Execution Version
THIRD AMENDMENT TO LOAN DOCUMENTS
THIS THIRD AMENDMENT TO LOAN DOCUMENTS (this "THIRD AMENDMENT") is made
this 31st day of July 2003, among INTELLIGROUP, INC., a corporation organized
under the laws of the State of New Jersey and EMPOWER, INC., a corporation
organized under the laws of the State of Michigan (each a "BORROWER" and
collectively "BORROWERS"), the financial institutions which are now or which
hereafter become a party hereto (collectively, the "LENDERS" and individually a
"LENDER") and PNC BANK, NATIONAL ASSOCIATION ("PNC"), as agent for Lenders (PNC,
in such capacity, the "AGENT").
BACKGROUND
A. Borrowers have executed and delivered to PNC, in its capacity as the
Agent and sole Lender with respect to this transaction, one or more promissory
notes, letter agreements, loan agreements, security agreements, mortgages,
pledge agreements, collateral assignments, and other agreements, instruments,
certificates and documents, some or all of which are more fully described on
attached Exhibit A, which is made a part of this Third Amendment (collectively,
as amended from time to time, the "LOAN DOCUMENTS"), which Loan Documents
evidence or secure some or all of Borrowers' obligations to Lenders for one or
more loans or other extensions of credit (the "OBLIGATIONS").
B. Borrowers, Agent and Lenders desire to amend the Loan Documents as
provided for in this Third Amendment.
NOW, THEREFORE, in consideration of the mutual covenants herein contained
and intending to be legally bound hereby, the parties hereto agree as follows:
1. Certain of the Loan Documents are amended as set forth in Exhibit A. Any
and all references to any Loan Document in any other Loan Document shall be
deemed to refer to such Loan Document as amended by this Third Amendment. This
Third Amendment is deemed incorporated into each of the Loan Documents. Any
initially capitalized terms used in this Third Amendment without definition
shall have the meanings assigned to those terms in the Loan Documents. To the
extent that any term or provision of this Third Amendment is or may be
inconsistent with any term or provision in any Loan Document, the terms and
provisions of this Third Amendment shall control.
2. Borrowers hereby certify that: (a) all of their representations and
warranties in the Loan Documents, as amended by this Third Amendment, are,
except as may otherwise be stated in this Third Amendment: (i) true and correct
as of the date of this Third Amendment, (ii) ratified and confirmed without
condition as if made anew, and (iii) incorporated into this Third Amendment by
reference; (b) no Event of Default or event which, with the passage of time or
the giving of notice or both, would constitute an Event of Default, exists under
any Loan Document which will not be cured by the execution and effectiveness of
this Third Amendment; (c) no consent, approval, order or authorization of, or
registration or filing with, any third party is required in connection with the
execution, delivery and carrying out of this Third Amendment or, if required,
has been obtained; and (d) this Third Amendment has been duly authorized,
executed
and delivered so that it constitutes the legal, valid and binding obligation of
Borrowers, enforceable in accordance with its terms. Borrowers confirm that the
Obligations remain outstanding without defense, set off, counterclaim, discount
or charge of any kind as of the date of this Third Amendment.
3. Borrowers hereby confirm that any collateral for the Obligations,
including liens, security interests, mortgages, and pledges granted by Borrowers
or third parties (if applicable), shall continue unimpaired and in full force
and effect, and shall cover and secure all of Borrowers' existing and future
Obligations, as modified by this Third Amendment.
4. As a condition precedent to the effectiveness of this Third Amendment,
Borrowers shall comply with the terms and conditions (if any) specified in
Exhibit A, if any.
5. This Third Amendment may be signed in any number of counterpart copies
and by the parties to this Third Amendment on separate counterparts, but all
such copies shall constitute one and the same instrument. Delivery of an
executed counterpart of a signature page to this Third Amendment by facsimile
transmission shall be effective as delivery of a manually executed counterpart.
Any party so executing this Third Amendment by facsimile transmission shall
promptly deliver a manually executed counterpart, provided that any failure to
do so shall not affect the validity of the counterpart executed by facsimile
transmission.
6. This Third Amendment will be binding upon and inure to the benefit of
Borrowers, Agent and Lenders and their respective successors and assigns.
7. This Third Amendment will be interpreted and the rights and liabilities
of the parties hereto determined in accordance with the laws of the State of New
Jersey, excluding its conflict of laws rules.
8. Except as amended hereby, the terms and provisions of the Loan Documents
remain unchanged, are and shall remain in full force and effect unless and until
modified or amended in writing in accordance with their terms, and are hereby
ratified and confirmed. Except as expressly provided herein, this Third
Amendment shall not constitute an amendment, waiver, consent or release with
respect to any provision of any Loan Document, a waiver of any default or Event
of Default under any Loan Document, or a waiver or release of any of Agent's or
Lenders' rights and remedies (all of which are hereby reserved). BORROWERS
EXPRESSLY RATIFY AND CONFIRM THE WAIVER OF JURY TRIAL PROVISIONS CONTAINED IN
THE LOAN DOCUMENTS.
[SIGNATURE PAGE FOLLOWS]
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WITNESS the due execution of this Third Amendment as a document under seal
as of the date first written above.
INTELLIGROUP, INC.
By: /s/ Xxxxxxxx Xxxxx
-----------------------------------------
Name: Xxxxxxxx Xxxxx
Title: Chief Financial Officer
000 Xxxxxxxx Xxxxxx
Xxxxxx, Xxx Xxxxxx 00000
EMPOWER, INC.
By: /s/ Xxxxxxxx Xxxxx
-----------------------------------------
Name: Xxxxxxxx Xxxxx
Title: Secretary
c/o Intelligroup, Inc.
000 Xxxxxxxx Xxxxxx
Xxxxxx, Xxx Xxxxxx 00000
PNC BANK, NATIONAL ASSOCIATION, as Lender
and as Agent
By: /s/ Xxxx Xxxxxxxxx
-----------------------------------------
Name: Xxxx Xxxxxxxxx
Title: Assistant Vice President
PNC Business Credit
00 Xxxx 00xx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Commitment Percentage: 100%
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EXHIBIT A TO
THIRD AMENDMENT TO LOAN DOCUMENTS
DATED JULY 31, 2003
A. The "Loan Documents" that are the subject of this Third Amendment include the
following (as any of the foregoing have previously been amended, modified or
otherwise supplemented):
1. The Amended and Restated Revolving Credit Loan and Security Agreement
dated May 31, 2000, as amended by the First Amendment to Loan Documents
and Waiver Agreement dated March 27, 2002, and as amended by the Second
Amendment to Loan Documents and Waiver Agreement dated January 6, 2003
(as amended, the "Loan Agreement"); and
2. All other documents, instruments, agreements, and certificates executed
and delivered in connection with the Loan Documents.
B. The Loan Documents are amended as follows:
1. The definitions of "Maximum Revolving Advance Amount", "Total
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Stockholders Equity" and "Unconsolidated Stockholders Equity" set forth in
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Article I of the Loan Agreement, "Definitions", are hereby amended and
restated as follows:
"Maximum Revolving Advance Amount" shall mean Fifteen
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Million Dollars ($15,000,000.00).
"Total Stockholders Equity" shall mean, at a particular
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date, (a) the aggregate amount of all assets of Borrowers on
a consolidated basis as may be properly classified as such
in accordance with GAAP consistently applied exclusive of
Borrowers' investment in SeraNova, less (b) the aggregate
amount of all liabilities of the Borrowers on a consolidated
basis. Notwithstanding anything contained herein to the
contrary, the computation of Total Stockholders Equity shall
exclude any changes thereto (positive or negative) other
than from the result of operations; specifically excluded
from this computation are: (i) any non-operational factors,
events or circumstances, such as, but not limited to, the
issuance of stock, options, warrants or similar instruments,
the repurchases or redemption of stock or unrealized
currency transactions, the sale (on terms acceptable to
Lenders and with the prior written consent of Lenders) of
all or substantially all of the stock or assets of any
foreign Subsidiary of Borrowers; (ii) the one-time expenses
incurred by Intelligroup, Inc. in conjunction with a
continuing proxy fight (y) in fiscal year 2002 in the
aggregate amount of $876,000.00 and (z) in fiscal year 2003
in the sum of up to but not exceeding $297,000.00 expended
prior to March 31, 2003; and (iii) any write-down or
write-off (up to but not exceeding the sum of $13,600,000)
of the note due from
SeraNova, provided also, however, sales of other assets not
in the ordinary course of business shall be included in said
computation.
"Unconsolidated Stockholders Equity" shall mean, at a
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particular date, (a) the aggregate amount of all assets of
Borrowers and their respective subsidiaries which are
organized under the laws of one of the states of the United
States (exclusive of Borrower's investment in Sera Nova) on
a consolidated basis as may be properly classified as such
in accordance with GAAP consistently applied, less (b) the
aggregate amount of all liabilities of the Borrowers and
such subsidiaries on a consolidated basis. Notwithstanding
anything contained hereto to the contrary, the definition of
Unconsolidated Stockholders Equity shall exclude any changes
thereto (positive or negative) other than from the results
of operations; specifically excluded from this computation
are: (i) any non-operational factors, events or
circumstances, such as, but not limited to, the issuance of
stock, options, warrants or similar instruments, the
repurchase or redemption of stock or unrealized currency
transactions, the sale (on terms acceptable to Lenders and
with the prior written consent of Lenders) of all or
substantially all of the stock or assets of any foreign
Subsidiary of Borrowers; (ii) the one-time expenses incurred
by Intelligroup, Inc. in conjunction with a continuing proxy
fight (y) in fiscal year 2002 in the aggregate amount of
$876,000.00 and (z) in fiscal year 2003 in the sum of up to
but not exceeding $297,000.00 expended prior to March 31,
2003; and (iii) and any write-down or write-off (up to but
not exceeding the sum of $13,600,000) of the note due from
SeraNova, provided also, however, sales of assets not in the
ordinary course of business shall be included in said
computation.
2. Sections 7.5, 7.6 and 7.20 of Article VII of the Loan Agreement,
"Negative Covenants", are hereby amended and restated as follows:
7.5 Loans. Make advances, loans or extensions of credit
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to any Person, including without limitation, any Parent,
Subsidiary or Affiliate except as hereinafter provided and
loans made in the ordinary course of business: (a) to
employees not to exceed the aggregate amount of Four Hundred
Thousand Dollars ($400,000.00) at any time outstanding; (b)
to SeraNova at any time, except that the existing note from
SeraNova, with an approximate outstanding principal balance
of $13,600,000.00, may be written down or written off; and
(c) after the Closing Date to foreign subsidiaries or
divisions, not to exceed the aggregate amount of One Million
Seven Hundred Thousand Dollars ($1,700,000.00) outstanding
at any time. Notwithstanding anything contained herein to
the contrary, Borrowers may make advances, loans or
extensions of credit to their Subsidiaries which are
organized under the laws of a United States jurisdiction
without restriction as to dollar amount, provided Agent
shall have received
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an executed Guarantee, Guarantor Security Agreements and
such other documents as Agent may require all in form and
substance satisfactory to Agent from each such Subsidiary,
prior to the making of any such loan or extension of credit.
7.6 Capital Expenditures. Contract for, purchase or make
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any expenditure or commitments for fixed or capital assets
(including capitalized leases but excluding capitalized
internally developed software costs) in any fiscal year in
an aggregate amount for all Borrowers in excess of Five
Million Dollars ($5,000,000.00).
7.20 Minimum EBITDA. Cause suffer or permit EBITDA,
----------------
calculated on a quarter-by-quarter basis for each of the
four fiscal quarters and, at year-end only, on a
year-to-date basis, to be or become less than: (a) during
the 2003 fiscal year (i) One Million Two Hundred Thirty Nine
Thousand Dollars ($1,239,000) as of the Xxxxx 00, 0000
xxxxxxx-xxx, (xx) One Million Two Hundred Ninety Thousand
Dollars ($1,290,000) as of the June 30, 2003 quarter-end,
(iii) One Million Seven Hundred Seventy Eight Thousand
Dollars ($1,778,000) as of the September 30, 2003
quarter-end, (iv) One Million Eight Hundred Eighty Thousand
Dollars ($1,880,000) as of the December 31, 2003
quarter-end, and (v) Six Million One Hundred Eighty Seven
Thousand Dollars ($6,187,000) for the fiscal year ending
December 31, 2003, and (b) thereafter, (i) as of the end of
each fiscal year not less than ninety-five percent (95%) of
actual EBITDA as of the prior fiscal year end and (ii)
during each fiscal year, as of the end of the first, second,
third and fourth fiscal quarters, to be or become less than
twenty percent (20%), twenty-five percent (25%), thirty
percent (30%), and twenty-five percent (25%), respectively,
of the required total EBITDA for such fiscal year. Anything
contained in this Agreement to the contrary notwithstanding,
for the purpose of calculating EBITDA for the 2003 fiscal
year only, the one-time expenses incurred by Intelligroup,
Inc. in conjunction with a continuing proxy fight in fiscal
year 2003 in the sum of up to but not exceeding $297,000.00
expended prior to March 31, 2003 shall be added to EBITDA
which, in all other respects, shall be determined in
accordance with GAAP.
2. Section 13.1 of Article XIII of the Loan Agreement, "Effective Date and
Termination", is hereby amended and restated as follows:
13.1 Term. This Agreement, which shall inure to the
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benefit of and shall be binding upon the respective
successors and permitted assigns of each Borrower, Agent and
each Lender, shall become effective on the date hereof and
shall continue in full force and effect until May 31, 2006
(the "Term") unless sooner terminated as herein provided.
Borrowers may terminate this
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Agreement at any time upon ninety (90) days' prior written
notice upon payment in full of the Obligations. In the event
the Obligations are prepaid in full prior to the second
annual anniversary of the Closing Date (the date of such
prepayment hereinafter referred to as the "Early Termination
Date"), Borrowers shall pay to Agent for the benefit of
Lenders an early termination fee in an amount equal to
one-quarter of one percent (1/4%) of the Maximum Revolving
Advance Amount if the Early Termination Date at any time on
or prior to May 31, 2005. Provided, however, no Early
Termination Fee shall be due in the event of a refinancing
of the Obligations by PNC.
C. In consideration of the facilities being granted by Lenders to Borrowers
under the terms and conditions of this Third Amendment and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the effectiveness of this Third Amendment is conditioned upon
satisfaction by the Borrowers of the following:
1. Borrowers' payment to PNC of a Fifty Thousand Dollar
($50,000.00) amendment fee which, shall be due and payable
in full, and deemed non-refundable upon the execution and
delivery of this Third Amendment. Such fee may be paid by
Lender making an Advance against the Borrowers' Revolving
Loan and retaining the proceeds of such Advance. Borrowers
hereby consent to Lender's making such charge.
2. Agent's receipt of a fully executed counterpart of (a) this
Third Amendment, (b) an Amended and Restated Secured
Revolving Note for the face amount of Fifteen Million
Dollars ($15,000,000.00), (c) resolution by the direction of
Borrowers, in form and substance acceptable to Agent,
authorizing this Third Amendment, and (d) all other
documents and instruments in conjunction with this Third
Amendment as may be required by Agent, in form and substance
satisfactory to Agent.
3. Borrowers' payment to Agent's counsel, immediately upon
presentation of an invoice, of all fees and expenses of such
counsel incurred in conjunction with the preparation and
execution of this Third Amendment. Such fees and expenses
may be paid by Lender making an Advance against the
Borrowers' Revolving Loan and retaining the proceeds of such
Advance. Borrowers hereby consent to Lender's making such
charge.
[End of Exhibit A to Third Amendment to Loan Documents]
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