Sample Business Contracts


Loan Documents and Waiver Agreement [Amendment No. 2] - Intelligroup Inc., Empower Inc. and PNC Bank NA


                       SECOND AMENDMENT TO LOAN DOCUMENTS
                                       and
                                WAIVER AGREEMENT

     THIS  SECOND  AMENDMENT  TO  LOAN  DOCUMENTS  and  WAIVER  AGREEMENT  (this
"AMENDMENT")  is made  this 6th day of  January,  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 Lenders and Agent 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  Amendment
(collectively,  as amended from time to time, the "Loan  Documents"),  and 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 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  Amendment.  This
Amendment is deemed incorporated into each of the Loan Documents.  Any initially
capitalized  terms  used in this  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 Amendment is or may be  inconsistent  with any term or
provision in any Loan Document, the terms and provisions of this Amendment shall
control.

     2.  Borrowers  hereby certify that:  (a) all of their  representations  and
warranties in the Loan Documents,  as amended by this Amendment,  are, except as
may otherwise be stated in this  Amendment:  (i) true and correct as of the date
of this  Amendment,  (ii)  ratified and confirmed  without  condition as if made
anew, and (iii)  incorporated into this 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 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 Amendment or, if required,  has been obtained, and (d) this
Amendment  has  been  duly  authorized,   executed  and  delivered  so  that  it
constitutes the

<PAGE>

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 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 Amendment.

     4.  As a  condition  precedent  to the  effectiveness  of  this  Amendment,
Borrowers  shall  comply with the terms and  conditions  (if any)  specified  in
Exhibit A, if any.

     5.  This Amendment may be signed in any number of counterpart copies and by
the  parties to this  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  Amendment by  facsimile  transmission
shall be effective as delivery of a manually executed counterpart.  Any party so
executing this  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  Amendment  will be  binding  upon  and  inure to the  benefit  of
Borrowers, Agent and Lenders and their respective successors and assigns.

     7.  This Amendment has been  delivered to and accepted by Agent and will be
deemed to be made in the State of New Jersey. This 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 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.


                                       2
<PAGE>

      WITNESS the due execution of this Amendment as a document under seal as of
the date first written above.


                                    INTELLIGROUP, INC.

                                    By: /s/ Nicholas Visco
                                       --------------------------------
                                    Name:  Nicholas Visco
                                    Title: Chief Financial Officer

                                    499 Thornall Street
                                    Edison, New Jersey 08837

                                    EMPOWER, INC.

                                    By: /s/ Nicholas Visco
                                       --------------------------------
                                    Name:  Nicholas Visco
                                    Title: Secretary

                                    c/o Intelligroup, Inc.
                                    499 Thornall Street
                                    Edison, New Jersey 08837

                                    PNC BANK, NATIONAL ASSOCIATION, as
                                    Lender and as Agent

                                    By: /s/ Meredith Fitz
                                       --------------------------------
                                    Name:  Meredith Fitz
                                    Title: Assistant Vice President

                                    PNC Business Credit
                                    70 East 55th Street, 14th Floor
                                    New York, New York 10022

                                    Commitment Percentage:  100%


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<PAGE>


                                  EXHIBIT A TO
                       SECOND AMENDMENT TO LOAN DOCUMENTS
                                       and
                                WAIVER AGREEMENT
                              dated January 6, 2003
                                           ---


A.   The "Loan  Documents"  that are the subject of this  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 (as amended,  the
          "Loan Agreement"); and

     2.   All  other  documents,   instruments,   agreements,  and  certificates
          executed and delivered in connection with the Loan Documents listed in
          this Section A.


B.   The Loan Documents are amended as follows:

     1.  The   definitions  of  "EBITDA",   "Total   Stockholders   Equity"  and
                                 ------      -----------------------------
     "Unconsolidated  Stockholders  Equity"  set forth in  Article I of the Loan
      ------------------------------------
     Agreement, "Definitions", are hereby amended and restated as follows:

         "EBITDA" shall mean for any period the sum of (i) Earnings Before
          ------
         Interest  and  Taxes  for  such  period  plus  (ii)  depreciation
         expenses for such period,  plus (iii)  amortization  expenses for
         such period.  Notwithstanding  anything  contained  herein to the
         contrary,  the computation of EBITDA shall  specifically  exclude
         the one-time expenses  incurred by Intelligroup,  Inc. in 2002 in
         conjunction  with a proxy fight (up to but not  exceeding the sum
         of $464,000.00  for the quarter ending June 30, 2002 only and the
         sum of  $413,000.00  for the quarter  ending  September  30, 2002
         only).

                                      ...

         "Total Stockholders Equity" shall mean, at a particular 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   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

<PAGE>

         (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,  the  one-time
         expenses   incurred  by  the   Intelligroup,   Inc.  in  2002  in
         conjunction  with a proxy fight (up to but not  exceeding the sum
         of $464,000.00  for the quarter ending June 30, 2002 only and the
         sum of  $413,000.00  for the quarter  ending  September  30, 2002
         only),  and any  write-down or write off (up to but not exceeding
         the sum of $12,600,000)  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 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 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,  the  one-time
         expenses  incurred by  Intelligroup,  Inc. in 2002 in conjunction
         with  a  proxy  fight  (up  to  but  not  exceeding  the  sum  of
         $464,000.00 for the quarter ending June 30, 2002 only and the sum
         of $413,000.00  for the quarter ending  September 30, 2002 only),
         and any  write-down or write off (up to but not exceeding the sum
         of  $12,600,000)  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 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 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


                                       5
<PAGE>

         ($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 $12,600,000.00,  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 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.

                                      ...

         7.20 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) One  Million  One Hundred  Fifty  Thousand  Dollars
         ($1,150,000)  as of December  31, 2002,  (b) Four  Million  Eight
         Hundred Fifty Thousand  Dollars  ($4,850,000) for the fiscal year
         ending  December 31, 2002, and (c)  thereafter,  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 during  such
         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.


C.   WAIVER AGREEMENT:

     1.  Borrowers  hereby  acknowledge  that  Borrowers  failed to comply  with
Section 7.20, "Minimum EBITDA" of the Loan Agreement. Section 7.20 requires that
               --------------
Borrowers  maintain EBITDA of not less than (a) One Million Two Hundred Thousand
Dollars ($1,200,000) as of June 30, 2002; and (b) One Million Five Hundred Fifty
Thousand  Dollars  ($1,550,000) as of September 30, 2002,  however actual EBITDA
did not meet these  minimums.  These  failures  to comply  constitute  Events of
Default under the terms and conditions of the Loan Agreement.

     2.   Borrowers have requested that Lenders waive:

          (a) the requirements that Borrowers comply with Section 7.20 as of the
fiscal quarter ended June 30, 2002 and as of the fiscal quarter ended  September
30, 2002; and

          (b) the rights and remedies  available as a result of the existence of
the Events of Default enumerated in subsection 1 above.


                                       6
<PAGE>

     3.  Lenders hereby waive:

          (a) the requirements that Borrowers comply with Section 7.20 as of the
fiscal quarter ended June 30, 2002 and as of the fiscal quarter ended  September
30, 2002; and

          (b) the right to exercise the rights and remedies  which are available
to Agent and Lenders  pursuant to the Loan Agreement,  at law and in equity as a
result of the  existence  of the Events of Default  enumerated  in  subsection 1
above.

          These waivers are specific to the Events of Default and fiscal periods
enumerated in  subsection 1 above.  This waiver is not intended and shall not be
deemed to extend to any other Events of Default  whether  known or unknown which
may presently exist under the Loan Agreement or which may occur hereafter.

D.   In consideration of the  facilities  being  granted by Lenders to Borrowers
under the terms and conditions of this Amendment and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
effectiveness  of  this  Amendment  is  conditioned  upon  satisfaction  by  the
Borrowers of the following:

          1.   Borrowers'   payment  of  a  Ten  Thousand  Dollar   ($10,000.00)
               amendment and waiver fee which, as of the date of this Amendment,
               is due and payable in full, and is non-refundable. Such fee shall
               by paid by  Lender  making  an  Advance  against  the  Borrowers'
               Revolving  Loan  and  retaining  the  proceed  of  such  Advance.
               Borrowers hereby consents to Lender making such charge.

          2.   Agent's receipt of a fully executed counterpart of this Amendment
               and all other  documents and  instruments  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 Amendment. Such fees and expenses shall by paid
               by Lender making an Advance against the Borrowers' Revolving Loan
               and  retaining  the  proceed of such  Advance.  Borrowers  hereby
               consents to Lender making such charge.


  [End of Exhibit A to Second Amendment to Loan Documents and Waiver Agreement]


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