EIGHTH AMENDMENT TO LOAN AND SECURITY AGREEMENT
This Eighth Amendment to Loan and Security agreement is dated as of
July 11, 1997 by and between Bank One, Wisconsin successor by merger to
Bank One, Milwaukee, NA, its successors and assigns (the "Secured Party")
and Effective Management Systems, Inc. ("EMS"), Effective Management
Systems of Michigan, Inc., EMS-East, Inc., Intercim Corp., Effective
Management Systems of Illinois, Inc., and EMS Asia Pacific Limited
(collectively, the "Debtors").
WHEREAS, the Secured Party and certain of the Debtors entered into a
Loan and Security Agreement dated as of April 23, 1993, which agreement
has subsequently been amended (as amended, the "Loan Agreement"); and
WHEREAS, the Secured Party and the Debtors desire to further amend
the Loan Agreement as hereinafter set forth.
NOW, THEREFORE, the parties hereto agree as follows (all capitalized
terms used but not defined herein shall have the meaning assigned in the
Loan Agreement):
1. The definition of "Note A" is amended and restated to mean the
Debtors' amended and restated Note A of even date herewith, a copy of
which is attached as Exhibit A.
2. The definitions for the defined terms "Default," "Minimum" and
"Target" levels of Consolidated Adjusted Net Earnings From Operations are
amended and restated as follows:
"Default," "Minimum" and "Target" levels of Consolidated
Adjusted Net Earnings From Operations shall be determined in
accordance with the following table, for the periods set forth
therein, as follows:
Period Consolidated Adjusted
Net Earnings From Operations
Four Fiscal quarters Default Minimum Target
ending:
May 31, 1997 ($950,000) $ 300,000 $ 800,000
August 31, 1997 ($425,000) $ 300,000 $ 800,000
November 30, 1997 ($250,000) $ 300,000 $1,000,000
February 28, 1998 $650,000 $1,000,000 $1,250,000
each quarter end thereafter $800,000 $1,000,000 $1,250,000
As used herein, amounts within parentheses are negative numbers and a
"Default" hereof constitutes an "event of default" as that term is used in
Section 9 of the Loan Agreement.
3. Section 2(a) of the Loan Agreement is amended by deleting
"$5,000,000" appearing therein and inserting "$5,500,000" in its place.
4. Section 4(a) shall be amended by deleting "until September 30,
1997, and $5,000,000 at September 30, 1997, and at all times thereafter"
to read "(a) $5,500,000 or" and the balance of the Section shall remain
unchanged.
5. Section 7(a)(3) of the Loan Agreement shall be amended by adding
the following to the end of the paragraph: "Secured Party may request and
Debtors agree to provide thereafter such reports weekly reflecting the
Collateral-Obligation Ratio as of the prior business week end, certified
by an authorized signatory of each of the Debtors."
6. The Debtors, jointly and severally, represent and warrant that
(a) the representations and warranties contained in the Credit Agreement
are true and correct in all material respects as of the date of this
Amendment, (b) no condition, act or event which could constitute and
"event of default" under Section 9 of the Loan Agreement exists, and (c)
no condition, event, act or omission has occurred, which, with the giving
of notice or passage of time, would constitute an "event of default" under
Section 9 of the Loan Agreement.
7. The Debtors, jointly and severally, agree to pay (a) a $5,000.00
amendment fee to Secured Party upon execution and delivery of this
Amendment, and (b) all costs of field examinations of the Collateral by
the Secured Party up to $2,500.00 for each exam. In addition, the Debtors
agree, jointly and severally, to pay all fees and out-of-pocket
disbursements incurred by the Bank in connection with this Amendment,
including legal fees incurred by the Bank in the preparation,
consummation, administration and enforcement of this Amendment.
8. Section 2 of this Amendment shall become effective as of May 31,
1997 notwithstanding the date of execution, and every other provision of
this Amendment shall be effective as of the date hereof, but only after it
is fully executed by the Debtors and the Secured Party, and the Secured
Party shall have received from the Debtors the following:
(a) Amended and Restated Note A, duly executed by an authorized
officer of each Debtor.
(b) $5,000.00 Amendment Fee.
(c) Borrowing Resolution and Certificate of Incumbency, for
each Debtor certified by an authorized officer of such Debtor.
(d) Other documents reasonably requested by Secured Party.
Except as specifically amended by this Amendment, the Loan Agreement shall
remain in full force and effect in accordance with its terms.
9. This Amendment is a modification only and not a novation.
Except for the above-quoted modification(s), the Loan Agreement, any
agreement or security document, and all the terms and conditions thereof,
shall be and remain in full force and effect with the changes herein
deemed to be incorporated therein. This Amendment is to be considered
attached to the Loan Agreement and made a part thereof. This Amendment
shall not release or affect the liability of any guarantor, surety or
endorser of the Loan Agreement or release any owner of collateral securing
the Loan Agreement. The validity, priority and enforceability of the Loan
Agreement shall not be impaired hereby. To the extent that any provision
of this Amendment conflicts with any term or condition set forth in the
Loan Agreement, or any agreement or security document executed in
conjunction therewith, the provisions of this Amendment shall supersede
and control. Each Debtor acknowledges that as of the date of this
Amendment they have no offsets with respect to all amounts owed by Debtors
to Secured Party and each Debtor waives and releases all claims which they
may have against Secured Party arising under the Loan Agreement on or
prior to the date of this Amendment.
10. The Debtors acknowledge and agree that this Amendment is limited
to the terms outlined above, and shall not be construed as an amendment of
any other terms or provisions of the Loan Agreement. The Debtors hereby
specifically ratify and affirm the terms and provisions of the Loan
Agreement. Each Debtor releases the Secured Party from any and all claims
which may have arisen, known or unknown, in connection with the Loan
Agreement on or prior to the date hereof. This Amendment shall not
establish a course of dealing or be construed as evidence of any
willingness on the Secured Party's part to grant other or future
amendments, should any be requested.
11. All obligations of the Debtors under the Loan Agreement and this
Amendment shall be their joint and several obligations.
IN WITNESS WHEREOF, the parties have entered into this Amendment as
of the day and year first above written.
BANK ONE, WISCONSIN
By: /s/ Xxxxxxx X. Xxxx
Xxxxxxx X. Xxxx, Vice President
EFFECTIVE MANAGEMENT SYSTEMS, INC.
By: /s/ Xxxxxxx X. Xxxxxx
Title:
[ ALL OTHER BORROWERS' SIGNATURES ON FOLLOWING PAGE ]
EFFECTIVE MANAGEMENT SYSTEMS OF MICHIGAN, INC.
By: /s/ Xxxxxxx X. Xxxxxx
Title:
EMS-EAST, INC.
By: /s/ Xxxxxxx X. Xxxxxx
Title:
INTERCIM CORP. f/k/a EMS ACQUISITION CORP.
By: /s/ Xxxxxxx X. Xxxxxx
Title:
EFFECTIVE MANAGEMENT SYSTEMS OF ILLINOIS, INC.
By: /s/ Xxxxxxx X. Xxxxxx
Title:
EMS ASIA PACIFIC LIMITED
By: /s/ Xxxxxxx X. Xxxxxx
Title:
EXHIBIT A
AMENDED AND RESTATED NOTE A
Dated: July 11, 1997 Executed at
Stated Principal: $5,500,000 Milwaukee, Wisconsin
FOR VALUE RECEIVED, on or before February 28, 1998, Effective
Management Systems, Inc., a Wisconsin corporation, Effective Management
Systems of Michigan, Inc, a Michigan corporation, EMS-East, Inc., a
Massachusetts corporation, Intercim Corp., a Minnesota corporation,
Effective Management Systems of Illinois, Inc., an Illinois corporation
and EMS Asia Pacific Limited, a corporation
(collectively, "Borrowers"), hereby promise to pay, jointly and severally,
to the order of Bank One, Wisconsin, its successors and assigns (the
"Secured Party") at its Milwaukee office at 000 Xxxx Xxxxxxxxx Xxxxxx,
Xxxxxxxxx, Xxxxxxxxx 00000, the principal sum of Five Million Five Hundred
Thousand Dollars ($5,500,000) or the aggregate unpaid principal amount of
all advances made by the Secured Party hereunder pursuant to the Loan
Agreement hereinafter referred to and to pay interest from the date hereof
on the unpaid balances hereof at the rate set forth in Section 2 of the
Loan Agreement and to pay interest at a rate equal to 2.5% per annum above
the Reference Rate (as defined in the Loan Agreement) after default or
maturity. Any change in interest hereon shall be effective on the date of
each such change in the Reference Rate. In the absence of a default,
interest (computed on the basis of actual days elapsed and a year of 360
days) for each calendar month shall be due and payable as of the first day
of the next succeeding month, commencing on the first such date after the
date hereof, and at Secured Party's sole discretion may be debited to
Borrowers' loan account ledger for Credit Facility A (as defined in the
Loan Agreement) or debited to any Borrowers' commercial demand account
maintained with Secured Party, and all principal and accrued but unpaid
interest shall be due and payable at maturity.
All payments received hereunder shall be applied first to interest
accrued and unpaid to date of receipt and then to repay principal.
No deferral of time of payment shall be valid unless the holder
consents in writing and if such deferral is granted, the deferred balance
including interest thereof at 2.5% in excess of the Reference Rate shall
be an additional obligation under this Note. The undersigned and each
endorser hereby waive presentment, demand, protest, notice of protest and
notice of dishonor and give consent to the holder to extend time and to
compound, release or delay enforcement of rights against the undersigned
or the security.
The Borrowers jointly and severally agree to pay all costs of
collection, including reasonable attorney's fees, before and after
judgment.
This Note shall be governed by the laws of the State of Wisconsin.
This Note is the Note A referred to in the Loan and Security
Agreement dated as of November 9, 1992, as amended by the First Amendment
to Loan and Security Agreement dated as of April 23, 1993, by the Second
Amendment to Loan and Security Agreement dated as of February 8, 1994, by
Third Amendment to Loan and Security Agreement dated as of May 11, 1995,
by Fourth Amendment to Loan and Security Agreement dated as of January 26,
1996, by Fifth Amendment to Loan and Security Agreement dated as of May
31, 1996, by Sixth Amendment to Loan and Security Agreement dated as of
October 31, 1996, by Seventh Amendment to the Loan and Credit Agreement
dated as of February 27, 1997, and by the Eighth Amendment to Loan and
Security Agreement of even date herewith, between the undersigned, or some
of the undersigned, and the Secured Party (as the same may be amended,
modified, supplemented or restated from time to time, the "Loan
Agreement") and evidences indebtedness incurred under, and is entitled to
the benefits of, the Loan Agreement, together with all future amendments,
modifications, waivers, supplements and replacements thereof, to which
Loan Agreement reference is made for a statement of the terms and
provisions under which the due date of this Note may be accelerated or
this Note may be prepaid. This Note is secured as provided in the Loan
Agreement and reference is made thereto for a statement of the terms and
provisions thereof.
This Note is, in part, in substitution and replacement of the Amended
and Restated Note A executed by the undersigned, or some of the
undersigned, and delivered to Secured Party dated October 31, 1996 in the
original principal amount of $5,000,000 as modified by the Promissory Note
Modification Agreement dated as of February 27, 1997 (the "Prior Note").
Borrower acknowledges and agrees that the remaining indebtedness evidenced
by the Prior Note has not been repaid or extinguished and that the
execution and delivery hereof does not constitute a novation of the Prior
Note.
EFFECTIVE MANAGEMENT SYSTEMS, INC.
By:
Title:
EFFECTIVE MANAGEMENT SYSTEMS OF MICHIGAN, INC.
By:
Title:
EMS-EAST, INC.
By:
Title:
INTERCIM CORP. f/k/a EMS ACQUISITION CORP.
By:
Title:
EFFECTIVE MANAGEMENT SYSTEMS OF ILLINOIS, INC.
By:
Title:
EMS ASIA PACIFIC LIMITED
By:
Title:
