of age. The Company contributes to the plan based upon employee
contributions and may make additional contributions at the discretion of the
Board of Directors. The Company made contributions to this plan of
approximately $496,000, $287,000, and $196,000 for the years ended June 30,
1998, 1997 and 1996, respectively.
The Company has an employee stock purchase plan that is in accordance with
Section 423 of the Internal Revenue Code whereby participants are eligible to
purchase common shares of the Company during the plan year. The purchase
price for a common share is determined by the Compensation
45
<PAGE>
Committee prior to the effective date. The purchase price may not be less
than 90% of the per share fair market value of the Company's common shares on
either the effective date or the option date for the offering, whichever is
the lesser. Substantially, all employees are eligible to participate.
NOTE E - LINE OF CREDIT
In June, 1998 the Company negotiated with a bank a $15.0 million unsecured
revolving line of credit that expires in fiscal year 2001, convertible to a
five year term loan at any time on or before March 31, 2001. As of June 30,
1998, there were $2,000,000 in borrowings on the line of credit.
NOTE F - INCOME TAXES
SFAS 109 requires recognition of deferred tax liabilities and assets for the
expected future consequences of events that have been included in the
financial statements or tax returns. Under this method, deferred tax
liabilities and assets are determined based on the difference between the
financial statement and tax basis of assets and liabilities using enacted tax
rates in effect for the year in which the differences are expected to reverse.
For the years ended June 30, 1998, 1997 and 1996, domestic operations
contributed approximately $2.3 million, $525,000, and $4.0 million to pre-tax
earnings, respectively, while foreign affiliates generated income (losses) of
($424,000), $4.6 million, and ($348,000) for the same periods. Income taxes
are summarized as follows:
<TABLE>
<CAPTION>
Year ended June 30, 1998 1997 1996
- --------------------------------------------------------------------------------
(In thousands)
<S> <C> <C> <C>
Current:
Federal $1,949 $ (336) $ 772
State and local 406 (80) 149
Foreign 356 1,919 242
------ ------ ------
2,711 1,503 1,163
Deferred:
Federal 412 444 473
State and local 73 68 73
Foreign 0 (99) (305)
------ ------ ------
485 413 241
------ ------ ------
$3,196 $1,916 $1,404
------ ------ ------
</TABLE>
During the years ended June 30, 1998, 1997 and 1996, the Company recorded a
tax benefit of approximately $459,000, $322,000, and $65,000, respectively,
in connection with the exercise of stock options. The benefit, which was due
to the difference in the fair market value and the exercise price of the
options at the date of exercise, was recorded as an increase in capital in
excess of stated value.
46
<PAGE>
The sources of significant timing differences which give rise to deferred
taxes are as follows:
<TABLE>
<CAPTION>
Year Ended June 30, 1998 1997 1996
- ---------------------------------------------------------------------------------
(In thousands)
<S> <C> <C> <C>
Depreciation/amortization $794 $539 $338
Allowance for doubtful accounts (144) (21) 39
Adjustments for accruals (28) (21) 74
Customer Deposits (51) 54 77
Losses related to investment in foreign affiliates 0 (99) (305)
Other, net (86) (39) 18
------ ------ ------
$485 $413 $241
----- ----- -----
</TABLE>
Significant components of the Company's deferred tax assets and liabilities
as of June 30, 1998 and 1997 are as follows:
<TABLE>
<CAPTION>
Year ended June 30, 1998 1997
- --------------------------------------------------------- -------------- -----------
(In thousands)
<S> <C> <C>
Current deferred tax assets:
Allowance for doubtful accounts $424 $198
Customer deposits 51 --
Accrued liabilities 98 113
---- ----
Total current deferred tax assets $573 $311
---- ----
Long-term deferred tax assets:
Foreign losses $180 $171
------ ----
Total long-term deferred tax assets $180 $171
------ ----
Long-term deferred tax liabilities:
Capitalized software $3,697 $1,935
Capitalized leases -- 425
------ ------
Total long-term deferred tax liabilities $3,697 $2,360
Long-term deferred tax assets:
Book over tax depreciation $353 $252
Domestic Losses 700 --
Other 168 --
------ ------
Total long-term deferred tax assets $1,221 $ 252
------ ------
Net long-term deferred tax liabilities $2,476 $2,108
------ ------
</TABLE>
The long-term deferred tax assets pertaining to foreign losses are net
operating loss carryforwards for certain foreign subsidiaries which the
Company believes will be utilized in future tax periods.
47
<PAGE>
The Company's effective tax rate differs from the statutory U.S. federal
income tax rate as follows:
<TABLE>
<CAPTION>
Year Ended June 30, 1998 1997 1996
- -------------------------------------------------------- --------- --------- --------
<S> <C> <C> <C>
Federal income tax statutory rate 34% 34% 34%
State and local income taxes net of federal tax benefit 3 0 4
Foreign operations taxed at rates different from U.S.
federal statutory rate 13 5 1
Other - (2) (1)
Non-deductible acquisition research and development
write-off 134 - -
General business credits (14) - -
Non-deductible permanent differences 4 - -
-- ----- - ----- -
174% 37% 38%
</TABLE>
The Company has net operating loss carryforwards for tax purposes of
$779,000, $347,000, $37,000 and $752,000 which expire in fiscal years 2008,
2010, 2012 and 2013, respectively.
NOTE G - RESTRUCTURING AND OTHER UNUSUAL CHARGES
During the first quarter of fiscal 1996, the Company incurred restructuring
and other non-recurring charges of $506,000 consisting primarily of severance
payments related to operational changes and costs associated with
reorganizing the European sales channel.
NOTE H - ACCOUNTS PAYABLE AND ACCRUED EXPENSES
Accounts payable and accrued expenses are summarized as follows:
<TABLE>
<CAPTION>
June 30, 1998 1997
- ------------------------------------------------------- ------------ ---------------
(In thousands)
<S> <C> <C>
Accounts payable $3,699 $2,437
Accrued commissions & bonus 2,635 1,416
Third party royalties 3,752 1,395
Other 3,190 2,175
------- -------
$13,276 $7,423
</TABLE>
NOTE I - ACQUISITIONS
On July 1, 1996 the Company acquired the net assets of Synchrony
Manufacturing Systems, Pty. Limited (Synchrony), its former distributor in
Australia, for approximately $220,000 which was payable in twenty-four equal
installments over two years and was paid in full as of June 30,1998. 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 $451,000 which is being amortized
over five years.
48
<PAGE>
On August 8, 1996 the Company acquired all of the outstanding stock of RDD,
the parent company of GSI Industrie ("GSI"), a French manufacturing software
specialist, from its shareholders for approximately $1.8 million, of which
$944,000 was paid in cash at closing. The remaining balance is payable in
three equal annual installments beginning August 1997. In addition, if GSI's
cumulative financial results for the first three years are profitable, a
payment is to be made equal to a percentage of cumulative software sales, not
to exceed approximately $1.4 million. The contingent payment is due October
15, 1999 and will be recorded at the end of fiscal 1999 once it has been
determined if the conditions have been met. 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 $1.9 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 redeemable Class B Preference Shares (the "Class B Shares") of a
subsidiary of the Company. The Class B Shares were redeemed by the holders
for $1.00 (Canadian) per share in January, 1998. 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 $3.4 million which is being amortized over five years.
On November 24, 1997, the Company acquired Pritsker Corporation ("Pritsker"),
for $737,000 in cash and 485,000 common shares of the Company. Pritsker
markets advanced planning and scheduling and simulation software to
mid-market manufacturers. Pursuant to the acquisition agreement, (i) Pritsker
was merged with and into a wholly-owned subsidiary of the Company
incorporated in Ohio, (ii) each share of Pritsker common stock was converted
into the right to receive 0.170108 common shares of the Company and (iii)
each share of Pritsker preferred stock was converted into the right to
receive $5.23 in cash plus accrued and unpaid dividends. Each unexercised
employee stock option and outstanding warrant for Pritsker common stock was
assumed by Symix and converted into the right to acquire that number of
common shares of the Company to which the holder would have been entitled if
such holder exercised the option or warrant immediately prior to the merger.
The transaction was accounted for as a purchase and resulted in a one-time,
non-recurring charge of approximately $6.5 million relating to the write off
of acquired in-process technology of Pritsker.
The following proforma information shows revenue and net income assuming the
Company and Pritsker had been combined at the beginning of the period
indicated. The one time, non-recurring charge of approximately $6.5 million
is excluded from proforma net income.
<TABLE>
<CAPTION>
Twelve MonthsEnded June 30,
---------------------------
1998 1997
---- ----
(In thousands)
<S> <C> <C>
Revenue $98,761 $69,527
Net Income $ 4,558 $ 3,281
</TABLE>
49
<PAGE>
NOTE J - LONG-TERM OBLIGATIONS
Long-term obligations consist of the following:
<TABLE>
<CAPTION>
June 30, 1998 1997
- --------------------------------------------------------- --------------- --------------
(In thousands)
<S> <C> <C>
GSI acquisition note payable $582 $835
Synchrony acquisition note payable - 113
Redeemable Class B Preference shares - 357
------- -----
582 1,305
Less current portion 277 775
------- -----
Long-term obligations $305 $530
------- -----
</TABLE>
The GSI acquisition note is secured by a letter of credit.
The long-term portion of the GSI acquisition note payable at June 30, 1998 is
due on August 9, 1999.
K - EARNINGS PER SHARE
The Company adopted the provisions of Statement No. 128, "Earnings Per Share"
(SFAS 128) during the fiscal year 1998. In accordance with the provisions,
earnings per share for 1997 and 1996 have been restated. The following table
sets forth the computation of basic and diluted earnings per share (in $000's
except per share data):
<TABLE>
<CAPTION>
Year ended June 30, 1998 1997 1996
- ------------------------------------------------------------------------------
<S> <C> <C> <C>
Numerator:
Net income (loss) for both basic and diluted
earnings (loss) per share ($1,356) $3,263 $2,308
Denominator:
Weighted-average shares outstanding 6,192 5,682 5,477
Contingently issuable shares (VAS) 125 71
Denominator for basic earnings (loss)
per share 6,317 5,753 5,477
Effect of dilutive securities:
employee stock options n/a 326 105
Denominator for diluted earnings (loss)
per share 6,317 6,079 5,582
50
<PAGE>
</TABLE>
Basic earnings (loss) per share ($0.21) $0.57 $0.42
Diluted earnings (loss) per share ($0.21) $0.54 $0.41
NOTE L - MINORITY INTEREST
In June, 1998, a wholly-owned subsidiary of the Company sold previously
unissued shares of common stock (representing a 13.3% interest in that
subsidiary) for $2 million. No gain or loss was recognized on the sale of the
subsidiary stock. The proceeds from the sale are recorded on the accompanying
balance sheet as minority interest.
The Company and the minority interest investors also entered into a put
option agreement which provides that during a six month period commencing
September 1, 2001, the minority interest investors have the right to put
their shares in the subsidiary to the Company at a formula price as provided
in the put agreement. The minority interest in the subsidiary will be
adjusted to its expected redemption value each year as a credit or charge to
income until the put is exercised or the redemption period expires.
<PAGE>
SCHEDULE II VALUATION AND QUALIFYING ACCOUNTS
<TABLE>
<CAPTION>
Balance at Charged to Charged to
Beginning of Costs and Other Balance at
Period Expenses Accounts Deductions End of Period
------------ ---------- --------- ---------- -------------
<S> <C> <C> <C> <C> <C>
Year ended June 30, 1998
Deducted from asset accounts:
Allowance for doubtful
accounts $702,000 $918,000 $ 0 $557,000 $1,063,000
-------- -------- --------- -------- ----------
Year ended June 30, 1997
Deducted from asset accounts:
Allowance for doubtful
accounts $450,400 $560,500 $ 0 $308,900 $702,000
-------- -------- --------- -------- --------
Year ended June 30, 1996
Deducted from asset accounts:
Allowance for doubtful
accounts $550,000 $475,000 $ 0 $574,600 $450,400
-------- -------- --------- -------- --------
</TABLE>
52
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit No. Description Page
- ----------- ----------- -----
<S> <C> <C>
3(a)(1) Amended Articles of Incorporated by reference to
Incorporation of Symix Exhibit 3(a)(1) to Registrant's
Systems, Inc. (as filed on Annual Report on Form 10-K for
February 8, 1991) the fiscal year ended June 30,
1997
3(a)(2) Certificate of Amendment to Incorporated by reference to
the Amended Articles of Exhibit 3(a)(2) to Registrant's
Incorporation of Symix Annual Report on Form 10-K for
Systems, Inc. (as filed on the fiscal year ended June 30,
July 16, 1996) 1997
3(a)(3) Amended Articles of Incorporated herein by reference
Incorporation of Symix to Exhibit 3(a)(3) to
Systems, Inc. (reflecting Registrant's Annual Report on
amendments through July 16, Form 10-K for the fiscal year
1996, for purposes of SEC ended June 30, 1997
reporting compliance only)
3(b) Amended Regulations of Symix Incorporated herein by reference
Systems, Inc. to Exhibit 3(b) to the
Registration Statement on Form
S-1 of Registrant, filed February
12, 1991 (Registration No. 33-38878)
4(a)(1) Amended Articles of Incorporated herein by reference
Incorporation of Symix to Exhibit 3(a) (1)of this Annual
Systems, Inc. (as filed on Report on Form 10-K
February 8, 1991)
4(a)(2) Certificate of Amendment to Incorporated herein by reference
the Amended Articles of to Exhibit 3(a)(2) of this Annual
Incorporation Report on Form 10-K
of Symix Systems, Inc. (as
filed on July 16, 1996)
53
<PAGE>
4(a)(3) Amended Articles of Incorporated herein by reference
Incorporation of Symix to Exhibit 3(a)(3) of this Annual
Systems, Inc. (reflecting Report on Form 10-K
amendments through July 16,
1996, for purposes of SEC
reporting compliance only)
4(b) Amended Regulations of Symix Incorporated herein by reference
Systems, Inc. to Exhibit 3(b) of this Annual
Report on Form 10-K
4(c) Share Exchange Agreement Incorporated herein by reference
dated January 9, 1997 to Exhibit 99 to Registrant's
Current Report on Form 8-K dated
January 9, 1997
10(a) Lease Agreement dated April 3, Incorporated herein by reference
1991 for office located at to Exhibit 10(c) to Registrant's
2800 Corporate Exchange Annual Report on Form 10-K for
Drive, Columbus, Ohio the fiscal year ended June 30,
1991
10(b) Lease Amendment to office Filed herein
located at 2800 Corporate
Exchange Drive, Columbus, Ohio
10(c) Second Lease Amendment to Filed herein
office located at 2800
Corporate Exchange Drive,
Columbus, Ohio
10(d) Third Lease Amendment to Incorporated herein by reference
office located at 2800 to Exhibit 10(c) to Registrant's
Corporate Exchange Drive, Annual Report on Form 10-K for
Columbus, Ohio the fiscal year ended June 30,
1994
10(e) Fourth Lease Amendment to Filed herein
office located at 2800
Corporate Exchange Drive,
Columbus, Ohio
10(f) Fifth Lease Amendment to Filed herein
office located at 2800
Corporate Exchange Drive,
Columbus, Ohio
54
<PAGE>
10(g) Progress Software Application Incorporated herein by reference
Partner Agreement dated to Exhibit 10(e) to Registrant's
February 8, 1995 Quarterly Report on Form 10-Q for
fiscal quarter ended March 31,
1995
10(h) Amendment to Progress Software Filed herein
Application Partner Agreement
dated July 1, 1997
10(i) Second Amendment to Progress Filed herein
Software Application Partner
Agreement dated July 1, 1998
10(j)* Summary of Bonus Plan Filed herein
10(k)* Symix Systems, Inc. Stock Incorporated herein by reference
Option Plan for Outside to Exhibit 10(i) of Registrant's
Directors Annual Report on Form 10-K for
fiscal year ended June 30, 1993
10(l)* Symix Systems, Inc. Incorporated herein by reference
Non-Qualified Stock Option to Exhibit 10(a) to Registrant's
Plan for Key Executives Quarterly Report on Form 10-Q for
fiscal quarter ended March 31,
1996
10(m)* Symix Systems, Inc. Incorporated herein by reference
Non-Qualified Stock Option to Exhibit 10(a) to Registrant's
Plan for Key Employees, as Annual Report on Form 10-K for
amended the fiscal year ended June 30,
1993
Incorporated herein by reference
to Exhibit 10(a) to Registrant's
10(n)* Symix Systems, Inc. Quarterly Report on Form 10-Q for
Non-Qualified Stock Option the fiscal quarter ended March
Plan for Key Executives 31, 1996
Incorporated herein by reference
10(o)* Symix Systems, Inc. Stock to Exhibit 10(i) to Registrant's
Option Plan for Outside Annual Report on Form 10-K for
Directors fiscal year ended June 30, 1993
10(p)* Sasser Employment Agreement Incorporated herein by reference
to Exhibit 10(b) to Registrant's
55
<PAGE>
Quarterly Report on Form 10-Q for
fiscal quarter ended March 31,
1996
10(q)* Stock Option Agreement between Incorporated herein by reference
the Company and Stephen A. to Exhibit 10(c) to Registrant's
Sasser dated January 17, 1996 Quarterly Report on Form 10-Q for
fiscal quarter ended March 31,
1996
10(r) Loan Agreement among Symix Incorporated herein by reference
Systems, Inc., Symix Computer to Exhibit 10(a)(1) to
Systems, Inc. and Bank One, Registrant's Form 10-Q for fiscal
Columbus, N.A. dated May 20, quarter ended September 30, 1997
1996
10(s) First Amendment to Loan Incorporated herein by reference
Agreement among Symix Systems, to Exhibit 10(b) to Registrant's
Inc., Symix Computer Systems, Form 10-Q for fiscal quarter
Inc. and Bank One, Columbus, ended September 30, 1997
N.A.
10(t) Second Amendment to Loan Incorporated herein by reference
Agreement Among Symix to Exhibit 10(b) to Registrant's
Systems, Inc., Symix Form 10-Q for fiscal quarter
Computer Systems, Inc. and ended March 31, 1998
Bank One, NA
10(u) Third Amendment to Loan Filed herein
Agreement Among Symix
Systems, Inc., Symix
Computer Systems, Inc. and
Bank One, NA
21 Subsidiaries of the Registrant Filed herein
23 Consent of Independent Auditors Filed herein
24 Powers of Attorney Filed herein
27 Financial Data Schedule Filed herein
</TABLE>
*Indicates management contracts or compensatory plans or arrangements that
are required to be filed as an exhibit to this Annual Report on Form 10-K for
the fiscal year ended June 30, 1998.
56
<PAGE>
EXHIBIT 10(b)TO SYMIX SYSTEMS, INC. 1998 FORM 10-K
LEASE AMENDMENT
This Lease Amendment is made and entered into as of the latest date on
which it is executed by either of the parties hereto ("Amendment Date"), by and
between Corporate Exchange Buildings IV and V Limited Partnership, an Ohio
limited partnership, 383 South Third Street, Columbus, Ohio 43215 (the
"Landlord") and Symix Computer Systems, Inc., an Ohio corporation, whose address
is 2800 Corporate Exchange Drive, Columbus, Ohio 43231 (the "Tenant").
RECITALS
A. 2600 Realty Corp. V, Landlord's predecessor in interest, and Tenant
entered into a lease agreement dated April 3, 1991 (the "Lease") and a Start
Date Agreement dated October 15, 1992, pursuant to which Landlord leased to
Tenant, and Tenant leased from Landlord, certain premises containing
approximately 60,238 rentable square feet of office space (the "Original
Premises") located on the third and fourth floors of Corporate Exchange
Building V, 2800 Corporate Exchange Drive, Columbus, Franklin County, Ohio (the
"Building").
B. Tenant desires to lease additional office space in the Building and to
amend the Lease.
NOW, THEREFORE, for valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, the parties agree as follows:
1. Tenant hereby leases an additional one thousand eight hundred
eighty (1,880) rentable square feet of office space (the "Expansion Space")
located on the second floor of the Building as shown on the floor plan attached
hereto as Exhibit A.
2. The term of the lease for the Expansion Space shall commence on
December 1, 1993, shall be concurrent with the Term of the Lease, and shall
expire on June 30, 1996 unless sooner terminated as provided in the Lease.
3. Commencing on December 1, 1993, (a) the Premises shall be deemed
to include the Expansion Space, and (b) the Premises, including the Original
Premises and the Expansion Space, will contain an aggregate of 62,118 rentable
square feet.
4. Tenant shall pay Landlord Base Rent for the Premises in the
amount of Fifty Thousand Two Hundred Sixteen and 33/100 Dollars ($50,216.33) per
month, payable in advance on the first day of each calendar month, without set
off or demand, beginning on December 1, 1993, and continuing each calendar month
until the expiration of the Lease Term.
57
<PAGE>
5. Commencing on December 1, 1993, Tenant's pro rata share shall be
increased to 51.7%.
6. Landlord shall, at its expense, install a partition wall to
demise the Premises as shown in Exhibit B attached hereto. Except for the
Landlord's Work set forth in this Section 6, Tenant accepts the Premises in "AS
IS" condition.
7. Within five (5) days after December 1, 1993, Tenant shall execute
and deliver an acceptance letter in the form of Exhibit C attached hereto (the
"Acceptance Letter"). By executing the Acceptance Letter, Tenant shall be
deemed conclusively to have accepted the Premises and to have acknowledged that
the Premises are in the condition required by the Lease and this Amendment.
8. Except as set forth in this Lease Amendment, all provisions of
the Lease shall remain unchanged and in full force and effect and shall apply to
this Lease Amendment. All terms and conditions of the Lease not specifically
amended by this Lease Amendment shall apply as if fully rewritten herein, and
the rights and obligations of Tenant shall be governed and controlled by the
terms and conditions of the Lease as amended hereby.
9. Tenant hereby certifies that no real estate broker has or will
represent it in this transaction and that no finder's fees have been earned by
any third party other than Pizzuti Realty, Inc. and Joseph Skilken Realty, Inc.
and Tenant shall indemnify and hold Landlord harmless from any liability or
expense that may arise from such claims, including reasonable attorney's fees.
Landlord will pay Pizzuti Realty, Inc. and Joseph Skilken Realty, Inc. fees in
accordance with separate written agreements between Landlord and Pizzuti Realty,
Inc. and Joseph Skilken Realty, Inc.
IN WITNESS WHEREOF, Landlord has executed this Lease Amendment on the ____
day of December, 1993 and Tenant has executed this Lease Amendment on the ____
day of December, 1993.
LANDLORD: CORPORATE EXCHANGE
BUILDINGS IV AND V
LIMITED PARTNERSHIP
WITNESSES: By Joseph Skilken & Co., General
partner
___________________________ By:______________________________
Steve Skilken, President
Print Name:________________
Date:____________________________
___________________________
Print Name:________________
58
<PAGE>
TENANT: SYMIX COMPUTER SYSTEMS,INC.
___________________________ By:_______________________________
Larry J. Fox
Print Name:________________ Chief Executive Officer
Date:_____________________________
___________________________
Print Name:________________
___________________________ By:_______________________________
Bradford W. Payne
Print Name:________________ Chief Financial Officer
Date:______________________________
__________________________
Print Name:________________
59
<PAGE>
NOTARIZATION FOR LANDLORD
STATE OF OHIO
COUNTY OF FRANKLIN
On this ___ day of December, 1993, before me, a notary public in and for
said County and State, personally appeared Steve Skilken, President of Joseph
Skilken & Co., an Ohio Corporation and the General Partner of CORPORATE EXCHANGE
BUILDINGS IV and V LIMITED PARTNERSHIP, an Ohio limited partnership, on behalf
of the limited partnership who acknowledged for and on behalf of the corporation
and limited partnership that he did sign the foregoing instrument on behalf of
the corporation and limited partnership.
________________________________
Notary Public
My Commission Expires:__________
NOTARIZATION FOR CORPORATE TENANT
STATE OF OHIO
COUNTY OF FRANKLIN
On this ___ day of December, 1993, before me, a notary public in and for
said County and State, personally appeared Larry J. Fox, Chief Executive
Officer, and Bradford W. Payne, Chief Financial Officer, of SYMIX COMPUTER
SYSTEMS, INC., an Ohio corporation, who represented that they are duly
authorized to sign and did sign the foregoing lease on behalf of the
corporation.
_________________________________
Notary Public
My Commission Expires:___________
60
<PAGE>
CERTIFICATE OF INCUMBENCY AND RESOLUTION
OF
SYMIX COMPUTER SYSTEMS, INC.
I, ______________, duly elected Secretary of Symix Computer Systems, Inc.,
an Ohio corporation (the "Company"), do hereby certify that Larry J. Fox, is the
duly elected and qualified Chief Executive Officer and Bradford W. Payne is the
duly elected and qualified Chief Financial Officer of Symix Computer Systems,
Inc. as of the date set forth below, and the signatures set forth opposite their
respective names are the true and genuine signatures of both:
<TABLE>
<CAPTION>
NAME SIGNATURE
<S> <C>
Larry J. Fox _______________________________
Bradford W. Payne _______________________________
</TABLE>
I, ______________, further certify that the following is a true and correct
copy of the resolution duly adopted by unanimous written consent of the Board of
Directors of Symix Computer Systems, Inc. on ____________________, 1993 and that
there are no modifications, additions or rescissions thereto:
RESOLVED, that the Chief Executive Officer and Chief Financial
Officer be and hereby are authorized and empowered to execute in the
name of and to deliver on behalf of the Company any and all documents
relating to real estate transactions including, but not limited to,
leases, subleases, and purchase and sale documents, and amendments and
supplements thereto, and specifically that they are authorized and
empowered to enter into a lease amendment with Corporate Exchange
Buildings IV and V Limited Partnership for additional office space at
Corporate Exchange Building V.
IN WITNESS WHEREOF, the undersigned has hereunto set (her) (his) hand and
affixed the seal of the Company on this ___ day of __________, 1993.
SYMIX COMPUTER SYSTEMS, INC.
(CORPORATE SEAL)
By:___________________________
61
<PAGE>
EXHIBITS A and B
[VISUAL VIEW OF FLOOR PLAN]
(Omitted)
<PAGE>
EXHIBIT C
TENANT ACCEPTANCE LETTER
[Letterhead of Tenant]
[Date]
Corporate Exchange Buildings IV and V Limited Partnership
383 South Third Street
Columbus, Ohio 43215
Attention: Steve Skilken
Re: Lease Dated April 3, 1991 and Lease Amendment Dated
December 1, 1993 for Suite ___, Corporate Exchange
Building V, 2800 Corporate Exchange Drive, Columbus, Ohio
43231
Gentlemen:
The undersigned, as Tenant, hereby confirms the following as of December 1,
1993:
1. Tenant has accepted possession of and is currently occupying the
entire Premises.
2. The commencement date for the Lease Amendment is December 1, 1993.
3. All alterations and improvements required to be performed by Landlord
pursuant to the terms of the Lease and the Lease Amendment to prepare
the entire Premises for Tenant's occupancy have been satisfactorily
completed.
4. As of the date hereof, Landlord, has fulfilled all its obligations
under the Lease.
5. The Lease is in full force and effect and has not been modified,
altered, or amended except pursuant to the instruments described
above.
6. There are no offsets or credits against Rent or any other charge
payable by Tenant under the Lease, nor has any Rent or any other
charge payable by Tenant been prepaid.
62
<PAGE>
7. Tenant has no notice of any prior assignment, hypothecation, or pledge
of the Lease or any Rent due under the Lease.
Sincerely,
SYMIX COMPUTER SYSTEMS, INC.
By:____________________________
Name:__________________________
Title:_________________________
Exhibit A
Floor Plan
(omitted)
63
<PAGE>
EXHIBIT 10(c) TO SYMIX SYSTEMS, INC. 1998 FORM 10-K
SECOND LEASE AMENDMENT
This Second Lease Amendment is made and entered into as of the latest date
on which it is executed by either of the parties hereto ("Amendment Date"), by
and between Corporate Exchange Buildings IV and V Limited Partnership, an Ohio
limited partnership, 383 South Third Street, Columbus, Ohio 43215 (the
"Landlord") and Symix Computer Systems, Inc., an Ohio corporation, whose address
is 2800 Corporate Exchange Drive, Columbus, Ohio 43231 (the "Tenant").
RECITALS
A. 2600 Realty Corp. V, Landlord's predecessor in interest, and Tenant
entered into a lease agreement dated April 3, 1991, a Start Date Agreement dated
October 15, 1992, a Second Lease Amendment dated December 1, 1993, and a Tenant
Acceptance Letter dated December 1, 1993 (collectively, the "Lease"), pursuant
to which Tenant leased certain premises containing approximately 62,118 rentable
square feet of office space (the "Original Premises") located on the second,
third and fourth floors of Corporate Exchange Building V, 2800 Corporate
Exchange Drive, Columbus, Franklin County, Ohio (the "Building").
B. Tenant desires to lease additional office space in the Building and to
amend the Lease.
IT IS, THEREFORE, agreed as follows:
1. Tenant hereby leases an additional five thousand six hundred
sixty six (5,666) usable square feet of office space (the "Expansion Space")
located on the lower level of the Building as shown on the floor plan attached
hereto as Exhibit A.
2. The term of the lease for the Expansion Space shall commence on
April 1, 1994, shall be concurrent with the Term of the Lease, and shall expire
on June 30, 1996 unless sooner terminated as provided in the Lease.
3. Commencing April 1, 1994, the Premises shall be deemed to include
the Expansion Space; and the Premises, including the Original Premises and the
Expansion Space, will contain an aggregate of approximately 67,784 rentable
square feet.
4. Tenant shall pay Landlord Base Rent for the Premises in the
amount of Fifty One Thousand Six Hundred Thirty
64
<PAGE>
Two and 83/100 Dollars ($51,632.83) per month, payable in advance on the
first day of each calendar month, without set off or demand, beginning on
April 1, 1994, and continuing each calendar month until the expiration of the
Lease Term.
5. Tenant's share of the Operating Expenses for the Expansion
Space shall be calculated by multiplying the total Operating Expenses (as
defined in the Lease) by a fraction, the numerator of which shall be the
number of square feet in the Expansion Space and the denominator of which
shall be 130,005. Tenant's Pro Rata Share of all Taxes and Operating Expenses
for the Expansion Space shall be 4.36%. Tenant's share of the Operating
Expenses for the Expansion Space shall be payable as Additional Rent in the
manner, and at such times, as is required by the terms of the Lease.
Operating Expense charges for all occupied office space in the lower
level of the Building will be deducted from the total Operating Expenses (the
"Adjusted Total Operating Expenses"). Operating Expense charges for the
Original Premises will be calculated in accordance with provisions in the
Lease, as amended, by multiplying the Adjusted Total Operating Expense by
Tenant's Pro Rata Share. Tenant's Pro Rata Share for the Original Premises
is 51.7%.
6. Tenant accepts the Premises in their current condition as far
as tenant finish and improvements, except for Landlord's obligations to
repair as set forth in Section 12 of the Lease, and except that Landlord
shall, at its expense, install panic hardware on the south side of the door
(the "Emergency Door") separating the Expansion Space from the adjacent space
as indicated on Exhibit A hereto. Landlord shall not be required to make
additional tenant improvements to the Premises.
Landlord has obtained consent from Digital Equipment Corporation ("DEC")
for Tenant to use the Emergency Door for emergency egress. Tenant has
reviewed and approved the DEC consent. If Tenant, after good faith efforts,
is unable to obtain the necessary approval of the appropriate government
authority that the installation of the Emergency Door meets building code
requirements, Landlord, at its option, may (a) obtain the governmental
approval or (b) terminate this Second Lease Amendment by written notice to
Tenant. By occupying the Expansion Space, Tenant shall be deemed
conclusively to have accepted the Premises, including the Expansion Space,
and to have acknowledged that the Premises are in the condition required by
the Lease and this Second Lease Amendment. Tenant shall execute and deliver
to Landlord an acceptance letter in the form attached as Exhibit B hereto no
later than April 14, 1994.
65
<PAGE>
Tenant shall indemnify and hold harmless Landlord from and against any
and all costs, expenses, liabilities, losses, damages, suits, penalties,
actions, fines, claims, judgements or demands of any kind asserted by or on
behalf of any person or governmental authority arising out of or in any way
connected with the use of the Emergency Door pursuant to the terms of Section
6 of the Lease.
7. Except as set forth in this Lease Amendment, all provisions of
the Lease shall remain unchanged and in full force and effect and shall apply
to this Lease Amendment. All terms and conditions of the Lease not
specifically amended by this Lease Amendment shall apply as if fully
rewritten herein, and the rights and obligations of Tenant shall be governed
and controlled by the terms and conditions of the Lease as amended hereby.
8. Tenant hereby certifies that no real estate broker has or will
represent it with regard to the Expansion Space and that no finder's fees
have been or will be earned by any third party and Tenant shall indemnify and
hold Landlord harmless from any liability or expense that may arise from such
claims, including reasonable attorney's fees.
9. This Second Lease Amendment shall be construed, governed and
enforced in accordance with the laws of the State of Ohio.
10. This Agreement and the instruments and documents contemplated
hereby, and the execution and delivery hereof by Tenant, and the consummation
of the transactions herein provided, have been duly authorized and approved
by Tenant's Board of Directors and do not violate any provision of the
constitution or bylaws of Tenant, or any agreement to which Tenant is a party
or by which Tenant is bound, and constitutes valid and binding obligations of
Tenant enforceable against it in accordance with their respective terms. No
consent or governmental approval is required in connection with the
consummation of the transactions contemplated hereby. Tenant represents and
warrants to Landlord that it has full right, power and authority to enter
into the transactions provided for in this Second Lease Amendment.
IN WITNESS WHEREOF, Landlord has executed this Lease Amendment on the
1st day of April, 1994, and Tenant has executed this Lease Amendment on the
1st day of April, 1994.
66
<PAGE>
LANDLORD: CORPORATE EXCHANGE
BUILDINGS IV AND V
LIMITED PARTNERSHIP
WITNESSES By: Joseph Skilken & Co.,
General Partner
/s/ Thomas W. Ramag By: /s/ Steve Skilken
----------------------------- ---------------------------
Steve Skilken, President
Print Name: Thomas W. Ramag
---------------
/s/ Julia B. Bolton Date: 4-1-94
----------------------------- -----------------------
Print Name: Julia B. Bolton
-----------------
TENANT: SYMIX COMPUTER SYSTEMS,
INC.
/s/ Michael C. Wyatt By: /s/ Larry J. Fox
------------------------------ ----------------------------
Larry J. Fox
Print Name: Michael C. Wyatt Chairman of the Board and
------------------- Chief Executive Officer
/s/ Mary E. Burmeister
------------------------------
Print Name: Mary E. Burmeister Date: April 1, 1994
------------------- ------------------------
/s/ Michael C. Wyatt By: /s/ Bradford W. Payne
-------------------------------- ----------------------------
Bradford W. Payne
Print Name: Michael C. Wyatt Senior Vice President of
--------------------- Finance and Administration
and Chief Financial Officer
/s/ Mary E. Burmeister
--------------------------------
Print Name: Mary E. Burmeister Date: April 1, 1994
--------------------- -------------------------
67
<PAGE>
NOTARIZATION FOR LANDLORD
STATE OF OHIO
COUNTY OF FRANKLIN
On this 1st day of April, 1994, before me, a notary public in and for said
County and State, personally appeared Steve Skilken, President of Joseph Skilken
& Co., an Ohio Corporation and the General Partner of CORPORATE EXCHANGE
BUILDINGS IV and V LIMITED PARTNERSHIP, an Ohio limited partnership, on behalf
of the limited partnership who acknowledged for and on behalf of the corporation
and limited partnership, that he did sign the foregoing instrument on behalf of
the corporation and limited partnership.
/s/ Teresa B. Johnson
--------------------------------
Notary Public
My Commission Expires: 11-1-97
-------
NOTARIZATION FOR CORPORATE TENANT
STATE OF OHIO
COUNTY OF FRANKLIN
On this 1st day of April, 1994, before me, a notary public in and for said
County and State, personally appeared Larry J. Fox, Chairman of the Board and
Chief Executive Officer, and Bradford W. Payne, Senior Vice President of Finance
and Administration and Chief Financial Officer, of SYMIX COMPUTER SYSTEMS, INC.,
an Ohio corporation, who represented that they are duly authorized to sign and
did sign the foregoing lease on behalf of the corporation.
/s/ Michael C. Wyatt
----------------------------------
Notary Public
My Commission Expires: None
-----------
68
<PAGE>
CERTIFICATE OF INCUMBENCY AND RESOLUTION
OF
SYMIX COMPUTER SYSTEMS, INC.
I, Michael C. Wyatt, duly elected Secretary of Symix Computer Systems, Inc., an
Ohio corporation (the "Company"), do hereby certify that Larry J. Fox, is the
duly elected and qualified Chairman of the Board and Chief Executive Officer and
Bradford W. Payne is the duly elected and qualified Senior Vice President of
Finance and Administration and Chief Financial Officer of Symix Computer
Systems, Inc. as of the date set forth below, and the signatures set forth
opposite their respective names are the true and genuine signatures of both:
<TABLE>
<CAPTION>
NAME SIGNATURE
<S> <C>
Larry J. Fox /s/ Larry J. Fox
------------------------
Bradford W. Payne /s/ Bradford W. Payne
------------------------
</TABLE>
I, Michael C. Wyatt, further certify that the following is a true and correct
copy of the resolution duly adopted by unanimous written consent of the Board of
Directors of Symix Computer Systems, Inc. on November 30, 1993 and that
there are no modifications, additions or rescissions thereto:
RESOLVED, that the Chairman of the Board and Chief Executive Officer and
Senior Vice President of Finance and Administration and Chief Financial
Officer be and hereby are authorized and empowered to execute in the name
of and to deliver on behalf of the Company any and all documents relating
to real estate transactions including, but not limited to, leases,
subleases, and purchase and sale documents, and amendments and supplements
thereto, and specifically that they are authorized and empowered to enter
into a lease amendment with Corporate Exchange Buildings IV and V Limited
Partnership for additional office space at Corporate Exchange Building V.
69
<PAGE>
IN WITNESS WHEREOF, the undersigned has hereunto set (his) hand and affixed the
seal of the Company on this 1st day of March, 1994.
SYMIX COMPUTER SYSTEMS, INC.
(CORPORATE SEAL)
By: /s/ Michael C. Wyatt, Secretary
---------------------------------
70
<PAGE>
EXHIBIT B
TENANT ACCEPTANCE LETTER
[Letterhead of Tenant]
[Date]
Corporate Exchange Buildings IV and V Limited Partnership
383 South Third Street
Columbus, Ohio 43215
Attention: Steve Skilken
Re: Lease Dated April 3, 1991, First Lease Amendment Dated December 1, 1993,
and Second Lease Amendment Dated April 1, 1994, at Corporate Exchange
Building V, 2800 Corporate Exchange Drive, Columbus, Ohio 43231
The undersigned, as Tenant, hereby confirms the following as of April 1,
1994:
1. Tenant has accepted possession of and is currently occupying the
entire Premises.
2. The commencement date for the Second Lease Amendment is
April 1, 1994.
3. All alterations and improvements required to be performed by Landlord
pursuant to the terms of the Lease, the First Lease Amendment, and the
Second Lease Amendment to prepare the Premises for Tenant's occupancy
have been satisfactorily completed.
4. As of the date hereof, Landlord has fulfilled all its obligations
under the Lease.
5. The Lease is in full force and effect and has not been modified,
altered, or amended except pursuant to the instruments described
above.
6. There are no offsets or credits against Rent or any other charge
payable by Tenant under the Lease, nor has any Rent or any other
charge payable by Tenant been prepaid.
7. Tenant has no notice of any prior assignment, hypothecation, or pledge
of the Lease or any Rent due under the Lease.
Sincerely,
<PAGE>
SYMIX COMPUTER SYSTEMS, INC.
By: /s/ Larry J. Fox
------------------------------
Larry J. Fox
Chairman of the Board and
Chief Executive Officer
1
<PAGE>
EXHIBIT 10(e) TO SYMIX SYSTEMS, INC. 1998 FORM 10-K
FOURTH LEASE AMENDMENT
This Fourth Lease Amendment is made and entered into as of
the latest date on which it is executed by either of the parties hereto (the
"Amendment Date"), by and between Corporate Exchange Buildings IV and V
Limited Partnership, an Ohio limited partnership, 383 South Third Street,
Columbus, Ohio 43215 (the "Landlord") and Symix Computer Systems, Inc., an
Ohio corporation, whose address is 2800 Corporate Exchange Drive, Columbus,
Ohio 43231 (the "Tenant")
RECITALS
A. 2600 Realty Corp. V, Landlord's predecessor in
interest, and Tenant entered into a lease agreement dated April 3, 1991, a
Start Date Agreement dated October 15, 1992, and a Lease For Storage Space
dated March 16, 1992, and Landlord and Tenant entered into a First Lease
Amendment dated December 1, 1993, a Start Date Agreement dated December 1,
1993, a Second Lease Amendment dated April 1, 1994, a Start Date Agreement
dated April 1, 1994, a Third Lease Amendment dated July 12, 1994, and a Start
Date Agreement dated July 12, 1994 (collectively these documents are referred
to herein as the "Lease"), by which Landlord leased to Tenant, and Tenant
leased from Landlord, certain premises containing approximately 68,684
rentable square feet (the "Premises") as shown on the floor plans attached
hereto as Exhibit A, located on the lower level, second, third, and fourth
floors of Corporate Exchange Building V, 2800 Corporate Exchange Drive,
Columbus, Franklin County, Ohio (the "Building").
B. Tenant desires to lease additional office space in the
Building and to amend the Lease.
IT IS, THEREFORE, agreed as follows:
1. Tenant hereby leases an additional one thousand three
hundred eighty (1,380) rentable square feet of office space (the "Additional
Expansion Space") located on the second floor of the Building as shown on the
floor plan attached hereto as Exhibit B.
2. The Term of the lease for the Additional Expansion
Space shall commence on November 1, 1994, shall be concurrent with the Term
of the Lease, and shall expire on June 30, 2001, unless sooner terminated as
provided in the Lease.
3. Commencing on November 1, 1994, the Premises shall be
deemed to include the Additional Expansion Space and will
2
<PAGE>
contain an aggregate of approximately 70,064 rentable square feet.
4. Tenant shall pay Landlord Base Rent for the Premises in
advance on the first day of each calendar month, without set off or demand,
beginning on November 1, 1994 and continuing each calendar month until the
expiration of the Term as follows:
November 1, 1994, through June 30, 1997: Fifty One Thousand
Three Hundred Seventy and 73/100 Dollars ($51,370.73) per month.
July 1, 1996, through June 30, 1997: Fifty Two Thousand Two
Hundred Forty and 06/100 Dollars ($52,240.06) per month.
July 1, 1997, through June 30, 1999: Fifty Four Thousand Eight
Hundred Ninety Six and 16/100 Dollars ($54,896.16) per month.
July 1, 1999, through June 30, 2001: Fifty Seven Thousand Five
Hundred Fifty Two and 26/100 Dollars ($57,552.26) per month.
5. Tenant accepts the Additional Expansion Space in "AS IS"
condition. By occupying the Additional Expansion Space (including occupancy for
Tenant's construction of its alterations and improvements), Tenant shall be
deemed conclusively to have accepted the Additional Expansion Space and to have
acknowledged that the Additional Expansion Space is in the condition required by
the Lease and this Amendment. Tenant shall execute and deliver to Landlord an
acceptance letter in the form attached as Exhibit C hereto no later than
November 1, 1994.
Tenant shall make no alterations, additions or improvements
to the Premises without the prior written consent of Landlord. Tenant shall
submit a statement of planned alterations, together with detailed
architectural plans, specifications, and description of materials for
Landlord's approval. Tenant shall not commence any work without first (a)
obtaining Landlord's written approval of Tenant's plans, specifications, and
description of materials, and (b) delivering to Landlord copies of Tenant's
comprehensive general liability insurance certificates naming Landlord as an
additional insured. Tenant shall perform all work in strict accordance with
Tenant's approved plans and specifications and with all applicable laws,
orders, regulations and requirements, in compliance with such rules and
regulations as Landlord may make, and shall obtain approval by all
appropriate governmental or quasi-governmental agencies. Tenant shall obtain
all applicable permits and
3
<PAGE>
authorizations before commencing work. All changes and alterations shall be
made at the sole cost of Tenant, shall be performed in a good and workmanlike
manner, shall not affect any structural parts of the Building, and shall not
interfere with the quiet enjoyment of other tenants. Tenant at its cost
shall repair any damage to the Building and/or Land caused by Tenant's
alterations and shall restore them to the condition in which they were prior
to the damage. Tenant shall promptly remove from the Premises and the
Building all trash resulting from its work. All materials placed in the
Premises or in the Building by Tenant, its contractors, agents,
representatives, employees, concessionaires, licenses, or invitees, and all
Tenant's work at any time, shall be at Tenant's sole risk. Tenant shall
indemnify Landlord, Landlord's managing agent, and anyone claiming through
them from all costs and expense incurred in connection with Tenant's
performance of Tenant's alterations.
Tenant shall keep the Premises, the Building, and the Land
free and clear of all mechanics' and/or materialman's liens resulting from
work done by or for Tenant. If any mechanics' or materialman's liens are
filed against the Premises or the Building as a result of or purporting to be
the result of any work for or act of Tenant, Tenant shall discharge the lien
within thirty (30) days by payment, or by notice and bond meeting the
requirements of the Ohio Revised Code. If Tenant does not discharge the
lien, Landlord may pay the lien for the account of Tenant without inquiring
into its validity and treat the amount of such payment as additional rent
immediately due from Tenant; and/or treat Tenant's failure to discharge the
lien as a default. Tenant shall indemnify and save harmless Landlord against
and from all costs, liabilities, suits, penalties, claims and demands,
including reasonable attorneys' fees resulting therefrom.
Nothing in this Lease shall be construed as constituting the
express or implied consent or request of Landlord to any contractor,
subcontractor, laborer or materialman for the performance of any labor or the
furnishing of any materials, fuel, machinery or supplies or any specific
improvements, alterations of or repair to the Building or the Premises or any
improvement thereto, nor as giving Tenant any right, power or authority to
act as agent of Landlord to contract for, or to permit the performance or
furnishing of any labor, materials, fuel, machinery or supplies on any basis
which would entitle any person to assert and/or perfect a mechanic's lien or
other claim encumbering the Building, the Premises or Landlord's interests in
the Premises. Tenant shall post and maintain at the Premises any notices
appropriate for the protection of the Premises from efforts by others to
perfect or assert mechanic's liens or other claims in respect of the Premises.
4
<PAGE>
Landlord will provide Tenant with an allowance for tenant
improvements to the Additional Expansion Space (the "Allowance") in the
amount of Eleven Thousand Forty and 00/000 Dollars ($11,040.00). Tenant
shall pay all costs for tenant improvements to the Additional Expansion Space
in excess of the allowance. Landlord shall remit the Allowance to Tenant
within thirty (30) days of receipt of Tenant's written notification that the
improvements to the Additional Expansion Space are complete, together with
originals of a Certificate of Occupancy, if necessary, from the applicable
governmental building authority.
6. Except as provided below, Tenant's combined payments for
Operating Expenses and Real Property Taxes shall not exceed Thirty Three
Thousand Five Hundred Seventy Two and 33/100 Dollars ($33,572.33) per month
during calendar year 1994, Thirty Four Thousand Six Hundred Twenty Three and
29/100 Dollars ($34,623.29) per month during calendar year 1995, and Thirty Five
Thousand Six Hundred Seventy Four and 25/100 Dollars (35,674.25) per month
during calendar year 1996. If, however, in Landlord's judgement, specific
events outside of Landlord's control cause Tenant's share of Operating Expenses
or Real Estate Taxes to exceed the preceding maximum expense levels for the
corresponding calendar year, Tenant shall pay the excess amount. Landlord shall
use reasonable efforts to notify Tenant as soon as possible when such special
events occur.
7. Except as set forth in this Fourth Lease Amendment, all
provisions of the Lease shall remain unchanged and in full force and effect and
shall apply to this Lease Amendment. All terms and conditions of the Lease not
specifically amended by this Fourth Lease Amendment shall apply as if fully
rewritten herein, and the rights and obligations of Tenant shall be governed and
controlled by the terms and conditions of the Lease as amended hereby.
Capitalized terms used herein and not otherwise defined shall have the
respective meanings ascribed thereto in the Lease.
8. Tenant hereby certifies that no real estate broker has
or will represent it concerning this Fourth Lease Amendment and that no
finder's fees have or will be earned by any third party. Tenant shall
indemnify and hold Landlord harmless from any liability or expense that may
arise from such claims, including reasonable attorney's fees.
9. This Fourth Lease Amendment shall be construed,
governed and enforced in accordance with the laws of the State of Ohio.
10. This Agreement and the instruments and documents
contemplated hereby, and the execution and delivery hereof by Tenant, and the
consummation of the transactions herein provided,
5
<PAGE>
have been duly authorized and approved by Tenant's Board of Directors and do
not violate any provision of the constitution or bylaws of Tenant, or any
agreement to which Tenant is a party or by which Tenant is bound, and
constitute valid and binding obligations of Tenant enforceable against it in
accordance with their respective terms. No consent or governmental approval
is required in connection with the consummation of the transactions
contemplated hereby. Tenant represents and warrants to Landlord that it has
full right, power and authority to enter into the transactions provided for
in this Lease Amendment; and that it has not, at any time, subleased,
pledged, hypothecated, assigned or encumbered the Lease or in any other
manner encumbered the Premises and will not do so.
IN WITNESS WHEREOF, Landlord has executed this Fourth Lease
Amendment on the 11th day of November, 1994, and Tenant has executed
this Fourth Lease Amendment on the 4th day of November, 1994.
LANDLORD: CORPORATE EXCHANGE
BUILDINGS IV AND V LIMITED
PARTNERSHIP
By: Joseph Skilken & Co.,
General Partner
WITNESSES:
/s/ Thomas W. Ramag By: /s/ Steve Skilken
- -------------------------------- -----------------------------
Steve Skilken
Print Name: Thomas W. Ramag President
------------------
/s/ Terri Johnson Date: 11/11/94
- -------------------------------- -----------------------
Print Name: Terri Johnson
-------------------
6
<PAGE>
TENANT: SYMIX COMPUTER SYSTEMS, INC.
/s/ Michael C. Wyatt By: /s/ Larry J. Fox
- ------------------------------- ----------------------------
Larry J. Fox
Print Name: Michael C. Wyatt Chairman of the Board and
------------------- Chief Executive Officer
Date: 11/4/94
----------------------------
/s/ Kim Hollis By: /s/ O. Kent LaRoque
- ------------------------------- ----------------------------
Print Name: Kim Hollis
-------------------
Date: 11/4/94
---------------------------
/s/ Michael C. Wyatt
- -------------------------------
Print Name: Michael C. Wyatt
-------------------
/s/ Kim Hollis
- -------------------------------
Print Name: Kim Hollis
-------------------
7
<PAGE>
NOTARIZATION FOR LANDLORD
STATE OF OHIO
COUNTY OF FRANKLIN
On this 11th day of November, 1994, before me, a notary public
in and for said County and State, personally appeared Steve Skilken,
President of Joseph Skilken & Co., an Ohio Corporation and the General
Partner of CORPORATE EXCHANGE BUILDINGS IV and V LIMITED PARTNERSHIP, an Ohio
limited partnership, on behalf of the limited partnership, who acknowledged
for and on behalf of the corporation and limited partnership that he did sign
the foregoing instrument on behalf of the corporation and limited partnership.
/s/ Teresa R. Johnson
--------------------------------
Notary Public
My Commission Expires: 11-1-97
---------
NOTARIZATION FOR CORPORATE TENANT
STATE OF OHIO
COUNTY OF FRANKLIN
On this 4th day of November, 1994, before me, a notary public
in and for said County and State, personally appeared Larry J. Fox, Chairman
of the Board and Chief Executive Officer and O. Kent LaRoque, President, of
Symix Computer Systems, Inc., an Ohio corporation, who represented that they
are duly authorized to sign and did sign the foregoing lease amendment on
behalf of the corporation.
/s/ Michael C. Wyatt
--------------------------------
Notary Public
My Commission Expires: None
---------
8
<PAGE>
CERTIFICATE OF INCUMBENCY AND RESOLUTION
OF
SYMIX COMPUTER SYSTEMS, INC.
I, Michael C. Wyatt, duly elected Secretary of Symix
Computer Systems, Inc., an Ohio corporation (the "Company"), do hereby
certify that Larry J. Fox, is the duly elected and qualified Chairman of the
Board and Chief Executive Officer, and O. Kent LaRoque, is the duly elected
and qualified President of Symix Computer Systems, Inc., as of the date set
forth below, and the signatures set forth opposite their respective names are
the true and genuine signatures of both:
Name Signature
---- ---------
Larry J. Fox /s/ Larry J. Fox
---------------------------------
O. Kent LaRoque /s/ O. Kent LaRoque
---------------------------------
I, Michael C. Wyatt, further certify that the following is
a true and correct copy of the resolution duly adopted by unanimous written
consent of the Board of Directors of Symix Computer Systems, Inc., on
July 12, 1994 and that there are no modifications, additions or
rescissions thereto:
RESOLVED, that the Chairman of the Board and Chief Executive
Officer and President be and hereby are authorized and
empowered to execute in the name of and to deliver on behalf
of the Company any and all documents relating to real estate
transactions including, but not limited to, leases,
subleases, and purchase and sale documents, and amendments
and supplements thereto, and specifically that they are
authorized and empowered to enter into a lease amendment
with Corporate Exchange Buildings IV and V Limited
Partnership for the lease amendment at Corporate Exchange
Building V.
IN WITNESS WHEREOF, the undersigned has hereunto set (her)
(his) hand and affixed the seal of the Company on this 4th day of November,
1994.
SYMIX COMPUTER SYSTEMS, INC.
(CORPORATE SEAL) By: /s/ Michael C. Wyatt
-------------------------------
EXHIBITS A AND B
9
<PAGE>
[VISUAL VIEW OF FLOOR PLAN]
(OMITTED)
10
<PAGE>
EXHIBIT C
TENANT ACCEPTANCE LETTER
[Letterhead of Tenant)
[Date]
Corporate Exchange Buildings IV and V Limited Partnership
383 South Third Street
Columbus, Ohio 43215
Attention: Steve Skilken
Re: Lease dated April 3, 1991, a Lease For Storage Space dated
March 16, 1992, a First Lease Amendment dated December 1,
1993, a Second Lease Amendment dated April 1, 1994, Third
Lease Amendment dated July 12, 1994, and Fourth Lease
Amendment at Corporate Exchange Building V, 2800 Corporate
Exchange Drive, Columbus, Ohio 43231
The undersigned, as Tenant, hereby confirms the following as of
November 4,1994:
1. Tenant has accepted possession of and is currently occupying
the entire Premises.
2. The commencement date for the Fourth Lease Amendment is
November 1, 1994.
3. Tenant accepts the Premises in "AS IS" condition and
acknowledges that the Premises are in the condition required
by the Lease and all amendments thereto.
4. As of the date hereof, Landlord has fulfilled all its
obligations under the Lease.
5. The Lease is in full force and effect and has not been
modified, altered, or amended except pursuant to the
instruments described above.
6. There are no offsets or credits against Rent or any other
charge payable by Tenant under the Lease, nor has any Rent
or any other charge payable by Tenant been prepaid.
11
<PAGE>
7. Tenant has no notice of any prior assignment, hypothecation,
or pledge of the Lease or any Rent due under the Lease.
Sincerely,
SYMIX COMPUTER SYSTEMS, INC.
By: /s/ Larry J. Fox
------------------------------
Larry J. Fox
Chairman of the Board and
Chief Executive Officer
12
<PAGE>
FIFTH LEASE AMENDMENT
This Fifth Lease Amendment is made and entered into as of the latest date
on which it is executed by either of the parties hereto (the "Amendment Date"),
by and between Corporate Exchange Buildings IV and V Limited Partnership, an
Ohio limited partnership, 383 South Third Street, Columbus, Ohio 43215 (the
"Landlord") and Symix Computer Systems, Inc., an Ohio corporation, whose address
is 2800 Corporate Exchange Drive, Columbus, Ohio 43231 (the "Tenant").
RECITALS
A. 2600 Realty Corp. V, Landlord's predecessor in interest, and Tenant
entered into a lease agreement dated April 3, 1991, a Start Date Agreement dated
October 15, 1992, and a Lease For Storage Space dated March 16, 1992, and
Landlord and Tenant entered into a First Lease Amendment dated December 1, 1993,
a Start Date Agreement dated December 1, 1993, a Second Lease Amendment dated
April 1, 1994, a Start Date Agreement dated April 1, 1994, a Third Lease
Amendment dated July 12, 1994, a Start Date Agreement dated July 12, 1994, and a
Fourth Lease Amendment dated November 11, 1994, (collectively these documents
are referred to herein as the "Lease"), by which Landlord leased to Tenant, and
Tenant leased from Landlord, certain premises containing approximately 70,064
rentable square feet (the "Premises") as shown on the floor plans attached
hereto as Exhibit A, located on the lower level, second, third, and fourth
floors of Corporate Exchange Building V, 2800 Corporate Exchange Drive,
Columbus, Franklin County, Ohio (the "Building")
B. Tenant desires to lease additional office space in the Building and to
amend the Lease.
IT IS, THEREFORE, agreed as follows:
1. Tenant hereby leases an additional four thousand five hundred seventy
eight (4,578) rentable square feet of office space (the "New Additional
Expansion Space") located on the first floor of the Building as shown on the
floor plan attached hereto as Exhibit B.
2. The Term of the lease for the New Additional Expansion Space shall
commence on July 1, 1998, shall be concurrent with the Term of the Lease, and
shall expire on June 30, 2001, unless sooner terminated as provided in the
Lease. Landlord's estimated occupancy date is projected to be May 31, 1998.
Tenant may occupy the Premises after Landlord's notice that the New Additional
Expansion Space is Ready for Occupancy provided all other terms of
<PAGE>
the Lease and this amendment are in full force and effect except the payment
of Base Rent, Operating Expenses and Real Property Taxes pertaining to the
New Additional Expansion Space ONLY shall not begin until the New Additional
Expansion Space Commencement Date. Notwithstanding other provisions of this
Amendment, the Commencement Date shall be extended one day for each day after
July 1, 1998 that Landlord notifies Tenant the New Additional Expansion Space
is Ready for Occupancy, unless such delay is caused by the act or omission of
Tenant.
3. Commencing on July 1, 1998 (the "New Additional Expansion Space
Commencement Date"), the Premises shall be deemed to include the New Additional
Expansion Space and will contain an aggregate of approximately 74,642 rentable
square feet. Tenant's prorata share of Operating Expenses and Real Property
Taxes shall be computed based upon the ratio of the number of rentable square
feet contained in the Premises in relation to the total number of rentable
square feet of office space contained in the Building.
4. Tenant shall pay Landlord Base Rent for the Premises in advance on the
first day of each calendar month, without set off or demand, as set forth in the
Lease until June 30, 1998, and beginning on July 1, 1998 and continuing each
calendar month until the expiration of the Term as follows:
July 1, 1998, through June 30, 1999: Fifty Nine Thousand Seven Hundred
Three and 06/100 Dollars ($59,703.06) per month.
July 1, 1999, through June 30, 2001: Sixty Two Thousand Five Hundred
Eighty Four and 25/100 Dollars ($62,584.25) per month.
5. Upon completion of Landlord's Work to be performed in accordance with
the plans and specifications as indicated on Exhibit C, attached hereto, and in
accordance with the Corporate Exchange Tenant Standard attached hereto as
Exhibit D, Tenant accepts the New Additional Expansion Space in "AS IS"
condition. By occupying the New Additional Expansion Space (including occupancy
for Tenant's construction of its alterations and improvements), Tenant shall be
deemed conclusively to have accepted the New Additional Expansion Space and to
have acknowledged that the New Additional Expansion Space is in the condition
required by the Lease and this Amendment. Tenant shall execute and deliver to
Landlord an acceptance letter in the form attached as Exhibit E hereto no later
than September 1, 1998.
6. Except as set forth in this Fifth Lease Amendment, all provisions of
the Lease shall remain unchanged and in full force and effect and shall apply to
this Fifth Lease Amendment. All
2
<PAGE>
terms and conditions of the Lease not specifically amended by this Fifth
Lease Amendment shall apply as if fully rewritten herein, and the rights and
obligations of Tenant shall be governed and controlled by the terms and
conditions of the Lease as amended hereby. Capitalized terms used herein and
not otherwise defined shall have the respective meanings ascribed thereto in
the Lease.
7. Tenant hereby certifies that no real estate broker has or will
represent it concerning this Fifth Lease Amendment and that no finder's fees
have or will be earned by any third party. Tenant shall indemnify and hold
Landlord harmless from any liability or expense that may arise from such claims,
including reasonable attorney's fees.
8. This Fifth Lease Amendment shall be construed, governed and enforced
in accordance with the laws of the State of Ohio.
9. This Agreement and the instruments and documents contemplated hereby,
and the execution and delivery hereof by Tenant, and the consummation of the
transactions herein provided, have been duly authorized and approved by Tenant's
Board of Directors and do not violate any provision of the constitution or
bylaws of Tenant, or any agreement to which Tenant is a party or by which Tenant
is bound, and constitute valid and binding obligations of Tenant enforceable
against it in accordance with their respective terms. No consent or
governmental approval is required in connection with the consummation of the
transactions contemplated hereby. Tenant represents and warrants to Landlord
that it has full right, power and authority to enter into the transactions
provided for in this Fifth Lease Amendment; and that it has not, at any time,
subleased, pledged, hypothecated, assigned or encumbered the Lease or in any
other manner encumbered the Premises and will not do so.
3
<PAGE>
IN WITNESS WHEREOF, Landlord has executed this Fifth Lease Amendment on the
28th day of May, 1998, and Tenant has executed this Fifth Lease Amendment on the
18th day of May, 1998.
LANDLORD: CORPORATE EXCHANGE
BUILDINGS IV AND V LIMITED
PARTNERSHIP
WITNESSES: By: Joseph Skilken & Co.,
General Partner
/s/ Thomas W. Ramag By:/s/ Steve Skilken
- --------------------------- -------------------------------
Steve Skilken
Print Name: Thomas W. Ramag President
---------------
Date: 5/28/98
/s/ Regina R. Watson -----------------------------
- ----------------------------
Print Name: Regina R. Watson
TENANT: SYMIX COMPUTER SYSTEMS, INC.
By: /s/ Larry J. Fox
--------------------------------
Larry J. Fox
/s/ Ivery D. Foreman Chairman of the Board and
- ---------------------------- Chief Executive Officer
Print Name: Ivery D. Foreman
-----------------
Date: 5/18/98
------------------------------
- ----------------------------
Print Name:
-----------------
/s/ Ivery D. Foreman By: /s/ Stephen A. Sasser
- ----------------------------- -------------------------------
Print Name: Ivery D. Foreman Stephen A. Sasser
----------------- President
Date: 5/18/98
------------------------------
- -----------------------------
Print Name:
------------------
4
<PAGE>
NOTARIZATION FOR LANDLORD
STATE OF OHIO
COUNTY OF FRANKLIN
On this 28th day of May, 1998, before me, a notary public in and for said
County and State, personally appeared Steve Skilken, President of Joseph
Skilken & Co., an Ohio Corporation and the General Partner of CORPORATE EXCHANGE
BUILDINGS IV and V LIMITED PARTNERSHIP, an Ohio limited partnership, on behalf
of the limited partnership, who acknowledged for and on behalf of the
corporation and limited partnership that he did sign the foregoing instrument on
behalf of the corporation and limited partnership.
/s/ Teresa R. Johnson
---------------------------------
Notary Public
My Commission Expires: 11/5/02
-----------
5
<PAGE>
NOTARIZATION FOR CORPORATE TENANT
STATE OF OHIO
COUNTY OF FRANKLIN
On this 18th day of May, 1998, before me, a notary public in and for said
County and State, personally appeared Larry J. Fox, Chairman of the Board and
Chief Executive Officer and Steve Sasser, President, of Symix Computer Systems,
Inc., an Ohio corporation, who represented that they are duly authorized to sign
and did sign the foregoing lease amendment on behalf of the corporation.
/s/ Ivery D. Foreman
---------------------------------
Notary Public
My Commission Expires: None
-----------
6
<PAGE>
CERTIFICATE OF INCUMBENCY AND RESOLUTION
OF
SYMIX COMPUTER SYSTEMS, INC.
I, Lawrence Deleon, duly elected Secretary of Symix Computer Systems, Inc.,
an Ohio corporation (the "Company"), do hereby certify that Larry J. Fox, is the
duly elected and qualified Chairman of the Board and Chief Executive Officer,
and Stephen A. Sasser, is the duly elected and qualified President of Symix
Computer Systems, Inc., as of the date set forth below, and the signatures set
forth opposite their respective names are the true and genuine signatures of
both:
<TABLE>
<CAPTION>
<S> <C>
NAME SIGNATURE
---- ---------
Larry J. Fox /s/ Larry J. Fox
-----------------------------
Stephen A. Sasser /s/ Stephen A. Sasser
-----------------------------
</TABLE>
I, Lawrence Deleon, further certify that the following is a true and
correct copy of the resolution duly adopted by unanimous written consent of the
Board of Directors of Symix Computer Systems, Inc., on May 17, 1998 and that
there are no modifi-cations, additions or rescissions thereto:
RESOLVED, that the Chairman of the Board and Chief Executive Officer
and President be and hereby are authorized and empowered to execute in
the name of and to deliver on behalf of the Company any and all
documents relating to real estate transactions including, but not
limited to, leases, subleases, and purchase and sale documents, and
amendments and supplements thereto, and specifically that they are
authorized and empowered to enter into a lease amendment with
Corporate Exchange Buildings IV and V Limited partnership for the
lease amendment at Corporate Exchange Building V.
7
<PAGE>
IN WITNESS WHEREOF, the undersigned has hereunto set (her) (his) hand and
affixed the seal of the Company on this 18th day of May, 1998.
SYMIX COMPUTER SYSTEMS, INC.
(CORPORATE SEAL)
By: /s/ Lawrence Deleon
-------------------------------
8
<PAGE>
EXHIBIT E
TENANT ACCEPTANCE LETTER
[Letterhead of Tenant]
[Date]
Corporate Exchange Buildings IV and V Limited Partnership
383 South Third Street
Columbus, Ohio 43215
Attention: Steve Skilken
Re: Lease dated April 3, 1991, a Lease For Storage Space dated
March 16, 1992, a First Lease Amendment dated December 1 1993, a
Second Lease Amendment dated April 1, 1994, Third Lease Amendment
dated July 12, 1994, Fourth Lease Amendment dated November 11,
1994, and a Fifth Lease Amendment at Corporate Exchange
Building V, 2800 Corporate Exchange Drive, Columbus, Ohio 43231.
The undersigned, as Tenant, hereby confirms the following as of
May 18, 1998:
1. Tenant has accepted possession of and is currently occupying the
entire Premises.
2. The commencement date for the Fifth Lease Amendment is July 1, 1998.
3. Tenant accepts the Premises and acknowledges that the Premises are in
the condition required by the Lease and all amendments thereto.
4. As of the date hereof, Landlord has fulfilled all its obligations
under the Lease.
5. The Lease is in full force and effect and has not been modified,
altered, or amended except pursuant to the instruments described
above.
6. There are no offsets or credits against Rent or any other charge
payable by Tenant under the Lease, nor has any Rent or any other
charge payable by Tenant been prepaid.
<PAGE>
7. Tenant has no notice of any prior assignment, hypothecation, or pledge
of the Lease or any Rent due under the Lease.
Sincerely,
SYMIX COMPUTER SYSTEMS, INC.
By: /s/ Larry J. Fox
------------------------------
Larry J. Fox
Chairman of the Board and
Chief Executive Officer
<PAGE>
EXHIBIT A
[VISUAL VIEW OF FLOOR PLAN OMITTED]
<PAGE>
EXHIBIT B
Unattached and referred hereto by reference. The architectural plans comprising
Exhibit B are enclosed hereto and signed and dated by Tenant.
<PAGE>
EXHIBIT 10(h) TO SYMIX SYSTEMS, INC. 1998 FORM 10-K
AMENDMENT TO THE PROGRESS SOFTWARE APPLICATION
PARTNER AGREEMENT
This AMENDMENT to the PROGRESS SOFTWARE APPLICATION PARTNER AGREEMENT is
entered into as of July 1, 1997 (the "Effective Date"), by and between
PROGRESS SOFTWARE CORPORATION, a Massachusetts corporation with its principal
place of business at 14 Oak Park, Bedford, Massachusetts 01730 ("PSC"), and
SYMIX COMPUTER SYSTEMS, INC., an Ohio corporation with its principal place of
business at 2800 Corporate Exchange Drive, Columbus, Ohio 43231 ("AP" or
"Symix").
WHEREAS, PSC and AP entered into a Progress Software Application Partner
Agreement effective as of February 8, 1995 (the "Agreement");
WHEREAS, PSC and AP desire to amend the terms and conditions of the Agreement
to provide for special pricing for certain PSC products to be distributed in
conjunction with certain AP PROGRESS-Registered Trademark--based
applications; and
WHEREAS, PSC is willing to provide AP with such special pricing subject to
the terms and conditions of this Amendment;
NOW, THEREFORE, for good and valuable consideration, the receipt and adequacy
of which is hereby acknowledged, the parties hereto agree as follows:
1. Capitalized terms used but not defined in this Amendment shall have the
same meaning as in the Agreement.
2. The following terms as used herein shall have the following meanings:
a) "NET LICENSE FEE" shall mean the then-current total license fee
charged by AP to each customer for the Symix portion of the AP Covered
Applications bundled with the Selected PSC Products in accordance with
Section 6 below, net of any and all discounts, sales tax and shipping
fees. The term "Net License Fee" shall not include revenue obtained
by AP for hardware, implementation, training, customization, data
conversion services, 1st year Annual License Fee ("Annual License Fee"
is the name used by AP to refer to its maintenance and support
services fee), or support services. For illustration purposes only,
see EXHIBIT C for example order and calculations.
b) "SELECTED PSC PRODUCTS" shall mean the PSC Versions 7 and 8 deployment
products listed in EXHIBIT A.
c) "COVERED APPLICATIONS" shall mean the PROGRESS-Registered
Trademark--based AP application software modules listed in EXHIBIT B
to this Amendment.
13
<PAGE>
3. PSC PRODUCT LICENSES DISTRIBUTED BY AP PRIOR TO THE EFFECTIVE DATE OF THIS
AMENDMENT. Except as otherwise set forth in Sections 8, 9 and 10 of this
Amendment, the terms and conditions set forth in this Amendment shall not
apply to PSC product licenses distributed by AP to its existing installed
base prior to the Effective Date of this Amendment. Such PSC product
licenses shall be subject to PSC's standard end-user license agreement
which accompanied the PSC product and PSC's then-current standard
maintenance and upgrade policies and price list. Notwithstanding the
foregoing, in the event AP licenses additional Covered Applications to an
existing AP customer such additional licenses (with or without additional
Selected PSC Products) shall be subject to the terms and conditions set
forth in this Amendment including but not limited to the PSC Product and
Maintenance Royalty requirements specified herein.
4. AP'S DISTRIBUTION OF SELECTED PSC PRODUCTS DURING THE TERM OF THIS
AMENDMENT. Notwithstanding anything to the contrary contained in the
Agreement, the following terms and conditions shall apply to the
distribution by AP of the Selected PSC Products in connection with the
Covered Applications during the term of this Amendment:
a) TERRITORY. AP shall have the right to distribute the Selected PSC
products solely in conjunction with the deployment of the Covered
Applications in North America subject to the terms and conditions of
the Agreement and this Amendment.
b) AP PRICING. AP will, in its sole discretion, establish and maintain a
product price schedule setting forth the license fees for the Covered
Applications. A copy of the current price schedule is attached hereto
as EXHIBIT B. AP shall provide PSC with written notice of any updates
to the above-mentioned price schedule in a timely fashion.
Notwithstanding the foregoing, the special pricing terms and
conditions set forth in this Amendment are based upon AP's pricing
model set forth in EXHIBIT B. In the event AP makes substantial
changes to its pricing model from the one set forth in EXHIBIT B, AP's
license royalty fee and maintenance fee for the Selected PSC
Product(s) deployed under such new pricing model shall be subject to
change in PSC's sole discretion provided, however, that in no event
shall such formulas be significantly different from the formulas set
forth herein.
c) AP'S AGREEMENT WITH ITS CUSTOMERS. The use of the Selected PSC
Products by AP's customers shall be subject to the terms and
conditions set forth in PSC's End-User Product License Agreement (a
copy of which is attached hereto as EXHIBIT D).
d) PSC LICENSE ROYALTIES. AP shall pay PSC a royalty equal to seventeen
percent (17%)(the "Product Royalty") of the total sales price for the
Symix portion of the Covered Application(s) licensed to its customers
on or after the Effective Date of this Amendment, less any applicable
customer discount. The 17% royalty described in the foregoing
sentence is based upon the following royalties:
14
<PAGE>
(1) 14.5% of the total sales price for the Symix portion of the
Covered Application as payment for the initial product license,
and
(2) 2.5% of the total sales price for the Symix portion of the
Covered Application as payment for an initial 12 month term of
generally available PSC maintenance.
In the event AP pays royalties to PSC for initial license, initial
maintenance and upgrade fees in excess of $1,920,000 in any one year
period beginning on July 1st of each year and ending on June 30th of
the following year, the royalty rate on such license and upgrade fees
will drop from 17% to 16% during the remainder of such one year
period. Except as otherwise set forth herein, PSC's license fees for
any additional PSC Products ordered but not listed in EXHIBIT A will
be calculated by using PSC's then-current price list less applicable
Symix discount.
e) PSC MAINTENANCE ROYALTIES.
i) INITIAL MAINTENANCE TERM. In connection with AP's initial
distribution of Selected PSC Products in conjunction with each AP
license of Covered Application(s) to an AP customer, PSC
maintenance coverage for such Selected PSC Products during the
initial maintenance term shall be subject to royalties specified
in Section 4(d) above. The above-mentioned fee is based upon a
twelve (12) month initial maintenance term.
ii) RENEWAL MAINTENANCE TERM. For each AP Covered Application
license, upon expiration of an initial term of maintenance as
described in paragraph (i) of this Section 4(e) or a renewal
term of maintenance as described in this paragraph (ii) of
this Section 4(e), PSC's maintenance coverage for a twelve
(12) month renewal term shall be subject to royalty equal to
two and one-half percent (2.5%) of the original sales price
charged by AP for the Symix portion of such Covered
Applications. If AP increases the maintenance fee for any
Covered Application after such Covered Application has been
purchased by the customer, the annual maintenance royalty for
such Covered Application described in this paragraph (ii) of
this Section 4(e) will automatically be increased by the same
percentage; provided, however, that in no event shall (a) the
amount of any such maintenance royalty for the second
maintenance term be less than the maintenance royalty for the
initial maintenance term, and (b) the amount of any such
annual maintenance royalty for the third maintenance term and
any subsequent maintenance term be less than the royalty paid
by AP for the previous maintenance term. The maintenance fee
for renewal maintenance for AP customers who have allowed
their maintenance to lapse is subject to the terms and
conditions of PSC's then-current standard maintenance renewal
policy and then-current pricing.
15
<PAGE>
f) UPDATES/UPGRADES OF THE COVERED APPLICATIONS. For each Selected PSC
Product license purchased for an AP customer pursuant to Section 4(d)
above, PSC shall be entitled to payment from AP when additional
application and/or maintenance revenue is generated from such AP
customer in connection with (i) the sale or license of additional
Covered Applications or (ii) any applicable upgrade or update to the
Covered Applications and/or the Selected PSC Products (including but
not limited to revenue relating to the license of additional Covered
Application modules, upgrades or updates to existing modules and
increase in user count. PSC's portion of such revenue shall be based
upon the then-current product royalty and maintenance royalty formulas
in effect at the time of the applicable update, upgrade or license of
additional Covered Applications. AP shall include information about
any such PSC product and/or maintenance royalties in accordance with
the reporting requirements of Section 7 herein.
5. The special pricing provisions set forth in this Amendment apply only to
the Selected PSC Products distributed solely in conjunction with AP's
Covered Applications for installation in North America, in accordance with
the terms and conditions of this Amendment and the Agreement. In the event
a new AP customer or existing AP customer desires to purchase a new PSC
product license or upgrade an existing PSC product license for a PSC
product not included in the definition of Selected PSC Products listed
above or covered in Sections 8, 9 or 10 hereof, the PSC license and
maintenance fees for such new PSC product license or upgrade shall be
subject to PSC's then-current price list, terms, and conditions.
6. If AP elects to separate the fees charged by AP for PSC Products from the
fees charged for the Symix portion of the Covered Applications when
submitting proposals or invoicing AP's customers, AP (i) must show only the
suggested list price for the application-specific versions of the PSC
Products as calculated in accordance with the formula set forth on
EXHIBIT E hereto, and (ii) must not discount the PSC Products more than the
discount given by AP on the Symix portion of the Covered Applications. PSC
may amend the suggested list prices for the application-specific version of
the PSC Products from time to time by providing prior written notice to AP.
The special pricing terms and conditions set forth in this Amendment shall
not apply if AP discounts the bundled application software, together with
the Selected PSC Products, at a percentage higher than the average discount
applied to the total sale to its customers on any particular order. Under
such circumstances, the PSC product licenses shall be subject to PSC's
then-current price list.
7. ORDERING AND PAYMENT PROCEDURES.
a) On a monthly basis, AP shall provide the following reports to PSC:
i) COVERED APPLICATION(S) DEPLOYMENT REPORT. For each Covered
Application(s) license granted by AP to an AP customer under the
terms and conditions of this Amendment during the report period,
AP shall provide PSC with the following information: the
customer name, address,
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<PAGE>
number of users, PSC serial number, AP's Net License Fee, PSC's
Product Royalty calculated in accordance with Section 4(e) above.
ii) INITIAL TWELVE (12) MONTH MAINTENANCE REPORT. For each Covered
Application(s) license including Selected PSC Products to be
covered under a twelve (12) month initial PSC maintenance term
(provided such maintenance is made generally available by PSC to
its customer base), AP shall provide the following information:
the customer name, address, PSC serial number, AP's Net License
Fee, maintenance start and end date, and PSC's Maintenance
Royalty calculated in accordance with Section 4(0(i) above.
iii) RENEWAL MAINTENANCE REPORT. For each Covered Application(s)
license including Selected PSC Products to be covered under a
twelve (12) month annual PSC renewal maintenance term (provided
such maintenance is made generally available by PSC to its
customer base), AP shall provide the following information: the
customer name, address, PSC serial number, maintenance start and
end date, and PSC's Maintenance Royalty calculated in accordance
with Section 4(f)(ii) above.
iv) UPGRADES/UPDATES. On a monthly basis, AP shall provide a report
to PSC of any and all add-on modules, updates or upgrades
occurring during the report period to AP customer licenses for
Covered Applications and/or Selected PSC Products resulting in
additional license and/or maintenance revenue to AP in accordance
with the provisions of Section 4(f) above and shall include the
following information with respect to each such update, add-on
and/or upgrade: customer name; address; PSC serial number(s);
description of the update, upgrade or add-on; PSC Product Royalty
(if additional license revenue is generated from the update,
add-on or upgrade); and PSC Maintenance Royalty (if additional
maintenance revenue is generated from the update, add-on or
upgrade).
v) The required reports referenced in paragraphs (i), (ii), (iii),
and (iv) above shall be received by PSC no later than the
fifteenth (15) day of the month following the month in which the
Covered Application(s) license is granted by AP or one of its
authorized distributors. Payment in full for all of PSC's
Product Royalties, Maintenance Royalties (initial and renewal),
and update/upgrades owed to PSC for the prior month are due with
these reports. Interest shall accrue on any delinquent amounts
owed by AP for PSC products at the lesser of eighteen percent
(18%) per annum or the maximum rate permitted by applicable usury
law.
8. AP's existing customers who have purchased PROGRESS-Registered
Trademark--based Symix applications which incorporate
PROGRESS-Registered Trademark-Version 6 or an earlier
PROGRESS-Registered Trademark- version ("Earlier PROGRESS-Registered
Trademark- Versions") prior to the Effective Date of this Amendment, may
upgrade from such applications to the Covered Applications if (i) AP
pays to PSC for each such
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existing customer a one-time fee equal to One Hundred and Fifty Dollars
($150.00) per user based upon a user count that is equal to the total
number of such customer's Symix users, (ii) AP pays to PSC an annual
maintenance royalty for each such application equal to the greater of
(a) two and one-half percent (2.5%) of the total current sales price
charged by AP for such application, or (b) the current maintenance fee
charged by PSC for such application, (iii) such existing Symix customer
has paid all required maintenance fees on such products due prior to the
date of such upgrade, and (iv) each such existing customer forfeits
their rights under the machine-based license or unlimited license
granted to such customer for the Earlier PROGRESS-Registered Trademark-
Versions and the license to use such products shall be based upon number
of users. If such Symix customers require any other PSC products other
than those included with the Covered Applications, such products must be
purchased at PSC's then current list price less Symix's standard AP
discount.
9. AP's existing customers who have purchased PROGRESS-Registered
Trademark--based Symix applications which incorporate
PROGRESS-Registered Trademark-Version 7 or 8 will be covered under the
percentage of application arrangement described in this Amendment and
such customers will not be charged PSC's standard platform and upgrade
fees for platform changes to such applications.
10. AP's customers who have purchased the Covered Applications will receive
free of charge Updates (as such term is hereinafter defined) to the PSC
Products included with Covered Applications provided that (a) the user
count for such Covered Applications has not been increased, and (b) the
customer has purchased maintenance services for the Covered Applications.
For purposes of this Section 10, "Updates" shall mean new releases of PSC
Products containing modifications or additions to the software that fixes
bugs or provides minor functionality enhancements and does not change
overall utility, functional capability or application of software.
11. Notwithstanding anything to the contrary set forth in Section 10.1 of the
Agreement, (a) the term of the Agreement shall be extended so that the
Agreement terminates on July 1, 1998 unless extended in writing by AP and
PSC, and (b) the initial term of this Amendment shall commence on July 1,
1997 and shall continue for a period of one year from such date.
Thereafter, the provisions of this Amendment shall continue in force
subject to termination (a) automatically upon termination of the Agreement
pursuant to Article 10 of the Agreement or (b) thirty (30) days after
written notice of termination by either party. If in excess of ninety
percent (90%) of the outstanding common stock of PSC is acquired by a third
party software vendor during the initial term of this Amendment or any
renewal term hereof, the term of this pricing arrangement shall be
automatically extended for an additional two-year period from the next
anniversary date hereof. In the event PSC terminates this Amendment in
accordance with part (b) above, AP's distribution of all PSC products,
including the Selected PSC Products described herein shall be subject to
the standard terms and conditions of the Agreement (prior to this
Amendment) and PSC's then-current pricing policies. Nothing in this
Section 11 shall alter or modify PSC's right, pursuant to Section 10.2 of
the Agreement, to terminate the Agreement and this Amendment at any time if
AP fails to cure a material breach of its obligations within thirty (30)
days of receipt of written notice from PSC.
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<PAGE>
12. Notwithstanding anything to the contrary set forth in Section 11.1 of the
Agreement and except as set forth in Section 10 of this Amendment, the
special pricing and distribution terms and conditions set forth in this
Amendment may not be assigned by AP without the prior written consent of
PSC, which shall not be unreasonably withheld.
13. It is the expectation of Symix and PSC that Symix will pay royalties to PSC
for initial license, initial maintenance and upgrade fees of at least
$1,920,000 in each one year period during the term of this Amendment
beginning on July 1st of each year and ending on June 30th of the following
year.
14. Except as modified herein, all provisions of the Agreement are hereby
confirmed and in all respects this Amendment (including Exhibits A through
E hereto) and the Agreement shall be read and construed together as if the
provisions of this Amendment had been part of the Agreement. This
Amendment completely supersedes any earlier Agreements between the parties.
No other modifications or additions are made to the Agreement. Except as
may be modified or amended by this Amendment, the terms and conditions of
the Agreement shall remain in effect until termination of the Agreement.
In the event of conflict between the terms and conditions of the Agreement
and this Amendment, the terms and conditions of this Amendment shall
govern.
IN WITNESS WHEREOF, this Amendment has been executed under seal for and on
behalf of each of the parties hereto by their duly authorized representative
as of the date first set forth above.
PROGRESS SOFTWARE CORPORATION SYMIX COMPUTER SYSTEMS, INC.
By: /s/ Paul Maddaluno By: /s/ Lawrence DeLeon
--------------------------- ----------------------------
Name: Paul Maddaluno Name: Lawrence DeLeon
------------------------- --------------------------
Title: Director, N.A. Sales Title: CFO
----------------------- ------------------------
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EXHIBIT A
SELECTED PSC PRODUCTS
PROGRESS-Registered Trademark- 4GL
PROGRESS-Registered Trademark- Enterprise Database Server
Query/Results
Client/Networking
PROGRESS-Registered Trademark- AppServer
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EXHIBIT B
COVERED APPLICATIONS/PRICE SCHEDULE
SyteLine
Data Collection
Symix 4.0
The Covered Applications will only include a single user 4GL license for
each database server and a user count equal to the number of Symix SyteLine
and Symix Data Collection sessions for Enterprise Database, Client
Networking, PROGRESS-Registered Trademark- AppServer and Query/Results.
[Attach Current AP Price Schedule]
(Attachment omitted)
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EXHIBIT C
EXAMPLE ORDER AND CALCULATIONS
If AP sells customer ABC company $130,000 in Covered Applications of
which the sales price for the Symix portion of such Covered Applications is
$100,000, AP would pay to PSC a royalty of $17,000 calculated as follows:
<TABLE>
<S> <C> <C>
a. 14.5% of the total sales price for the Symix portion
of the Covered Applications for the initial product
license $14,500
b. 2.5% of the total sales price for PSC maintenance
during the Initial Maintenance Term 2,500
-------
TOTAL ROYALTY DUE PSC $17,000
</TABLE>
22
<PAGE>
EXHIBIT D
[This page will be replaced by a copy of PSC's End-User Product License
Agreement]
23
<PAGE>
EXHIBIT E
FORMULA FOR CALCULATING SUGGESTED LIST PRICE
The suggested list price of the PSC Products included with any Covered
Application shall be calculated as follows:
$1,200 per user for the Enterprise Database Server, Client
Networking, Query/RESULTS and PROGRESS-Registered Trademark-
App Server and one 4GL Development System.
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EXHIBIT 10(i) TO SYMIX SYSTEMS, INC. 1998 FORM 10-K
SECOND AMENDMENT TO
PROGRESS SOFTWARE APPLICATION PARTNER AGREEMENT
SECOND AMENDMENT to the Progress Software Corporation Application
Partner Agreement is effective as of the 1st day of July, 1998 ("Effective
Date"), by and between Progress Software Corporation, a Massachusetts
corporation with its principal place of business at 14 Oak Park, Bedford,
Massachusetts 01730 ("PSC") and Symix Computer Systems, Inc., an Ohio
corporation with its principal place of business at 2800 Corporate Exchange
Drive, Columbus, Ohio 43231 ("AP" or "Symix").
WHEREAS, PSC and AP entered into a Progress Software Application Partner
Agreement effective as of February 8, 1995 (the "Agreement"); and
WHEREAS, PSC and AP previously amended the Agreement by entering into an
Amendment to the Agreement as of July 1, 1997 specifying special pricing for
designated PSC products distributed by AP in conjunction with certain AP
PROGRESS-based applications (the "Amendment");
WHEREAS, AP desires to expand the geographic scope of the special
pricing terms and conditions in the Amendment to apply on a worldwide basis,
to specify additional terms and conditions pursuant to which AP will have the
right to copy and distribute an evaluation version of certain PSC products in
combination with an evaluation version of AP's PROGRESS-based application(s),
and to obtain the right to distribute the WebSpeed transaction server product
in conjunction with AP's SyteWeb application;
WHEREAS, PSC is willing to agree, subject to the terms and conditions
contained herein, to such expansion in the geographic territory of the
special pricing terms and conditions in the Amendment, to grant AP the
above-mentioned rights to copy and distribute the evaluation version of the
designated PSC products, and to allow AP to distribute the WebSpeed
transaction server product in conjunction with AP's SyteWeb application;
NOW, THEREFORE, for good and valuable consideration, the receipt and
adequacy of which is hereby acknowledged, the parties hereto agree as follows:
1. Capitalized terms used but not defined in this Second Amendment shall
have the same meaning as in the Agreement or the Amendment.
2. The terms and conditions of the Amendment shall continue in force during
the term of this Second Amendment subject to the following:
a. Section 4(a) of the Amendment limits the territory for the special
pricing terms and conditions specified therein to North America. The
parties agree that, as of the Effective Date of this Second Amendment,
the territory will be expanded to apply on a worldwide basis.
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<PAGE>
b. Section 4(b) of the Amendment specifies that: (i) AP has sole
discretion to establish and maintain a price schedule for the Covered
Application, (ii) AP is required to provide PSC with a copy of the
price schedule and written notice of any updates thereto, and (iii)
PSC has the right to modify AP's license and maintenance royalty
formulas in the event AP substantially alters its pricing model,
provided that such adjusted royalty formulas are not significantly
different from the formulas set forth in the Amendment. In addition to
the requirements already established under Section 4(b), in the event
AP has different price schedules for installation locations outside
the United States, AP shall provide PSC with a copy of each price
schedule and written notice of any updates thereto.
c. Section 4(c) of the Amendment states that the use of the Selected PSC
Products by AP's customers shall be subject to the terms and
conditions of PSC's End-User Product License Agreement. Such End-User
Product License Agreement accompanies each Selected PSC Product. A
copy of such End-User Product License Agreement was to be attached to
the Amendment as Exhibit D; however, said Exhibit D was inadvertently
omitted from the list of Exhibits attached to the Amendment. A copy
of PSC's current End-User Product License Agreement for the Selected
PSC Products is attached hereto. Such End-User Product License
Agreement is subject to change by PSC from time to time without notice
to AP. In accordance with the terms and conditions of Section 3.3 of
the Agreement, AP shall deliver each PSC Product to its customers
unopened with the above-mentioned End-User Product License Agreement
in tact.
d. Sections 4(d), 4(e), and 4(f) specify the license royalty, maintenance
royalty, and upgrade royalty arrangements respectively. The terms and
conditions set forth in Sections 4(d), 4(e), and 4(f) shall remain the
same, except that:
(i) The annual revenue goal specified in the last paragraph of
Section 4(d) shall be increased from US$1,920,000 to
US$2,500,000. In the event AP pays royalties to PSC for initial
license, initial maintenance and upgrade fees in excess of
US$2,500,000 in any one year period beginning on July 1st of each
year and ending on June 30th of the following year, the royalty
rate on such license and upgrade fees will drop from 17% to 16%
for orders processed during the remainder of such one year
period. Any royalties paid by AP to PSC or a PSC subsidiary for
initial license, initial maintenance and upgrade fees on Selected
PSC products ordered by AP for installation at an AP customer
location outside of North America shall be applied to the
above-mentioned goal (except for orders placed by AP through a
PSC distributor). AP's performance in relation to the
above-mentioned annual revenue goal will be monitored by PSC's
Bedford, Massachusetts headquarters. AP shall be responsible for
promptly reporting to PSC's Bedford, Massachusetts headquarters
any royalties paid by AP to a PSC subsidiary which, pursuant to
the provisions above, should be counted toward the annual revenue
goal.
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(ii) For each Covered Application license installed at an AP customer
location outside of the United States, the royalty formulas
specified in Sections 4(d), 4(e) and 4(t) shall be applied to the
total local sales price for the Symix portion of the Covered
Application (if different from AP's U.S. sales price).
e. Section 5 of the Amendment states, in the first sentence, that the
terms and conditions of the Amendment shall only apply to AP's
distribution of the Selected PSC Products in conjunction with the
Covered Applications solely in North America. The territory
limitation shall no longer apply. The requirement that the Selected
PSC Products be distributed in conjunction with the Covered
Applications will continue in full force and effect. The remaining
provisions of Section 5 of the Amendment concerning the purchase of
licenses of PSC products not covered under the definition of "Selected
PSC Products" shall remain in effect.
f. Section 7 of the Amendment specifies the ordering, payment and
reporting procedures for the Selected PSC products ordered and
deployed by AP in conjunction with each Covered Application(s)
license. As of the Effective Date of this Second Amendment, the
ordering, payment and reporting procedures specified in Section 7
of the Amendment will be replaced with the following procedures:
INSTALLATIONS IN NORTH AMERICA:
SELECTED PSC PRODUCT ORDERS: For each AP customer location in
North America requiring Selected PSC Products in conjunction with
the Covered Applications(s), AP shall order such Selected PSC
Products from PSC's United States headquarters in Bedford,
Massachusetts ("PSC Headquarters"). With each order, AP shall
provide PSC with the following information: the customer name,
address, number of users, AP's Net License Fee, PSC's Product
Royalty calculated in accordance with Section 4(d) of the
Amendment. PSC shall invoice AP for the Product Royalty owed to
PSC under each order.
ORDERS FOR RENEWAL MAINTENANCE: For each Covered Application(s)
license installation in North America requiring a renewal PSC
maintenance term pursuant to Section 4(e)(ii) of the Amendment
(provided that such maintenance is generally offered by PSC to
its customers), AP shall submit an order to PSC Headquarters
within thirty (30) days prior to the expiration of the current
maintenance term. In each such order, AP shall provide PSC with
the following information: the customer name, location, number
of users, PSC product serial number(s), the original Net License
Fee of the Covered Application(s) licensed to the AP customer,
and PSC's Maintenance Royalty calculated in accordance with
Section 4(e)(ii) of the
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Amendment. PSC shall invoice AP for the Maintenance Royalty
owed to PSC under each order.
ORDERS FOR UPGRADES TO THE SELECTED PSC PRODUCT(S): For each
Covered Application(s) installation in North America requiring an
increase in the user count of the Selected PSC Product(s) or a
generally available update to the Selected PSC Product(s), AP
shall submit an order to PSC Headquarters. Such order shall
include: the customer name, location, PSC product serial
number(s), current number of users, number of users after the
increase (if applicable), the version of the Selected PSC
Products ordered (if ordering an update), PSC Product Royalty and
PSC Maintenance Royalty in accordance with Sections 4(d) and
4(e)(ii) of the Amendment (if additional license and/or
maintenance revenue is generated by AP from the user count
increase or the update). PSC shall invoice AP for the Product
and/or Maintenance Royalties owed to PSC under each order.
REPORTING OF UPGRADES TO THE COVERED APPLICATION(S): In
accordance with Section 4(f) of the Amendment, PSC is entitied to
a Product Royalty payment on any license and maintenance revenue
obtained by AP from upgrades to the Covered Applications, even if
such upgrades do not involve upgrades to the Selected PSC
Products. If AP performs an upgrade to a Covered Application(s)
license which does not require an order for an upgrade to the
Selected PSC Products, and license and/or maintenance revenue is
generated from such upgrade, AP shall immediately report to PSC
the following information regarding the upgrade to the Covered
Application(s) license: customer name, location, PSC serial
number(s), PSC Product Royalty and Maintenance Royalty in
accordance with Sections 4(d) and 4(e)(ii) of the Amendment (if
additional license and/or maintenance revenue is generated by AP
from the upgrade). Upon receipt of the report from AP, PSC shall
invoice AP for the Product and/or Maintenance Royalties owed to
PSC in connection with each reported upgrade.
PAYMENT OF INVOICES: AP shall pay all invoices within thirty
(30) days of the invoice date provided AP meets PSC's credit
requirements. Otherwise, payment shall be made in advance or on
a C.O.D. basis. Interest shall accrue on any delinquent amounts
owed by AP for PSC products at the lesser of eighteen percent
(18%) per annum or the maximum rate permitted by applicable usury
law.
INSTALLATIONS IN PSC SUBSIDIARY COUNTRIES:
The ordering, payment and reporting obligations shall be the same
as those set forth above, except that all orders for Selected PSC
Products to be installed in a local PSC subsidiary country shall
be placed with the local
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<PAGE>
PSC subsidiary, all upgrade reports delivered to the local PSC
subsidiary, and all invoices generated by the local PSC
subsidiary. AP shall make all payments to the local PSC
subsidiary in the currency specified in the invoice.
INSTALLATIONS OUTSIDE OF NORTH AMERICA AND OUTSIDE OF A PSC SUBSIDIARY
COUNTRY:
For AP customer installation locations outside of North America
and outside a PSC subsidiary location, AP shall have the option
of: (a) ordering Selected PSC Products from PSC under the
special royalty arrangements set forth in the Amendment and this
Second Amendment by following the ordering, payment and reporting
obligations described above for installations in North America,
or (b) ordering the Selected PSC Products from a local PSC
distributor. If AP elects to order the Selected PSC Products
through a PSC distributor, then such order shall be subject to
the PSC distributor's then-current pricing and shall not be
subject to the special terms and conditions set forth in the
Amendment and this Second Amendment.
g. Section 8 of the Amendment specifies the conversion options available
for AP's existing customers who have purchased PROGRESS-based Symix
applications which incorporate PROGRESS Version 6 or an earlier
PROGRESS version and who desire to upgrade to the Covered Applications
including the Selected PSC Products. The terms and conditions set
forth in Section 8 shall remain the same, except that, for purpose of
clarification, the one hundred and fifty dollars ($150.00) per user
conversion fee referenced in Section 8 of the Amendment shall be
calculated in U.S. dollars regardless of the installation location.
h. Section 11 of the Amendment specifies the term of the Agreement and
the Amendment. The Agreement is scheduled to terminate as of July 1,
1998, and pursuant to the terms and conditions of Section 11 of the
Amendment, the Amendment would automatically terminate upon
termination of the Agreement. The term of the Agreement shall be
extended on an indefinite basis subject to termination pursuant to
Article 10 of the Agreement. Except as otherwise specified in this
paragraph 2(h), the terms and conditions of Section 11 of the
Amendment shall continue in full force and effect.
i. Exhibit A of the Amendment was supposed to list the PSC products
included in the definition of Selected PSC Products; however, at the
time the Amendment was mutually-executed, the list of Selected PSC
Products was included in Exhibit B rather than Exhibit A. Thus, all
references Selected PSC Products in the Amendment and this Second
Amendment shall mean the PSC products listed in Exhibit B to the
Amendment.
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<PAGE>
3. AP agrees that all Selected PSC Product licenses delivered by AP to AP
customers shall be in compliance with all applicable laws concerning the
exporting, importing and re-exporting of products as referenced in the
attachment hereto entitied "Restricted Country Groups".
4. PSC shall provide AP with a master copy of generally available evaluation
versions of the Selected PSC products on all available operating platforms,
and shall grant AP a license to copy and distribute such evaluation
versions of the Selected PSC products to AP customers in combination with
an evaluation version of the Covered Applications subject to the following
terms and conditions:
a. AP must display an evaluation agreement in a prominent location in the
packaging and/or the installation routines, said evaluation agreement
including terms and conditions substantially similar to those set
forth in PSC's standard form of evaluation license agreement attached
hereto. Such evaluation agreement between AP and AP's customer shall
in any event contain the following terms and conditions:
(i) warranty and liability limitations, confidentiality obligations
and limitations on copying, modifying, reverse engineering, or
altering the evaluation software, which are no less
restrictive than those set forth in PSC standard evaluation
agreement attached hereto, with all such terms and conditions
applying with the same force and effect for the benefit of
AP's suppliers;
(ii) an express provision notifying the AP customer that the
evaluation software may contain a disabling function triggered
automatically upon expiration of the evaluation license period;
(iii) a provision specifying that the evaluation software should not
be used in connection with AP customer's regular data processing
activities; and
(iv) a provision stating that title to software products of AP's
supplier, including patents, copyrights and property rights
applicable thereto, shall at all times remain solely and
exclusively with such supplier;
b. AP shall maintain sole control over all copies of the master media and
shall not release any such copies to any other party, including, but
not limited to, AP's authorized distributors and replication
companies;
c. AP shall indemnify, defend and hold PSC, and its officers, directors,
employees and agents harmless from and against any costs, damages, and
expenses, including but not limited to reasonable attorney's fees,
resulting from any demand, claim, or cause of action against PSC
arising out of AP's distribution of the evaluation version of the
Selected PSC Products to AP customers; and
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d. Following the termination of this Second Amendment, AP shall
immediately return to PSC all master copies of the evaluation software
for the Selected PSC Products.
5. Exhibit B to the Amendment shall be deemed to be updated to include AP's
SyteWeb module which is an add-on module to AP's SyteLine application (the
SyteLine application is already listed in Exhibit B and included in the
definition of Covered Application). For new Covered Application licenses
including the SiteWeb application or existing Covered Application licenses
where the Site Web application is provided as an add-on module, AP may
include a WebSpeed transaction server license for 5 concurrent agents,
subject to payment of license and maintenance royalties on the total sales
price for SiteWeb application in accordance with the terms and conditions
of the Amendment and this Second Amendment. Any increases to the
concurrent agent count for the WebSpeed transaction server licenses shall
be subject to PSC's then-current standard license and maintenance fees,
less then applicable AP discounts.
6. The term of this Second Amendment shall commence as of the Effective Date
defined above, and shall continue in force until the termination of the
Amendment pursuant to Section 11 of the Amendment (as modified by Section
2(h) above).
7. Except as may be modified or amended by this Second Amendment, the terms
and conditions of the Agreement (as previously amended by the Amendment)
shall remain in effect until the termination of the Agreement. No other
modifications or additions are made to the Agreement. The Agreement,
Amendment, and this Second Amendment constitute the entire agreement
between the parties with respect to the subject matter hereof. In the
event of conflict among the terms and conditions of the Agreement, the
Amendment, or this Second Amendment, the order of precedence shall be:
first, this Second Amendment, second, the Amendment, and third and finally,
the Agreement.
IN WITNESS WHEREOF, this Second Amendment has been executed under seal
for and on behalf of each of the parties hereto by their duly authorized
representative as of the date first set forth above.
PROGRESS SOFTWARE CORPORATION SYMIX COMPUTER SYSTEMS, INC.
By: /s/ David Vesty By: /s/ Lawrence DeLeon
---------------------------- -------------------------------
Name: David Vesty Name: Lawrence DeLeon
---------------------------- -------------------------------
Title: Vice President Title: CFO
---------------------------- -------------------------------
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EXHIBIT 10(j) TO SYMIX SYSTEMS, INC. 1998 FORM 10-K
SUMMARY OF BONUS PLAN
The executive officers named in the Symix Systems, Inc. ("Symix" or the
"Company") Annual Report on Form 10-K for its fiscal year ended June 30, 1998
and other management employees of Symix ("Participants") participate in
compensation plans based upon the performance of Symix. Annual target
bonuses are established by the Symix Compensation Committee for executive
officers and by executive officers for all other Participants. Total
targeted compensation is determined based on average compensation (base
compensation plus bonus) levels for the industry. Under the Company's fiscal
year 1999 plan (the "Plan"), a Participant can earn a bonus based upon the
performance of Symix as reflected by Symix's earnings per share and revenue
achievements in relation to its targeted performance. Bonuses for revenue
achievement are paid quarterly based upon year-to-date performance.
Quarterly eligible components are pro -rated against targeted annual
objectives. Bonuses are based on formulas which provide larger bonuses for
higher earnings per share and/or revenue achievement. The revenues for a
quarter and the annual earnings per share must be at least ninety percent
(90%) of target before any bonuses are earned. Variable components of the
compensation plan are self-correcting to reflect over or under achievement on
a quarterly bonus. A maximum of 200% of the targeted bonus based on earnings
per share and revenue objectives is payable under the compensation plans in
the event actual performance of the Company exceeds 150% of targeted
performance. In addition, individual bonus plans may contain other variable
components related to management objectives, operating margins, and market or
geographic revenue targets. The Company's Chief Executive Officer is not a
participant in the Plan.
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EXHIBIT 10(u) TO SYMIX SYSTEMS, INC. 1998 FORM 10-K
THIRD AMENDMENT TO LOAN AGREEMENT AMONG
SYMIX SYSTEMS, INC. and SYMIX COMPUTER SYSTEMS, INC.
AND
BANK ONE, NA
DATED AS OF MAY 20, 1996
THIS THIRD AMENDMENT ("Third Amendment") is dated as of June 1, 1998,
between SYMIX SYSTEMS, INC., an Ohio corporation ("SSI") and SYMIX COMPUTER
SYSTEMS, INC., an Ohio corporation ("SCSI" and, collectively with SSI, the
"Companies") and BANK ONE, NA, a national association ("Bank One").
WITNESSETH:
WHEREAS, the Companies and Bank One, parties to that certain Loan
Agreement dated as of May 20, 1996, amended by First Amendment dated as of
August 13, 1997 and further amended by Second Amendment dated as of March 4,
1998 (the "Agreement"), have agreed to amend the Agreement on the terms and
conditions hereinafter set forth. Terms not otherwise defined herein are
used as defined in the Agreement as amended hereby.
NOW, THEREFORE, the Companies and Bank One hereby agree as follows:
SECTION 1. AMENDMENT OF THE AGREEMENT. The Agreement is, effective the
date hereof, hereby amended as follows:
1.1. Section 1.1.1 shall be amended and restated in its entirety
as follows:
1.1.1. AMOUNT. Bank One hereby agrees to lend the
Borrowers the maximum aggregate amount of Fifteen Million
Dollars ($15,000,000) in the form of revolving credit loans
under the Revolving Credit Notes in the maximum collective
amount of Fifteen Million Dollars ($15,000,000), minus the
drawn or undrawn principal amount of any letter of credit or
other independent undertaking issued by Bank One for the
account of the Borrowers (the "Credit Commitment").
1.2. Section 1.1.2 shall be amended and restated in its entirety as
follows:
1.1.2. DISBURSEMENTS. The Companies shall execute and
deliver to Bank One the amended and restated revolving
credit note in the form of Exhibit A-4 attached hereto (the
"$13,000,000 Revolving Credit Note") and the Borrowers shall
execute and deliver to Bank One the revolving credit note in
the form of Exhibit A-5 attached hereto (the "$2,000,000
Revolving Credit Note" and, collectively with the
$13,000,000 Revolving Credit Note, the "Revolving Credit
Notes"). Bank One may make disbursements to the Borrowers
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from time to time in principal amounts at any one time
outstanding up to an amount that equals the lesser of (a)
the Credit Commitment or (b) the Borrowing Base. Subject to
the terms and conditions of the Agreement, the Borrowers may
borrow, repay and reborrow loans under the Revolving Credit
Notes from Bank One at any time or from time to time,
without penalty, from the date of the Agreement until the
earlier of (a) March 31, 2001 or (b) the date amounts owing
hereunder or under the Revolving Credit Notes become due and
payable, whether through acceleration or any other cause.
1.3. In Section 1.1.4(a) and (b) and in Section 1.2.4(a) and (b),
the word "month" shall be deleted and the word "quarter" shall be inserted in
its place each time it is used. In addition, throughout Section 1.1.4, the
words "October 31, 1999" shall be deleted and the words "March 31, 2001" shall
be inserted in their place.
1.4. In Section 1.1.4(b), the words "two hundred (200) basis
points" shall be deleted and the words "one hundred seventy-five (175) basis
points" shall be inserted in their place.
1.5. Section 1.1.4(c) shall be amended and restated in its entirety
as follows:
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 and greater than 1.0 to 1.0, the interest rate for the
succeeding calendar quarter shall be adjusted to, as
appropriate, either the Prime Rate minus one-eighth of one
percent (0.125%) or one hundred fifty (150) 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 twenty-five (125) basis points in excess of the
Benchmark Rate.
1.6. In Section 1.1.5, the fraction "three-eighths percent (3/8%)"
shall be deleted and replaced with "one-fourth percent (1/4%)" and the words
"payable quarterly commencing on June 29, 1996" shall be deleted and the words
"payable monthly commencing on June 30, 1998" shall be inserted in their place.
In addition, the following shall be added at the end of the first sentence of
Section 1.1.5: "; PROVIDED, HOWEVER, THAT THE facility fee rate shall be reduced
from one-quarter percent (1/4%) to one-eighth percent (1/8%) if the Companies
usage of the Revolving Credit Note averages more than $7,500,000 for each day
during the month."
1.7. Section 1.2 shall be deleted in its entirety.
1.8. In Section 4.1, the words "Audited Consolidated Financial
Statements" shall be deleted and the words "Audited Consolidated and
Consolidating Financial Statements" shall be inserted in their place.
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1.9. In Section 4.2, the words "Consolidated Financial Statements"
shall be deleted and the words "Consolidated and Consolidating Financial
Statements" shall be inserted in their place.
1.10. The following shall be added to the end of Section 4.3:
The Chief Financial Officer of SSI shall deliver the
Covenant Compliance Certificate to Bank One (in the form
attached hereto as Exhibit 4.3) within 30 days of the end of
each fiscal quarter.
1.11. A new Section 4.18 shall be added to the Agreement as follows:
4.18. ACCOUNTS RECEIVABLE REPORTING. SCSI will furnish to
Bank One as soon as practicable after the end of each
calendar month, and in any event within 10 days thereafter,
a summary Accounts aging report in a format acceptable to
Bank One and a Borrowing Base Certificate for such month.
From time to time, SCSI shall be required to deliver
detailed aging schedules, trial balances, test verifications
of Accounts and other reports reasonably requested by Bank
One.
1.12. A new Section 4.19 shall be added to the Agreement as follows:
4.19. RETENTION OF CERTAIN OFFICERS. The Companies shall
retain the services of Stephen A. Sasser and Lawrence W.
DeLeon, or persons of similar experience and reputation to
serve in such office.
1.13. A new Section 4.20 shall be added to the Agreement as follows:
4.20. PLEDGE OF INTERCOMPANY NOTE. The Companies shall
cause all the Non-Obligor Subsidiaries to execute an
intercompany promissory note that evidences all borrowings
the Non-Obligor Subsidiaries make from the Companies of
funds borrowed under the $13,000,000 Revolving Credit Note,
and the Companies shall deliver such intercompany promissory
note to Bank One as security for the amounts due hereunder
and under the Revolving Credit Notes.
1.14. Section 5.1 shall be amended and restated in its entirety as
follows:
5.1. ENCUMBERING ASSETS. Companies and Subsidiaries shall not
create, incur, assume or permit to continue any mortgage,
pledge, encumbrance, lien or charge of any kind upon or
security interest in any of their or any Subsidiary's
property or assets, whether now owned or hereafter acquired,
except (i) the Pledge Agreement contemplated hereby (as set
forth in Section 6.4 of the Third Amendment to Loan
Agreement dated June 1, 1998),
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(ii) 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. Companies and
Subsidiaries shall not grant a "negative pledge" of assets,
exemplified by the preceding sentence, to any Person other
than Bank One.
1.15. Section 5.2 shall be amended and restated in its entirety as
follows:
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 or Seller financing of
acquisitions 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.
1.16. Section 5.9 shall be amended and restated in its entirety as
follows:
5.9. AMOUNT OF CONSOLIDATED TANGIBLE NET WORTH. Companies
shall not permit Consolidated Tangible Net Worth to be less
than:
(a) $11,500,000 from the date of the Third Amendment
until June 29, 1998;
(b) $13,500,000 from June 30, 1998 until June 29,
1999;
(c) $17,500,000 from June 30, 1999 until June 29,
2000; and
(d) $20,000,000 from and after June 30, 2000.
1.17. Section 5.10 shall be amended and restated in its entirety as
follows:
5.10. LEVERAGE RATIO. Companies shall not permit the
Consolidated Leverage Ratio to exceed the ratio of:
(a) 3.00 to 1.00 from the date of the Third Amendment
to June 29, 1998;
(b) 2.50 to 1.00 from June 30, 1998 until June 29,
1999; and
(c) 2.00 to 1.00 from June 30, 1999 and thereafter.
1.18. Section 5.12 shall be amended and restated in its entirety as
follows:
5.12. CURRENT RATIO. Companies shall not permit the
Consolidated Current Ratio to be less than:
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<PAGE>
(a) 1.25 to 1.00 from the date of the Third Amendment
until December 31, 1998; and
(b) 1.50 to 1.00 thereafter.
1.19 A new Section 5.13 shall be added to the Agreement as follows:
5.13. FUNDING. The Companies shall not use the proceeds
of the Revolving Credit Notes to fund any Non-Obligor
Subsidiary acquisitions or non-operational purposes or
obligations other than operating cash flow of such
Non-Obligor Subsidiary.
1.20. A new Section 5.14 shall be added to the Agreement as follows:
5.14. ROYALTY AGREEMENTS. The form of royalty agreement
in place between the Companies and each of the Subsidiaries
is attached hereto as Exhibit 5.14. The Companies shall not
materially change, amend or modify this royalty agreement or
any term thereof without the prior written consent of Bank
One. After the occurrence of an Event of Default hereunder,
the Companies shall enforce each royalty agreement to
require payment to be made by each Subsidiary, as long as
the Subsidiary has positive net worth, calculated without
intercompany liabilities.
1.21. In Section 8, the definition of "Current Assets," "Current
Liabilities", "Debt Service Coverage Ratio", "Guarantors" and "Revolving Credit
Note" shall be amended and restated in its entirety as follows:
"Current Assets" and "Current Liabilities" shall mean the
current assets and current liabilities of the companies, all
determined in accordance with generally accepted accounting
principles applied on a consistent basis; PROVIDED, HOWEVER,
that "Current Assets" shall exclude all prepaid items and
"Current Liabilities" shall include all deferred revenue and
the current portion of deferred taxes.
"Debt Service Coverage Ratio" shall mean the ratio of (a)
net income after tax plus depreciation and amortization plus
interest expense minus capitalized software minus capital
expenditures to (b) current maturities of long term debt
plus interest expense, all determined in accordance with
generally accepted accounting principles applied on a
consistent basis. The current maturities of long term debt
under the Revolving Credit Note shall be determined on a pro
forma basis assuming that the then-current principal balance
of the Revolving Credit Note would be amortized, on a
straight line basis, over 60 months.
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"Guarantors" shall mean Pritsker Corporation, Symix Computer
Systems (Canada), Inc., Symix (UK) Ltd., Symix Computer
Systems (UK) Ltd., Symix Systems B.V. and Symix Computer
Systems (Mexico) S. De R.L. De C.V.
"Revolving Credit Notes" is defined in Section 1.1.2.
1.22. The following definitions shall be added to Section 8:
"Account" means and includes all accounts (whether or not
earned by performance), contract rights, chattel paper,
instruments, documents, general intangibles (including,
without limitation, tax refunds and tax refund claims) and
all other forms of obligations owing to either of the
Companies, whether secured or unsecured, whether now
existing or hereafter created, by account debtors whose
principal place of business is the United States of America,
and all guaranties and other security therefor, all
merchandise returned to or repossessed by either of the
Companies, and all rights of stoppage in transit and all
other rights and remedies of an unpaid vendor, lienor or
secured party.
"Borrowers" means the Companies, Symix Systems Ontario,
Inc., an Ontario corporation and Visual Applications
Software, Inc., an Ontario corporation.
"Borrowing Base" means the Net Value of Eligible Accounts.
"Borrowing Base Certificate" means a certificate, in the
form required by Bank One, signed by a duly authorized
officer of the Companies, that computes the Borrowing Base,
together with any memo of returns and credits, remittance
report, schedule of Accounts and such other supporting
documents and materials which Bank One, in its sole
discretion, may require to be delivered with such
certificate.
"Eligible Account" means each Account of SCSI which, at the
time of determination, meets all the following
qualifications: (a) SCSI has lawful and absolute title to
such Account, and such Account is not subject to any lien
charge or encumbrance ("Lien") whatsoever; (b) SCSI has the
full unqualified right to grant a Lien in such Account to
Bank One; (c) the Account is evidenced by an invoice issued
to the proper account debtor (a "Customer") and is not
evidenced by any instrument or chattel paper; (d) the
Account arose from the sale of goods or services by SCSI in
the ordinary course of business, which goods or services
have been shipped or delivered to the Customer under such
Account; and such sale was an absolute sale and not on
consignment, approval or a sale-and-return basis;
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(e) no notice of the bankruptcy, receivership,
reorganization or insolvency of the Customer has been
received by SCSI; (f) the Account is a valid, legally
enforceable obligation of the Customer, and is not subject
to any dispute, offset, counterclaim, or other defense on
the part of such Customer; (g) the terms of the Account
require payment no more than 120 days from the date an
invoice is issued and the Account is less than 121 days past
due; (h) the Customer on the Account is not (1) the United
States of America or any foreign government, or any
department, agency or instrumentality thereof (unless SCSI
and Bank One shall have fully complied with the Assignment
of Claims Act of 1940, as amended, or any other applicable
law governing government Accounts, with respect to such
Account), (2) SCSI, or any affiliated company or Subsidiary,
(3) located outside the United States, or (4) indebted to
SCSI in an amount, which when added to all other amounts
then owed to SCSI by any affiliate of such Customer, exceeds
50% of the amount of all then outstanding Eligible Accounts;
(i) SCSI is not indebted to the Customer on the Account (or
any affiliate of such Customer) for any goods provided or
services rendered to SCSI; (j) the Account is not owing by
any Customer with 50% or more of the value of its
outstanding Accounts not qualifying as Eligible Accounts;
(k) the Account is an Account representing all or part of
the sales price of merchandise, insurance and service within
the meaning of Section 3(c)(5) of the Investment Company Act
of 1940, as amended; (l) a purchase of the Account would
constitute a "current transaction" within the meaning of
Section 3(a)(3) of the Securities Act of 1933, as amended;
and (m) the Account is denominated and payable only in
United States dollars in the United States.
"Net Value of Eligible Accounts" means (a) 85% of the lower
of the book value or collectible value of Eligible Accounts,
as reflected in the Borrower's books in accordance with
GAAP, net of all credits, discounts and allowances
(including all unissued credits in the form of a competitive
allowance or otherwise).
"Non-Obligor Subsidiary" means Symix Asia Company Ltd.,
Symix Computer Systems (Hong Kong) Ltd., Symix Computer
Systems (Singapore) Pte. Ltd., Symix Computer Systems
(Australia) Pty. Ltd., Symix Computer Systems (Malaysia) Sdn
Bhd., Symix New Zealand, Ltd., Symix Italia, S.p.A. and any
other Subsidiary created after January 31, 1998 that does
not have a tangible net worth in excess of $250,000.
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SECTION 2. GOVERNING LAW. This Third Amendment shall be governed by
and construed in accordance with the laws of the State of Ohio.
SECTION 3. COSTS AND EXPENSES. All fees, costs or expenses, including
reasonable fees and expenses of outside legal counsel, incurred by Bank One
in connection with either the preparation, administration, amendment,
modification or enforcement of this Third Amendment shall be paid by the
Companies on request, PROVIDED, HOWEVER, that Bank One and its outside legal
counsel will provide the Companies good faith estimates of the cost of legal
services in connection with the amendment or modification of this Third
Amendment.
SECTION 4. COUNTERPARTS. This Third Amendment may be executed in any
number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed shall be deemed to be an
original and all of which when taken together shall constitute one and the
same agreement.
SECTION 5. CONFESSION OF JUDGMENT. Each Company hereby authorizes any
attorney at law to appear for the Company, in an action on this Third
Amendment, at any time after the same becomes due, as herein provided, in any
court of record in or of the State of Ohio, or elsewhere, to waive the
issuing and service of process against the Company and to confess judgment in
favor of the holder of this Third Amendment or the party entitled to the
benefits of this Third Amendment against the Company for the amount that may
be due, with interest at the rate herein mentioned and costs of suit, and to
waive and release all errors in said proceedings and judgment, and all
petitions in error, and right of appeal from the judgment rendered. No
judgment against one Company shall preclude Bank One from taking a confessed
judgment against the other Company.
SECTION 6. CONDITIONS PRECEDENT. Simultaneously with the execution
hereof, Bank One shall receive all of the following, each dated the date
hereof, in form and substance satisfactory to Bank One:
6.1. Certified copies of (a) the resolutions of the board of
directors of each Company evidencing authorization of the execution,
delivery, and performance of this Third Amendment, the Revolving Credit Note,
the other documents set forth in this Section 6 and such other instruments
and agreements contemplated thereby; and (b) all documents evidencing other
necessary corporate action and governmental approvals, if any, with respect
to this Third Amendment or the transactions contemplated hereby.
6.2. The $13,000,000 Revolving Credit Note, and the $2,000,000
Revolving Credit Note, each dated as of the date hereof, issued by the
Companies and the Borrowers, respectively.
6.3. Consents of each of the Guarantors accompanied by (a)
certified copies of the resolutions of each Guarantor's board of directors
evidencing the authorization of the execution, delivery and performance of
such consent and (b) an incumbency certificate of such Guarantor.
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<PAGE>
6.4. The Pledge Agreement between the Companies and Bank One,
dated as of the date hereof.
6.5. The Assignment of Intercompany Note, dated as of the date
hereof.
6.6. A closing fee in the amount of $37,500.
6.7. Such other documents as Bank One may, in its reasonable
discretion, so require.
SECTION 7. BANK ONE CONSENT. Bank One hereby consents to the Companies
entering into the Agreement with Mitsui dated June 5, 1998.
SECTION 8. REAFFIRMATION OF REPRESENTATIONS AND WARRANTIES; NO
DEFAULTS. The Companies hereby expressly acknowledge and confirm that the
representations and warranties of the Company set forth in Section 3 of the
Agreement are true and accurate on this date with the same effect as if made
on and as of this date; that no financial condition or circumstance exists
which would inevitably result in the occurrence of an Event of Default under
Section 6 of the Agreement; and that no event has occurred or no condition
exists which constitutes, or with the running of time or the giving of notice
would constitute an Event of Default under Section 6 of the Agreement.
SECTION 9. REAFFIRMATION OF DOCUMENTS. Except as herein expressly
modified, the parties hereto ratify and confirm all of the terms, conditions,
warranties and covenants of the Agreement, and all security agreements,
pledge agreements, mortgage deeds, assignments, subordination agreements, or
other instruments or documents executed in connection with the Agreement,
including provisions for the payment of the Notes pursuant to the terms of
the Agreement. This Third Amendment does not constitute the extinguishment of
any obligation or indebtedness previously incurred, nor does it in any manner
affect or impair any security interest granted to Bank One, all of such
security interests to be continued in full force and effect until the
indebtedness described herein is fully satisfied.
The Companies have executed this Third Amendment as of the date first
above written.
SYMIX SYSTEMS, INC. SYMIX COMPUTER SYSTEMS, INC.
By /s/ Lawrence W. DeLeon By: /s/ Lawrence W. DeLeon
---------------------------------- ------------------------------------
Name: Lawrence W. DeLeon Name: Lawrence W. DeLeon
Its: Vice President, Chief Financial Its: Vice President, Chief
Officer and Secretary Financial Officer and Secretary
- -------------------------------------------------------------------------------
WARNING - BY SIGNING THIS PAPER YOU GIVE UP YOUR RIGHT TO NOTICE
- -------------------------------------------------------------------------------
41
<PAGE>
- -------------------------------------------------------------------------------
AND COURT TRIAL. IF YOU DO NOT PAY ON TIME A COURT JUDGMENT MAY BE TAKEN
AGAINST YOU WITHOUT YOUR PRIOR KNOWLEDGE AND THE POWERS OF A COURT CAN BE
USED TO COLLECT FROM YOU REGARDLESS OF ANY CLAIMS YOU MAY HAVE AGAINST THE
CREDITOR WHETHER FOR RETURNED GOODS, FAULTY GOODS, FAILURE ON HIS PART TO
COMPLY WITH THE AGREEMENT, OR ANY OTHER CAUSE.
- -------------------------------------------------------------------------------
BANK ONE, NA
By: /s/ Kimberley C. Currie
--------------------------------------
Name: Kimberley C. Currie
Its: Vice President
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<PAGE>
Exhibit A-4
AMENDED AND RESTATED REVOLVING CREDIT NOTE
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
$13,000,000 Columbus, Ohio
June 1, 1998
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
On or before March 31, 2001, for value received, the undersigned, SYMIX
SYSTEMS, INC., an Ohio corporation and SYMIX COMPUTER SYSTEMS, INC., an Ohio
corporation (individually, a "Company" and, collectively, the "Companies")
hereby jointly and severally promise to pay to the order of Bank One, NA, a
national association (the "Bank") or its assigns, as further provided herein,
the principal amount of Thirteen Million Dollars ($13,000,000) or, if such
principal is less, the aggregate unpaid principal amount of all loans made by
the Bank to the Companies pursuant to the Credit Commitment under the
Agreement referred to in Section 1 hereof, together with interest on the
unpaid principal balance from time to time outstanding hereunder until paid
in full at the rates determined in accordance with the provisions of Section
1.1.4 of the Agreement, payable as set forth in the Agreement. Both
principal and interest are payable in federal funds or other immediately
available money of the United States of America at the Main Office of the
Bank, 100 East Broad Street, Columbus, Ohio 43271-0170. This Amended and
Restated Revolving Credit Note amends and restates in its entirety the
Amended and Restated Revolving Credit Note issued to the Bank by the
Companies dated March 4, 1998, the Amended and Restated Revolving Credit Note
issued to the Bank by the Companies dated August 13, 1997 and the Revolving
Credit Note issued to the Bank by the Companies dated May 20, 1996.
SECTION 1. LOAN AGREEMENT. This Amended and Restated Revolving Credit
Note is the $13,000,000 Revolving Credit Note referred to in the Loan
Agreement dated as of May 20, 1996 as amended by First Amendment dated August
13, 1997, Second Amendment dated March 4, 1998 and Third Amendment dated as
of the date hereof (the "Agreement") between the Companies and the Bank, as
the same may be amended, modified or supplemented from time to time, which
Agreement, as amended, is incorporated by reference herein. All capitalized
terms used herein shall have the same meanings as are assigned to such terms
in the Agreement. This Amended and Restated Revolving Credit Note is entitled
to the benefits of and is subject to the terms, conditions and provisions of
the Agreement. The Agreement, among other things, contains provisions for
acceleration of the maturity hereof upon the happening of certain stated
events, and also for repayments and reborrowings on account of the principal
hereof prior to maturity upon the terms, conditions and provisions specified.
SECTION 2. WAIVER OF PRESENTMENT. The Companies hereby waive
presentment, demand, notice, protest, notice of protest, notice of dishonor
and all other demands and notices in connection with the delivery,
acceptance, performance and enforcement of this Note.
SECTION 3. CONFESSION OF JUDGMENT. The Companies hereby authorize any
attorney at law to appear for the Companies, in an action on this Note, at
any time after the same becomes
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due, as herein provided, in any court of record in or of the State of Ohio,
or elsewhere, to waive the issuing and service of process against the
Companies and to confess judgment in favor of the holder of this Note against
the Companies for the amount that may be due, with interest at the rate
herein mentioned and costs of suit, and to waive and release all errors in
said proceedings and judgment, and all petitions in error, and right of
appeal from the judgment rendered. No judgment against one Company shall
impair the Bank's right to receive a confession of judgment against the
remaining Company.
SECTION 4. WAIVER OF JURY TRIAL. THE BANK AND THE COMPANIES HEREBY
VOLUNTARILY, IRREVOCABLY AND UNCONDITIONALLY WAIVE ANY RIGHT TO HAVE A JURY
PARTICIPATE IN RESOLVING ANY DISPUTE, WHETHER SOUNDING IN CONTRACT, TORT, OR
OTHERWISE, BETWEEN THE BANK AND THE COMPANIES ARISING OUT OF, IN CONNECTION
WITH, RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED BETWEEN THE
COMPANIES AND THE BANK IN CONNECTION WITH ANY LOAN DOCUMENT EXECUTED OR
DELIVERED IN CONNECTION HEREWITH OR THEREWITH OR THE TRANSACTIONS RELATED
HERETO OR THERETO. THIS PROVISION IS A MATERIAL INDUCEMENT TO THE BANK TO
ENTER INTO THE FINANCING TRANSACTIONS WITH COMPANIES. IT SHALL NOT IN ANY
WAY AFFECT, WAIVE, LIMIT, AMEND OR MODIFY THE BANK'S ABILITY TO PURSUE ITS
REMEDIES INCLUDING, BUT NOT LIMITED TO, ANY CONFESSION OF JUDGMENT OR
COGNOVIT PROVISION CONTAINED HEREIN OR IN ANY OTHER DOCUMENT RELATED HERETO.
SECTION 5. NATURE OF OBLIGATIONS. The obligations of the Companies
hereunder (the "Obligations") are joint and several and a separate action or
actions may be brought and prosecuted against either Company regardless of
whether any action is brought against the other Company or whether the other
Company is joined in any such action(s). The Companies may be sued together
or either of them may be sued separately without first, contemporaneously or
subsequently, suing the other. The Bank may compromise with either of the
Companies for less than all of the amounts owing hereunder and under the Loan
Documents and release either of the Companies from all further liability to
the Bank for the amounts owing hereunder and under the Agreement all without
impairing the rights of the Bank to demand and collect the balance of the
amounts owing hereunder and under the Agreement from the other Company not so
sued or released. There shall be no duty or obligation of the Bank to
exhaust any remedy in law or in equity against either Company before bringing
suit or instituting proceedings of any kind against the other Company. The
Companies and all sureties, endorsers and guarantors of this Amended and
Restated Revolving Credit Note (a) waive demand, presentment for payment,
notice of nonpayment, protest, notice of protest and all other notices,
filing of suit and diligence in collecting this Amended and Restated
Revolving Credit Note, (b) agree to any release of any party primarily or
secondarily liable thereon, and (c) consent to any extension or postponement
of time of payment of this Amended and Restated Revolving Credit Note and to
any other indulgence with respect hereto without notice thereof to any of
them.
The Obligations hereunder are irrevocable and may only be discharged by
the full and timely payment of the amounts owing by the Companies hereunder
and thereunder and will not be discharged, released, altered or modified by
any other action or omission of any Person, on any
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one or more occasions, including, without limitation (a) the amendment,
modification or waiver of the Agreement or any performance due hereunder or
thereunder, (b) the impairment, grant, exchange, release, surrender or
disposal of any collateral, (c) the release or discharge of a Company's
Obligations, (d) the existence or assertion by either Company of any personal
defense to its obligations including, without limitation, bankruptcy, (e) the
exercise, pursuit or waiver of any right or remedy that the Bank may have at
any time, (f) the Bank's failure to give notice to either Company of the
occurrence of any default in the Company's performance hereunder or under the
Agreement, (g) the taking or omission to take any action hereunder or under
the Agreement, (h) the Bank's release or discharge of any guaranty or
accommodation with respect to the Obligations, (i) the impossibility or
illegality of performance by the Companies or (j) any change in the corporate
organization of the Bank.
If either Company at any time shall pay any sums on account of any
Obligation or take any other action in performance of any Obligation, such
Company shall be subrogated to the rights, powers, privileges and remedies of
the Bank in respect of such Obligation; PROVIDED that all such rights of
subrogation and all claims and indebtedness arising therefrom shall be, and
the Company hereby agrees that the same are, and shall be at all times, in
all respects subordinate and junior to the Banks claims for all the
Obligations, and PROVIDED, FURTHER, that the Company hereby agrees that it
shall not seek to exercise any such rights of subrogation, reimbursement,
exoneration, or indemnity whatsoever or any rights of recourse to any
security for any of the Obligations unless or until all the Obligations shall
have been indefeasibly paid in full. The waivers, representations,
warranties, covenants and agreements contained in this paragraph are for the
benefit of and may be enforced by the Bank and such Company and their
respective successors and assigns, including without limitation any trustee
in bankruptcy of such Company.
45
<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.
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SYMIX SYSTEMS, INC. SYMIX COMPUTER SYSTEMS, INC.
<S> <C>
By /s/ Lawrence W. DeLeon By: /s/ Lawrence W. DeLeon
------------------------------------- ----------------------------------
Name: Lawrence W. DeLeon Name: Lawrence W. DeLeon
Its: Vice President, Chief Financial Its: Vice President, Chief
Officer and Secretary Financial Officer and Secretary
</TABLE>
46
<PAGE>
EXHIBIT A-5
REVOLVING CREDIT NOTE
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
$2,000,000 Columbus, Ohio
June 1, 1998
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
On or before March 31, 2001, for value received, the undersigned, SYMIX
SYSTEMS, INC., an Ohio corporation ("SSI"), SYMIX COMPUTER SYSTEMS, INC., an
Ohio corporation ("SCSI"), SYMIX SYSTEMS ONTARIO, INC., an Ontario
corporation ("SSO") and VISUAL APPLICATIONS SOFTWARE, INC., an Ontario
corporation ("VAS") (individually, a "Borrower" and, collectively, the
"Borrowers") hereby promise to pay to the order of Bank One, NA, a national
association (the "Bank") or its assigns, as further provided herein, the
principal amount of Two Million Dollars ($2,000,000) or, if such principal is
less, the aggregate unpaid principal amount of all loans made by the Bank to
the Borrowers pursuant to the Credit Commitment less any amounts loaned to
SSI and SCSI (the "Companies") under the $13,000,000 Amended and Restated
Revolving Credit Note dated as of the date hereof under the Agreement
referred to in Section 1 hereof, together with interest on the unpaid
principal balance from time to time outstanding hereunder until paid in full
at the rates determined in accordance with the provisions of Section 1.1.4 of
the Agreement, payable as set forth in the Agreement. Both principal and
interest are payable in federal funds or other immediately available money of
the United States of America at the Main Office of the Bank, 100 East Broad
Street, Columbus, Ohio 43271-0170. Proceeds from borrowings under this Note
are to be used solely to fund the operations of SS0 and VAS, whether borrowed
by VAS, SSO or the Companies.
SECTION 1. LOAN AGREEMENT. This Revolving Credit Note is the
$2,000,000 Revolving Credit Note referred to in the Loan Agreement dated as
of May 20, 1996 as amended by First Amendment dated August 13, 1997, Second
Amendment dated March 4, 1998 and Third Amendment dated as of the date hereof
(the "Agreement") between the Companies and the Bank, as the same may be
amended, modified or supplemented from time to time, which Agreement, as
amended, is incorporated by reference herein. All capitalized terms used
herein shall have the same meanings as are assigned to such terms in the
Agreement. This Revolving Credit Note is entitled to the benefits of and is
subject to the terms, conditions and provisions of the Agreement. The
Agreement, among other things, contains provisions for acceleration of the
maturity hereof upon the happening of certain stated events, and also for
repayments and reborrowings on account of the principal hereof prior to
maturity upon the terms, conditions and provisions specified.
SECTION 2. WAIVER OF PRESENTMENT. The Borrowers hereby waive
presentment, demand, notice, protest, notice of protest, notice of dishonor
and all other demands and notices in connection with the delivery,
acceptance, performance and enforcement of this Note.
SECTION 3. CONFESSION OF JUDGMENT. The Borrowers hereby authorize any
attorney at law to appear for the Borrowers, in an action on this 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
47
<PAGE>
the issuing and service of process against the Borrowers and to confess
judgment in favor of the holder of this Note against the Borrowers for the
amount that may be due, with interest at the rate herein mentioned and costs
of suit, and to waive and release all errors in said proceedings and
judgment, and all petitions in error, and right of appeal from the judgment
rendered. No judgment against one Borrower shall impair the Bank's right to
receive a confession of judgment against any of the remaining Borrowers.
SECTION 4. WAIVER OF JURY TRIAL. THE BANK AND THE COMPANIES HEREBY
VOLUNTARILY, IRREVOCABLY AND UNCONDITIONALLY WAIVE ANY RIGHT TO HAVE A JURY
PARTICIPATE IN RESOLVING ANY DISPUTE, WHETHER SOUNDING IN CONTRACT, TORT, OR
OTHERWISE, BETWEEN THE BANK AND THE COMPANIES ARISING OUT OF, IN CONNECTION
WITH, RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED BETWEEN THE
COMPANIES AND THE BANK IN CONNECTION WITH ANY LOAN DOCUMENT EXECUTED OR
DELIVERED IN CONNECTION HEREWITH OR THEREWITH OR THE TRANSACTIONS RELATED
HERETO OR THERETO. THIS PROVISION IS A MATERIAL INDUCEMENT TO THE BANK TO
ENTER INTO THE FINANCING TRANSACTIONS WITH COMPANIES. IT SHALL NOT IN ANY
WAY AFFECT, WAIVE, LIMIT, AMEND OR MODIFY THE BANK'S ABILITY TO PURSUE ITS
REMEDIES INCLUDING, BUT NOT LIMITED TO, ANY CONFESSION OF JUDGMENT OR
COGNOVIT PROVISION CONTAINED HEREIN OR IN ANY OTHER DOCUMENT RELATED HERETO.
SECTION 5. NATURE OF OBLIGATIONS. The obligations of the Borrowers
hereunder (the "Obligations") are joint and several and a separate action or
actions may be brought and prosecuted against any Borrower regardless of
whether any action is brought against any other Borrower or whether the other
Borrower is joined in any such action(s). The Borrowers may be sued together
or either of them may be sued separately without first, contemporaneously or
subsequently, suing the other. The Bank may compromise with any of the
Borrowers for less than all of the amounts owing hereunder and under the Loan
Documents and release any of the Borrowers from all further liability to the
Bank for the amounts owing hereunder and under the Agreement all without
impairing the rights of the Bank to demand and collect the balance of the
amounts owing hereunder and under the Agreement from any other Borrower not
so sued or released. There shall be no duty or obligation of the Bank to
exhaust any remedy in law or in equity against any Borrower before bringing
suit or instituting proceedings of any kind against any other Borrower. The
Borrowers and all sureties, endorsers and guarantors of this Revolving Credit
Note (a) waive demand, presentment for payment, notice of nonpayment,
protest, notice of protest and all other notices, filing of suit and
diligence in collecting this Revolving Credit Note, (b) agree to any release
of any party primarily or secondarily liable thereon, and (c) consent to any
extension or postponement of time of payment of this Revolving Credit Note
and to any other indulgence with respect hereto without notice thereof to any
of them.
The Obligations hereunder are irrevocable and may only be discharged by
the full and timely payment of the amounts owing by the Borrowers hereunder
and thereunder and will not be discharged, released, altered or modified by
any other action or omission of any Person, on any one or more occasions,
including, without limitation (a) the amendment, modification or waiver of
the Agreement or any performance due hereunder or thereunder, (b) the
impairment, grant,
48
<PAGE>
exchange, release, surrender or disposal of any collateral, (c) the release
or discharge of a Borrower's Obligations, (d) the existence or assertion by
any Borrower of any personal defense to its obligations including, without
limitation, bankruptcy, (e) the exercise, pursuit or waiver of any right or
remedy that the Bank may have at any time, (f) the Bank's failure to give
notice to any Borrower of the occurrence of any default in any Borrower's
performance hereunder or under the Agreement, (g) the taking or omission to
take any action hereunder or under the Agreement, (h) the Bank's release or
discharge of any guaranty or accommodation with respect to the Obligations,
(i) the impossibility or illegality of performance by the Borrowers or (j)
any change in the corporate organization of the Bank.
If any Borrower at any time shall pay any sums on account of any
Obligation or take any other action in performance of any Obligation, such
Borrower shall be subrogated to the rights, powers, privileges and remedies
of the Bank in respect of such Obligation; PROVIDED that all such rights of
subrogation and all claims and indebtedness arising therefrom shall be, and
the Borrower hereby agrees that the same are, and shall be at all times, in
all respects subordinate and junior to the Banks claims for all the
Obligations, and PROVIDED, FURTHER, that the Borrower hereby agrees that it
shall not seek to exercise any such rights of subrogation, reimbursement,
exoneration, or indemnity whatsoever or any rights of recourse to any
security for any of the Obligations unless or until all the Obligations shall
have been indefeasibly paid in full. The waivers, representations,
warranties, covenants and agreements contained in this paragraph are for the
benefit of and may be enforced by the Bank and such Borrower and their
respective successors and assigns, including without limitation any trustee
in bankruptcy of such Borrower.
49
<PAGE>
The undersigned executed this Revolving Credit Note as of the day and
year first set forth above.
<TABLE>
<CAPTION>
SYMIX SYSTEMS ONTARIO, INC. VISUAL APPLICATIONS SOFTWARE, INC.
<S> <C>
By By:
------------------------------- ------------------------------
Name: Lawrence W. DeLeon Name: Lawrence W. DeLeon
Its: Vice President, Chief Financial Its: Vice President, Chief Financial
Officer and Secretary Officer and Secretary
</TABLE>
- -------------------------------------------------------------------------------
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.
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SYMIX SYSTEMS, INC. SYMIX COMPUTER SYSTEMS, INC.
<S> <C>
By By:
------------------------------- ------------------------------
Name: Lawrence W. DeLeon Name: Lawrence W. DeLeon
Its: Vice President, Chief Financial Its: Vice President, Chief Financial
Officer and Secretary Officer and Secretary
</TABLE>
50
<PAGE>
Exhibit 4.3
[Compliance Certificate
TO FOLLOW]
51
<PAGE>
Exhibit 5.14
[Form of Royalty Agreement
TO FOLLOW]
52
<PAGE>
EXHIBIT 21 TO SYMIX SYSTEMS, INC. 1998 FORM 10-K
SUBSIDIARIES OF REGISTRANT
SUBSIDIARIES OF REGISTRANT
<TABLE>
<CAPTION>
NAME JURISDICTION % OWNERSHIP
<S> <C> <C>
Symix Computer Systems, Inc. Ohio 100
Symix Systems, B.V. The Netherlands 100
Symix France, SA France 100
<CAPTION>
SUBSIDIARIES OF SYMIX COMPUTER SYSTEMS, INC.
Symix Systems (Ontario) Inc. Canada 100
Symix Computer Systems Canada 100
(Canada) Inc.
Symix Computer Systems (UK) The United Kingdom 100
Ltd.
Symix Computer Systems Singapore 86.7
(Singapore) Pte. Ltd.
Symix Computer Systems Mexico 100
(Mexico) S. De R.L. De C.V.
53
<PAGE>
<CAPTION>
SUBSIDIARIES OF SYMIX SYSTEMS, B.V.
<S> <C> <C>
Symix (U.K.) Ltd. The United Kingdom 100
Symix Systems GmbH Germany 100
Symix Italia S.r.l. Italy 95*
- -------------
*Remaining 5% owned by Symix
Systems, Inc.
<CAPTION>
SUBSIDIARIES OF SYMIX SYSTEMS (ONTARIO) INC.
Visual Applications Software, Canada 100
Inc.
<CAPTION>
SUBSIDIARIES OF SYMIX SYSTEMS (SINGAPORE) PTE. LTD.
Symix Asia Company Ltd. Thailand 100
Symix Computer Systems (Hong Hong Kong 100
Kong) Ltd.
Symix Computer Systems Australia 100
(Australia) Pty. Ltd.
Symix New Zealand Ltd. New Zealand 100
Symix Computer Systems Malaysia 100
(Malaysia) Sdn Bhd.
54
</TABLE>
<PAGE>
EXHIBIT 23 TO SYMIX SYSTEMS, INC. 1998 FORM 10-K
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration Statements
(Forms S-8 No. 33-40546, No. 33-45416, No. 33-73014, No. 33-73016, No. 333-660,
No. 333-10631 and No. 333-10633 and Form S-3 No. 333-23385) of Symix Systems,
Inc. dated June 25, 1991, January 30, 1992, December 16, 1993, December 16,
1993, January 29, 1996, August 22, 1996, August 22, 1996 and March 26, 1997,
respectively, of our report dated July 21, 1998, with respect to the
consolidated financial statements and the financial statement schedule included
in this Annual Report (Form 10-K) of Symix Systems, Inc.
Ernst & Young LLP
Columbus, Ohio
September 28, 1998
56
<PAGE>
EXHIBIT 24 TO SYMIX SYSTEMS, INC. 1998 FORM 10-K
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned officer and/or
director of Symix Systems, Inc., an Ohio corporation which is about to file
with the Securities and Exchange Commission, under the provisions of the
Securities Exchange Act of 1934, as amended, an Annual Report on Form 10-K
for the fiscal year ended June 30, 1998, hereby constitutes and appoints
Stephen A. Sasser and Lawrence W. DeLeon, and each of them, his true and
lawful attorneys-in-fact and agents with full power of substitution and
resubstitution, for him and in his name, place and stead in any and all
capacities, to sign such Annual Report on Form 10-K, and to file the same
with all exhibits and financial statements and schedules thereto, and other
documents in connection therewith, including any amendment thereto, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact and
agents or any of them or their or his substitute or substitutes may lawfully
do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunder set his hand this
28th day of September, 1998.
/s/ Lawrence J. Fox
----------------------------------------
Lawrence J. Fox
Chairman of the Board, Chief Executive
Officer and Director
56
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned officer and/or
director of Symix Systems, Inc., an Ohio corporation which is about to file
with the Securities and Exchange Commission, under the provisions of the
Securities Exchange Act of 1934, as amended, an Annual Report on Form 10-K
for the fiscal year ended June 30, 1998, hereby constitutes and appoints
Lawrence J. Fox and Lawrence W. DeLeon, and each of them, his true and lawful
attorneys-in-fact and agents with full power of substitution and
resubstitution, for him and in his name, place and stead in any and all
capacities, to sign such Annual Report on Form 10-K, and to file the same
with all exhibits and financial statements and schedules thereto, and other
documents in connection therewith, including any amendment thereto, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact and
agents or any of them or their or his substitute or substitutes may lawfully
do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunder set his hand this
20th day of September, 1998.
/s/ Stephen A. Sasser
-----------------------------------
Stephen A. Sasser
President, Chief Operating Officer
and Director
57
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned officer and/or
director of Symix Systems, Inc., an Ohio corporation which is about to file with
the Securities and Exchange Commission, under the provisions of the Securities
Exchange Act of 1934, as amended, an Annual Report on Form 10-K for the fiscal
year ended June 30, 1998, hereby constitutes and appoints Lawrence J. Fox,
Stephen A. Sasser and Lawrence W. DeLeon, and each of them, his true and lawful
attorneys-in-fact and agents with full power of substitution and resubstitution,
for him and in his name, place and stead in any and all capacities, to sign such
Annual Report on Form 10-K, and to file the same with all exhibits and financial
statements and schedules thereto, and other documents in connection therewith,
including any amendment thereto, with the Securities and Exchange Commission,
granting unto said attorneys-in-fact and agents, and each of them, full power
and authority to do and perform each and every act and thing requisite and
necessary to be done in and about the premises, as fully to all intents and
purposes as he might or could do in person, hereby ratifying and confirming all
that said attorneys-in-fact and agents or any of them or their or his substitute
or substitutes may lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunder set his hand this
18th day of September, 1998.
/s/ John T. Tait
----------------------------------
John T. Tait
Director
58
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned officer and/or
director of Symix Systems, Inc., an Ohio corporation which is about to file
with the Securities and Exchange Commission, under the provisions of the
Securities Exchange Act of 1934, as amended, an Annual Report on Form 10-K
for the fiscal year ended June 30, 1998, hereby constitutes and appoints
Lawrence J. Fox, Stephen A. Sasser and Lawrence W. DeLeon, and each of them,
his true and lawful attorneys-in-fact and agents with full power of
substitution and resubstitution, for him and in his name, place and stead in
any and all capacities, to sign such Annual Report on Form 10-K, and to file
the same with all exhibits and financial statements and schedules thereto,
and other documents in connection therewith, including any amendment thereto,
with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents, and each of them, full power and authority to
do and perform each and every act and thing requisite and necessary to be
done in and about the premises, as fully to all intents and purposes as he
might or could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents or any of them or their or his substitute or
substitutes may lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunder set his hand this
18th day of September, 1998.
/s/ Duke W. Thomas
----------------------------------
Duke W. Thomas
Director
59
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned officer and/or
director of Symix Systems, Inc., an Ohio corporation which is about to file
with the Securities and Exchange Commission, under the provisions of the
Securities Exchange Act of 1934, as amended, an Annual Report on Form 10-K
for the fiscal year ended June 30, 1998, hereby constitutes and appoints
Lawrence J. Fox, Stephen A. Sasser and Lawrence W. DeLeon, and each of them,
his true and lawful attorneys-in-fact and agents with full power of
substitution and resubstitution, for him and in his name, place and stead in
any and all capacities, to sign such Annual Report on Form 10-K, and to file
the same with all exhibits and financial statements and schedules thereto,
and other documents in connection therewith, including any amendment thereto,
with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents, and each of them, full power and authority to
do and perform each and every act and thing requisite and necessary to be
done in and about the premises, as fully to all intents and purposes as he
might or could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents or any of them or their or his substitute or
substitutes may lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunder set his hand this
28th day of September, 1998.
/s/ Larry L. Liebert
----------------------------------
Larry L. Liebert
Director
60
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned officer and/or
director of Symix Systems, Inc., an Ohio corporation which is about to file
with the Securities and Exchange Commission, under the provisions of the
Securities Exchange Act of 1934, as amended, an Annual Report on Form 10-K
for the fiscal year ended June 30, 1998, hereby constitutes and appoints
Lawrence J. Fox, Stephen A. Sasser and Lawrence W. DeLeon, and each of them,
his true and lawful attorneys-in-fact and agents with full power of
substitution and resubstitution, for him and in his name, place and stead in
any and all capacities, to sign such Annual Report on Form 10-K, and to file
the same with all exhibits and financial statements and schedules thereto,
and other documents in connection therewith, including any amendment thereto,
with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents, and each of them, full power and authority to
do and perform each and every act and thing requisite and necessary to be
done in and about the premises, as fully to all intents and purposes as he
might or could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents or any of them or their or his substitute or
substitutes may lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunder set his hand this
17th day of September, 1998.
/s/ James A. Rutherford
----------------------------------
James A. Rutherford
Director
61
<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
ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED JUNE 30, 1998 FOR SYMIX SYSTEMS,
INC. AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JUN-30-1998
<PERIOD-START> JUL-01-1997
<PERIOD-END> JUN-30-1998
<CASH> 6,115
<SECURITIES> 0
<RECEIVABLES> 33,988
<ALLOWANCES> 1,063
<INVENTORY> 489
<CURRENT-ASSETS> 41,875
<PP&E> 15,715
<DEPRECIATION> 9,216
<TOTAL-ASSETS> 66,382
<CURRENT-LIABILITIES> 28,300
<BONDS> 0
0
1,031
<COMMON> 68
<OTHER-SE> 30,202
<TOTAL-LIABILITY-AND-EQUITY> 66,382
<SALES> 58,498
<TOTAL-REVENUES> 97,597
<CGS> 14,746
<TOTAL-COSTS> 35,701
<OTHER-EXPENSES> 59,878
<LOSS-PROVISION> 353
<INTEREST-EXPENSE> 374
<INCOME-PRETAX> 1,840
<INCOME-TAX> 3,196
<INCOME-CONTINUING> (1,356)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,356)
<EPS-PRIMARY> (0.21)
<EPS-DILUTED> (0.21)
</TABLE>
