SEVENTH AMENDMENT TO THE LOAN AND CREDIT AGREEMENT
This Amendment ("Amendment") is made as of the 27th day of
February, 1997, by and between Effective Management Systems, Inc.("EMS"),
Effective Management Systems of Michigan, Inc., EMS-East, Inc., Intercim
Corp. f/k/a EMS Acquisition Corp., EMS Asia Pacific Limited and Effective
Management Systems of Illinois, Inc. (collectively the "Debtors") and
Bank One, Wisconsin (the "Secured Party").
WHEREAS, the Debtors and the Secured Party entered into a Loan and Security
Agreement dated April 23, 1993, which agreement has subsequently been
amended (the "Loan Agreement"); and
WHEREAS, the Secured Party and the Debtors (the "Parties") desire to further
amend the Loan Agreement as set forth below:
NOW, THEREFORE, the parties hereto agree as follows (All capitalized terms
not defined herein shall have the meanings assigned in the Loan Agreement.):
1. The definition of "Note A" is amended and restated such that
it shall mean Debtors' Amended and Restated Note A dated October 31,
1996, as modified by a Promissory Note Modification Agreement of even
date herewith, a copy of which Promissory Note Modification Agreement
is attached as Exhibit A.
2. Debtors hereby acknowledge and agree that, in accordance with the
currently existing performance grid, borrowings under the Credit
Facility "A", effective from 03/01/97, shall be increased by .25%
Reference Rate + .75% and Libor Rate + 3.00%.
3. Secured Party has agreed to extend to Debtors a 500,000.00 90 day
temporary overline shall be evidenced by Note A.
4. The definition for the defined terms "Default", "Minimum" and "Target"
levels of Consolidated adjusted Net Earnings From Operations are
amended and restated as follow:
"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:
Consolidated Adjusted
Period Net Earnings From Operations
Four fiscal quarters
ending: Default Minimum Target
Qtr ending 2/28/97 (650,000) 300,000 800,000
Qtr ending 5/31/97 (525,000) 300,000 800,000
Qtr ending 8/31/97 (100,000) 300,000 800,000
Thereafter 800,000 1,000,000 1,250,000
As used herein, amounts in parenthesis are negative numbers and
a "Default" hereof constitutes an "event of default" as that term is
used in Section 9 of the Loan Agreement.
5. Section 4./ "COLLATERAL-OBLIGATION RATIO"
The section bearing the title "Collateral-Obligation Ratio" of
the Loan Agreement is reinstated and amended to read as follows:
Without Secured Party's written consent, Debtors shall not at
any time permit the sum of the aggregate amount of those Obligations
reflected by the loan account ledger for Credit facility A plus all
Letter of Credit Liabilities to exceed the lesser of (a) $5,500,000
until September 30, 1997, and $5,000,000 at September 30, 1997, and
at all times thereafter or (b) eighty percent (80%) of the amount
owing on Qualified Accounts minus amounts owing by Debtors to IBM.
In addition to other required payments, Debtors shall pay Secured
Party, in reduction of the Obligations owing to Secured Party at
any time, such sums as may be necessary from time to time to maintain
the foregoing advance limits. Such ratio is stated only for the purpose
of advances under this Agreement and not for valuation of the Collateral.
If, for the four quarters ending 11/30/97 or any quarterly fiscal
calculation date thereafter (in the event the Loan Agreement is
extended), the Debtors' Consolidated Net Earnings from Operations
exceeds the "Minimum" level set forth herein, Section 4 of the Loan
Agreement shall be automatically amended, by deleting this section.
6. Section 7./ "DEBTORS AFFIRMATIVE COVENANTS"
Section 7(a) Business Records; Reports. Paragraph (3) of the
Loan Agreement is hereby reinstated and amended to read as follows:
(3) "Monthly and at such other times as Secured Party may request, a
report in the form required by the Secured Party reflecting the
Collateral-Obligation Ratio (based on daily Qualified Accounts figures)
as of the end of the prior business month end, together with such
information relating to the Collateral as Secured Party may request,
certified by an authorized signatory of each of the Debtors. If for the
four quarters ending 11/30/97 or any quarterly fiscal calculation date
thereafter (in the event the Loan Agreement is extended), the Debtors'
Consolidated Net Earnings from Operations exceeds the "Minimum" level
set forth herein, Section 4 of the Loan Agreement shall be automatically
amended, by deleting this section.
7. Paragraph (2) of Section 7(a) is amended by deleting "quarter" and
inserting "month" in each place it appears in that Paragraph. If, for
the four quarters ended 11/30/97 or any quarterly fiscal calculation
date thereafter (in the event the Loan Agreement is extended), the
Consolidated Adjusted Net Earnings from Operations exceeds the "minimum"
level set forth herein, Paragraph (2) of Section 7(a) shall be
automatically amended by deleting "month" and inserting in it's place
"quarter" in each place it appears in that paragraph.
8. The Debtors 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 an "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.
9. The Debtor agrees to pay a $5,000.00 amendment fee to Secured Party.
10. This Amendment shall become effective only after it is fully executed by
the Debtor and the Secured Party, and the Secured Party shall have
received from the Debtors the following:
(a) Promissory Note Modification Agreement (Note A)
(b) $5,000 Amendment Fee
(c) Borrowing Resolution and Certificate of Incumbency
(d) Other Documents as Secured Party may reasonably request
Except as specifically amended by this Amendment, the Loan Agreement
shall remain in full force and effect in accordance with its terms.
11. 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. Debtors acknowledge that as of the date of this Amendment
they have no offsets with respect to all amounts owed by Debtors to
Secured Party and Debtors waive and releases all claims which they
each may have against Secured Party arising under the Loan Agreement on
or prior to the date of this Amendment.
12. 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. Debtors release 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.
13. All obligations of Debtors under the Loan Agreement and this Amendment
shall be their jointed several obligations.
IN WITNESS WHEREOF, the parties have entered into this Amendment
as of the day and year first above written.
BANK ONE, WISCONSIN EFFECTIVE MANAGEMENT SYSTEMS INC.
By: /s/ Xxxxxxx X. Xxxx By: /s/ Xxxxxxx X. Xxxxxx
Xxxxxxx X. Xxxx
Title: Vice President Title: _________________________
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: ______________________________
ACKNOWLEDGMENT AND AGREEMENT BY GUARANTOR(S) AND/OR OWNER(S)
OF COLLATERAL SECURING THE PROMISSORY NOTE.
The undersigned (i) consent to the modification of the Credit
Agreement and all other matters in the foregoing Amendment and,
if a guarantor (ii) reaffirm the __________________ Guaranty,
dated ____________, 19 _____ and any other agreements, documents
and instruments securing or otherwise relating thereto
("Guarantor Documents"), (iii) acknowledge that the Guarantor
Documents continue in full force and effect, remain unchanged,
except as specifically modified hereby, and are valid, binding
and enforceable in accordance with their respective terms, (iv)
agree that all references, if any, in the Guarantor Documents to
the Credit Agreement are modified to refer to that document as
modified by the Amendment, and (v) agree to be bound by the
release of Bank set forth in the Amendment.
_________________________________ __________________________
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