EFFECTIVE MANAGEMENT SYSTEMS, INC.

                       NONSTATUTORY STOCK OPTION AGREEMENT

     THIS NONSTATUTORY  STOCK OPTION AGREEMENT (this "Stock Option  Agreement"),
dated as of this 1st day of February,  1999, by and between Effective Management
Systems,    Inc.,    a    Wisconsin    corporation    (the    "Company"),    and
______________________ (the "Optionee").

                              W I T N E S S E T H:

     WHEREAS,  in  recognition  of  the  Optionee's  service  as a  non-employee
director of the Company,  the Board of Directors  has deemed it  appropriate  to
grant the Optionee an option to purchase  shares of the Company's  common stock,
par value $0.01 per share (the "Common Stock"); and

     WHEREAS,  the parties deem it appropriate to memorialize  the grant of such
option.

     NOW,  THEREFORE,  in consideration of the premises and of the covenants and
agreements  herein set forth, the parties hereby mutually  covenant and agree as
follows:

     1.  Grant of  Option.  Subject  to the terms and  conditions  of this Stock
Option  Agreement,  the  Company  hereby  grants to the  Optionee an option (the
"Option") to purchase from the Company all or any part of the  aggregate  amount
of ______________ shares of Common Stock (the "Optioned Shares").  The Option is
intended to constitute a  nonstatutory  stock option and shall not be treated as
an  incentive  stock  option  within the meaning of Section 422 of the  Internal
Revenue Code of 1986, as amended.

     2. Option  Price.  The price to be paid for the  Optioned  Shares  shall be
$1-7/16 per share.

     3. Exercisability and Termination of Option.

     a. The Option shall vest and become  exercisable,  but only during the time
that the  Optionee  is serving as a director  of the  Company,  as to 30% of the
Optioned Shares immediately, as to an additional 30% after one calendar year has
elapsed  from the date of this Stock Option  Agreement,  and as to the final 40%
after the second  calendar  year has elapsed  from the date of this Stock Option
Agreement;  provided,  however,  that if the Optionee ceases to be a director of
the Company by reason of death,  disability,  or retirement  within two calendar
years after the date of this Stock Option  Agreement or in the event of a Change
in  Control  (as  defined  in  Section  3.b  below),  the  Option  shall  become
immediately  exercisable in full. The Option shall  terminate on the earlier of:
(i) February 1, 2009; (ii) six months after the Optionee ceases to be a director
of the Company by reason of death;  or (iii)  three  months  after the  Optionee
ceases to be a director of the Company for any reason other than death.

     b. A "Change in Control" shall be deemed to have occurred if the events set
forth in any one of the following paragraphs shall have occurred:

<PAGE>

          i. any  "Person"  (as such term is defined  in section  3(a)(9) of the
     Securities  Exchange  Act of 1934,  as  amended,  as  modified  and used in
     sections 13(d) and 14(d) thereof), other than (A) the Company or any of its
     subsidiaries, (B) a trustee or other fiduciary holding securities under any
     employee  benefit  plan of the Company or any of its  subsidiaries,  (C) an
     underwriter  temporarily holding securities pursuant to an offering of such
     securities  or (D) a  corporation  owned,  directly or  indirectly,  by the
     shareholders of the Company in  substantially  the same proportion as their
     ownership  of  Common  Stock in the  Company  ("Excluded  Persons"),  is or
     becomes  the  "Beneficial  Owner"  (as  defined  in rule  13d-3  under  the
     Securities  Exchange Act of 1934, as amended),  directly or indirectly,  of
     securities  of the  Company  representing  25% or more of  either  the then
     outstanding  shares of Common  Stock or the  combined  voting  power of the
     Company's the outstanding voting securities; or

          ii. the  shareholders of the Company approve a merger or consolidation
     of the Company with any other corporation or approve the issuance of voting
     securities of the Company in connection with a merger or  consolidation  of
     the Company (or any direct or indirect  subsidiary of the Company) pursuant
     to  applicable  stock  exchange  requirements,  other  than (i) a merger or
     consolidation  that would  result in the voting  securities  of the Company
     outstanding immediately prior to such merger or consolidation continuing to
     represent  (either by  remaining  outstanding  or by being  converted  into
     voting  securities of the surviving  entity or any parent thereof) at least
     50% of the combined voting power of the voting securities of the Company or
     such surviving entity or any parent thereof  outstanding  immediately after
     such merger or consolidation, or (ii) a merger or consolidation effected to
     implement a  recapitalization  of the Company (or similar  transaction)  in
     which  no  Person  (other  than  an  Excluded  Person)  is or  becomes  the
     Beneficial  Owner,  directly or  indirectly,  of  securities of the Company
     representing  25% or more of either the then  outstanding  shares of Common
     Stock or the combined voting power of the Company's then outstanding voting
     securities; or

          iii.  the  shareholders  of the  Company  approve  a plan of  complete
     liquidation  or  dissolution of the Company or an agreement for the sale or
     disposition  by the Company of all or  substantially  all of the  Company's
     assets (in one transaction or a series of related  transactions  within any
     period of 24 consecutive  months),  other than a sale or disposition by the
     Company of all or substantially all of the Company's assets to an entity at
     least 75% of the combined  voting power of the voting  securities  of which
     are  owned  by  Persons  in  substantially  the  same  proportion  as their
     ownership of the Company immediately prior to such sale.

Notwithstanding  the  foregoing,  no "Change in Control" shall be deemed to have
occurred  if there is  consummated  any  transaction  or  series  of  integrated
transactions  immediately following which the record holders of the Common Stock
immediately prior to such transaction or series of transactions continue to have
substantially  the same  proportionate  ownership  in an entity that owns all or
substantially  all of the  assets  of the  Company  immediately  following  such
transaction or series of transactions.

     4. Manner of Exercise and Payment. Subject to the provisions of Paragraph 3
hereof,  the Option may be exercised in full at any time or in part from time to
time by  

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<PAGE>

delivery to the Assistant  Secretary of the Company at the  Company's  principal
office in Milwaukee,  Wisconsin,  of a written notice of exercise specifying the
number of shares with respect to which the Option is being exercised. The notice
of  exercise  must be  accompanied  by full  payment of the option  price of the
shares  being  purchased:  (i) in cash  or its  equivalent;  (ii)  by  tendering
previously acquired shares of Common Stock (valued at their fair market value as
of the date of exercise as  determined in the manner as provided by the Board of
Directors);  or (iii) by any  combination  of the means of payment  set forth in
subparagraphs (i) and (ii). For purposes of subparagraphs  (ii) and (iii) above,
the term "previously  acquired shares of Common Stock" shall only include Common
Stock owned by the  Optionee  prior to the  exercise of the Option and shall not
include shares of Common Stock which are being acquired pursuant to the exercise
of the Option.  No Optioned  Shares shall be issued until full payment  therefor
has been made.

     5.  Nontransferability  of the Option. The Option shall not be transferable
by the Optionee other than by will or the laws of descent and distribution.  The
Option may be exercised  during the life of the Optionee only by the Optionee or
the Optionee's guardian or legal representative.

     6. Tax  Withholding.  The  Company  may deduct and  withhold  from any cash
otherwise  payable to the Optionee (whether payable as director's fees, bonus or
other compensation) such amount as may be required for the purpose of satisfying
any obligation the Company may have to withhold  federal,  state or local taxes.
Further,  in the event the amount so withheld is insufficient  for such purpose,
the Company may require  that the Optionee pay to the Company upon its demand or
otherwise  make  arrangements  satisfactory  to the  Company for payment of such
amount as may be requested by the Company in order to satisfy its  obligation to
withhold any such taxes.

     7.  Capital  Adjustments  Affecting  the  Common  Stock.  In the event of a
capital adjustment  resulting from a stock dividend (other than a stock dividend
in lieu of an ordinary cash dividend),  stock split,  reorganization,  spin-off,
split-up or distribution of assets to  shareholders,  recapitalization,  merger,
consolidation,  combination  or  exchange  of shares or the like,  the number of
shares of Common  Stock  subject to the  Option  shall be  adjusted  in a manner
consistent  with  such  capital  adjustment;  provided,  however,  that  no such
adjustment  shall  require  the  Company to sell any  fractional  shares and the
adjustment  shall be  limited  accordingly.  The price of any  shares  under the
Option  shall be  adjusted  so that  there  will be no change  in the  aggregate
purchase  price payable upon exercise of the Option.  The  determination  of the
Board of Directors of the Company as to any adjustment shall be final.

     8.  Representation  by the  Optionee.  By  execution  of this Stock  Option
Agreement,  the  Optionee  represents  to the Company  that his  acquisition  of
Optioned Shares upon exercise of the Option will be for investment purposes only
for his own account and not with a view to resell or otherwise  distribute  such
shares.  The Optionee  acknowledges  that the  issuance of Optioned  Shares upon
exercise of the Option will not be registered  under the Securities Act of 1933,
as amended,  or under any state  securities laws, and that such shares cannot be
resold or otherwise  transferred  unless  registered  under said Act and laws or
unless an  exemption  from  registration  is  available.  The  Optionee  further
acknowledges  that the  certificate  or  certificate  representing  the Optioned
Shares acquired upon exercise of the Option shall bear the following legend:

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<PAGE>

          "The shares of common  stock of  Effective  Management  Systems,  Inc.
          represented by this  certificate  have not been  registered  under the
          Securities Act of 1933, as amended,  or any state securities laws, and
          such  shares  may  not  be  resold  or  otherwise  transferred  unless
          registered  under  said  Act and  laws or  unless  an  exemption  from
          registration is available."

     9. Status of Optionee.  The Optionee  shall have no rights as a shareholder
with respect to Optioned Shares covered by the Option until the date of issuance
of stock certificates to the Optionee and only after such shares are fully paid.
The  Option  shall not  confer  upon the  Optionee  the right to  continue  as a
director of the Company.

     10. Powers of the Company Not  Affected.  The existence of the Option shall
not affect in any way the right or power of the Company or its  shareholders  to
make or authorize any or all adjustments, recapitalizations,  reorganizations or
other changes in the Company's capital structure or its business,  or any merger
or consolidation of the Company, or any issue of bonds, debentures, preferred or
prior  preference  stock ahead of or  affecting  the Common  Stock or the rights
thereof,  or any  dissolution  or  liquidation  of the  Company,  or any sale or
transfer of all or any part of its assets or business or any other corporate act
or proceeding, whether of a similar character or otherwise.

     11.  Interpretation  by the  Board  of  Directors.  As a  condition  of the
granting  of the  Option,  the  Optionee  agrees,  for  himself  and  his  legal
representatives  or  guardians,  that  this  Stock  Option  Agreement  shall  be
interpreted by the Board of Directors and that any  interpretation  by the Board
of the terms of this Stock Option  Agreement and any  determination  made by the
Board  pursuant  to this Stock  Option  Agreement  shall be final,  binding  and
conclusive.

     12.  Requirements  of Law.  The grant of the  Option  and the  issuance  of
Optioned  Shares  pursuant  to this Stock  Option  Agreement  are subject to all
applicable laws, statutes, rules and regulations.

     13.  Governing  Law. This Stock Option  Agreement  shall be governed by and
construed in accordance with the internal laws of the State of Wisconsin.

     14.  Amendment.  This Stock Option Agreement may not be amended,  modified,
terminated  or otherwise  altered  except by the written  consent of the parties
hereto.

     15.  Severability.  The parties  agree that if any  provision of this Stock
Option Agreement shall under any circumstances be deemed invalid or inoperative,
this Stock Option  Agreement  shall be construed with the invalid or inoperative
provision or provisions  deleted and the rights and  obligations  of the parties
shall be construed and enforced accordingly.

     16.  Entire  Agreement.  This Stock Option  Agreement  evidences the entire
agreement  between the parties  hereto with respect to the matters  provided for
herein and there are no agreements,  representations  or warranties with respect
to the matters provided herein other than those set forth herein.

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<PAGE>

     17.  Headings.  The  headings  for  the  paragraphs  of this  Stock  Option
Agreement are inserted for  convenience  only and shall not constitute a part of
this Stock Option Agreement.

     IN WITNESS  WHEREOF,  the Company has caused this Stock Option Agreement to
be  executed  by its  duly  authorized  officers  and its  corporate  seal to be
hereunto affixed,  and the Optionee has hereunto affixed his hand and seal as of
the day and year first above written.

                                  EFFECTIVE MANAGEMENT SYSTEMS, INC.



                                  By: _________________________________
[SEAL]
                                  Attest: _____________________________



                                  _____________________________________ [SEAL]

                                  _________________, Optionee


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