EXHIBIT 10.1
Line of Credit Agreement
Bank One, Michigan (the "Bank"), whose address is 000 Xxxxxxxx Xxxxxx, Xxxxxxx,
Xxxxxxxx 00000-0000, has approved the credit facilities listed below
(collectively, the "Credit Facilities," and, individually, as designated below)
to Syntel, Inc. (the "Borrower"), whose address is 0000 Xxxxxxxxx, Xxxxx 000,
Xxxx, XX 00000 subject to the terms and conditions set forth in this agreement.
1.0 Credit Facilities.
1.1 Facility A (Including Letters of Credit). The Bank has approved a
credit facility to the Borrower in the principal sum not to exceed
$20,000,000.00 in the aggregate at any one time outstanding
("Facility A"). Facility A shall include the issuance of standby
letters of credit not exceeding $5,000,000.00 in the aggregate at
any one time outstanding, expiring not later than February 28,
2003 (the "Letters of Credit"). Each Letter of Credit shall be in
form acceptable to the Bank and shall bear a fee of 1% per year of
the face amount payable annually in advance. Credit under Facility
A shall be in the form of disbursements evidenced by credits to
the Borrower's account and shall be repayable as set forth in a
Revolving Business Credit Note executed concurrently (referred to
in this agreement both singularly and together with any other
promissory notes referenced in this Section 1 as the "Notes") or
by issuance of a Letter of Credit upon completion of an
application acceptable to the Bank. The proceeds of Facility A
shall be used for the following purpose: working capital. Facility
A shall expire on August 31, 2002 unless earlier withdrawn.
1.2 Liabilities. The Term "Liabilities" in this agreement means all
obligations, indebtedness and liabilities of the Borrower to any
one or more of the Bank, BANK ONE CORPORATION, and any of their
subsidiaries, affiliates or successors, now existing or later
arising, including, without limitation, all loans, advances,
interests, costs, overdraft indebtedness, credit card
indebtedness, lease obligations, or obligations relating to any
Rate Management Transaction, all monetary obligations incurred or
accrued during the pendency of any bankruptcy, insolvency,
receivership or other similar proceedings, regardless of whether
allowed or allowable in such proceeding, and all renewals,
extensions, modifications, consolidations or substitutions of any
foregoing, whether the Borrower may be liable jointly with others
or individually liable as a debtor, maker, co-maker, drawer,
endorser, guarantor, surety or otherwise, and whether voluntarily
or involuntarily incurred, due or not due, absolute or contingent,
direct or indirect, liquidated or unliquidated. The term "Rate
Management Transaction" in this agreement means any transaction
(including an agreement with respect thereto) now existing or
hereafter entered into among the Borrower, the Bank or BANK ONE
CORPORATION, or any of its subsidiaries or affiliates or their
successors, which is a rate swap, basis swap, forward rate
transaction, commodity swap, commodity option, equity or equity
index swap, equity or equity index option, bond option, interest
rate option, foreign exchange transaction, cap transaction, floor
transaction, collar transaction, forward transaction, currency
swap transaction, cross-currency rate swap transaction, currency
option or any similar transaction (including any option with
respect to any of these transactions) or any combination thereof,
whether linked to one or more interest rates, foreign currencies,
commodity prices,
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equity prices or other financial measures.
2.0 Conditions Precedent.
2.1 Conditions Precedent to Initial Extension of Credit. Before the
first extension of credit under this agreement, whether by
disbursement of a loan, issuance of a letter of credit, the
funding of a Lease or otherwise, the Borrower shall deliver to the
Bank, in form and substance satisfactory to the Bank:
A. Loan Documents. The Notes, and if applicable, the Leases,
the letter of credit applications, the security agreement,
financing statements, mortgage, guaranties, subordination
agreements and any other loan documents which the Bank may
reasonably require to give effect to the transactions
described by this agreement or to any Liabilities being
entered into concurrently;
B. Evidence of Due Organization and Good Standing. Evidence
satisfactory to the Bank of the due organization and good
standing of the Borrower and every other business equity
that is a party to this agreement or any other loan
document required by this agreement;
C. Evidence of Authority to Enter into Loan Documents.
Evidence satisfactory to the Bank that (i) each party to
this agreement and any other loan document required by
this agreement is authorized to enter into the
transactions described by this agreement and the other
loan documents, and (ii) the person signing on behalf of
each party is authorized to do so; and
2.2 Conditions Precedent to Each Extension of Credit. Before any
extension of credit under this agreement, whether by disbursement
of a loan, issuance of a letter of credit, the funding of a Lease
or otherwise, the following conditions shall have been satisfied;
A. Representations. The Representations contained in this
agreement shall be true on and as of the date of the
extension of credit;
B. No Event of Default. No event of default shall have
occurred and be continuing or would result from the
extension of credit;
C. Additional Approvals, Opinions, and Documents. The Bank
shall have received such other approvals, opinions and
documents as it may reasonably request.
3.0 Fees and Expenses.
3.1 Out-of-Pocket Expenses. The Borrower shall reimburse the Bank for
its out-of-pocket expenses, and reasonable attorney's fees
(including the fees of in-house counsel) allocated to the Credit
Facilities.
4.0 Security.
4.1 [Deleted].
4.2 No forbearance or extension of time granted any subsequent owner
of the Collateral shall release the Borrower from liability.
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4.3 Additional Collateral/Setoff. To further secure payment of the
borrowings and all other obligations under the Credit Facilities
and all other Liabilities, the Borrower grants to the Bank a
continuing security interest in: (i) all securities and other
property of the Borrower in the custody, possession or control of
the Bank (other than property held by the Bank solely in a
fiduciary capacity) and (ii) all balances of deposit accounts of
the Borrower with the Bank ("deposit account" having the meaning
given to it in the UCC). The foregoing shall be considered to be
part of the Collateral for the Credit Facilities and all other
Liabilities and is included whenever the term "Collateral" is used
in this agreement. The Bank shall have the right at any time to
apply its own debt or liability to the Borrower, or to any other
party liable for payment of the obligations under the Credit
Facilities or any other Liabilities, in whole or partial payment
of such obligations or other Liabilities, without any requirement
of mutual maturity.
4.4 Cross Lien. Any of the Borrower's other property in which the Bank
has a security interest to secure payment or performance of any
other Liabilities, shall also secure payment of and be part of the
Collateral for the Credit Facilities.
5.0 Affirmative Covenants. The Borrower, and each of its subsidiaries, if
any, shall:
5.1 Insurance. Maintain insurance with financially sound and reputable
insurers covering its properties and business against those
casualties and contingencies and in the types and amounts as shall
be in accordance with sound business and industry practices.
5.2 Existence. Maintain its existence and business operations as
presently in effect in accordance with all applicable laws and
regulations, pay its debts and obligations when due under normal
terms, and pay on or before their due date, all taxes,
assessments, fees and other governmental monetary obligations,
except as they may be contested in good faith if they have been
properly reflected on its book and, at the Bank's request,
adequate funds or security has been pledged to insure payment.
5.3 Financial Records. Maintain proper books and records of account,
in accordance with generally accepted accounting principles where
applicable, and consistent with financial statements previously
submitted to the Bank. The Bank retains the right to inspect the
Collateral and business records related to it at such times and at
such intervals as the Bank may reasonably require.
5.4 Notice. Give prompt notice to the Bank of the occurrence of (i)
any Event of Default, and (ii) any other development, financial or
otherwise, which would affect the Borrower's business, properties
or affairs in a materially adverse manner.
5.5 Financial Reports. Furnish to the Bank whatever information,
books, and records the Bank may reasonably request, including at a
minimum: (If the Borrower has subsidiaries, all financial
statements required will be provided on a consolidated and on a
separate basis.)
5.6 Financial Reports. Furnish to the Bank whatever information,
books, and records the Bank may reasonably request, including at a
minimum: If the Borrower has subsidiaries, all financial
statements required will be provided on a consolidated and on a
separate basis.
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A. Within 45 days after each quarterly period, a balance
sheet as of the end of that period and statements of
income, cash flows, and retained earnings from the
beginning of that fiscal year to the end of that period,
certified as correct by one of its authorized agents.
B. Within 180 days after, and as of the end of, each of its
fiscal years, a detailed financial statement including a
balance sheet and statements of income, retained earnings,
and cash flows audited by an independent certified public
accountant of recognized standing.
6.0 Negative Covenants.
6.1 Definitions. As used in this agreement, the following terms shall
have the following respective meanings:
A. "Debt Service" means for any period, principal and
interest payments either paid or due during that period on
all debt of the Borrower.
B. "EBITDA" means for any period, net income plus to the
extent deducted in determining net income, interest
expense (including but not limited to imputed interest on
capital leases), tax expense, depreciation, and
amortization.
C. "Subordinated Debt" means debt subordinated to the Bank in
manner and by agreement satisfactory to the Bank.
D. "Tangible Net Worth" means total assets less intangible
asses, total liabilities, and all sums owing from
stockholders, members, or partners, as the case may be,
and from officers, managers, and directors. Intangible
assets include goodwill, patents, copyrights, mailing
lists, catalogs, trademarks, bond discount and
underwriting expenses, organization expenses, and all
other intangibles.
6.2 Unless otherwise noted, the financial requirements set forth in
this section shall be computed in accordance with generally
accepted accounting principles applied on a basis consistent with
financial statements previously submitted by the Borrower to the
Bank.
6.3 Without the written consent of the Bank, the Borrower shall not:
(where appropriate, covenants apply on a consolidated basis).
A. Dividends. Acquire or retire any of its shares of capital
stock, or declare or pay dividends or make any other
distributions upon any of its share of capital stock or
percentage ownership interests, except dividends payable
in its capital stock and dividends payable to "Subchapter
S" corporation shareholders and distributions payable to
LLC members in amounts sufficient to pay the shareholders'
or members' income tax obligations related to the
Borrower's taxable income.
B. Sale of Shares. Issue, sell or otherwise dispose of any
shares of its capital stock or other securities, or
rights, warrants or options to purchase or acquire any
such shares or securities.
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C. Debt. Incur, or permit to remain outstanding, debt for
borrowed money or installment obligations, except debt
reflected in the latest financial statement of the
Borrower furnished to the Bank prior to execution of this
agreement and not to be paid with proceeds of borrowings
or leases under the Credit Facilities. For purposes of
this covenant, the sale of any accounts receivable shall
be deemed the incurring of debt for borrowed money.
D. Guaranties. Guarantee or otherwise become or remain
secondarily liable on the undertaking of another, except
for endorsement of drafts for deposit and collection in
the ordinary course of business.
E. Liens. Create or permit to exist any lien on any of its
property, real or personal, except: existing liens known
to the Bank; liens to the Bank; liens incurred in the
ordinary course of business securing current nondelinquent
liabilities for taxes, worker's compensation, unemployment
insurance, social security and pension liabilities; and
liens for taxes being contested in good faith.
F. Advances and Investments. Purchase or acquire any
securities of, or make any loans or advances to, or
investments in, any person, firm or corporation, except
obligations of the United States Government, open market
commercial paper rated one of the top two ratings by a
rating agency of recognized standing, or certificates of
deposit in insured financial institutions.
G. Use of Proceeds. Use, or permit any proceeds of the Credit
Facilities to be used, directly or indirectly, for the
purpose of "purchasing or carrying any margin stock"
within the meaning of Federal Reserve Board Regulation U.
At the Bank's request, the Borrower shall furnish to the
Bank a completed Federal Reserve Board Form U-1.
H. Tangible Net Worth. Permit its Tangible Net Worth to be
less than $70,000,000.00.
I. Leverage Ratio. Permit the ratio of its total liabilities
to its Tangible Net Worth to exceed 1.00 to 1.00*.
J. Borrowing capabilities not to exceed $60,000.00.
*Tangible Net Worth defined as total assets less intangible
assets, less all sums owing from stockholders, officers,
directors, employees, and investments in related entities, less
total liabilities.
7.0 Representations by Borrower. Each Borrower represents that: (a) the
execution and delivery of this agreement, the Notes, and the Leases and
the performance of the obligations they impose do not violate any law,
conflict with any agreement by which the Borrower is bound, or require
the consent or approval of any governmental authority or other third
party; (b) this agreement, the Notes, and the Leases are valid and
binding agreements, enforceable in accordance with their terms; and (c)
all balance sheets, profit and loss statements, and other financial
statements furnished to the Bank are accurate and fairly reflect the
financial condition of the organizations and persons to which they
apply on their effective dates, including contingent liabilities of
every type, which financial condition has not changed materially and
adversely since those dates. Each Borrower, if other than a natural
person, further represents that: (a) it is duly organized, existing and
in good standing under the
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laws of the jurisdiction under which it was organized; and (b) the
execution and delivery of this agreement, the Notes, and the Leases
and the performance of the obligations they impose (i) are within its
powers; (ii) have been duly authorized by all necessary action of its
governing body; and (iii) do not contravene the terms of its articles
of incorporation or organization, its bylaws, or any partnership,
operating or other agreement governing its affairs.
8.0 Events of Default/Acceleration.
8.1 Events of Default/Acceleration. If any of the following events
occurs, the Credit Facilities shall terminate and all borrowings
and other obligations under them shall be due immediately, without
notice, at the Bank's option whether or not the Bank has made
demand.
A. The Borrower or any guarantor of any of the Credit
Facilities, the Notes, the Leases or any other Liabilities
(each, a "Guarantor") fails to pay when due any amount
payable under the Credit Facilities, under any other
Liabilities, or under any agreement or instrument
evidencing debt to any creditor;
B. The Borrower or any Guarantor (a) fails to observe or
perform any other term of this agreement, the Notes, or
the Leases; (b) makes any materially incorrect or
misleading representation, warranty, or certificate to the
Bank; (c) makes any materially incorrect or misleading
representation in any financial statement or other
information delivered to the Bank; or (d) defaults under
the terms of any agreement or instrument relating to any
debt for borrowed money (other than borrowings under the
Credit Facilities) such that the creditor declares the
debt due before its maturity;
C. There is a default under the terms of any loan agreement,
mortgage, security agreement or any other document
executed as part of the Credit Facilities or any other
Liabilities, or any guaranty of the obligations under the
Credit Facilities or any other Liabilities becomes
unenforceable in whole or in part, or any Guarantor fails
to promptly perform under its guaranty;
D. A "reportable event" (as defined in the Employee
Retirement Income Security Act of 1974 as amended)
occurs that would permit the Pension Benefit Guaranty
Corporation to terminate any employee benefit plan of
the Borrower or any affiliate of the Borrower;
E. The Borrower or any Guarantor becomes insolvent or
unable to pay its debts as they become due;
F. The Borrower or any Guarantor (a) makes an assignment
for the benefit of creditors; (b) consents to the
appointment of a custodian, receiver or trustee for it
or for a substantial part of its assets; or (c)
commences any proceeding under any bankruptcy,
reorganization, liquidation or similar laws of any
jurisdiction;
G. A custodian, receiver or trustee is appointed for the
Borrower or any Guarantor or for a substantial part of its
assets without its consent and is not removed within 60
days after such appointment;
H. Proceedings are commenced against the Borrower or any
Guarantor under any bankruptcy, reorganization,
liquidation, or similar laws of any jurisdiction, and such
proceedings remain undismissed for 60 days after
commencement; or the Borrower or Guarantor consents to the
commencement of such proceedings;
I. Any judgment is entered against the Borrower or any
Guarantor, or any attachment, levy or garnishment is
issued against any property of the Borrower or any
Guarantor;
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J. The Borrower or any Guarantor dies;
K. The Borrower or any Guarantor, without the Bank's written
consent, (a) is dissolved, (b) merges or consolidates with
any third party, (c) leases, sells or otherwise conveys a
material part of its assets or business outside the
ordinary course of business, (d) leases, purchases, or
otherwise acquires a material part of the assets of any
other corporation or business entity, except in the
ordinary course of business, or (e) agrees to do any of
the foregoing, (notwithstanding the foregoing, any
subsidiary may merge or consolidate with any other
subsidiary, or with the Borrower, so long as the Borrower
is the survivor);
L. The loan-to-value ratio of any pledged securities at any
time exceeds N/A%, and such excess continues for five (5)
days after notice from the Bank to the Borrower;
M. There is a substantial change in the existing or
prospective financial condition of the Borrower or any
Guarantor which the Bank in good faith determines to be
materially adverse; or
N. The Bank in good faith shall deem itself insecure.
8.2 Remedies. If the borrowings and all other obligations under the
Credit Facilities are not paid at maturity, whether by
acceleration or otherwise, the Bank shall have all of the rights
and remedies provided by any law or agreement. Any requirement of
reasonable notice shall be met if the Bank sends the notice to the
Borrower at least ten (10) days prior to the date of sale,
disposition or other event giving rise to the required notice. The
Bank is authorized to cause all or any part of the Collateral to
be transferred to or registered in its name or in the name of any
other person, firm or corporation, with or without designation of
the capacity of such nominee. The Borrower shall be liable for any
deficiency remaining after disposition of any Collateral. The
Borrower is liable to the Bank for all reasonable costs and
expenses of every kind incurred in the making or collection of the
Credit Facilities, including, without limitation, reasonable
attorney's fees and court costs (whether attributable to the
Bank's in-house or outside counsel). These costs and expenses
shall include, without limitation, any costs or expenses incurred
by the Bank in any bankruptcy, reorganization, insolvency or other
similar proceeding.
9.0 Miscellaneous.
9.1 Notice from one party to another relating to this agreement shall
be deemed effective if made in writing (including
telecommunications) and delivered to the recipient's address,
telex number or fax number set forth under its name below by any
of the following means: (a) hand delivery, (b) registered or
certified mail, postage prepaid, with return receipt requested,
(c) first class or express mail, postage prepaid, (d) Federal
Express or like overnight courier service or (e) fax, telex or
other wire transmission with request for assurance of receipt in a
manner typical with respect to communication of that type. Notice
made in accordance with this section shall be deemed delivered
upon receipt if delivered by hand or wire transmission, 3 business
days after mailing if mailed by first class, registered or
certified mail, or one business day after mailing or deposit with
an overnight courier service if delivered by express mail or
overnight courier.
9.2 No delay on the part of the Bank in the exercise of any right or
remedy shall operate as a waiver. No single or partial exercise by
the Bank of any right or remedy shall preclude any other future
exercise of it or the exercise of any other right
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or remedy. No waiver or indulgence by the Bank of any default
shall be effective unless in writing and signed be the Bank, nor
shall a waiver on one occasion by construed as a bar to or waiver
of that right on any future occasion.
9.3 This agreement, the Notes, the Leases and any related loan
documents embody the entire agreement and understanding between
the Borrower and the Bank and supersede all prior agreements and
understandings relating to their subject matter. If any one or
more of the obligations of the Borrower under this agreement, the
Notes or the Leases shall be invalid, illegal or unenforceable in
any jurisdiction, the validity, legality and enforceability of the
remaining obligations of the Borrower shall not in any way be
affected or impaired, and such invalidity, illegality or
unenforceability in one jurisdiction shall not affect the
validity, legality or enforceability of the obligations of the
Borrower under this agreement, the Notes or the Leases in any
other jurisdiction.
9.4 The Borrower, if more than one, shall be jointly and severally
liable.
9.5 This agreement is delivered in the State of Michigan and governed
by Michigan law. This agreement is binding on the Borrower and its
successors, and shall inure to the benefit of the Bank, its
successors and assigns.
9.6 Section headings are for convenience of reference only and shall
not affect the interpretation of this agreement.
10.0 Information Sharing. The Bank may provide, without any limitation
whatsoever, any information or knowledge the Bank may have about the
undersigned or any matter relating to this agreement and any related
documents to BANK ONE CORPORATION, or any of its subsidiaries or
affiliates or their successors, or to any one or more purchasers or
potential purchasers of this agreement or any related documents, and
the undersigned waives any right to privacy the undersigned may have
with respect to such matters. The Borrower agrees that the Bank may at
any time sell, assign or transfer one or more interests or participants
in all or any part of its rights or obligations in this agreement to
one or more purchasers whether or not related to the Bank.
11.0 Waiver of Jury Trial. The Bank and the Borrower knowingly and
voluntarily waive any right either of them have a trial by jury in any
proceeding (whether sounding in contract or tort) which is in any way
connected with this or any related agreement, or the relationship
established under them. This provision may only be modified in a
written instrument executed by the Bank and the Borrower.
Executed by the parties on: August 31, 2001.
Bank One, Michigan Borrower: Syntel, Inc.
BY: /s/ Xxxxxxx X. Xxxxxxx BY: /s/ X. X. Xxxxxx
-------------------------------- -------------------------------
Xxxxxxx X. Xxxxxxx X. X. Xxxxxx
Its: Loan Officer Its: Sr., Director of Internal
Audit
Address for Notices:
2155 W. Big Beaver 0000 Xxxxxxxxx Xxxx, Xxxxx 000
Xxxx, Xxxxxxxx 00000 Xxxx, Xxxxxxxx 00000
Fax No. (000) 000-0000 Fax/Telex No.
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