EMPLOYEE SOLUTIONS INC
WAIVER AND AMENDMENT AGREEMENT
<DOCUMENT>
<TYPE>EX-10.18
<SEQUENCE>4
<FILENAME>0004.txt
<DESCRIPTION>WAIVER AND AMENDMENT AGREEMENT
<TEXT>

                         WAIVER AND AMENDMENT AGREEMENT

     This Waiver and Amendment  Agreement (this  "Agreement") is entered into as
of July 6, 2000,  between  Employee  Solutions,  Inc.,  an Arizona  corporation,
E.R.C. of Indiana, Inc., an Indiana corporation, Employee Resources Corporation,
an Indiana corporation,  Employee Solutions - East, Inc., a Georgia corporation,
Employee Solutions - Midwest, Inc., a Michigan corporation, Employee Solutions--
Ohio,  Inc., an Indiana  corporation,  Employee  Solutions of Alabama,  Inc., an
Alabama   corporation,   Employee  Solutions  of  California,   Inc.,  a  Nevada
corporation,  Employee Solutions of Texas,  Inc., a Texas corporation,  Employee
Solutions - North America,  Inc., a Delaware  corporation,  Employee Solutions -
Southeast,  Inc.,  a  Florida  corporation,  ERC  of  Minn,  Inc.,  a  Minnesota
corporation,  ERC of Ohio,  Inc., a Michigan  corporation,  ESI - Nevada Holding
Company,  Inc., a Nevada corporation,  ESI America,  Inc., a Nevada corporation,
ESI Risk Management Agency, Inc., an Arizona corporation, ESI - Midwest, Inc., a
Nevada  corporation,  ESI - New York,  Inc.,  an Arizona  corporation,  Fidelity
Resources  Corporation,  an Oklahoma  corporation,  Logistics Personnel Corp., a
Nevada corporation,  Phoenix Capital Management,  Inc., an Indiana  corporation,
jointly  and   severally  as   co-borrowers   (hereinafter,   individually   and
collectively,  "Debtors"),  and Ableco Finance LLC, a Delaware limited liability
company ("Ableco"),  and Foothill Capital Corporation,  a California corporation
("Agent", and collectively with Abelco, "Lenders"), in light of the following:

     WHEREAS,  Debtors  executed and  delivered to Lenders that certain Loan and
Security  Agreement  (the  "Loan  Agreement"),  letter of  credit  reimbursement
agreements,  Uniform  Commercial Code Financing  Statements and other documents,
instruments and agreements (collectively, the "Loan Documents");

     WHEREAS,  Debtors have defaulted in the compliance with various  covenants,
terms,  conditions  and  provisions  of the Loan  Documents  (collectively,  the
"Existing Defaults");

     WHEREAS,  Debtor has requested Lenders to enter into this Agreement for the
purpose  of  amending  certain  of the  terms of the Loan  Documents,  affirming
Debtors' liabilities thereunder, and waiving the Existing Defaults; and

     WHEREAS,  Lenders have agreed to amend and waive with respect to such terms
of the Loan Documents  subject to all of the conditions,  requirements and terms
of this Agreement.

     NOW,  THEREFORE,  in  consideration of the foregoing and for other good and
valuable   consideration,   the  receipt   and   adequacy  of  which  is  hereby
acknowledged, the parties hereto agree as follows:
<PAGE>
     1. DEFINITIONS

     Unless expressly  defined herein,  all capitalized  terms used herein shall
have the meanings assigned to them in the Loan Agreement.

     2. ACKNOWLEDGMENT OF DEFAULTS.

     Debtors  hereby  acknowledge  and agree that they are  currently in default
under the Loan  Documents  by reason of the  Existing  Defaults,  such  Existing
Defaults being specifically described as follows:

          a. Section 6.6 of the Loan Agreement.  Debtors have failed to maintain
cash in accordance with this provision.

          b.  Section  7.20(a) of the Loan  Agreement.  Debtors  have  failed to
maintain the required tangible net worth.

          c.  Section  7.20(b) of the Loan  Agreement.  Debtors  have  failed to
achieve the required EBITDA.

          d.  Section  7.20(c) of the Loan  Agreement.  Debtors  have  failed to
maintain the minimum average active employee headcount.

          e. Section 8.10 of the Loan  Agreement.  Debtors have committed one or
more events of default under the Indenture.

Debtors  represent that such Existing Defaults comprise all of Debtors' defaults
under the Loan Documents.  Debtors hereby waive any and all rights they may have
to contest or dispute the  validity of the  Existing  Defaults.  Debtors  hereby
further   acknowledge   and  agree  that  Lenders  are  relying  upon   Debtors'
acknowledgement of the existence of the Existing Defaults and Debtors' waiver of
any right to dispute the existence thereof in entering into this Agreement.

     3. ACKNOWLEDGEMENT OF DEBT.

     Debtors  acknowledge  and  agree  that  as of June  30,  2000  Debtors  are
obligated  to Lenders in an amount no less than  fifteen  million  four  hundred
thousands dollars ($15,400,000.00), plus accrued interests, fees, costs, and any
other applicable charges.
<PAGE>
     4. LIMITED WAIVER.

     In  consideration  of the  satisfaction  of the terms hereof by Debtors and
subject to the fulfillment of all of the conditions  precedent set forth herein,
Lenders  hereby waive any of their rights and remedies  under the Loan Documents
with respect to the Existing Defaults;  PROVIDED,  HOWEVER, the foregoing waiver
is limited  only to those  Existing  Defaults  that are  expressly  described in
Paragraph  2 hereto  and does not  extend to any  other  defaults,  breaches  or
failures  under the Loan  Documents  which  are not so  described,  whether  now
existing  or  hereafter  arising,  does  not  extend  to  any  deterioration  of
circumstances  which has the effect of creating an  additional  default  under a
term of any Loan  Document  with  respect  to which  there  currently  exists an
Existing Default,  and except as may be modified by subsequent  agreement of the
parties which modifies this  Agreement,  any of the Existing  Defaults or any of
the Loan  Documents,  does not extend to any failure to comply with the terms of
this  Agreement or the Loan  Documents  (collectively,  "Additional  Defaults").
Additional Defaults shall include,  without limitation,  any acceleration of the
Indenture  obligations,  any additional  defaults  under the Indenture,  and the
exercise of any  remedies  under the  Indenture on account of existing or future
defaults.

     5. AMENDMENTS OF LOAN DOCUMENTS.

     Debtors and Lenders  hereby agree that the terms of the Loan  Agreement are
amended only follows (collectively, the "Amendments"):

          a.  Section  2.6(a)  shall  be  replaced  in  its  entirety  with  the
following:

               "(a)  Interest  Rate.  Except as  provided  in clause  (c) below,
effective  April 30,  2000,  (i) all  Obligations  (except for the Term Loan and
amounts undrawn under Letters of Credit) shall bear interest at a per annum rate
of two (2)  percentage  points above the  reference  rate and (ii) the Term Loan
shall  bear  interest  at a rate of  15.50  percent  per  annum,  increasing  by
twenty-five  basis  points per month  beginning  on September 1, 2000 and on the
first day of each month  thereafter  for so long as any portion of the Term Loan
remains outstanding."

          b.  Section  2.6(b)  shall  be  replaced  in  its  entirety  with  the
following:

               "(b)  Letter of Credit  Fee.  Except as  provided  in clause  (c)
below,  Borrower shall pay Agent,  for the ratable benefit of the Lender Group a
fee (in addition to the charges,  commissions, fees and costs set forth therein)
equal to 6% per annum times the amount of the undrawn Letters of Credit."

          c. Debtors  shall  deposit the sum of $5 million in a deposit  account
acceptable  to Agent,  which  account  shall be subject  to a control  agreement
acceptable  to  Agent  (the  "Deposit  Amount").  The  Deposit  Amount  shall be
increased  by $1 million  beginning  on August 1, 2000,  and on the first day of
each month thereafter as long as any of the Obligations are owing.
<PAGE>
     6. AGREEMENT AS EXECUTORY; NO NOVATION.

          a. Debtors and Lenders  hereby agree that the  obligations  of Debtors
hereunder and under the Loan  Documents as amended  hereby are all executory and
that this Agreement shall be considered for all purposes,  including  assumption
or  rejection  under  Section 365 of the  Bankruptcy  Code,  to be an  executory
contract and the Loan Documents  shall be considered to be executory  agreements
relating to the extension of financial  accommodations unless this Agreement and
the Loan  Documents are  terminated  by Lenders  pursuant to the terms hereof or
thereof.

          b. Debtors and Lenders further agree that in no event shall the effect
of this Agreement be deemed to be a novation of the Loan  Documents,  the intent
of Debtors and Lenders  hereunder  being to confirm the  obligations  of Debtors
under the Loan Documents as amended hereby, with all of the terms and provisions
of the Loan  Documents  remaining in full force and effect save and except those
modified by the Amendments.

     7. CONDITIONS PRECEDENT.

     Debtors and Lenders hereby agree that each of the Amendments and the waiver
by Lender are expressly  conditioned upon the fulfillment and  satisfaction,  in
form and substance  acceptable to Agent in its sole discretion,  of each and all
of the following conditions precedent:

          a. This Agreement shall have been fully executed; and

          b. Debtors shall have complied with Section 5(c) of this Agreement.

     8. REPRESENTATIONS AND WARRANTIES.

     Debtors represent and warrant to Lenders that:

          a. Each and all of the Loan  Documents  and this  Agreement are valid,
binding and enforceable against Debtors in accordance with their terms.

          b. The  amount of  Debtors'  obligation  to Lenders is as set forth in
Section 3 hereto.

          c. No defaults,  breaches or failures  exist or have  occurred and are
continuing under the Loan Documents except for the Existing Defaults.
<PAGE>
          d.  Debtors  have all  necessary  capacity,  power  and  authority  to
execute,  deliver and perform its obligations under this Agreement,  and Debtors
are in good  standing  in such  jurisdiction  and in  every  other  in  which it
conducts business.

          e. The execution, delivery and performance of this Agreement have been
duly authorized by all necessary  corporate  action,  by Debtors and each of the
officers  of  Debtors  executing  this  Agreement.  Each such  officer  has been
authorized by Debtors to execute and deliver this Agreement.


<PAGE>


          f. Except as previously disclosed to Lenders,  there exist no defaults
under any material agreements to which Debtors are a party.

          g. Except as previously disclosed to Lenders, there exist no lawsuits,
legal,  governmental,  judicial or other proceedings,  investigations or similar
matters pending or threatened against Debtors.

     9. AFFIRMATIVE AND NEGATIVE COVENANTS.

          Debtors hereby covenant and agree:

          a. Each and every agreement,  security  interest,  benefit,  and other
item granted or  delivered  or to be granted or  delivered to Lenders  hereunder
shall remain in full force and effect.

          b.  Debtors  shall  cause to be  delivered  to Lenders  such  reports,
financial  statements and other  information  in form,  content and frequency as
required by Lenders.

          c.  Debtors  agree not to transfer any of their monies or other assets
except  in the  usual  and  ordinary  course  of their  business,  will  make no
extraordinary  payments  of any  type  whatsoever,  and will  not  increase  any
compensation  or pay any bonuses to its officers or  directors  unless and until
the Obligations are paid in full.

     10. EVENTS OF DEFAULT.

     Debtors  and  Lenders  hereby  agree  that  the  occurrence  of  any of the
following shall constitute an event of default ("Event of Default") hereunder:

          a. Any Additional Default.

          b.  The  failure  by  Debtors  to  fulfill  any of  their  obligations
hereunder.

          c. The breach by Debtors of any representation or warranty hereunder.
<PAGE>
          d.  Debtors  shall be the  subject  of any  voluntary  or  involuntary
petition in bankruptcy, receivership, assignment for the benefit of creditors or
any similar insolvency proceeding.

          e. There occurs any material  impairment in the prospects of repayment
of the obligations of Debtors to Lenders in addition to the Existing Defaults.

     11. REMEDIES.

     Upon the  occurrence of an Event of Default as defined  hereunder,  Lenders
may, at their election and without notice to or demand upon Debtor, exercise any
and all rights and  remedies  provided for under the Loan  Documents,  terminate
their obligations under this Agreement,  enforce any of their rights against all
collateral  security for the obligations of Debtors pursuant to the terms of the
applicable  Loan  Documents  and pursuant to  applicable  law, and exercise such
other rights and  remedies as may be available to Lenders at law, in equity,  or
otherwise.

     12. ADDITIONAL WAIVERS.

          a. Debtors, in light of the occurrence of the Existing Defaults,  each
hereby  unconditionally  and forever waives and renounces all rights that it may
have to  notification  of sale,  whether  public or  private,  under the Uniform
Commercial Code and the Loan Documents  which waiver and  renouncement is hereby
given in accordance with Uniform Commercial Code Section 9504(3).

          b.  Debtors  acknowledge  that  Lenders  would  not  enter  into  this
Agreement if, in the event of Debtors' subsequent default,  Debtors could impede
Lenders'  exercise of their rights and remedies under this  Agreement,  the Loan
Documents or applicable law, by seeking protection under the Bankruptcy Code. In
consideration of Lenders' agreements hereunder, Debtors agree that, in the event
that any of Debtors  commences a voluntary case under the Bankruptcy Code, or is
the subject of an involuntary case under the Bankruptcy  Code,  Lenders shall be
entitled to an immediate hearing (on forty eight hours notice) with respect to a
motion for relief from the  automatic  stay imposed by  Bankruptcy  Code section
362(a) (the "Relief Motion"), in order to enforce any and all of Lenders' rights
and remedies  provided under this Agreement,  the Loan Documents,  or applicable
law.  Debtors  agree that "cause" for such relief  exists  within the meaning of
Bankruptcy Code section  362(d)(1).  Debtors expressly waive any rights each may
otherwise have to oppose the Relief Motion, whether such motion is brought under
Bankruptcy Code section 362(d)(1) and/or 362(d)(2).  Further,  Debtors expressly
waive any rights each may have to seek injunctive  relief under  Bankruptcy Code
section 105, and to assert  Bankruptcy  Rule 7065 against  enforcement of, or in
conflict  with  the  provisions  of,  this  Agreement,  the  Loan  Documents  or
applicable law.
<PAGE>
     13. GOVERNING LAW.

     This Agreement shall be deemed to have been made in the State of California
and the validity, enforceability,  construction,  interpretation and enforcement
of this  Agreement  and the rights of the  parties  hereto  shall be  determined
under,  governed by and  construed in  accordance  with the laws of the State of
California, without regard to the principles of conflicts of law.

     14. COMPLETE AGREEMENT; INTEGRATION; MERGER; NO THIRD PARTY BENEFICIARIES.

     This Agreement,  and the Loan Documents, is intended by Debtors and Lenders
to be the complete,  integrated  and final  expression of their  agreement.  All
prior  understandings,  whether oral or written,  other than the Loan Documents,
are hereby merged into this Agreement. In the event of any contradiction between
any term or  condition  of this  Agreement  and a term or  condition of any Loan
Document,  this Agreement  shall control.  This Agreement and the Loan Documents
may only be  amended  by a writing  executed  by Lenders  and  Debtors.  No oral
amendment,  waiver or other  understanding with respect to the subject matter of
this Agreement or the Loan Documents, whether arising prior or subsequent to the
date hereof,  shall be enforceable.  This Agreement is entered into for the sole
benefit of Debtors  and  Lenders  and no other  person or entity  shall have any
rights or benefits under or by reason of this Agreement.

     15. JURISDICTION AND VENUE; WAIVER OF JURY TRIAL.

          a. Debtors and Lenders agree that all actions or  proceedings  arising
in connection  with this Agreement or any of the Loan  Documents  shall be tried
and litigated  only in the state and federal courts located in the County of Los
Angeles,  State of California or, at the sole election of Lenders,  in any other
court in which Lenders shall initiate legal or equitable  proceedings  and which
has subject matter jurisdiction over the matter in controversy.

          b. DEBTORS,  AND LENDERS HEREBY  EXPRESSLY WAIVE ANY RIGHT TO TRIAL BY
JURY OF ANY CLAIM,  DEMAND,  ACTION, CAUSE OF ACTION OR PROCEEDING ARISING UNDER
OR WITH  RESPECT TO OR IN ANY WAY RELATED TO THIS  AGREEMENT  OR ANY OF THE LOAN
DOCUMENTS. DEBTORS OR LENDERS MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS
SECTION  WITH ANY COURT AS WRITTEN  EVIDENCE  OF THE  CONSENT OF THE OTHER PARTY
HERETO TO THE WAIVER OF ITS RIGHT TO TRIAL BY JURY.
<PAGE>
     16. GENERAL RELEASE.

     IN  CONSIDERATION  OF LENDERS AGREEING TO ENTER INTO THIS AGREEMENT AND FOR
OTHER GOOD AND VALUABLE CONSIDERATION, DEBTORS EACH HEREBY RELEASE AND DISCHARGE
LENDERS THEIR AGENTS,  REPRESENTATIVES,  OFFICERS,  DIRECTORS, AND ASSIGNS, FROM
ANY  AND  ALL  CLAIMS,  LIABILITIES,  RIGHTS  AND  OBLIGATIONS,  OF  ANY  NATURE
WHATSOEVER,  WHETHER  SOUNDING IN TORT OR  CONTRACT,  ARISING  PRIOR TO THE DATE
HEREOF.  THIS  RELEASE  SHALL  BE  EFFECTIVE  NOTWITHSTANDING,  AND  DEBTOR  AND
GUARANTORS  EACH HEREBY WAIVE ANY AND ALL RIGHTS  ARISING  UNDER OR WITH RESPECT
TO, CALIFORNIA CIVIL CODE SECTION 1542 WHICH PROVIDES:

     "A GENERAL  RELEASE DOES NOT EXTEND TO CLAIMS  WHICH THE CREDITOR  DOES NOT
     KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING THE RELEASE,
     WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED HIS SETTLEMENT WITH THE
     DEBTOR."

     20. LENDERS EXPENSES.

     All costs and expenses  incurred by Lenders to negotiate  and document this
Agreement,  or any other document,  agreement or instrument contemplated hereby,
including without limitation the legal fees and cost of Buchalter, Nemer, Fields
& Younger,  a Professional  Corporation,  shall be paid by Debtors  concurrently
with the execution  hereof,  or at the option of Lenders,  shall be added to the
obligations owing to Lenders under the Loan Documents, and shall thereafter bear
interest as set forth therein.

IN WITNESS  WHEREOF,  the  parties  hereto  have  caused  this  Agreement  to be
executed.

                                  EMPLOYEE SOLUTIONS, INC.,
                                  an Arizona corporation


                                  By: /s/ John V. Prince
                                      ------------------------------------------
                                  Title: Senior Vice President, CFO, & TREASURER


                                  E.R.C. OF INDIANA, INC.,
                                  an Indiana corporation


                                  By: /s/ John V. Prince
                                      ------------------------------------------
                                      Title: Treasurer
<PAGE>
                                  EMPLOYEE RESOURCES CORPORATION,
                                  an Indiana corporation


                                  By: /s/ John V. Prince
                                      ------------------------------------------
                                      Title: Treasurer


                                  EMPLOYEE SOLUTIONS - EAST, INC.,
                                  a Georgia corporation


                                  By: /s/ John V. Prince
                                      ------------------------------------------
                                      Title: Treasurer


                                  EMPLOYEE SOLUTIONS - MIDWEST, INC.,
                                  a Michigan corporation


                                  By: /s/ John V. Prince
                                      ------------------------------------------
                                      Title: Treasurer


                                  EMPLOYEE SOLUTIONS - OHIO, INC.,
                                  an Indiana corporation


                                  By: /s/ John V. Prince
                                      ------------------------------------------
                                      Title: Treasurer


                                  EMPLOYEE SOLUTIONS OF ALABAMA, INC.,
                                  an Alabama corporation


                                  By: /s/ John V. Prince
                                      ------------------------------------------
                                      Title: Treasurer
<PAGE>
                                  EMPLOYEE SOLUTIONS OF CALIFORNIA, INC.,
                                  a Nevada corporation

                                  By: /s/ John V. Prince
                                      ------------------------------------------
                                      Title: Treasurer


                                  EMPLOYEE SOLUTIONS OF TEXAS, INC.,
                                  a Texas corporation


                                  By: /s/ John V. Prince
                                      ------------------------------------------
                                      Title: Treasurer


                                  EMPLOYEE SOLUTIONS - NORTH AMERICA,
                                  INC., a Delaware corporation


                                  By: /s/ John V. Prince
                                      ------------------------------------------
                                      Title: Treasurer


                                  EMPLOYEE SOLUTIONS - SOUTHEAST, INC.,
                                  a Florida corporation


                                  By: /s/ John V. Prince
                                      ------------------------------------------
                                      Title: Treasurer


                                  ERC OF MINN INC.,
                                  a Minnesota corporation


                                  By: /s/ John V. Prince
                                      ------------------------------------------
                                      Title: Treasurer
<PAGE>
                                  ERC OF OHIO INC.,
                                  a Michigan corporation


                                  By: /s/ John V. Prince
                                      ------------------------------------------
                                      Title: Treasurer


                                  ESI-NEVADA HOLDING COMPANY, INC.,
                                  a Nevada corporation


                                  By: /s/ John V. Prince
                                      ------------------------------------------
                                      Title: Treasurer


                                  ESI AMERICA, INC.,
                                  a Nevada corporation


                                  By: /s/ John V. Prince
                                      ------------------------------------------
                                      Title: Treasurer


                                  ESI RISK MANAGEMENT AGENCY, INC.,
                                  an Arizona corporation


                                  By: /s/ John V. Prince
                                      ------------------------------------------
                                      Title: Treasurer


                                  ESI-MIDWEST, INC.,
                                  a Nevada corporation


                                  By: /s/ John V. Prince
                                      ------------------------------------------
                                      Title: Treasurer


                                  ESI-NEW YORK, INC.,
                                  an Arizona corporation


                                  By: /s/ John V. Prince
                                      ------------------------------------------
                                      Title: Treasurer
<PAGE>
                                  FIDELITY RESOURCES CORPORATION,
                                  an Oklahoma corporation


                                  By: /s/ John V. Prince
                                      ------------------------------------------
                                      Title: Treasurer


                                  LOGISTICS PERSONNEL CORP.,
                                  a Nevada corporation


                                  By: /s/ John V. Prince
                                      ------------------------------------------
                                      Title: Treasurer


                                  PHOENIX CAPITAL MANAGEMENT, INC.,
                                  an Indiana corporation

                                  By: /s/ John V. Prince
                                      ------------------------------------------
                                      Title: Treasurer


                                  FOOTHILL CAPITAL CORPORATION,
                                  a California corporation, as Agent
                                  and a Lender


                                  By: /s/ Amy Lam
                                      ------------------------------------------
                                      Title: Vice President/Account Executive


                                  ABLECO FINANCE LLC,
                                  a Delaware limited liability company


                                  By: /s/ Ableco Finance LLC
                                      ------------------------------------------
                                      Title:
</TEXT>
</DOCUMENT>
