Loan Documents and Waiver Agreement [Amendment No. 1] - Intelligroup Inc., Empower Inc. and PNC Bank NA
FIRST AMENDMENT TO LOAN DOCUMENTS
and
WAIVER AGREEMENT
THIS FIRST AMENDMENT TO LOAN DOCUMENTS and WAIVER AGREEMENT (this
"AMENDMENT") is made as of March 27, 2002, 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
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(d) this 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 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.
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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/ Susanne Raschner
---------------------------------
Name: Susanne Raschner
Title: Vice President
PNC Business Credit
70 East 55th Street, 14th Floor
New York, New York 10022
Commitment Percentage: 100%
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EXHIBIT A TO
FIRST AMENDMENT TO LOAN DOCUMENTS
and
WAIVER AGREEMENT
dated as of March 27, 2002
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 (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 "Total Stockholders Equity" and "Unconsolidated
Stockholders Equity" sect forth in Article I of the Loan Agreement,
"Definitions", are hereby amended and restated as follows:
"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 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 and any write-down or write
off (up to but not exceeding the sum of $10,833,000) 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
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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
and any write-down or write off (up to but not exceeding the
sum of $10,833,000) 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, 7.18 and 7.19 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 $10,833,000.00, 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.
...
7.18. Total Stockholders Equity. Cause, suffer or permit
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Total Stockholders Equity to be or become: (a) commencing
with the quarter ending March 31, 2002, as at the end of the
first three
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fiscal quarters in each fiscal year, not less than
ninety-five percent (95%) of actual Total Stockholders
Equity for the immediately preceding fiscal year-end; and
(b) as at the end of the fourth fiscal quarter in any fiscal
year (i) for the quarter ending December 31, 2002, not less
than one hundred two percent (102%) of actual Total
Stockholders Equity as of the December 31, 2001 fiscal
year-end; and (ii) as at the end of the fourth fiscal
quarter of each fiscal year thereafter, not less than one
hundred five percent (105%) of actual Total Stockholders
Equity as of the prior fiscal year end; provided also,
however, the covenants set forth in Sections 7.18(a) and (b)
shall be tested only for any fiscal quarters, in which
Undrawn Availability is less than Five Million Dollars
($5,000,000.00).
7.19. Unconsolidated Stockholders Equity. Cause, suffer
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or permit Unconsolidated Stockholders Equity to be or
become: (a) commencing with the quarter ending March 31,
2002, as at the end of the first three fiscal quarters in
each fiscal year, not less than ninety-five percent (95%) of
actual Unconsolidated Stockholders Equity for the
immediately preceding fiscal year-end; and (b) as at the end
of the fourth fiscal quarter in any fiscal year (i) for the
quarter ending December 31, 2002, not less than one hundred
two percent (102%) of actual Unconsolidated Stockholders
Equity as of the December 31, 2001 fiscal year-end; and (ii)
as at the end of the fourth fiscal quarter of each fiscal
year thereafter, not less than one hundred five percent
(105%) of actual Unconsolidated Stockholders Equity as of
the prior fiscal year end; provided also, however, the
covenants set forth in Sections 7.19(a) and (b) shall be
tested only for any fiscal quarters, in which Undrawn
Availability is less than Five Million Dollars
($5,000,000.00).
3. Article VII, "Negative Covenants" is hereby amended to include the
following Section 7.20, "Minimum EBITDA" as new material:
7.20 Minimum EBITDA. Cause suffer or permit EBITDA,
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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) Nine
Hundred Thousand Dollars ($900,000.00) as of March 31, 2002,
(b) One Million Two Hundred Thousand Dollars ($1,200,000) as
of June 30, 2002, (c) One Million Five Hundred Fifty
Thousand Dollars ($1,550,000) as of September 30, 2002, (d)
One Million Four Hundred Thousand Dollars ($1,400,000) as of
December 31, 2002, (e) Five Million Fifty Thousand Dollars
($5,050,000) for the fiscal year ending December 31, 2002,
and (f) 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
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(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
certain financial covenants set forth in the Loan Agreement as follows:
(a) Section 7.18 of the Loan Agreement requires that Borrowers
maintain Total Stockholders Equity as of December 31, 2001 of not
less than one hundred five percent (105%) of actual Total
Stockholders Equity as of December 31, 2000; however the actual
amount did not meet this minimum; and
(b) Section 7.19 of the Loan Agreement requires that Borrowers
maintain Unconsolidated Stockholders Equity as of December 31,
2001 of not less than one hundred five percent (105%) of actual
Unconsolidated Stockholders Equity as of December 31, 2000;
however the actual amount did not meet this minimum.
which 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 requirement that Borrowers comply with the noted covenants as
of the December 31, 2001 fiscal year end; and
(b) the rights and remedies available as a result of the existence of
the Events of Default enumerated in subsection 1 above.
3. Lenders hereby waive:
(a) the requirement that Borrowers comply with the noted covenants for
the December 31, 2001 fiscal year end; and
(b) the right to exercise the rights and remedies which are available
to Agent 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 period
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
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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 Twenty-Five Thousand Dollar ($25,000.00)
amendment and waiver fee which, as of the date of this Amendment,
is due and payable in full, and is non-refundable.
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.
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