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
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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
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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
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Name: Nicholas Visco
Title: Chief Financial Officer
499 Thornall Street
Edison, New Jersey 08837
EMPOWER, INC.
By: /s/ Nicholas Visco
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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
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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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EXHIBIT A TO
SECOND AMENDMENT TO LOAN DOCUMENTS
and
WAIVER AGREEMENT
dated January 6, 2003
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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
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"Unconsolidated Stockholders Equity" set forth in Article I of the Loan
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Agreement, "Definitions", are hereby amended and restated as follows:
"EBITDA" shall mean for any period the sum of (i) Earnings Before
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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)
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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
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(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
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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
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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
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($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
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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
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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.
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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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