WAIVER
THIS WAIVER (this "Waiver") is entered into as of January 28, 1999, among
Effective Management Systems, Inc. ("EMS"), a Wisconsin corporation, EMS-East,
Inc. ("EMS-East"), a Massachusetts corporation, Effective Management Systems of
Illinois, Inc. ("EMS-Illinois"), and Illinois corporation (EMS, EMS-East and
EMS-Illinois are each individually a "Borrower", and collectively "Borrowers"),
and Foothill Capital Corporation ("Lender").
WHEREAS, Borrowers and Lender are parties to a Loan and Security
Agreement dated as of December 30, 1997, as amended (the "Loan Agreement");
WHEREAS, Borrower has informed Lender that Borrowers' Tangible Net Worth
(as defined in the Loan Agreement) for the fiscal quarter ended November 30,
1998 is approximately negative Four Million Four Hundred Eighty-Two Thousand
Dollars (-$4,482,000);
WHEREAS, Borrower has informed Lender that Borrowers' EBITDA (as defined
in the Loan Agreement) for the three month period ending November 30, 1998 is
approximately negative Eight Hundred Seventeen Thousand Dollars (-$817,000);
WHEREAS, as a result of the foregoing, Borrowers have breached Sections
7.20(a) and 7.20 (b) of the Loan Agreement and Events of Default exist under
Section 8.2 of the Loan Agreement.
WHEREAS, Borrowers have requested that Lender waive the foregoing Events
of Default and Lender has agreed to do so subject to the terms hereof;'
NOW THEREFORE, in consideration of the premises and mutual agreements
herein contained, the parties hereto agree as follows:
1. Defined Terms. Unless otherwise defined herein, capitalized terms used
herein shall have the meanings ascribed to such terms in the Loan
Agreement.
2. Waiver. Subject to the reaffirmation by each Borrower of its
representations and warranties under the Loan Agreement and its
representations and warranties set forth herein and receipt by Lender of
the waiver fee referred to below, Lender hereby waives the Events of
Default arising solely as a result of the (i) Tangible Net Worth of
Borrowers not being at least Three Hundred Seventy-Five Thousand Dollars
($375,000) for the fiscal quarter ended November 30, 1998 and (ii) EBITDA
of Borrowers not being at least Zero Dollars ($0) for the six month
period ending November 30, 1998. The foregoing waiver shall not
constitute a waiver of any other Event of Default
1
that may exist, or a waiver of any future Event of Default tha0t may
occur (including, without limitation, any Event of Default occurring as a
result of a breach of Section 7.20 (a) or Section 7.20 (b) as of any date
or for any period ending after November 30, 1998).
3. Representations. In order to induce Lender to enter into this Waiver,
Borrower hereby represents and warrants to Lender that:
(a) The representations and warranties of each Borrower contained in the Loan
Agreement, are true and correct as of the date hereof as if made on the
date hereof;
(b) No Event of Default or event which, with giving of notice or the passage
of time, or both would become an Event of Default, exists as of the date
hereof (other than as described in Section 2 above);
(c) The Tangible Net Worth of Borrowers as of November 30, 1998 is
approximately negative Four Million Four Hundred Eight-Two Thousand
Dollars (-$4,482,000); and
(d) The EBITDA of Borrowers for the six month ending November 30, 1998 was
approximately negative Eight Hundred Seventeen Thousand Dollars
(-$817,000).
4. Waiver Fee. In consideration of the waiver described above, Borrowers
agree to pay Lender a waiver fee of Two Thousand Dollars ($2,000) on the
date hereof.
The remainder of the page is intentionally left blank
IN WITNESS WHEREOF, the parties hereto have caused this Waiver to be
executed by their respective officers therunto duly authorized and delivered as
of the date first above written.
EFFECTIVE MANAGEMENT SYSTEMS, INC.,
A Wisconsin corporation
By:
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Its:
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EMS - EAST, INC., a Massachusetts corporation
By:
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Its:
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EFFECTIVE MANAGEMENT SYSTEMS OF
ILLINOIS, an Illinois corporation
By:
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Its:
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FOOTHILL CAPITAL CORPORATION
By:
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Its:
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