TENTH AMENDMENT TO LOAN AND SECURITY AGREEMENT
This Tenth Amendment to Loan and Security Agreement is dated as of
September 30, 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., Effective Management
Systems of Illinois, Inc., and EMS Asia Pacific Limited (collectively, the
"Debtors").
RECITALS
WHEREAS, the Secured Party and certain of the Debtors entered into a
Loan and Security Agreement dated as of November 9, 1992, which agreement
has subsequently been amended as of April 23, 1993, February 8, 1994, May
11, 1995, August 31, 1995, May 31, 1996, October 31, 1996, February 27,
1997, July 11, 1997, September 9, 1997 and as of the date hereof (as
amended and as hereafter renewed, extended, amended, modified, or
supplemented, the "Loan Agreement"); and
WHEREAS, Intercim Corp. has been merged with and into EMS; 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:
1. Definitions. Capitalized terms not defined herein shall have
the meaning ascribed in the Loan Agreement.
2. Note A. The maturity date of Note A is hereby amended to be
December 31, 1997. Notwithstanding anything to the contrary contained
therein or in the Loan Agreement, Secured Party's obligation to lend
monies to the Debtors shall terminate December 31, 1997, at which time all
of the Obligations shall be due and payable.
3. Interest Rate. The LIBOR interest rate option is hereby
deleted. Notwithstanding anything to the contrary in the Loan Agreement,
Debtors shall not be liable for any breakage fees as a result of the
conversion of LIBOR Borrowings prior to the end of the applicable Interest
Periods. Effective October 1, 1997, Section 2(c) of the Loan Agreement is
hereby amended to read in its entirety as follows:
"(c) Interest Rate and Payment. The interest rate
hereunder on Note A shall be equal to three-quarters percentage
points (.75%) per annum in excess of the Reference Rate. The
unpaid balances shall bear interest after default or maturity at
two and one-half percentage points (2.5%) per annum in excess of
Secured Party's Reference Rate as announced from time to time.
Interest shall be computed daily based upon a 360-day year and
the Reference Rate and the outstanding loan balances as they
exist at the end of each day. Interest for each calendar month
on Note A shall be due and payable to Secured Party by Debtors
as of the first day of the next succeeding month, and at Secured
Party's sole option may be debited to Debtors' loan account
ledger for Credit Facility A or debited against any Debtor's
commercial demand account maintained with Secured Party."
4. New Financing. So long as no event of default has occurred and
is continuing, Secured Party agrees to lend Debtors up to an additional
$1,000,000 (in addition to monies available under Credit Facility A),
repayable in accordance with the terms set forth in the Promissory Note
attached hereto. The Debtors' obligations under that note shall
constitute "Obligations" as such term is used in the Loan Agreement and
Secured Party's advances thereunder shall be cross-collateralized and
cross-defaulted with all other Obligations.
5. Security Interests. Each of the Debtors hereby acknowledges
that they have, by virtue of becoming party to the Loan Agreement, granted
Secured Party a security interest in the Collateral and each of them
hereby grants Secured Party a security interest and lien in all of the
Collateral to secure all of the Obligations.
6. Consolidated Net Earnings from Operations. Secured Party hereby
acknowledges that it waived effective August 31, 1997 the failure of the
Debtors to comply with the "Default" levels of Consolidated Adjusted Net
Earnings From Operations through August 31, 1997. EMS shall achieve
Consolidated Adjusted Net Earnings From Operations of at least (or, where
negative, not exceeding) the following amounts for the periods set forth
below:
Consolidated Adjusted
Period Net Earnings from Operations
Month ending September 30, 1997 ($ 725,000)
Two Months ending October 31, 1997 ($1,150,000)
Three Months ending November 30, 1997 $ 125,000
Failure to achieve such levels shall constitute an event of default under
the Loan Agreement.
7. Operating Leases. Section 8(d) of the Loan Agreement is hereby
amended to read in its entirety as follows:
"(d) Operating Leases. Expend or contract to expend in any
fiscal year in the aggregate for all Debtors under all operating
leases more than $500,000."
8. Representations and Warranties. Debtor represents and warrants
that (a) each Debtor's respective chief executive office and the
respective places in which Collateral owned by it is located is as set
forth in Schedule I hereto, (b) the representations and warranties
contained in the Loan Agreement are true and correct in all material
respects as of the date of this Amendment, (c) except as disclosed to
Secured Party in writing, which defaults or events of default have not
been waived by Secured Party (and shall not be waived by the execution
hereof), no condition, act or event which could constitute an event of
default under the Loan Agreement exists, and (d) 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 the Loan Agreement.
9. Termination. Section 10 of the Loan Agreement is amended by
deleting "February 28, 1998" appearing therein and inserting "December 31,
1997" in its place.
10. Conditions Precedent. This Amendment shall become effective
September 30, 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, in form
satisfactory to Secured Party, the following:
(a) The Promissory Note in the form attached hereto, duly
executed by an authorized officer of each Debtor.
(b) A $25,000.00 Amendment Fee (which may be debited to
Debtor's loan account for Credit Facility A or debited against
any Debtor's commercial demand account maintained with Secured
Party).
(c) An Officer's Certificate for each Debtor, certified by
an authorized officer of such Debtor.
(d) An Amendment to General Intangibles Mortgage and
Security Agreement.
(e) A Collateral Assignment Agreement, together with the
Assigned Note referenced therein, duly endorsed, accompanied with
proof of corporate authority for EMS Solutions, Inc.
11. Deliveries Subsequent. Within two business days of Secured
Party's request, Debtors agree to execute and deliver such UCC financing
statements as may be necessary to perfect Secured Party's security
interest in all of the jurisdictions noted on Schedule I.
12. Expenses. Debtors agrees to pay all fees and out-of-pocket
disbursements incurred by the Secured Party in connection with this
Amendment, including legal fees incurred by the Secured Party in the
preparation, consummation, administration and enforcement of this
Amendment.
13. Other Terms; Release; Effect. Except as amended by this Tenth
Amendment, the Loan Agreement shall remain in full force and effect in
accordance with its terms. All Collateral Agreements shall remain in full
force and effective and shall continue to secure all of the Obligations.
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.
14. Joint and Several. All obligations of the Debtors under the
Loan Agreement and this Amendment shall be their joint and several
obligations.
BANK ONE, WISCONSIN EFFECTIVE MANAGEMENT SYSTEMS,
INC.
By: /s/ Xxxxxxx X. Xxxx By:/s/ Xxxxxxx X. Xxxxxx
Xxxxxxx X. Xxxx, Vice President
Title:President
EFFECTIVE MANAGEMENT SYSTEMS
OF MICHIGAN, INC.
By:/s/ Xxxxxxx X. Xxxxxx
Title:Secretary
EMS-EAST, INC.
By:/s/ Xxxxxxx X. Xxxxxx
Title:Treasurer
EFFECTIVE MANAGEMENT SYSTEMS
OF ILLINOIS, INC.
By:/s/ Xxxxxxx X. Xxxxxx
Title:Secretary
EMS ASIA PACIFIC LIMITED
By:/s/ Xxxxxxx X. Xxxxxx
Title:President
