Exhibit 4.1
FIFTH AMENDMENT TO
LOAN AGREEMENT
THIS FIFTH AMENDMENT (this "Amendment") is entered into as of August
1, 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"), an 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 (the "Loan Agreement");
WHEREAS, Borrowers have requested that Lender amend the Loan
Agreement, and Lender has agreed to do so subject to the terms and conditions
contained herein;
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. Amendments to Loan Agreement. Subject to the satisfaction of the
conditions set forth in Section 5 hereof, the Loan Agreement is amended as
follows:
(a) Section 2.1(a) of the Loan Agreement is hereby amended and
restated in its entirety, as follows:
(a) Subject to the terms and conditions of this Agreement, Foothill
agrees to make advances ("Advances") to Borrowers in an amount outstanding not
to exceed at any one time the lesser of (i) the Maximum Revolving Amount less
the outstanding balance of all undrawn or unreimbursed Letters of Credit, or
(ii) the Borrowing Base less (A) the aggregate amount of all undrawn or
unreimbursed Letters of Credit. For purposes of this Agreement, "Borrowing
Base", as of any date of determination, shall mean the result of:
(x) the lesser of (i) 80% of Eligible Accounts of Borrowers, less the
amount, if any, of the Dilution Reserve, and (ii) an amount equal to Borrowers'
Collections with respect to Accounts of Borrowers for the immediately preceding
100 day period (provided, that such period may be adjusted for seasonality in
Foothill's reasonable credit judgment), minus
(y) the aggregate amount of reserves, if any, established by Foothill
under Section 2.1(b), plus
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(z) the "Additional Availability Amount" (as defined below). The
"Additional Availability Amount" means (i) during the period commencing on
August 1, 1999 and ending on September 15, 1999, 1999 an amount equal to
$750,000 and (ii) at all times on and after September 16, 1999 an amount equal
to zero.
3. Ratification. This Amendment, subject to satisfaction of the
conditions provided below, shall constitute amendments to the Loan Agreement and
all of the Loan Documents as appropriate to express the agreements contained
herein. In all other respects, the Loan Agreement and the Loan Documents shall
remain unchanged and in full force and effect in accordance with their original
terms.
4. Conditions to Effectiveness. Subject to Section 6 below, the
amendments to the Loan Agreement set forth in this Amendment shall become
effective as of the date of this Amendment and upon the satisfaction of the
following conditions precedent in form and substance satisfactory to Lender:
(a) Modification Fee. Borrower shall pay to Lender a modification fee
equal to Seven Thousand Five Hundred Dollars ($7,500).
(b) No Default. No Event of Default or event which, with the giving of
notice or the passage of time, or both, would become an Event of Default, shall
have occurred and be continuing, and, after giving effect to the amendments
contained herein, no Event of Default or event which, with the giving of notice
or the passage of time, or both, would become an Event of Default, shall have
occurred and be continuing.
5. Miscellaneous.
(a) Warranties and Absence of Defaults. In order to induce Lender to
enter into this Amendment, each Borrower hereby warrants to Lender, as of the
date hereof, that:
(i) The warranties of such Borrower contained in the Loan Agreement,
as herein amended, are true and correct as of the date hereof as if made on the
date hereof.
(ii) All information, reports and other papers and data heretofore
furnished to Lender by such Borrower in connection with this Amendment, the Loan
Agreement and the other Loan Documents are accurate and correct in all material
respects and complete insofar as may be necessary to give Lender true and
accurate knowledge of the subject matter thereof. Such Borrower has disclosed to
Lender every fact of which it is aware which would reasonably be expected to
materially and adversely affect the business, operations or financial condition
of such Borrower or the ability of such Borrower to perform its obligations
under this Amendment, the Loan Agreement or under any of the other Loan
Documents. None of the information furnished to Lender by or on behalf of such
Borrower contained any material misstatement of fact or omitted to state a
material fact or any fact necessary to make the statements contained herein or
therein not materially misleading.
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(iii) 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.
(b) Expenses. Borrowers agree to pay on demand all costs and expenses
of Lender (including the reasonable fees and expenses of outside counsel for
Lender) in connection with the preparation, negotiation, execution, delivery and
administration of this Amendment and all other instruments or documents provided
for herein or delivered or to be delivered hereunder or in connection herewith.
In addition, Borrowers agree to pay, and save Lender harmless from all liability
for, any stamp or other taxes which may be payable in connection with the
execution or delivery of this Amendment or the Loan Agreement, as amended
hereby, and the execution and delivery of any instruments or documents provided
for herein or delivered or to be delivered hereunder or in connection herewith.
All obligations provided in this Section 6 (b) shall survive any termination of
this Amendment and the Loan Agreement as amended hereby.
(c) Governing Law. This Amendment shall be a contract made under and
governed by the internal laws of the State of California.
(d) Counterparts. This Amendment may be executed in any number of
counterparts, and by the parties hereto on the same or separate counterparts,
and each such counterpart, when executed and delivered, shall be deemed to be an
original, but all such counterparts shall together constitute but one and the
same Amendment.
(e) Reference to Loan Agreement. On and after the effectiveness of the
amendment to the Loan Agreement accomplished hereby, each reference in the Loan
Agreement to "this Agreement," "hereunder," "hereof," "herein" or words of like
import, and each reference to the Loan Agreement in any Loan Documents, or other
agreements, documents or other instruments executed and delivered pursuant to
the Loan Agreement, shall mean and be a reference to the Loan Agreement, as
amended by this Amendment.
(f) Successors. This Amendment shall be binding upon Borrowers, Lender
and their respective successors and assigns, and shall inure to the benefit of
Borrowers, Lender and their respective successors and assigns.
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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be executed by their respective officers thereunto duly authorized and delivered
as of the date first above written.
EFFECTIVE MANAGEMENT SYSTEMS, INC.,
a Wisconsin corporation
By /s/ Xxxxxxx X. Xxxxxx
Xxxxxxx X. Xxxxxx
Title: President
EMS-EAST, INC., a Massachusetts corporation
By /s/ Xxxxxxx X. Xxxxxx
Xxxxxxx X. Xxxxxx
Title: President
EFFECTIVE MANAGEMENT SYSTEMS OF
ILLINOIS, INC., an Illinois corporation
By /s/ Xxxxxxx X. Xxxxxx
Xxxxxxx X. Xxxxxx
Title: President
FOOTHILL CAPITAL CORPORATION,
a California corporation
By /s/ Xxxxx X. Xxxx
Xxxxx X. Xxxx
Title: Vice President
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