Exhibit 4.1
WAIVER
THIS WAIVER (this "Waiver") is entered into as of April 13, 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, 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 February
28, 1999 is approximately negative Six Million Seven Hundred Nineteen Thousand
Dollars (-$6,719,000);
WHEREAS, Borrower has informed Lender that Borrowers' EBITDA (as
defined in the Loan Agreement) for the three month period ending February 28,
1999 is approximately negative Two Million One Hundred and Seventy-Five Thousand
Dollars (-$2,175,000); 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 Four Million
Dollars ($4,000,000) for the fiscal quarter ended February 28, 1999 and (ii)
EBITDA of Borrowers not being at least negative Five Hundred Thousand Dollars
(-$500,000) for the three month period ending February 28, 1999. The foregoing
waiver shall not constitute a waiver of any other Event of Default that may
exist, or a wavier of any future Event of Default that 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
February 28, 1999).
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 February 28, 1999 is
approximately negative Six Million Seven Hundred Nineteen Thousand Dollars
(-$6,719,000); and
(d) The EBITDA of Borrowers for the three month ending February 28,
1999 is approximately negative Two Million One Hundred and Seventy-Five Thousand
Dollars (-$2,175,000).
4. Waiver Fee. In consideration of the waiver described above,
Borrowers agree to pay Lender a waiver fee of Five Thousand Dollars ($5,000) 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 thereunto duly authorized and delivered as
of the date first above written.
EFFECTIVE MANAGEMENT SYSTEMS, INC.,
a Wisconsin corporation
By
Its
EMS-EAST, INC., a Massachusetts corporation
By
Its
EFFECTIVE MANAGEMENT SYSTEMS OF ILLINOIS, an
Illinois corporation
By
Its
FOOTHILL CAPITAL CORPORATION
By
Its