<PAGE>   2



                                                               EXECUTION VERSION





THIS WARRANT AND ANY SECURITIES ACQUIRED UPON EXERCISE OF THIS WARRANT HAVE NOT

BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES

LAW OF ANY STATE AND MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF

EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT AND

APPLICABLE STATE SECURITIES LAWS OR PURSUANT TO AN APPLICABLE EXEMPTION TO THE

REGISTRATION REQUIREMENTS OF SUCH ACT AND SUCH LAWS. THIS WARRANT AND SUCH

SECURITIES MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF EXCEPT IN

COMPLIANCE WITH THE CONDITIONS SPECIFIED IN THIS WARRANT.





                                 FRONTSTEP, INC.



                          COMMON SHARE PURCHASE WARRANT



No. W-1                                                            July 17, 2001

                                       Warrant to Purchase 550,000 Common Shares





                  FRONTSTEP, INC., an Ohio corporation (the "Company"), for

value received, hereby certifies that FOOTHILL CAPITAL CORPORATION, a California

corporation, or its registered assigns (the "Holder"), is entitled to purchase

from the Company 550,000 shares of duly authorized, validly issued, fully paid

and nonassessable common shares, no par value, of the Company (the "Common

Shares"), at a purchase price equal to the Purchase Price (this "Warrant"), at

any time or from time to time but prior to 5:00 P.M., New York City time, on

July 17, 2006 (the "Expiration Date"), all subject to the terms, conditions and

adjustments set forth below in this Warrant. Capitalized terms used herein and

not otherwise defined herein shall have the meanings assigned such terms in the

Loan Agreement.



         1. DEFINITIONS. As used herein, unless the context otherwise requires,

the following terms shall have the meanings indicated:



         "ADDITIONAL COMMON SHARES" shall mean all Common Shares (including

treasury shares) issued or sold (or, pursuant to Section 3.3 or 3.4, deemed to

be issued) by the Company after the date hereof, whether or not subsequently

reacquired or retired by the Company, other than



         (a) shares issued upon the exercise of this Warrant,



         (b) such number of additional shares as may become issuable upon the

exercise of this Warrant by reason of adjustments required pursuant to the

anti-dilution provisions applicable to this Warrant as in effect on the date

hereof,



         (c) shares, warrants, options and other securities issued by the

Company at any time to the Holder or any Affiliate thereof,





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         (d) (i) Common Shares or options exercisable therefor, issued or to be

issued under the Company's existing employee stock option and purchase plans and

stock option plan for outside directors, each as may be amended from time to

time or under any other employee stock option or purchase plan or plans, or

pursuant to compensatory or incentive agreements, for officers, directors,

employees or consultants of the Company or any of its Subsidiaries, in each case

adopted or assumed after such date by the Company's Board of Directors; PROVIDED

in each case that the exercise or purchase price for any such share shall not be

less than 90% of the fair market value (determined in good faith by the

Company's Board of Directors) of the Common Shares on the date of the grant, and

(ii) such additional number of shares as may become issuable pursuant to the

terms of any such plans by reason of adjustments required pursuant to

antidilution provisions applicable to such securities in order to reflect any

subdivision or combination of Common Shares, by reclassification or otherwise,

or any dividend on Common Shares payable in Common Shares,



         (e) (i) Common Shares issued upon the exercise of any warrants or

options, or upon conversion of any preferred shares of the Company. outstanding

on the date hereof and (ii) such additional number of shares as may become

issuable upon the exercise or conversion of any such securities by reason of

adjustments required pursuant to anti-dilution provisions applicable to such

securities as in effect on the date hereof, and



         (f) Common Shares (not to exceed 500,000 Common Shares in the aggregate

as constituted on the date hereof (and subject to adjustment for stock splits,

subdividions stock dividends and similar such transactions)) issued in

connection with acquisitions of assets and/or securities of another Person in a

transaction or series of transactions, each of which is approved by the Board of

Directors of the Company.



         "BUSINESS DAY" shall mean any day other than a Saturday or a Sunday or

any day on which national banks are authorized or required by law to close. Any

reference to "days" (unless Business Days are specified) shall mean calendar

days.



         "COMMISSION" shall mean the Securities and Exchange Commission or any

successor agency having jurisdiction to enforce the Securities Act.



         "COMMON SHARES" shall have the meaning assigned to it in the

introduction to this Warrant, such term to include any stock into which such

Common Shares shall have been changed or any stock resulting from any

reclassification of such Common Shares, and all other stock of any class or

classes (however designated) of the Company the holders of which have the right,

without limitation as to amount, either to all or to a share of the balance of

current dividends and liquidating dividends after the payment of dividends and

distributions on any shares entitled to preference.



         "COMPANY" shall have the meaning assigned to it in the introduction to

this Warrant, such term to include any corporation or other entity which shall

succeed to or assume the obligations of the Company hereunder in compliance with

Section 4.





                                       2

<PAGE>   4



         "CONVERTIBLE SECURITIES" shall mean any evidences of indebtedness,

shares of stock (other than Common Shares) or other securities directly or

indirectly convertible into or exchangeable for Additional Common Shares.



         "CURRENT MARKET PRICE" shall mean, on any date specified herein, the

average of the daily Market Price during the 10 consecutive trading days before

such date, except that, if on any such date the Common Shares are not listed or

admitted for trading on any national securities exchange or quoted in the

over-the-counter market, the Current Market Price shall be the Market Price on

such date.



         "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.



         "EXPIRATION DATE" shall have the meaning assigned to it in the

introduction to this Warrant.



         "FAIR VALUE" shall mean, on any date specified herein (i) in the case

of cash, the dollar amount thereof, (ii) in the case of a security, the Current

Market Price, and (iii) in all other cases, the fair value thereof (as of a date

which is within 20 days of the date as of which the determination is to be made)

determined in good faith by the Company's Board of Directors.



         "HOLDER" shall have the meaning assigned to it in the introduction to

this Warrant.



         "INITIAL HOLDER" shall mean Foothill Capital Corporation.



         "LOAN AGREEMENT" shall mean that certain Loan and Security Agreement,

dated as of July 17, 2001, among the Company, certain subsidiaries of the

Company, the Lender parties thereto and Foothill Capital Corporation, as the

Arranger and Administrative Agent.



         "MARKET PRICE" shall mean, on any date specified herein, the amount per

Common Share, equal to (i) the last reported sale price of such Common Shares,

regular way, on such date or, in case no such sale takes place on such date, the

average of the closing bid and asked prices thereof regular way on such date, in

either case as officially reported on the principal national securities exchange

on which such Common Shares are then listed or admitted for trading, (ii) if

such Common Shares are not then listed or admitted for trading on any national

securities exchange but is designated as a national market system security by

the NASD, the last reported trading price of the Common Shares on such date,

(iii) if there shall have been no trading on such date or if the Common Shares

are not so designated, the average of the closing bid and asked prices of the

Common Shares on such date as shown by the NASD automated quotation system, or

(iv) if such Common Shares are not then listed or admitted for trading on any

national exchange or quoted in the over-the-counter market, the fair value

thereof (as of a date which is within 20 days of the date as of which the

determination is to be made) determined in good faith by the Company's Board of

Directors.



                  "NASD" shall mean the National Association of Securities

Dealers, Inc.





                                       3

<PAGE>   5



         "OPTIONS" shall mean any rights, options or warrants to subscribe for,

purchase or otherwise acquire either Additional Common Shares or Convertible

Securities.



         "OTHER SECURITIES" shall mean any stock (other than Common Shares) and

other securities of the Company or any other Person (corporate or otherwise)

which the holders of the Warrants at any time shall be entitled to receive, or

shall have received, upon the exercise of the Warrants, in lieu of or in

addition to Common Shares, or which at any time shall be issuable or shall have

been issued in exchange for or in replacement of Common Shares or Other

Securities pursuant to Section 4 or otherwise.



         "PERSON" shall mean any individual, firm, partnership, corporation,

trust, joint venture, association, joint stock company, limited liability

company, unincorporated organization 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.



         "PURCHASE PRICE" shall mean initially $3.36 per share, subject to

adjustment and readjustment from time to time as provided in Section 3, and, as

so adjusted or readjusted, shall remain in effect until a further adjustment or

readjustment thereof is required by Section 3.



         "REGISTRATION RIGHTS AGREEMENT" shall mean the Registration Rights

Agreement, dated as of the date hereof between the Company and the Initial

Holder.



         "RESTRICTED SECURITIES" shall mean (i) any Warrants bearing the

applicable legend set forth in Section 9.1, (ii) any Common Shares (or Other

Securities) issued or issuable upon the exercise of Warrants which are (or, upon

issuance, will be) evidenced by a certificate or certificates bearing the

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