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           EXHIBIT 4(h) TO FRONTSTEP, INC. ANNUAL REPORT ON FORM 10-K
































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                                                               EXECUTION VERSION



                          REGISTRATION RIGHTS AGREEMENT

                                 by and between

                                 FRONTSTEP, INC.

                                       and

                         THE INITIAL HOLDER SPECIFIED ON
                           THE SIGNATURE PAGES HEREOF


                            Dated as of July 17, 2001







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                  REGISTRATION RIGHTS AGREEMENT (the "AGREEMENT") dated as of
July 17, 2001, by and between Frontstep, Inc. an Ohio corporation (the
"COMPANY"), and the Initial Holder specified on the signature pages to this
Agreement.

                              W I T N E S S E T H :
                               - - - - - - - - - -

                  WHEREAS, in connection with the Loan and Security Agreement
dated as of the date hereof, by and among the Company, certain subsidiaries of
the Company, the Lender parties thereto and Foothill Capital Corporation, as the
Arranger and Administrative Agent (as such agreement is amended or otherwise
modified from time to time, the "LOAN AGREEMENT"), the Company has agreed, upon
the terms and subject to the conditions of the Loan Agreement, to issue a
warrant (the "WARRANT") to the Initial Holder dated as of the date hereof
exercisable for up to 550,000 shares (subject to adjustment pursuant to the
terms of the Warrant), of the Company's common shares, no par value (the "COMMON
SHARES"), pursuant to the terms of the Loan Agreement (the Common Shares issued
or issuable upon exercise of the Warrant are hereinafter referred to as the
"WARRANT SHARES"); and

                  WHEREAS, to induce the Initial Holder to enter into the Loan
Agreement and to make the loans thereunder, the Company has agreed to provide
certain registration rights under the Securities Act of 1933, as amended, and
the rules and regulations thereunder, or any similar successor statute
(collectively, the "SECURITIES ACT"), and applicable state securities laws;

                  NOW, THEREFORE, in consideration of the premises and the
mutual covenants contained herein and in order to induce the Initial Holder to
enter into the Loan Agreement and to make the loans thereunder, the Company and
the Initial Holder hereby agree as follows:

                  1. DEFINITIONS. As used in this Agreement, the following terms
shall have the following meanings:

                  "AFFILIATE" shall mean (i) with respect to any Person, any
other Person directly or indirectly controlling or controlled by or under direct
or indirect common control with such Person, and (ii) with respect to any
individual, shall also mean the spouse, sibling, child, step-child, grandchild,
niece, nephew or parent of such Person, or the spouse thereof.

                  "COMMON SHARES" shall have the meaning set forth in the
preamble.

                  "COMPANY" shall have the meaning set forth in the preamble.

                  "EXCHANGE ACT" shall mean the Securities Exchange Act of 1934,
as amended from time to time, and the rules and regulations thereunder, or any
successor statute.

                  "HOLDERS" shall mean the Initial Holder for so long as it is
the registered owner of any Registrable Securities and such of its respective
heirs, successors and permitted assigns (including any permitted transferees of
Registrable Securities) who acquire or are otherwise the transferee of
Registrable Securities, directly or indirectly, from such Initial Holder (or any
subsequent Holder), for so long as such heirs, successors and permitted assigns
are the registered owner of any Registrable Securities. For purposes of this
Agreement, a Person will be deemed to


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be a Holder whenever such Person holds an option to purchase, or a security
convertible into or exercisable or exchangeable for, Registrable Securities,
whether or not such purchase, conversion, exercise or exchange has actually been
effected and disregarding any legal restrictions upon the exercise of such
rights. Registrable Securities issuable upon exercise of an option or upon
conversion, exchange or exercise of another security shall be deemed outstanding
for the purposes of this Agreement.

                  "HOLDERS' COUNSEL" shall mean one firm of counsel (per
registration) to the Holders of Registrable Securities participating in such
registration, which counsel shall be selected by the Majority Holders of the
Registration.

                  "INCIDENTAL REGISTRATION" shall mean a registration required
to be effected by the Company pursuant to Section 2.2.

                  "INCIDENTAL REGISTRATION STATEMENT" shall mean a registration
statement of the Company, which covers the Registrable Securities requested to
be included therein pursuant to the provisions of Section 2.2 and all amendments
and supplements to such registration statement, including post-effective
amendments, in each case including the Prospectus contained therein, all
exhibits thereto and all material incorporated by reference (or deemed to be
incorporated by reference) therein.

                  "INITIAL HOLDER" shall mean the Person specified as such on
the signature pages to this Agreement on the date hereof.

                  "LOAN AGREEMENT" shall have the meaning set forth in the
preamble.

                  "MAJORITY HOLDERS" shall mean one or more Holders of
Registrable Securities who would hold a majority of the Registrable Securities
then outstanding.

                  "MAJORITY HOLDERS OF THE REGISTRATION" shall mean, with
respect to a particular registration, one or more Holders of Registrable
Securities who would hold a majority of the Registrable Securities to be
included in such registration.

                  "MANDATORY REGISTRATION" shall mean a registration required to
be effected by the Company pursuant to Section 2.1.

                  "MANDATORY REGISTRATION STATEMENT" shall mean a registration
statement of the Company which covers the Registrable Securities requested to be
included therein pursuant to the provisions of Section 2.1 and all amendments
and supplements to such registration statement, including post-effective
amendments, in each case including the Prospectus contained therein, all
exhibits thereto and all material incorporated by reference (or deemed to be
incorporated by reference) therein.

                  "NASD" shall mean the National Association of Securities
Dealers, Inc.

                  "PERSON" shall mean any individual, firm, partnership,
corporation, trust, joint venture, association, joint stock company, limited
liability company, unincorporated organization



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or any other entity or organization, including a government or agency or
political subdivision thereof, and shall include any successor (by merger or
otherwise) of such entity.

                  "PROSPECTUS" shall mean the prospectus included in a
Registration Statement (including, without limitation, any preliminary
prospectus and any prospectus that includes any information previously omitted
from a prospectus filed as part of an effective registration statement in
reliance upon Rule 430A promulgated under the Securities Act) and any such
Prospectus as amended or supplemented by any prospectus supplement, and all
other amendments and supplements to such Prospectus, including post-effective
amendments, and in each case including all material incorporated by reference
(or deemed to be incorporated by reference) therein.

                  "REGISTRABLE SECURITIES" shall mean (i) any Warrant Shares
issued upon exercise of the Warrant, (ii) any shares of Common Stock issued to
or acquired by any Holder or its Affiliates after the date hereof; and (iii) any
other securities of the Company (or any successor or assign of the Company,
whether by merger, consolidation, sale of assets or otherwise) which may be
issued with respect to, in exchange for, or in substitution of, Registrable
Securities referenced in clauses (i) and (ii) above by reason of any dividend or
stock split, combination of shares, merger, consolidation, recapitalization,
reclassification, reorganization, sale of assets or similar transaction. As to
any particular Registrable Securities, such securities shall cease to be
Registrable Securities when (A) a registration statement with respect to the
sale of such securities shall have been declared effective under the Securities
Act and either (i) the registration statement with respect thereto has remained
continuously effective for one year from the time the Warrant Shares are issued
pursuant to the Warrant (PROVIDED, that this clause (A)(i) shall not apply to a
registration statement that is a shelf registration) or (ii) such securities
shall have been disposed of in accordance with such registration statement, (B)
such securities are sold pursuant to Rule 144 (or any similar provisions then in
force) under the Securities Act, (C) such securities have been otherwise
transferred, a new certificate or other evidence of ownership for them not
bearing the legend restricting further transfer shall have been delivered by the
Company and subsequent public distribution of them shall not require
registration under the Securities Act, or (D) such securities shall have ceased
to be outstanding.

                  "REGISTRATION EXPENSES" shall mean any and all reasonable out
of pocket expenses incident to performance of or compliance with this Agreement
by the Company and its subsidiaries, including, without limitation (i) all SEC,
stock exchange, NASD and other registration, listing and filing fees, (ii) all
fees and expenses incurred in connection with compliance with state securities
or blue sky laws and compliance with the rules of any stock exchange (including
fees and disbursements of counsel in connection with such compliance and the
preparation of a blue sky memorandum and legal investment survey), (iii) all
printers' fees and costs incurred in printing, distributing, mailing and
delivering any Registration Statement, any Prospectus and any other document
relating to the performance of or compliance with this Agreement, (iv) the fees
and disbursements of counsel for the Company, (v) the reasonable fees and
disbursements of Holders' Counsel, (vi) the fees and disbursements of all
independent public accountants (including the expenses of any audit and/or "cold
comfort" letters) and the fees and expenses of other Persons, including experts,
retained by the Company, (vii) the expenses incurred in connection with making
road show presentations and holding meetings with potential


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investors to facilitate the distribution and sale of Registrable Securities,
(viii) any fees and disbursements of underwriters customarily paid by issuers or
sellers of securities, (ix) premiums and other costs of policies of insurance
against liabilities arising out of the public offering of the Registrable
Securities being registered, and (x) all internal expenses of the Company
(including all salaries and expenses of officers and employees performing legal
or accounting duties); PROVIDED, HOWEVER, Registration Expenses shall not
include discounts and commissions payable to underwriters, selling brokers,
dealer managers or other similar Persons engaged in the distribution of any of
the Registrable Securities; and PROVIDED FURTHER, that in any case where
Registration Expenses are not to be borne by the Company, such expenses shall
not include salaries of Company personnel or general overhead expenses of the
Company, auditing fees, premiums or other expenses relating to liability
insurance required by underwriters of the Company or other expenses for the
preparation of financial statements or other data normally prepared by the
Company in the ordinary course of its business or which the Company would have
incurred in any event; PROVIDED, FURTHER, that in the event the Company shall
not register any securities with respect to which it had given written notice of
its intention to register to Holders, notwithstanding anything to the contrary
in the foregoing, all of the costs incurred by the Holders in connection with
such registration shall be deemed to be Registration Expenses.

                  "REGISTRATION STATEMENT" shall mean any registration statement
of the Company which covers any Registrable Securities and all amendments and
supplements to any such Registration Statement, including post-effective
amendments, in each case including the Prospectus contained therein, all
exhibits thereto and all material incorporated by reference (or deemed to be
incorporated by reference) therein.

                  "RIGHTS AGREEMENT" means the Investors' Rights Agreement dated
May 10, 2000 among the Company, Morgan Stanley Dean Witter Venture Partners IV,
L.P. and the several other investors identified on the signature pages thereto.

                  "RULE 144" means Rule 144 issued by the SEC under the
Securities Act, or any subsequent rule pertaining to the disposition of
securities without registration.

                  "RULE 144A" means Rule 144A issued by the SEC under the
Securities Act, or any subsequent rule pertaining to private resales of
securities to institutions.

                  "SEC" shall mean the Securities and Exchange Commission, or
any successor agency having jurisdiction to enforce the Securities Act.

                  "SECURITIES ACT" shall have the meaning set forth in the
preamble.

                  "UNDERWRITERS" shall mean the underwriters, if any, of the
offering being registered under the Securities Act.

                  "UNDERWRITTEN OFFERING" shall mean a sale of securities of the
Company to an Underwriter or Underwriters for reoffering to the public.

                  "WARRANT" shall have the meaning set forth in the preamble.


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                  "WARRANT SHARES" shall have the meaning set forth in the
preamble.

         Capitalized terms used herein and not otherwise defined herein shall
have the respective meanings set forth in the Loan Agreement.

                  2.       REGISTRATION UNDER THE SECURITIES ACT.

                  2.1      REGISTRATION.

                           (a) MANDATORY REGISTRATION. The Company shall
prepare, and, as soon as practicable but in no event later than 90 days after
the Closing Date (as defined in the Loan Agreement) (the "Filing Deadline"),
file with the SEC a Registration Statement on Form S-3 covering the resale of
all of the Registrable Securities. In the event that Form S-3 is unavailable for
such a registration, the Company shall use such other form as is available for
such a registration, subject to the provisions of Section 2.1(c). The
Registration Statement prepared pursuant hereto shall register for resale at
least that number of shares of Common Stock equal to the product of (x) 1.25 and
(y) the number of Registrable Securities as of the trading day immediately
preceding the date the Registration Statement is initially filed with the SEC,
subject to adjustment as provided in Section 2(d). The Company shall use its
best efforts to have the Registration Statement declared effective by the SEC as
soon as practicable, but in no event later than the date which is 180 days after
the Closing Date (the "Effectiveness Deadline).

                           (b) ALLOCATION OF REGISTRABLE SECURITIES. The initial
number of Registrable Securities included in any Registration Statement and each
increase in the number of Registrable Securities included therein shall be
allocated pro rata among the Holders based on the number of Registrable
Securities held by each Holder at the time the Registration Statement covering
such initial number of Registrable Securities or increase thereof is declared
effective by the SEC. In the event that a Holder sells or otherwise transfers
any of such Holder's Registrable Securities, each transferee shall be allocated
a pro rata portion of the then remaining number of Registrable Securities
included in such Registration Statement for such transferor. Any shares of
Common Stock included in a Registration Statement and which remain allocated to
any Person which ceases to hold any Registrable Securities covered by such
Registration Statement shall be allocated to the remaining Holders, pro rata
based on the number of Registrable Securities then held by such Holders which
are covered by such Registration Statement.

                           (c) ELIGIBILITY FOR FORM S-3. The Company represents,
warrants and covenants that as of the date hereof it meets the requirements for
the use of Form S-3 for registration of the resale by the Holders of the
Registrable Securities and thereafter shall use its best efforts to remain
eligible to use Form S-3, and the Company has filed and shall use its best
efforts to timely file all reports required to be filed by the Company with the
SEC in a timely manner so as to obtain and maintain such eligibility for the use
of Form S-3. In the event that Form S-3 is not available for the registration of
the resale of Registrable Securities hereunder, the Company shall (i) register
the resale of the Registrable Securities on another appropriate form reasonably
acceptable to the Majority Holders and (ii) undertake to register the
Registrable Securities on Form S-3 as soon as such form is available, provided
that the Company shall maintain the effectiveness of the Registration Statement
then in effect until such time as a


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Registration Statement on Form S-3 covering the Registrable Securities has been
declared effective by the SEC.

                           (d) SUFFICIENT NUMBER OF SHARES REGISTERED. In the
event the number of shares available under a Registration Statement filed
pursuant to Section 2.1(a) is insufficient to cover all of the Registrable
Securities required to be covered by such Registration Statement or a Holder's
allocated portion of the Registrable Securities pursuant to Section 2.1(b), the
Company shall amend the Registration Statement, or file a new Registration
Statement (on the short form available therefor, if applicable), or both, so as
to cover at least 125% of the number of such Registrable Securities as of the
trading day immediately preceding the date of the filing of such amendment or
new Registration Statement, in each case, as soon as practicable, but in any
event not later than thirty (30) days after the necessity therefor arises. The
Company shall use it best efforts to cause such amendment and/or new
Registration Statement to become effective as soon as practicable following the
filing thereof. For purposes of the foregoing provision, the number of shares
available under a Registration Statement shall be deemed "insufficient to cover
all of the Registrable Securities" if at any time the number of Registrable
Securities covered by such Registration Statement is greater than the quotient
determined by dividing (i) number of shares of Common Stock available for resale
under such Registration Statement by (ii) 1.25. The calculation set forth in the
foregoing sentence shall be made without regard to any limitations on the
exercise of the Warrants and such calculation shall assume that the Warrants are
then exercisable into shares of Common Stock at the then prevailing Purchase
Price (as defined in the Warrants).

                           (e) UNDERWRITING; SELECTION OF UNDERWRITERS.
Notwithstanding anything to the contrary contained in Section 2.1(a), if the
Majority Holders of the Registration effected under Section 2.1(a) so elect, the
offering of such Registrable Securities pursuant to such Mandatory Registration
shall be in the form of a firm commitment Underwritten Offering and such
Majority Holders of the Registration may require that all Persons (including
other Holders) participating in such registration sell their Registrable
Securities to the Underwriters at the same price and on the same terms of
underwriting applicable to the Majority Holders of the Registration. If any
Registration effected under Section 2.1(a) involves an Underwritten Offering,
the sole or managing Underwriters and any additional investment bankers and
managers to be used in connection with such registration shall be selected by
the Majority Holders of the Registration, subject to the approval of the Company
(such approval not to be unreasonably withheld).

                           (f) EFFECTIVE REGISTRATION STATEMENT; SUSPENSION. A
Registration Statement effected pursuant to Section 2.1(a) shall not be deemed
to have become effective (and the related registration will not be deemed to
have been effected) (i) unless it has been declared effective by the SEC and
remains effective in compliance with the provisions of the Securities Act until
the earlier of (A) the disposition of all Registrable Securities covered by such
Mandatory Registration Statement or (B) the five and one-half year anniversary
of the effective date of the Mandatory Registration Statement, (ii) if the
offering of any Registrable Securities pursuant to such Mandatory Registration
Statement is interfered with by any stop order, injunction or other order or
requirement of the SEC or any other governmental agency or court, or (iii) if,
in the case of an Underwritten Offering, the conditions to closing specified in
an


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underwriting agreement to which the Company is a party are not satisfied
(other than by the sole reason of any breach or failure by the Holders of
Registrable Securities) and are not otherwise waived.

                           (g) REGISTRATION OF OTHER SECURITIES. Whenever the
Company shall effect a Registration pursuant to Section 2.1(a), no securities
other than the Registrable Securities shall be covered by such registration
unless the Majority Holders of the Registration shall have consented in writing
to the inclusion of such other securities.

                           (h) OTHER REGISTRATIONS. During the period (i)
beginning on the Closing Date and (ii) ending on the date that is 90 days after
the date that a Registration Statement filed pursuant to Section 2.1(a) has been
declared effective by the SEC, the Company shall not, without the consent of the
Majority Holders of the Registration, file a registration statement pertaining
to any other securities of the Company except for a Registration Statement
covering only the sale of Common Shares issued under employee benefit plans or
outside director stock option plans.

                           (i) The Company shall use its best efforts to keep
the Registration Statement filed pursuant to Section 2.1(a) continuously
effective through the date on which all of the Registrable Securities covered by
such Shelf Registration are sold in accordance with the plan of distribution
contained therein.

                  2.2      INCIDENTAL REGISTRATION.

                  (a)      RIGHT TO INCLUDE REGISTRABLE SECURITIES. So long as
the Company is no longer obligated to keep effective the Registration Statement
filed with the SEC pursuant to Section 2.1, if the Company at any time or from
time to time proposes to register any of its securities under the Securities Act
(other than in a registration on Form S-4 or S-8 or any successor form to such
forms and other than pursuant to Section 2.1 or 2.3) whether or not pursuant to
registration rights granted to other holders of its securities and whether or
not for sale for its own account, the Company shall deliver prompt written
notice (which notice shall be given at least 30 days prior to such proposed
registration) to all Holders of Registrable Securities of its intention to
undertake such registration, describing in reasonable detail the proposed
registration and distribution (including the anticipated range of the proposed
offering price, the class and number of securities proposed to be registered and
the distribution arrangements) and of such Holders' right to participate in such
registration under this Section 2.2 as hereinafter provided. Subject to the
other provisions of this paragraph (a) and Section 2.2(b), upon the written
request of any Holder made within 30 days after the receipt of such written
notice (which request shall specify the amount of Registrable Securities to be
registered and the intended method of disposition thereof), the Company shall
use its best efforts to cause all Registrable Securities as requested by Holders
to be covered by such Registration Statement (an "Incidental Registration"), to
the extent requisite to permit the disposition (in accordance with the intended
methods thereof as aforesaid) of the Registrable Securities so to be registered,
by inclusion of such Registrable Securities in the Registration Statement which
covers the securities which the Company proposes to register and shall cause
such Registration Statement to become and remain effective with respect to such
Registrable Securities in accordance with the registration procedures set forth
in Section 4. If an Incidental Registration involves an Underwritten


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Offering, immediately upon notification to the Company from the Underwriter of
the price at which such securities are to be sold, the Company shall so advise
each participating Holder. The Holders requesting inclusion in an Incidental
Registration may, at any time prior to the effective date of the Incidental
Registration Statement (and for any reason), revoke such request by delivering
written notice to the Company revoking such requested inclusion.

                  If at any time after giving written notice of its intention to
register any securities and prior to the effective date of the Incidental
Registration Statement filed in connection with such registration, the Company
shall determine for any reason not to register or to delay registration of such
securities, the Company may, at its election, give written notice of such
determination to each Holder of Registrable Securities and, thereupon, (A) in
the case of a determination not to register, the Company shall be relieved of
its obligation to register any Registrable Securities in connection with such
registration (but not from its obligation to pay the Registration Expenses
incurred in connection therewith), without prejudice, however, to the rights of
Holders to cause such registration to be effected as a registration under
Section 2.1 and (B) in the case of a determination to delay such registration,
the Company shall be permitted to delay the registration of such Registrable
Securities for the same period as the delay in registering such other
securities; PROVIDED, HOWEVER, that if such delay shall extend beyond 120 days
from the date the Company received a request to include Registrable Securities
in such Incidental Registration, then the Company shall again give all Holders
the opportunity to participate therein and shall follow the notification
procedures set forth in the preceding paragraph. There is no limitation on the
number of such Incidental Registrations pursuant to this Section 2.2 which the
Company is obligated to effect.

                  The registration rights granted pursuant to the provisions of
this Section 2.2 shall be in addition to the registration rights granted
pursuant to the other provisions of Section 2 hereof.

                  (b) PRIORITY IN INCIDENTAL REGISTRATION. If an Incidental
Registration involves an Underwritten Offering (on a firm commitment basis), and
the sole or the lead managing Underwriter, as the case may be, of such
Underwritten Offering shall advise the Company in writing (with a copy to each
Holder requesting registration) on or before the date five days prior to the
date then scheduled for such offering that, in its opinion, the amount of
securities (including Registrable Securities) requested to be included in such
registration exceeds the amount which can be sold in such offering without
materially interfering with the successful marketing of the securities being
offered (such writing to state the basis of such opinion and the approximate
number of such securities which may be included in such offering without such
effect), the Company shall include in such registration, to the extent of the
number which the Company is so advised may be included in such offering without
such effect, (i) in the case of a registration initiated by the Company, (A)
first, the securities that the Company proposes to register for its own account
(but solely to the extent that the proceeds thereof shall not be used to
purchase shares of common stock of the Company or other securities of the
Company), (B) second, subject to the obligations of the Company to include
securities under the Rights Agreement, on a PRO RATA basis, in proportion to the
number of securities requested to be included in such registration, the
Registrable Securities requested to be included in such registration by the
Holders and (C) third, other securities of the Company to be registered on
behalf of any other


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Person, and (ii) in the case of a registration initiated by a Person other than
the Company, (A) first, the Registrable Securities requested to be included in
such registration by any Persons initiating such registration requested to be
included in such registration by any Persons initiating such registration, (B)
second, the Registrable Securities requested to be included in such registration
by the Holders; (C) third, the securities requested to be included in such
registration by any other Persons (not including Affiliates of the Company),
allocated PRO RATA in proportion to the number of securities requested to be
included in such registration by each of them, and (D) fourth, the securities
that the Company proposes to register for its own account and the accounts of
its Affiliates, PROVIDED, HOWEVER, that in the event the Company will not, by
virtue of this Section 2.2(b), include in any such registration all of the
Registrable Securities of any Holder requested to be included in such
registration, such Holder may, upon written notice to the Company given within
three days of the time such Holder first is notified of such matter, reduce the
amount of Registrable Securities it desires to have included in such
registration, whereupon only the Registrable Securities, if any, it desires to
have included will be so included and the Holders not so reducing shall be
entitled to a corresponding pro rata increase in the amount of Registrable
Securities to be included in such registration.

                  2.3      INTENTIONALLY OMITTED .

                  2.4      UNDERWRITTEN OFFERINGS.

                  (a)      MANDATORY UNDERWRITTEN OFFERINGS. If requested by
the sole or lead managing Underwriter for any Underwritten Offering effected
pursuant to a Registration effected pursuant to Section 2.1(a), the Company
shall enter into a customary underwriting agreement with the Underwriters for
such offering, such agreement to be reasonably satisfactory in substance and
form to the Company and each Holder of Registrable Securities participating in
such offering and to contain such representations and warranties by the Company
and such other terms as are generally prevailing in agreements of that type,
including, without limitation, indemnification and contribution to the effect
and to the extent provided in Section 5.

                  (b)      HOLDERS OF REGISTRABLE SECURITIES TO BE PARTIES TO
UNDERWRITING AGREEMENT. The Holders of Registrable Securities to be distributed
by Underwriters in an Underwritten Offering contemplated by Section 2 shall be
parties to the underwriting agreement between the Company and such Underwriters
and may, at such Holders' option, require that any or all of the representations
and warranties by, and the other agreements on the part of, the Company to and
for the benefit of such Underwriters shall also be made to and for the benefit
of such Holders of Registrable Securities and that any or all of the conditions
precedent to the obligations of such Underwriters under such underwriting
agreement be conditions precedent to the obligations of such Holders of
Registrable Securities; PROVIDED, HOWEVER, that the Company shall not be
required to make any representations or warranties with respect to written
information specifically provided by a selling Holder for inclusion in the
Registration Statement. No Holder shall be required to make any representations
or warranties to, or agreements with, the Company or (in the case of an
Incidental Registration) the Underwriters other than representations, warranties
or agreements regarding such Holder, such Holder's Registrable Securities and
such Holder's intended method of disposition.


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                  (c)      PARTICIPATION IN UNDERWRITTEN REGISTRATION.
Notwithstanding anything herein to the contrary, no Person may participate in
any underwritten registration hereunder unless such Person (i) agrees to sell
its securities on the same terms and conditions provided in any underwritten
arrangements approved by the Persons entitled hereunder to approve such
arrangement and (ii) accurately completes and executes in a timely manner all
questionnaires, powers of attorney, indemnities, custody agreements,
underwriting agreements and other documents reasonably required under the terms
of such underwriting arrangements.

                  2.5      EXPENSES. The Company shall pay all Registration
Expenses in connection with any Registration pursuant to Section 2.1(a),
Incidental Registration whether or not such registration shall become effective
and whether or not all Registrable Securities originally requested to be
included in such registration are withdrawn or otherwise ultimately not included
in such registration.

                  3.       HOLDBACK ARRANGEMENTS

                  3.1      RESTRICTIONS ON SALE BY HOLDERS OF REGISTRABLE
SECURITIES. Each Holder of Registrable Securities agrees, by acquisition of such
Registrable Securities, if timely requested in writing by the sole or lead
managing Underwriter, not to make any short sale of, loan, grant any option for
the purchase of or effect any public sale or distribution, including a sale
pursuant to Rule 144 (or any successor provision having similar effect) under
the Securities Act of any Registrable Securities (except as part of such
registration), during the fourteen (14) days prior to, and during the time
period reasonably requested by the sole or lead managing Underwriter, not to
exceed 90 days, beginning on the effective date of the applicable registration
statement, unless the sole or lead Managing Underwriter in such Underwritten
Offering otherwise agrees.

                  3.2      RESTRICTIONS ON SALE BY THE COMPANY AND OTHERS. The
Company agrees that if timely requested in writing by the sole or lead managing
Underwriter in an Underwritten Offering of any Registrable Securities, not to
make any short sale of, loan, grant any option for the purchase of or effect any
public sale or distribution of any of the Company's equity securities (or any
security convertible into or exchangeable or exercisable for any of the
Company's equity securities) during the fourteen (14) days prior to, and during
the time period reasonably requested by the sole or lead managing Underwriter
not to exceed 90 days, beginning on the effective date of the applicable
registration statement (except as part of such underwritten registration or
pursuant to registrations on Forms S-4 or S-8 or any successor form to such
forms), unless the sole or lead Managing Underwriter in such Underwritten
Offering otherwise Agrees. The Company will use its best efforts to cause each
director and officer of the Company and each holder of 3% or more of the equity
securities (or any security convertible into or exchangeable or exercisable for
any of its equity securities) of the Company purchased from the Company at any
time after the date of this Agreement (other than in a registered public
offering or in a public sale) to so agree.

                  4.       REGISTRATION PROCEDURES.

                  4.1      OBLIGATIONS OF THE COMPANY. Whenever the Company is
required to effect the registration of Registrable Securities under the
Securities Act pursuant to Section 2 of this Agreement, the Company shall, as
expeditiously as reasonably possible:


                                      -10-
<PAGE>   13

                  (a) prepare and file with the SEC (promptly, and in any event
within 60 days after receipt of a request to register Registrable Securities)
the requisite Registration Statement to effect such registration, which
Registration Statement shall comply as to form in all material respects with the
requirements of the applicable form and include all financial statements
required by the SEC to be filed therewith, and the Company shall use its best
efforts to cause such Registration Statement to become effective (promptly, and
in any event within 60 days after receipt of a request to register Registrable
Securities) (PROVIDED, that the Company may discontinue any registration of its
securities that are not Registrable Securities, and, under the circumstances
specified in Section 2.2, its securities that are Registrable Securities);
PROVIDED, HOWEVER, that before filing a Registration Statement or Prospectus or
any amendments or supplements thereto, or comparable statements under securities
or blue sky laws of any jurisdiction, the Company shall (i) provide Holders'
Counsel and any other Inspector with an adequate and appropriate opportunity to
participate in the preparation of such Registration Statement and each
Prospectus included therein (and each amendment or supplement thereto or
comparable statement) to be filed with the SEC, which documents shall be subject
to the review and comment of Holders' Counsel, and (ii) not file any such
Registration Statement or Prospectus (or amendment or supplement thereto or
comparable statement) with the SEC to which Holder's Counsel, any selling Holder
or any other Inspector shall have reasonably objected on the grounds that such
filing does not comply in all material respects with the requirements of the
Securities Act or of the rules or regulations thereunder;

                  (b) prepare and file with the SEC such amendments and
supplements to such Registration Statement and the Prospectus used in connection
therewith as may be necessary (i) to keep such Registration Statement effective,
and (ii) to comply with the provisions of the Securities Act with respect to the
disposition of all Registrable Securities covered by such Registration
Statement, in each case for at least 120 days after the Registration Statement
becomes effective or as otherwise provided in Section 2.1(f) hereof.

                  (c) furnish, without charge, to each selling Holder of such
Registrable Securities and each Underwriter, if any, of the securities covered
by such Registration Statement, such number of copies of such Registration
Statement, each amendment and supplement thereto (in each case including all
exhibits), and the Prospectus included in such Registration Statement (including
each preliminary Prospectus) in conformity with the requirements of the
Securities Act, and other documents, as such selling Holder and Underwriter may
reasonably request in order to facilitate the public sale or other disposition
of the Registrable Securities owned by such selling Holder (the Company hereby
consenting to the use in accordance with applicable law of each such
Registration Statement (or amendment or post-effective amendment thereto) and
each such Prospectus (or preliminary prospectus or supplement thereto) by each
such selling Holder of Registrable Securities and the Underwriters, if any, in
connection with the offering and sale of the Registrable Securities covered by
such Registration Statement or Prospectus);

                  (d) prior to any public offering of Registrable Securities,
use its reasonable best efforts to register or qualify all Registrable
Securities and other securities covered by such Registration Statement under
such other securities or blue sky laws of such jurisdictions as any selling
Holder of Registrable Securities covered by such Registration Statement or the
sole or lead managing Underwriter, if any, may reasonably request to enable such
selling Holder to


                                      -11-
<PAGE>   14

consummate the disposition in such jurisdictions of the Registrable Securities
owned by such selling Holder and to continue such registration or qualification
in effect in each such jurisdiction for as long as such Registration Statement
remains in effect (including through new filings or amendments or renewals), and
do any and all other acts and things which may be necessary or advisable to
enable any such selling Holder to consummate the disposition in such
jurisdictions of the Registrable Securities owned by such selling Holder.
Notwithstanding anything to the contrary contained herein, the Company shall not
be obligated to make any filing in any particular jurisdiction in which the
Company would be required to execute a general consent to service of process in
order to effect such registration, qualification or compliance unless the
Company already is subject to service in such jurisdiction in the reasonable
opinion of counsel to the Company.

                  (e) use its reasonable best efforts to obtain all other
approvals, consents, exemptions or authorizations from such governmental
agencies or authorities as may be necessary to enable the selling Holders of
such Registrable Securities to consummate the disposition of such Registrable
Securities;

                  (f) notify Holders' Counsel, each Holder of Registrable
Securities covered by such Registration Statement and the sole or lead managing
Underwriter, if any: (i) when the Registration Statement, any pre-effective
amendment, the Prospectus or any prospectus supplement related thereto or
post-effective amendment to the Registration Statement has been filed and, with
respect to the Registration Statement or any post-effective amendment, when the
same has become effective, (ii) of any request by the SEC or any state
securities or blue sky authority for amendments or supplements to the
Registration Statement or the Prospectus related thereto or for additional
information, (iii) of the issuance by the SEC of any stop order suspending the
effectiveness of the Registration Statement or any initiation or threat known to
the Company, after reasonable investigation, of any proceedings for that
purpose, (iv) of the receipt by the Company of any notification with respect to
the suspension of the qualification of any Registrable Securities for sale under
the securities or blue sky laws of any jurisdiction or the initiation of any
proceeding for such purpose, (v) of the existence of any fact of which the
Company becomes aware or the happening of any event which results in (A) the
Registration Statement containing an untrue statement of a material fact or
omitting to state a material fact required to be stated therein or necessary to
make any statements therein, in light of the circumstances in which they were
made, not misleading, or (B) the Prospectus included in such Registration
Statement containing an untrue statement of a material fact or omitting to state
a material fact required to be stated therein or necessary to make any
statements therein, in the light of the circumstances under which they were
made, not misleading, (vi) if at any time the representations and warranties
contained in any underwriting agreement in respect of such offering cease to be
true and correct in all material respects, and (vii) of the Company's reasonable
determination that a post-effective amendment to a Registration Statement would
be appropriate or that there exists circumstances not yet disclosed to the
public which make further sales under such Registration Statement inadvisable
pending such disclosure and post-effective amendment; and, if the notification
relates to an event described in any of the clauses (ii) through (vii) of this
Section 4.1(f), the Company shall promptly prepare a supplement or
post-effective amendment to such Registration Statement or related Prospectus or
any document incorporated therein by reference or file any other required
document so that (1) such Registration Statement


                                      -12-
<PAGE>   15

shall not contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances in which they were made, not misleading,
and (2) as thereafter delivered to the purchasers of the Registrable Securities
being sold thereunder, such Prospectus shall not include an untrue statement of
a material fact or omit to state a material fact required to be stated therein
or necessary to make the statements therein in the light of the circumstances
under which they were made not misleading (and shall furnish to each such Holder
and each Underwriter, if any, a reasonable number of copies of such Prospectus
so supplemented or amended); and if the notification relates to an event
described in clause (iii) of this Section 4.1(f), the Company shall take all
reasonable action required to prevent the entry of such stop order or to remove
it if entered;

                  (g) make available for inspection by any selling Holder of
Registrable Securities, any sole or lead managing Underwriter participating in
any disposition pursuant to such Registration Statement, Holders' Counsel and
any attorney, accountant or other agent retained by any such seller or any
Underwriter (each, an "Inspector" and, collectively, the "Inspectors"), all
financial and other records, pertinent corporate documents and properties of the
Company and any subsidiaries thereof as may be in existence at such time
(collectively, the "Records") as shall be necessary, in the opinion of such
Holders' and such Underwriters' respective counsel, to enable them to exercise
their due diligence responsibility and to conduct a reasonable investigation
within the meaning of the Securities Act, and cause the Company's and any
subsidiaries' officers, directors and employees, and the independent public
accountants of the Company, to supply all information reasonably requested by
any such Inspectors in connection with such Registration Statement;

                  (h) obtain an opinion from the Company's counsel and a "cold
comfort" letter from the Company's independent public accountants who have
certified the Company's financial statements included or incorporated by
reference in such Registration Statement, in each case dated the effective date
of such Registration Statement (and if such registration involves an
Underwritten Offering, dated the date of the closing under the underwriting
agreement), in customary form and covering such matters as are customarily
covered by such opinions and "cold comfort" letters delivered to underwriters in
underwritten public offerings, which opinion and letter shall be reasonably
satisfactory to the sole or lead managing Underwriter, if any, and to the
Majority Holders of the Registration, and furnish to each Holder participating
in the offering and to each Underwriter, if any, a copy of such opinion and
letter addressed to such Holder (in the case of the opinion) and Underwriter (in
the case of the opinion and the "cold comfort" letter);

                  (i) provide a CUSIP number for all Registrable Securities and
provide and cause to be maintained a transfer agent and registrar for all such
Registrable Securities covered by such Registration Statement not later than the
effectiveness of such Registration Statement;

                  (j) otherwise use its best efforts to comply with all
applicable rules and regulations of the SEC and any other governmental agency or
authority having jurisdiction over the offering, and make available to its
security holders, as soon as reasonably practicable but no later than 90 days
after the end of any 12-month period, an earnings statement (i) commencing at
the end of any month in which Registrable Securities are sold to Underwriters in
an Underwritten


                                      -13-
<PAGE>   16

Offering and (ii) commencing with the first day of the Company's calendar month
next succeeding each sale of Registrable Securities after the effective date of
a Registration Statement, which statement shall cover such 12-month periods, in
a manner which satisfies the provisions of Section 11(a) of the Securities Act
and Rule 158 thereunder;

                  (k) if so requested by the Majority Holders of the
Registration, use its best efforts to cause all such Registrable Securities to
be duly included for quotation on the Nasdaq Stock Market's National Market (the
"Nasdaq National Market"), the Nasdaq Stock Market's SmallCap Market (the
"Nasdaq SmallCap Market") or listed on the principal national securities
exchange on which the Company's similar securities are then listed, if
applicable;

                  (l) enter into and perform customary agreements (including, if
applicable, an underwriting agreement in customary form) and provide officers'
certificates and other customary closing documents;

                  (m) cooperate with each selling Holder of Registrable
Securities and each Underwriter participating in the disposition of such
Registrable Securities and their respective counsel in connection with any
filings required to be made with the NASD and make reasonably available its
employees and personnel and otherwise provide reasonable assistance to the
Underwriters (taking into account the needs of the Company's businesses and the
requirements of the marketing process) in the marketing of Registrable
Securities in any Underwritten Offering;

                  (n) cooperate with the selling Holders of Registrable
Securities and the sole or lead managing Underwriter, if any, to facilitate the
timely preparation and delivery of certificates not bearing any restrictive
legends representing the Registrable Securities to be sold, and cause such
Registrable Securities to be issued in such denominations and registered in such
names in accordance with the underwriting agreement prior to any sale of
Registrable Securities to the Underwriters or, if not an Underwritten Offering,
in accordance with the instructions of the selling Holders of Registrable
Securities at least three business days prior to any sale of Registrable
Securities;

                  (o) keep each selling Holder of Registrable Securities advised
in writing as to the initiation and progress of any registration under Section 2
hereunder;

                  (p) furnish to each Holder participating in the offering and
the sole or lead managing Underwriter, if any, without charge, at least one copy
of the Registration Statement and any post-effective amendments thereto,
including financial statements and schedules, all documents incorporated therein
by reference and all exhibits (including those deemed to be incorporated by
reference); and

                  (q) if requested by the sole or lead managing Underwriter or
any selling Holder of Registrable Securities, promptly incorporate in a
prospectus supplement or post-effective amendment such information concerning
such Holder of Registrable Securities, the Underwriters or the intended method
of distribution as the sole or lead managing Underwriter or the selling Holder
of Registrable Securities reasonably requests to be included therein and as is
appropriate in the reasonable judgment of the Company, including, without
limitation, information with respect to the number of shares of the Registrable
Securities being sold to the


                                      -14-
<PAGE>   17

Underwriters, the purchase price being paid therefor by such Underwriters and
with respect to any other terms of the Underwritten Offering of the Registrable
Securities to be sold in such offering; make all required filings of such
Prospectus supplement or post-effective amendment as soon as notified of the
matters to be incorporated in such Prospectus supplement or post-effective
amendment; and supplement or make amendments to any Registration Statement if
reasonably requested by the sole or lead managing Underwriter of such
Registrable Securities.

                  4.2      SELLER INFORMATION. The Company may require each
selling Holder of Registrable Securities as to which any registration is being
effected to furnish to the Company such information regarding such seller and
the disposition of such securities as the Company may from time to time
reasonably request in writing; PROVIDED, HOWEVER, that such information shall be
used only in connection with such Registration. If any Registration Statement or
comparable statement under "blue sky" laws refers to any Holder by name or
otherwise as the Holder of any securities of the Company, then such Holder shall
have the right to require (i) the insertion therein of language, in form and
substance satisfactory to such Holder and the Company, to the effect that the
holding by such Holder of such securities is not to be construed as a
recommendation by such Holder of the investment quality of the Company's
securities covered thereby and that such holding does not imply that such Holder
will assist in meeting any future financial requirements of the Company, and
(ii) in the event that such reference to such Holder by name or otherwise is not
in the judgment of the Company, as advised by counsel, required by the
Securities Act or any similar federal statute or any state "blue sky" or
securities law then in force, the deletion of the reference to such Holder.

                  4.3      NOTICE TO DISCONTINUE. Each Holder of Registrable
Securities agrees by acquisition of such Registrable Securities that, (i) upon
receipt of any notice from the Company of the happening of any event of the kind
described in Section 4.1(f)(ii) through 4.1(f)(v), such Holder shall forthwith
discontinue disposition of Registrable Securities pursuant to the Registration
Statement covering such Registrable Securities until such Holder's receipt of
the copies of the supplemented or amended prospectus contemplated by Section
4.1(f) and, if so directed by the Company, such Holder shall deliver to the
Company (at the Company's expense) all copies, other than permanent file copies,
then in such Holder's possession of the Prospectus covering such Registrable
Securities which is current at the time of receipt of such notice. If the
Company shall give any such notice, the Company shall extend the period during
which such Registration Statement shall be maintained effective pursuant to this
Agreement (including, without limitation, the period referred to in Section
4.1(b)) by the number of days during the period from and including the date of
the giving of such notice pursuant to Section 4.1(f) to and including the date
when the Holder shall have received the copies of the supplemented or amended
prospectus contemplated by and meeting the requirements of Section 4.1(f).

                  5.       INDEMNIFICATION; CONTRIBUTION.

                  5.1      INDEMNIFICATION BY THE COMPANY. The Company agrees to
indemnify and hold harmless, to the fullest extent permitted by law, each Holder
of Registrable Securities, its officers, directors, partners, members,
shareholders, employees, Affiliates, advisers, attorneys and agents
(collectively, "Agents") and each Person who controls such Holder (within the
meaning of the Securities Act) and its Agents with respect to each registration
which has been effected pursuant to this Agreement, against any and all losses,
claims, damages or liabilities,


                                      -15-
<PAGE>   18

joint or several, actions or proceedings (whether commenced or threatened) in
respect thereof, and expenses (as incurred or suffered and including, but not
limited to, any and all expenses incurred in investigating, preparing or
defending any litigation or proceeding, whether commenced or threatened, and the
reasonable fees, disbursements and other charges of legal counsel) in respect
thereof (collectively, "Claims"), insofar as such Claims arise out of or are
based upon any untrue or alleged untrue statement of a material fact contained
in any Registration Statement or Prospectus (including any preliminary, final or
summary prospectus and any amendment or supplement thereto) related to any such
registration or any omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances in which they were made, not misleading, or any
violation by the Company of the Securities Act or any rule or regulation
thereunder applicable to the Company and relating to action or inaction required
of the Company in connection with any such registration, or any qualification or
compliance incident thereto; PROVIDED, HOWEVER, that the Company will not be
liable in any such case to the extent that any such Claims arise out of or are
based upon any untrue statement or alleged untrue statement of a material fact
or omission or alleged omission of a material fact so made in reliance upon and
in conformity with written information furnished to the Company by a Holder,
Underwriter or other indemnified person hereunder expressly for use therein. The
Company shall also indemnify any Underwriters of the Registrable Securities,
their Agents and each Person who controls any such Underwriter (within the
meaning of the Securities Act) to the same extent as provided above with respect
to the indemnification of the Holders of Registrable Securities. Such indemnity
shall remain in full force and effect regardless of any investigation made by or
on behalf of any Person who may be entitled to indemnification pursuant to this
Section 5 and shall survive the transfer of securities by such Holder or
Underwriter.

                  5.2      INDEMNIFICATION BY HOLDERS. Each Holder, if
Registrable Securities held by it are included in the securities as to which a
registration is being effected, agrees to, severally and not jointly, indemnify
and hold harmless, to the fullest extent permitted by law, the Company, its
directors, officers and employees, each other Person who participates as an
Underwriter in the offering or sale of such securities and its Agents and each
Person who controls the Company against any and all Claims, insofar as such
Claims arise out of or are based upon any untrue or alleged untrue statement of
a material fact contained in any Registration Statement or Prospectus (including
any preliminary, final or summary prospectus and any amendment or supplement
thereto) related to such registration, or any omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances in which they were made,
not misleading, to the extent, but only to the extent, that such untrue
statement or alleged untrue statement or omission or alleged omission was made
in reliance upon and in conformity with written information furnished by such
Holder to the Company, Underwriter or other indemnified person hereunder
expressly for use therein; PROVIDED, HOWEVER, that the aggregate amount which
any such Holder shall be required to pay pursuant to this Section 5.2 shall in
no event be greater than the amount of the net proceeds received by such Holder
upon the sale of the Registrable Securities pursuant to the Registration
Statement giving rise to such Claims less all amounts previously paid by such
Holder with respect to any such Claims.


                                      -16-
<PAGE>   19

                  5.3      CONDUCT OF INDEMNIFICATION PROCEEDINGS. Promptly
after receipt by an indemnified party of notice of any Claim or the commencement
of any action or proceeding involving a Claim under this Section 5, such
indemnified party shall, if a claim in respect thereof is to be made against the
indemnifying party pursuant to Section 5, (i) notify the indemnifying party in
writing of the Claim or the commencement of such action or proceeding; PROVIDED,
that the failure of any indemnified party to provide such notice shall not
relieve the indemnifying party of its obligations under this Section 5, except
to the extent the indemnifying party is materially and actually prejudiced
thereby and shall not relieve the indemnifying party from any liability which it
may have to any indemnified party otherwise than under this Section 5, and (ii)
permit such indemnifying party to assume the defense of such claim with counsel
reasonably satisfactory to the indemnified party; PROVIDED, HOWEVER, that any
indemnified party shall have the right to employ separate counsel and to
participate in the defense of such claim, but the fees and expenses of such
counsel shall be at the expense of such indemnified party unless (A) the
indemnifying party has agreed in writing to pay such fees and expenses, (B) the
indemnifying party shall have failed to assume the defense of such claim and
employ counsel reasonably satisfactory to such indemnified party within 20 days
after receiving notice from such indemnified party that the indemnified party
believes it has failed to do so, or (C) in the reasonable judgment of any such
indemnified party, based upon advice of counsel, a conflict of interest shall
exist between such indemnified party and the indemnifying party with respect to
such claims; it being understood, however, that the indemnifying party shall
not, in connection with any one such action or separate but substantially
similar or related actions in the same jurisdiction arising out of the same
general allegations or circumstances, be liable for the reasonable fees and
expenses of more than one separate firm of attorneys (in addition to no more
than one firm of local counsel) at any time for all such indemnified parties. No
indemnifying party shall be liable for any settlement of any such claim or
action effected without its written consent, which consent shall not be
unreasonably withheld. No indemnifying party shall, without the consent of the
indemnified party, which consent shall not be unreasonable withheld, consent to
entry of any judgment or enter into any settlement of any claim or action in
respect of which indemnification or contribution may be sought hereunder, unless
such settlement, (i) includes an unconditional release of the indemnified party
from all liability arising out of such action or claim, (ii) does not include a
statement as to or an admission of fault, culpability or a failure to act, by or
on behalf of any indemnified party, and (3) does not provide for any action on
the part of any party other than the payment of money damages which is to be
paid in full by the indemnifying party.

                  5.4      CONTRIBUTION. If the indemnification provided for in
Section 5.1 or 5.2 from the indemnifying party for any reason is unavailable to
(other than by reason of exceptions provided therein), or is insufficient to
hold harmless an indemnified party hereunder in respect of any Claim, then the
indemnifying party, in lieu of indemnifying such indemnified party, shall
contribute to the amount paid or payable by such indemnified party as a result
of such Claim in such proportion as is appropriate to reflect the relative fault
of the indemnifying party, on the one hand, and the indemnified party, on the
other hand, in connection with the actions which resulted in such Claim, as well
as any other relevant equitable considerations. The relative fault of such
indemnifying party and indemnified party shall be determined by reference to,
among other things, whether any action in question, including any untrue or
alleged untrue statement of a material fact or omission or alleged omission to
state a material fact, has been made by, or relates


                                      -17-
<PAGE>   20

to information supplied by, such indemnifying party or indemnified party, and
the parties' relative intent, knowledge, access to information and opportunity
to correct or prevent such action. If, however, the foregoing allocation is not
permitted by applicable law, then each indemnifying party shall contribute to
the amount paid or payable by such indemnified party in such proportion as is
appropriate to reflect not only such relative faults but also the relative
benefits of the indemnifying party and the indemnified party as well as any
other relevant equitable considerations.

                  5.5      INDEMNIFICATION PAYMENTS. The indemnification and
contribution required by this Section 5 shall be made by periodic payments of
the amount thereof during the course of any investigation or defense, as and
when bills are received or any expense, loss, damage or liability is incurred.

                  6.       GENERAL.

                  6.1      ADJUSTMENTS AFFECTING REGISTRABLE SECURITIES. The
Company agrees that it shall not effect or permit to occur any combination or
subdivision of shares which would adversely affect the ability of the Holder of
any Registrable Securities to include such Registrable Securities in any
registration contemplated by this Agreement or the marketability of such
Registrable Securities in any such registration.

                  6.2      REGISTRATION RIGHTS TO OTHERS. Except as specifically
described on Schedule 6.2, the Company represents and warrants that it is not
currently a party to any agreement with respect to its securities granting
registration rights to Persons. If the Company shall at any time hereafter
provide to any holder of any securities of the Company rights with respect to
the registration of such securities under the Securities Act (not including any
such rights which have been previously granted), such rights shall not be in
conflict with or adversely affect any of the rights provided in this Agreement
to the Holders.

                  6.3      AVAILABILITY OF INFORMATION; RULE 144; OTHER
EXEMPTIONS. At any time during which the Company is not subject to the reporting
requirements of the Exchange Act, the Company shall, at any time and from time
to time, upon the request of any Holder of Registrable Securities or upon the
request of any Person designated by such Holder as a prospective purchaser of
any Registrable Securities, furnish in writing to such Holder or such
prospective purchaser, as the case may be, a statement as of a date not earlier
than 12 months prior to the date of such request of the nature of the business
of the Company and the products and services it offers and copies of the
Company's most recent balance sheet and profit and loss and retained earnings
statements, together with similar financial statements for such part of the two
preceding fiscal years as the Company shall have been in operation, all such
financial statements to be audited to the extent audited statements are
reasonable available, PROVIDED that, in any event the most recent financial
statements so furnished shall include a balance sheet as of a date less than 16
months prior to the date of such request, statements of profit and loss and
retained earnings for the 12 months preceding the date of such balance sheet,
and, if such balance sheet is not as of a date less than 6 months prior to the
date of such request, additional statements of profit and loss and retained
earnings for the period from the date of such balance sheet to a date less than
6 months prior to the date of such request. During any time during which the
Company is not subject to the reporting requirements of the Exchange Act and as
long as any Registrable


                                      -18-
<PAGE>   21

Securities are outstanding or the Warrants have not yet expired, the Company
shall deliver to the Holders all reports, financial statements and other
documents required to be provided under subsections (i), (ii) and (iii) of
Section 7.01(a) of the Loan Agreement, without regard to (A) whether, at any
time, such reporting requirements are required pursuant to Section 7.01 of the
Loan Agreement and (B) whether all Liens, Reimbursement Obligations, Letter of
Credit Obligations and all other Obligations under the Loan Agreement have been
paid or whether any Lender shall have any commitment thereunder. The Company
will use its best efforts to take such steps as are necessary to allow the
Company to become, and remain, eligible to register securities on Form S-3 (of
any comparable form adopted by the SEC) for resale purposes, and to make
publicly available and available to the Holder of Registrable Securities to make
sales of Registrable Securities pursuant to such rules.

                  The Company covenants that it shall timely file any reports
required to be filed by it under the Securities Act or the Exchange Act
(including, but not limited to, the reports under Sections 13 and 15(d) of the
Exchange Act referred to in subparagraph (c) of Rule 144 under the Securities
Act), and that it shall take such further action as any Holder of Registrable
Securities may reasonably request, all to the extent required from time to time
to enable such Holder to sell Registrable Securities without registration under
the Securities Act within the limitation of the exemptions provided by (i) Rule
144 under the Securities Act, as such rule may be amended from time to time, or
(ii) any other rule or regulation now existing or hereafter adopted by the SEC.
The Company will furnish to any Holder of Registrable Securities, upon request
made by such Holder at any time, a written statement signed by the Company,
addressed to such Holder, as to whether the Company has complied with the
current public information requirements of Rule 144 or Rule 144A. The Company
will, at the request of any Holder of Registrable Securities (upon receipt from
such Holder of a certificate certifying (i) that such Holder has held such
Registrable Securities for a period of not less than one (1) year, and (ii) that
such Holder has not been an affiliate (as defined in Rule 144) of the Company
for more than the ninety (90) preceding days), remove from the stock
certificates representing such Registrable Securities that portion of any
restrictive legend which relates to the registration provisions of the
Securities Act.

                  6.4      AMENDMENTS AND WAIVERS. The provisions of this
Agreement, including the provisions of this sentence, may not be amended,
modified, supplemented or terminated, and waivers or consents to departures from
the provisions hereof may not be given, without the written consent of the
Company and the Majority Holders; PROVIDED, HOWEVER, that no such amendment,
modification, supplement, waiver or consent to departure shall reduce the
aforesaid percentage of Registrable Securities without the written consent of
all of the Holders of Registrable Securities; and PROVIDED FURTHER, that nothing
herein shall prohibit any amendment, modification, supplement, termination,
waiver or consent to departure the effect of which is limited only to those
Holders who have agreed to such amendment, modification, supplement,
termination, waiver or consent to departure.

                  6.5      NOTICES. All notices and other communications
provided for or permitted hereunder shall be made in writing by hand delivery,
telecopier, any courier guaranteeing overnight delivery or first class
registered or certified mail, return receipt requested, postage prepaid,
addressed to the applicable party at the address set forth below or such other
address as


                                      -19-
<PAGE>   22

may hereafter be designated in writing by such party to the other parties in
accordance with the provisions of this Section:


If to the Company:                  Frontstep, Inc.
                                    2800 Corporate Exchange Drive
                                    Columbus, Ohio 43231
                                    Attn:  Daniel P. Buettin
                                    Fax No.  614-895-2504

with copies to:                     Vorys, Sater Seymour & Pease LLP
                                    52 East Gay Street
                                    Columbus, Ohio 43231
                                    Attn: Ivery D. Foreman, Esq.
                                    Fax No. 614-464-6350

If to the Initial Holder:           Foothill Capital Corporation
                                    2450 Colorado Avenue
                                    Suite 3000 West
                                    Santa Monica, CA 90404
                                    Attn:  Business Finance Division Manager
                                    Fax No. 310-453-7443

with copies to:                     Schulte Roth & Zabel LLP
                                    919 Third Avenue
                                    New York, New York 10022
                                    Attn:  Frederic L. Ragucci, Esq.
                                    Fax No. (212) 593-5955



                                    If to any subsequent
                                    Holder, to the address of
                                    such Person set forth in
                                    the records of the Company.

                  All such notices and communications shall be deemed to have
been duly given: at the time delivered by hand, if personally delivered; when
receipt is acknowledged, if telecopied; on the next business day, if timely
delivered to a courier guaranteeing overnight delivery; and five days after
being deposited in the mail, if sent first class or certified mail, return
receipt requested, postage prepaid.

                  6.6      SUCCESSORS AND ASSIGNS. This Agreement shall inure to
the benefit of and be binding upon the parties hereto and their respective
heirs, successors and permitted assigns (including any permitted transferee of
the Warrant or Registrable Securities). Any Holder may assign to any permitted
(as determined under the Warrant) transferee of its Warrant or Registrable
Securities (other than a transferee that acquires such Registrable Securities in
a registered public offering or pursuant to a sale under Rule 144 of the
Securities Act (or any


                                      -20-
<PAGE>   23

successor rule)), its rights and obligations under this Agreement; PROVIDED,
HOWEVER, if any permitted transferee shall take and hold the Warrant or
Registrable Securities, such transferee shall promptly notify the Company and by
taking and holding such Registrable Securities such permitted transferee shall
automatically be entitled to receive the benefits of and be conclusively deemed
to have agreed to be bound by and to perform all of the terms and provisions of
this Agreement as if it were a party hereto (and shall, for all purposes, be
deemed a Holder under this Agreement). If the Company shall so request any heir,
successor or permitted assign (including any permitted transferee) wishing to
avail itself of the benefits of this Agreement shall agree in writing to acquire
and hold the Registrable Securities subject to all of the terms hereof. For
purposes of this Agreement, "successor" for any entity other than a natural
person shall mean a successor to such entity as a result of such entity's
merger, consolidation, sale of substantially all of its assets, or similar
transaction. Except as provided above or otherwise permitted by this Agreement,
neither this Agreement nor any right, remedy, obligation or liability arising
hereunder or by reason hereof shall be assignable by any Holder or by the
Company without the consent of the other parties hereto.

                  6.7      COUNTERPARTS. This Agreement may be executed in two
or more counterparts, each of which, when so executed and delivered, shall be
deemed to be an original, but all of which counterparts, taken together, shall
constitute one and the same instrument.

                  6.8      DESCRIPTIVE HEADINGS, ETC. The headings in this
Agreement are for convenience of reference only and shall not limit or otherwise
affect the meaning of terms contained herein. Unless the context of this
Agreement otherwise requires: (1) words of any gender shall be deemed to include
each other gender; (2) words using the singular or plural number shall also
include the plural or singular number, respectively; (3) the words "hereof",
"herein" and "hereunder" and words of similar import when used in this Agreement
shall refer to this Agreement as a whole and not to any particular provision of
this Agreement, and Section and paragraph references are to the Sections and
paragraphs of this Agreement unless otherwise specified; (4) the word
"including" and words of similar import when used in this Agreement shall mean
"including, without limitation," unless otherwise specified; (5) "or" is not
exclusive; and (6) provisions apply to successive events and transactions.

                  6.9      SEVERABILITY. In the event that any one or more of
the provisions, paragraphs, words, clauses, phrases or sentences contained
herein, or the application thereof in any circumstances, is held invalid,
illegal or unenforceable in any respect for any reason, the validity, legality
and enforceability of any such provision, paragraph, word, clause, phrase or
sentence in every other respect and of the other remaining provisions,
paragraphs, words, clauses, phrases or sentences hereof shall not be in any way
impaired, it being intended that all rights, powers and privileges of the
parties hereto shall be enforceable to the fullest extent permitted by law.

                  6.10     CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER. THE
VALIDITY OF THIS AGREEMENT, THE CONSTRUCTION, INTERPRETATION, AND ENFORCEMENT
HEREOF, AND THE RIGHTS OF THE PARTIES HERETO WITH RESPECT TO ALL MATTERS ARISING
HEREUNDER OR RELATED HERETO SHALL BE DETERMINED UNDER, GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.


                                      -21-
<PAGE>   24

                  THE PARTIES AGREE THAT ALL ACTIONS OR PROCEEDINGS ARISING IN
CONNECTION WITH THIS AGREEMENT SHALL BE TRIED AND LITIGATED ONLY IN THE STATE
AND FEDERAL COURTS LOCATED IN THE COUNTY OF NEW YORK, STATE OF NEW YORK. THE
COMPANY AND THE INITIAL HOLDERS WAIVE, TO THE EXTENT PERMITTED UNDER APPLICABLE
LAW, ANY RIGHT EACH MAY HAVE TO ASSERT THE DOCTRINE OF FORUM NON CONVENIENS OR
TO OBJECT TO VENUE TO THE EXTENT ANY PROCEEDING IS BROUGHT IN ACCORDANCE WITH
THIS SECTION 6.10.

                  THE COMPANY AND THE INITIAL HOLDERS HEREBY WAIVE THEIR
RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR
ARISING OUT OF THIS AGREEMENT OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREIN,
INCLUDING CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER
COMMON LAW OR STATUTORY CLAIMS. THE COMPANY AND THE INITIAL HOLDERS REPRESENT
THAT EACH HAS REVIEWED THIS WAIVER AND EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS
JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. IN THE EVENT OF
LITIGATION, A COPY OF THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A
TRIAL BY THE COURT.

                  6.11     REMEDIES; SPECIFIC PERFORMANCE. The parties hereto
acknowledge that money damages would not be an adequate remedy at law if any
party fails to perform in any material respect any of its obligations hereunder,
and accordingly agree that each party, in addition to any other remedy to which
it may be entitled at law or in equity, shall be entitled to seek to compel
specific performance of the obligations of any other party under this Agreement,
without the posting of any bond, in accordance with the terms and conditions of
this Agreement in any court specified in Section 6.10 hereof, and if any action
should be brought in equity to enforce any of the provisions of this Agreement,
none of the parties hereto shall raise the defense that there is an adequate
remedy at law. Except as otherwise provided by law, a delay or omission by a
party hereto in exercising any right or remedy accruing upon any such breach
shall not impair the right or remedy or constitute a waiver of or acquiescence
in any such breach. No remedy shall be exclusive of any other remedy. All
available remedies shall be cumulative.

                  6.12     ENTIRE AGREEMENT. This Agreement, the Loan Agreement,
the Warrant and the other transaction documents (collectively, (the "Other
Agreements")) are intended by the parties as a final expression of their
agreement and intended to be a complete and exclusive statement of the agreement
and understanding of the parties hereto in respect of the subject matter
contained herein. There are no restrictions, promises, representations,
warranties, covenants or undertakings relating to such subject matter, other
than those set forth or referred to herein or in the Other Agreements. This
Agreement and the Other Agreements supersede all prior agreements and
understandings between the Company and the other parties to this Agreement with
respect to such subject matter.

                  6.13     FURTHER ASSURANCES. Each party hereto shall do and
perform or cause to be done and performed all such further acts and things and
shall execute and deliver all such other agreements, certificates, instruments
and documents as any other party hereto reasonably may


                                      -22-
<PAGE>   25

request in order to carry out the intent and accomplish the purposes of this
Agreement and the consummation of the transactions contemplated hereby.

                  6.14     CONSTRUCTION. The Company and the Initial Holders
acknowledge that each of them has had the benefit of legal counsel of its own
choice and has been afforded an opportunity to review this Agreement with its
legal counsel and that this Agreement shall be construed as if jointly drafted
by the Company and the Holders.

                  6.15     NO INCONSISTENT AGREEMENT. The Company will not
hereafter enter into any agreement which conflicts with the rights granted to
the Holders in this Agreement.

                  6.16     COSTS AND ATTORNEYS' FEES. In the event that any
action, suit or other proceeding is instituted concerning or arising out of this
Agreement, the Company and the Initial Holders agree that the prevailing party
shall recover from the non-prevailing party all of such prevailing party's costs
and reasonable attorneys' fees incurred in each and every such action, suit or
other proceeding, including any and all appeals or petitions therefrom.

                  6.17     MOST FAVORED HOLDER. The Company agrees that if at
any time after the date of this Agreement and from time to time prior to the
sale or disposition of all Registrable Securities covered by this Agreement, it
enters into any agreement with or grants rights to any other holder of the
Company's securities that are more favorable to such holder than those rights
granted to Holders hereunder or imposes obligations on the Company with respect
to the registration of the Company's securities that are not imposed on the
Company hereunder, then this Agreement shall be deemed amended to provide such
additional rights to the Holders and/or impose such additional obligations on
the Company. Upon the request of any Holder, the Company shall execute and
deliver to such Holder an amendment to this Agreement to such effect or execute
a written instrument in form and substance reasonably satisfactory to such
Holder confirming such amendment to this Agreement. Notwithstanding the
foregoing, no additional rights of any or all of the Holders by reason of this
provision shall be created or triggered by the existence and/or exercise of any
rights of the holders of the Company's presently outstanding preferred shares
and/or warrants which arise under the Rights Agreement, or which inure solely to
the benefit of such investors in the Amended Articles of Incorporation, as
amended, of the Company, the Regulations, as amended, of the Company and the
terms and provisions of such outstanding warrants solely to the extent provided
under such Rights Agreement, Articles, Regulations and warrants as of the date
hereof.






                                      -23-
<PAGE>   26



                  IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed as of the date first written above.

                                                 INITIAL HOLDER:


FRONTSTEP, INC.                                  FOOTHILL CAPITAL CORPORATION



By:  /s/ Daniel P. Buettin                       By:  /s/ Katy J. Brooks
     --------------------------------------           -------------------------
      Name:  Daniel P. Buettin                         Name:  Katy J. Brooks
      Title:  Vice President & CFO                     Title:  V.P.


<PAGE>   27

Page
----

                                  SCHEDULE 6.2
                                       To
                          Registration Rights Agreement
                                 By and Between
                         Frontstep, Inc. (the "Company")
                                       And
                          The Initial Holder Specified
                                     On the
                             Signature Pages Thereof
                            Dated as of July 17, 2001

                             ----------------------



The Company is a party to a certain Investor Rights Agreement dated May 10, 2000
among the Company, the several investors named therein who presently hold
outstanding convertible preferred shares and warrants issued by the Company and
Lawrence J. Fox, a principal shareholder of the Company (the "Rights
Agreement"). The investors named in the Rights Agreement (and certain
transferees of the common share equivalents held by such investors) have been
granted certain registration rights under the Rights Agreement with respect to
the common shares of the Company issuable upon conversion of the outstanding
convertible preferred shares and upon exercise of the outstanding warrants.





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<PAGE>   28

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                                TABLE OF CONTENTS
                                                                          PAGE

1.   DEFINITIONS............................................................1


2.   REGISTRATION UNDER THE SECURITIES ACT..................................5

      2.1   Mandatory Registration..........................................5
      2.2   Incidental Registration.........................................7
      2.3   Shelf Registration..............................................9
      2.4   Underwritten Offerings..........................................9
      2.5   Expenses.......................................................10

3.   HOLDBACK ARRANGEMENTS.................................................10

      3.1   Restrictions on Sale by Holders of Registrable Securities......10
      3.2   Restrictions on Sale by the Company and Others.................10

4.   REGISTRATION PROCEDURES...............................................10

      4.1   Obligations of the Company.....................................11
      4.2   Seller Information.............................................15
      4.3   Notice to Discontinue..........................................15

5.   INDEMNIFICATION; CONTRIBUTION.........................................16

      5.1   Indemnification by the Company.................................16
      5.2   Indemnification by Holders.....................................16
      5.3   Conduct of Indemnification Proceedings.........................17
      5.4   Contribution...................................................18
      5.5   Indemnification Payments.......................................18

6.   GENERAL...............................................................18

      6.1   Adjustments Affecting Registrable Securities...................18
      6.2   Registration Rights to Others..................................18
      6.3   Availability of Information; Rule 144; Other Exemptions........18
      6.4   Amendments and Waivers.........................................19
      6.5   Notices........................................................20
      6.6   Successors and Assigns.........................................21
      6.7   Counterparts...................................................21
      6.8   Descriptive Headings, Etc......................................21
      6.9   Severability...................................................22
      6.10   Choice of Law and Venue; Jury Trial Waiver....................22
      6.11   Remedies; Specific Performance................................22
      6.12   Entire Agreement..............................................23
      6.13   Further Assurances............................................23
      6.14   Construction..................................................23
      6.15   No Inconsistent Agreement.....................................23
      6.16   Costs and Attorneys' Fees.....................................23

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<PAGE>   29

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      6.17   Most Favored Holder...........................................23














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