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Exhibit 10.18
INTELLIGROUP, INC.
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LOAN AND SECURITY AGREEMENT
dated as of January 22, 1997
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PNC BANK, NATIONAL ASSOCIATION
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This LOAN AND SECURITY AGREEMENT (this "Agreement") made as of the
22nd day of January, 1997 between PNC BANK, National Association ("Lender"),
having an office at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇, and INTELLIGROUP, INC., a New Jersey corporation ("Borrower"), having an
office at ▇▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇.
W I T N E S S E T H:
WHEREAS, to provide a source of funds for the purposes described in
Sections 2.5 and 3.8 hereof, Borrower has requested that Lender enter into this
Agreement, agree to make the Revolving Line of Credit (as defined herein)
available to Borrower and, in Lender's sole discretion, agree to make Equipment
Loans (as defined herein) to Borrower; and
WHEREAS, Lender has agreed to make the Revolving Line of Credit
available to Borrower and, in its sole discretion, Equipment Loans to Borrower
subject to and upon the terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained, the parties hereto agree as follows:
1. DEFINITIONS
1.1 DEFINED TERMS. As used herein, the following terms shall have the
following meanings (such meanings to be equally applicable to both the singular
and plural forms of the terms defined):
"Account" - all items described or otherwise included in the UCC
definition thereof and all of the following, whether or not so described or
included and without limiting the generality of the foregoing (in all cases
whether now existing or hereafter created): all obligations of any kind or
nature at any time due or owing to Borrower and all rights of Borrower to
receive payment or any other consideration (whether classified under the UCC or
the law of any other state as accounts, accounts receivable, contract rights,
chattel paper, general intangibles, or otherwise) including, without limitation,
invoices, contract rights, accounts receivable, general intangibles,
choses-in-action, notes, drafts, acceptances, instruments and all other debts,
obligations and liabilities in whatever form owing to Borrower from any Person,
together with all security for any thereof, and all of Borrower's rights to
goods sold (whether delivered, undelivered, in transit or returns), represented
by any thereof.
"Affiliate" - any Person which, directly or indirectly, is in control
of, is controlled by, or is under common control with, such Person, including
any directors, officers or other management personnel of such Person. For
purposes of this definition, "control" means the power, direct or indirect, to
direct or cause the direction of the management and policies of such Person,
whether through the ownership of voting securities, by contract or otherwise.
"Agreement" - this Loan and Security Agreement, as amended,
supplemented, restated and otherwise modified from time to time.
"Balance Sheet" - as defined in Subsection 7.5(b) hereof.
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"Banking Day" - any day other than a Saturday, Sunday or legal
holiday for banks under the laws of the State of New Jersey.
"Borrowing Base" - 70% of the net face amount of Qualified Accounts
(excluding amounts representing contra accounts, ▇▇▇▇ and hold sales, reserves
determined by or acceptable to Lender for advertising allowances, warranty
claims, price adjustments, uncollectible items, volume rebates, price disputes
and other contingencies); provided that Lender may, in Lender's reasonable
discretion, increase or decrease such percentage from time to time.
"Borrowing Base Certificates" - the certificates delivered by
Borrower pursuant to Subsection 8.5(d) hereof.
"Capital Lease" - (a) any lease of property, real or personal, the
obligations under which are capitalized on a consolidated balance sheet of
Borrower, and (b) any other such lease to the extent that the then present value
of the minimum rental commitment thereunder should, in accordance with GAAP, be
capitalized on a balance sheet of the lessee.
"Code" - as defined in Section 7.17 hereof.
"Collateral" - all of the following, wherever located and whether now
existing or hereafter created or arising and whether now owned or hereafter
acquired by Borrower: (a) all Accounts; (b) all Equipment; (c) all Inventory;
(d) all fixtures; (e) all guaranties, security and liens for payment of any
Accounts; (f) all documents of title, policies or certificates of insurance,
insurance proceeds, proceeds of condemnation or other seizure, securities,
chattel paper and other documents and instruments evidencing or pertaining to
any thereof; (g) all claims of Borrower against third parties for loss of or
damage to, or otherwise relating to, any of the Collateral; (h) all files,
correspondence, customer lists, computer programs, tapes, discs and related data
processing software, general ledgers, information respecting Accounts
(including, without limitation, any identifying any Account debtor or the amount
owed by same), or any books and records owned by Borrower or in which Borrower
has an interest, which contains information identifying any of the Collateral or
which would or may otherwise be necessary or helpful in the actual and/or
potential realization on any of the Collateral; (i) all moneys, securities,
drafts, notes, items, Contracts and other contract rights, leases, documents of
title, licenses, goodwill, and all general or special deposits, balances, sums,
proceeds, tax refunds and credits of Borrower; (j) all patents and patent
applications (including all letters patent of the United States and all reissues
and extensions thereof, any thereof referred to in Schedule 8 hereto, and all
applications for letters patent of the United States and all divisions,
continuations and continuations-in-part thereof or any other country, including,
any thereof referred to in Schedule 8 hereto) (collectively, "Patents"), patent
and know-how licenses, trade secrets, copyrights, inventions, technology
permits, trademarks, trade names, corporate names, service marks, logos and
other source or business identifiers, and all applications in connection
therewith, including, any thereof referred to in Schedule 9 hereto
(collectively, "Trademarks"), the goodwill of the business associated therewith,
all franchises and licenses in which Borrower has an interest, and all other
intangible personal property similar to any of the foregoing; (k) all rights and
remedies which Borrower might exercise with respect to any of the foregoing but
for the execution of this Agreement (including, without limitation, the right to
▇▇▇ for past, present or future infringements of Patents and Trademarks); (l)
all goodwill; (m) all general intangibles not listed in the preceding clauses in
this definition of Collateral and described or otherwise included in the UCC
definition thereof; (n) all other personal property of any kind or nature,
tangible or intangible, not listed in the preceding clauses in
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this definition of Collateral; and (o) all accessions and additions to,
replacements and substitutions for, and proceeds and products of, the items
described in the preceding clauses in this definition of Collateral.
"Contracts" - all contracts (including, without limitation, Capital
Leases) or other Documents in or under which Borrower may now or hereafter have
any right, title or interest, whether the same pertain to the acquisition,
lease, sale or other disposition of any Inventory, Equipment, fixtures, real
property or any interest in real property, or otherwise, as the same may be
amended, supplemented, restated or otherwise modified from time to time,
including, without limitation, (a) all rights of Borrower to receive moneys due
and to become due to it thereunder or otherwise in connection therewith, (b) all
rights of Borrower to damages arising out of, or for, any breach or other
default in respect thereof and (c) all rights of Borrower to perform and to
exercise all remedies thereunder.
"Default Rate" - a rate of interest equal to two percent (2%) per
annum in excess of the rate otherwise applicable at the time to a Loan.
"Document" - any agreement, instrument, undertaking, other paper or
writing or other document.
"Eligible Equipment" - Equipment to be purchased with the proceeds of
Equipment Loans to be used by Borrower in the ordinary course of business at any
of the locations identified on Schedule 1 hereto.
"Environmental Activity" - means any generation, processing,
abatement, manufacture, refining, transportation, treatment, storage, handling,
release, emission, discharge or disposal of any Hazardous Substances or any
threat of such activity.
"Environmental Complaint" - means any complaint, order, citation,
notice or other written or express oral communication from any Person with
respect to the existence or alleged existence of a violation of any
Environmental Law or legal liability resulting from any Hazardous Substance, any
Environmental Activity or any other environmental matter at, upon, under, within
or from any real property owned, leased or otherwise occupied by Borrower or
otherwise relating to such real property or the ownership, use, operation or
occupancy thereof, or any business, activity or other property of Borrower.
"Environmental Laws" - means all applicable federal, state and local
statutes, rules, regulations, orders, judgments, permits, licenses and other
provisions of law relating to any one or more of the following: air emissions,
water discharge, noise emissions, solid and liquid disposal, Hazardous
Substances, any Environmental Activity and other environmental, health and
safety matters.
"Equipment" - all items described or otherwise included in the UCC
definition thereof and all of the following, whether or not described or
included and without limiting the generality of the foregoing (in all cases
whether now owned or hereafter acquired by Borrower and wherever located): all
machinery, equipment, furnishing and fixtures, whether affixed to real property
or not, and all additions, substitutions for, replacements of or extensions to
any of such items and all attachments, components, parts (including spare parts)
and accessories whether installed thereon or affixed thereto.
"Equipment Credit Limit" - $350,000.
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"Equipment Loans" - as defined in Section 3.1 hereof.
"Equipment Manufacturer/Dealer" - as defined in Section 3.5 hereof.
"Equipment Notes" - as defined in Section 3.2 hereof.
"ERISA" - as defined in Section 7.17 hereof.
"ERISA Affiliate" - as defined in Section 7.17 hereof.
"Event of Default" - as defined in Article 11.
"GAAP" - United States generally accepted accounting principles
consistently applied as in effect in the from time to time.
"Governmental Authority" - any federal, state, local or foreign
governmental authority, agency, department or instrumentality or other
regulatory body of any kind or nature, including any court.
"Hazardous Substances" - means (a) any flammable, explosive,
radioactive material or friable asbestos, (b) any "hazardous substance" as such
term is presently defined in the Comprehensive Environmental Response
Compensation and Liability Act of 1980, as amended, (c) any "hazardous material"
as such term is presently defined in the Hazardous Material Transportation Act,
as amended, (d) any "hazardous waste" as presently defined in the Resource
Conservation and Recovery Act of 1976, as amended, (e) any additional substances
or materials which are hereafter defined as, incorporated in or added to, the
definition of "hazardous substance", "hazardous material" or "hazardous waste"
pursuant to, or for the purposes of, any applicable Environmental Law
(including, without limitation, the New Jersey Industrial Site Recovery Act),
and (f) any additional substances or materials which are now or hereafter
regulated or considered to be hazardous or toxic under any applicable
Environmental Law relating to any real and/or personal property owned, leased,
used or, in the case of real property otherwise occupied by Borrower, the
ownership, use, operation or occupancy thereof or any business, activity or
other property of Borrower.
"Inventory" - all items described or otherwise included in the UCC
definition thereof and all of the following, whether or not so described or
included and without limiting the generality of the foregoing (in all cases
whether now owned or hereafter acquired by Borrower and wherever located): all
goods, merchandise or other personal property held by Borrower for sale, lease
or license, and all right, title and interest of Borrower therein and thereto;
all raw materials, work or goods in process; and all materials and supplies of
any kind or description used or usable in connection with the performance of
services by Borrower and/or the operation of the businesses operated by
Borrower.
"Lien" - any mortgage, security interest, assignment, pledge,
hypothecation, lien, conditional sale or other title retention agreement,
financing lease having substantially the same effect as any of the foregoing,
other preferential arrangement or other encumbrance of any kind or nature.
"Loan Documents" - this Agreement and any and all other agreements,
instruments and other Documents delivered to Lender pursuant or incident to this
Agreement, as each may be amended, supplemented, restated or otherwise modified
from time to time, between Borrower, any Affiliate of Borrower, any grantor of
any Lien securing any Obligations or any guarantor of any Obligations, on the
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one hand, and Lender, on the other, or executed by Borrower, any Affiliate of
Borrower, any such grantor or any such guarantor for the benefit of Lender.
"Loans" - the Revolving Loans and the Equipment Loans.
"Margin Stock" - as defined in Regulation U issued by the Board of
Governors of the Federal Reserve System as in effect from time to time.
"Material Adverse Effect" - material adverse effect on (a) the
validity or enforceability of this Agreement, the Notes or any other Loan
Document (including the rights and remedies of Lender hereunder and thereunder),
(b) the ability of Borrower to perform any of its Obligations, (c) the
Collateral, or (d) the condition (financial or otherwise), results of
operations, assets or operations of Borrower.
"Notes" - the Revolving Note and the Equipment Notes.
"Obligations" - (a) all principal of and interest on the Loans, and
all other sums payable by Borrower under the terms of this Agreement, the Notes
or any of the other Loan Documents; (b) all other indebtedness, liabilities,
obligations and agreements of every kind and nature, whether primary or
secondary, purchase money or nonpurchase money, regardless of form or purpose,
of Borrower to or with Lender or any affiliate of Lender, including, without
limitation, loans for consumer, agricultural or business purposes and credit
evidenced by promissory notes, open accounts, overdrafts or any other
contractual obligations; (c) all guaranties of any of Borrower's Obligations, if
any; and (d) any participation or interest of Lender or any affiliate of Lender
in any indebtedness, liabilities, obligations or agreements of Borrower or any
such guarantor to or with others, in each case whether now existing or hereafter
created, whether pursuant to this Agreement, any of the other Loan Documents or
otherwise, whether in the form of refinancing, bankers acceptances, guaranties,
loans, interest, charges, fees, expenses or otherwise, whether direct or
indirect, whether acquired outright, conditionally or as collateral security
from another, whether absolute or contingent, joint or several, liquidated or
unliquidated, secured or unsecured, whether due or to become due, whether on
account of principal, interest, reimbursement obligations, fees, indemnities,
costs, expenses (including, without limitation, all fees and disbursements of
counsel to Lender) or otherwise, and whether arising by operation of law or
otherwise, including, without limitation, any future advances, renewals,
extensions, modifications or changes in the form of, or substitutions for, any
of the items described in the preceding clauses (a) through (d). For purposes of
Section 9-204 of the UCC, all of the foregoing are contemplated by the parties
hereto.
"Order" - as defined in Section 11.10 hereof.
"Organizational Documents" - with respect to any entity, the
certificate of incorporation or articles of incorporation thereof, as
applicable, and the by-laws thereof, each as heretofore amended and/or restated
and now in effect.
"Oxford" - Oxford Systems Inc., a New Jersey corporation that was a
wholly-owned subsidiary of Borrower before it was merged with and into Borrower.
"PBGC" - as defined in Section 7.17 hereof.
"Permitted Liens" - as defined in Section 9.3 hereof.
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"Person" - an individual, partnership, corporation, business trust,
joint stock company, trust, unincorporated association, limited liability
company, joint venture, Governmental Authority or other entity of any kind or
nature.
"Plan" - as defined in Section 7.17 hereof.
"Portable Computer Equipment" - lap top computers and other portable
computer equipment that Borrower's employees carry with them when they visit
customers in the ordinary course of business.
"Prime Rate" - the rate of interest announced from time to time by
Lender as its "prime rate" or "prime lending rate," which rate is determined
from time to time by Lender as a means of pricing some loans to its customers
and is neither tied to any external rate of interest or index nor necessarily
reflects the lowest rate of interest actually charged by Lender to any
particular class or category of customers.
"Proceeding" - as defined in Section 11.10 hereof.
"Qualified Account" - an Account which has been identified and
described to Lender's satisfaction, at all times meets (and is represented by
either Borrower's acceptance of any Revolving Loan as meeting) all of the
following criteria, and is in all other respects acceptable to Lender, in its
sole and absolute discretion:
(i) Borrower is the sole owner of the Account and
has not sold, assigned or otherwise transferred it, and the Account
is not subject to any claim, Lien or other right of any Person (other
than Lender);
(ii) the Account is bona fide and legally
enforceable and owing to Borrower for the sale and delivery of goods
or performance of services in the ordinary course of business and the
Account does not require any further act on the part of Borrower to
make it owing by the Account debtor, and Borrower has delivered to
Lender, if required by Lender, invoices, ▇▇▇▇▇▇▇▇, shipping
documents, timesheets, contracts and other Documents evidencing the
obligation to pay the Account;
(iii) Lender has a perfected first priority security
interest in the Account;
(iv) the Account does not represent a conditional
sale, consignment or other sale on a basis other than that of an
absolute sale, is not evidenced by any note, instrument, chattel
paper or like document, and does not arise out of a contract with the
United States or any other Governmental Authority;
(v) the Account has been invoiced by Borrower and
has not been outstanding for more than ninety (90) days from the
invoice date;
(vi) the amount of the Account, together with all
other Accounts of the same Account debtor and its affiliates, does
not exceed twenty percent (20%) of Borrower's total Qualified
Accounts at the time outstanding; provided that the amount of
Accounts from
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such Account debtor below such twenty percent (20%) threshold may be
Qualified Accounts if they otherwise qualify in accordance herewith;
(vii) not more than fifty percent (50%) of the
amount owed by the Account debtor has been invoiced by Borrower and
been outstanding for more than ninety (90) days from the invoice date
(i.e. if this clause (vii) is violated, none of the Accounts owing
from such Account debtor shall be Qualified Accounts);
(viii) the Account is not subject to any defense,
offset, counterclaim, credit, allowance or adjustment except usual
and customary prompt payment discounts, nor has the Account debtor
returned the goods or indicated any dispute or complaint concerning
such goods or the performance of any services by Borrower, as
applicable;
(ix) Borrower has not received any notice of, nor
to Borrower's knowledge are there, any facts which adversely affect
the credit of the Account debtor in any material respect, and the
Account conforms in all respects to the representations and
warranties contained and/or deemed to be contained in this Agreement;
(x) the Account debtor is not an Affiliate of
Borrower nor a director or officer of Borrower nor an Affiliate of
any of Borrower's directors or officers;
(xi) Lender has not notified Borrower that either
the Account or the Account debtor is not qualified; and
(xii) the Account is denominated in U.S. Dollars and
is payable only in U.S. Dollars and payable only in the United
States.
"Revolving Credit Limit" - the lesser of $7,500,000 or the Borrowing
Base.
"Revolving Credit Termination Date" - as defined in Section 2.1
hereof.
"Revolving Line of Credit" - as defined in Section 2.1 hereof.
"Revolving Loans" - as defined in Section 2.1 hereof.
"Revolving Note" - as defined in Section 2.2 hereof.
"SEC" - the Securities and Exchange Commission.
"Tangible Net Worth" - at any particular date, all amounts which
would be included under shareholders' equity on a consolidated balance sheet of
Borrower as at such date, determined in accordance with GAAP, excluding,
however, (i) all goodwill, organizational expenses, research and development
expenses, trademarks, trade names, copyrights, patents, patent applications,
franchises, licenses and rights in any thereof and other similar intangibles,
(ii) all deferred charges, unamortized debt discount and expense, (iii) all
reserves carried and not deducted from assets, (iv) treasury stock and capital
stock, obligations or other securities of, or capital contributions to, or
investments in, any Affiliate of Borrower, (v) securities which are not readily
marketable, (vi) any write-up in the book value of any asset resulting from a
revaluation thereof subsequent to September 30, 1996, and (vii) any items not
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included in clauses (i) through (vi) above which would properly be treated as
intangibles in conformity with GAAP.
"Trademark Security Agreement" - the Trademark Assignment and
Security Agreement dated as of the date hereof, as amended, supplemented,
restated and otherwise modified from time to time.
"UCC" - the Uniform Commercial Code as in effect from time to time in
the State of New Jersey.
"Undismissed" - as defined in Section 11.10 hereof.
"Working Capital" - as of the date of any determination thereof, the
amount determined in accordance with GAAP, applied on a consistent basis, by
which the consolidated current assets of Borrower exceeds the consolidated
current liabilities of Borrower.
1.2 OTHER DEFINITIONAL PROVISIONS. The words "hereof," "herein" and
"hereunder" and words of similar import when used in this Agreement shall refer
to this Agreement as a whole and not to any particular provision of this
Agreement. Article, Section, Subsection, Schedule and Exhibit references are to
this Agreement unless otherwise specified. "Including", "includes," and
"include" means "including, without limitation," "includes, without limitation,"
and "include, without limitation," whether or not specified herein. "To
Borrower's knowledge" or other words having similar effect means the actual
knowledge of any of the Chairman of the Board, the President, the Chief
Executive Officer, the Chief Financial Officer or any Vice President of
Borrower. "To the best of Borrower's knowledge" or other words having similar
effect means the actual knowledge of any of the Chairman of the Board, the
President, the Chief Executive Officer, the Chief Financial Officer or any Vice
President of Borrower, after due inquiry of the responsible officers and
employees of Borrower.
2. REVOLVING LOANS
2.1 AMOUNT OF REVOLVING LOANS. Subject to the terms and conditions
hereof, Lender agrees to make available to Borrower a line of credit pursuant to
which Lender will make loans to Borrower on a revolving loan basis (the
"Revolving Loans") from time to time during the term of this Agreement in an
aggregate principal amount at any one time outstanding not to exceed $7,500,000
(the "Revolving Line of Credit"); provided, that on the date of the making of
any Revolving Loans, and after giving effect to the making of such Revolving
Loans, the aggregate outstanding principal amount of Revolving Loans on such
date) shall not exceed the Revolving Credit Limit on such date. During the term
of this Agreement, Borrower may use the Revolving Line of Credit by requesting
Lender to make Revolving Loans, repaying Revolving Loans and reborrowing, all in
accordance with and subject to the terms and conditions hereof. The Revolving
Loans shall be payable (i) on January 22, 1999, or (ii) at such other time as is
provided in Article 4 or 11 hereof or elsewhere in this Agreement, whichever of
(i) or (ii) shall first occur (the "Revolving Credit Termination Date").
2.2 REVOLVING NOTE. The Revolving Loans shall be evidenced by a
promissory note (as amended, supplemented, restated and otherwise modified from
time to time, the "Revolving Note") in the form of Exhibit A hereto.
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2.3 PROCEDURE FOR REVOLVING LOAN BORROWINGS. Borrower may request to
borrow under the Revolving Line of Credit on any Banking Day prior to the
Revolving Credit Termination Date by giving Lender irrevocable notice prior to
12:30 p.m. (eastern standard time) on the Banking Day of the proposed borrowing
date, specifying (a) the amount to be borrowed and (b) the requested borrowing
date (which must be a Banking Day). Such notice may be by telephone (confirmed
immediately in writing). Not later than 3:00 p.m. (eastern standard time) on the
borrowing date specified in such notice, subject to the terms and conditions
hereof, Lender shall make the amount of such Revolving Loan available to
Borrower by depositing such amount in immediately available funds in the account
of Borrower with Lender. Each borrowing under the Revolving Line of Credit shall
be in a minimum amount of $50,000.
2.4 OVERDRAFTS. In the event Lender honors a check of Borrower
resulting in Borrower's checking account being overdrawn, then Lender shall be
deemed to have made a Revolving Loan to Borrower in the amount of such
overdraft, pursuant to the terms of this Article 2, on the Banking Day
immediately preceding the day on which Borrower's check is tendered to Lender
for collection. Lender shall not be obliged to honor any overdraft of Borrower
at any time, whether or not it has done so prior to such time.
2.5 USE OF PROCEEDS. The Revolving Loans shall be used to finance the
working capital needs of Borrower in the ordinary course of business.
3. EQUIPMENT LOANS
3.1 AMOUNT. Subject to the terms and conditions hereof, Lender, in
its sole and absolute discretion, may lend to Borrower on a term basis (the
"Equipment Loans"), in an aggregate principal amount of Equipment Loans at any
one time outstanding not to exceed $350,000; provided, that on the date of the
making of any Equipment Loan, and after giving effect to the making of such
Equipment Loan, the aggregate outstanding principal amount of all Equipment
Loans on such date shall not exceed the Equipment Credit Limit on such date.
BORROWER HEREBY ACKNOWLEDGES THAT LENDER HAS NO OBLIGATION TO MAKE ANY REQUESTED
EQUIPMENT LOAN. Notwithstanding anything to the contrary contained in this
Agreement, in no event shall the original principal amount of any Equipment Loan
exceed seventy-five percent (75%) of the invoice price of the Eligible Equipment
to be purchased by Borrower with the proceeds of such Equipment Loan (exclusive
of reasonable soft costs such as charges for delivery, installation and set-up).
3.2 EQUIPMENT NOTES. Each Equipment Loan shall be evidenced by
Borrower's promissory note in the form of Exhibit B hereto (as amended,
supplemented, restated and otherwise modified from time to time, the "Equipment
Notes"), with appropriate insertions thereon made by Lender.
3.3 PRINCIPAL PAYMENTS. The term of each Equipment Loan shall be the
number of months requested by Borrower and agreed to by Lender, provided that
the term of each Term Loan shall not be more than the lesser of (a) the expected
useful life of the Eligible Equipment to be purchased with the proceeds of such
Equipment Loan or (b) thirty-six (36) months. The principal of each Equipment
Loan shall be repaid in consecutive equal monthly principal payments over the
term of such Equipment Loan, together plus accrued interest, provided that the
final payment on the maturity date of such Equipment Loan shall be in an amount
equal to the entire unpaid principal balance of such Equipment
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Loan plus accrued interest and all unpaid fees, expenses and other sums, if any,
due and payable hereunder or under the Equipment Note relating thereto.
3.4 PROCEDURE FOR EQUIPMENT LOAN BORROWINGS. Borrower may request (at
any time prior to the Revolving Credit Termination Date) that Lender make an
Equipment Loan on any Banking Day prior to the Revolving Credit Termination Date
by giving Lender irrevocable notice prior to 12:30 p.m. (eastern standard time)
three (3) Banking Days prior to the proposed borrowing date, specifying (i) the
amount to be borrowed, and (ii) the requested borrowing date (which must be a
Banking Day). Such notice may be by telephone (confirmed immediately in
writing). Such notice shall be accompanied by the invoice or purchase order
relating to the Eligible Equipment to be purchased with the proceeds of such
Equipment Loan (which invoice shall indicate the cost thereof), and such other
related documents as Lender may reasonably request (including those referred to
in Subsection 3.5 hereof). In the event that Lender decides to make such
requested Equipment Loan, subject to the terms and conditions hereof, Lender
shall, at its option, (a) make the amount of such Equipment Loan available to
Borrower by depositing such amount in immediately available funds in the account
of Borrower with Lender not later than 3:00 p.m. (eastern standard time) on the
borrowing date specified in such notice, or (b) pay the amount of such Equipment
Loan by paying the purchase price of the Equipment directly to the Equipment
Manufacturer/Dealer. Each Equipment Loan shall be in a minimum principal amount
of $100,000.
3.5 CERTAIN CONDITIONS TO EQUIPMENT LOAN BORROWINGS. In addition to
the conditions set forth in Article 5 hereof, the obligation of Lender to
consider making any Equipment Loan is subject to Borrower providing to Lender
documents which evidence, to the Lender's reasonable satisfaction, that (a) the
Borrower has acquired title (or will acquire title upon the funding of such
Equipment Loan) to the Equipment from the manufacturer or authorized dealer
thereof, as provided in the invoice or purchase order relating thereto (the
"Equipment Manufacturer/Dealer"), which manufacturer or dealer is a seller of
such Equipment in the ordinary course; (b) such Equipment is free and clear of
all Liens, except Liens in favor of the Lender; (c) such Equipment shall be and
consist of new Equipment only and, except for Portable Computer Equipment, such
Equipment shall be used only in the existing premises located at the locations
listed on Schedule 1 hereto; (d) Borrower has obtained additional insurance in
accordance with Section 8.7(a) hereof relating to such Equipment in an amount
not less than the purchase price of the Equipment; and (e) Lender shall have
received such other documents and consents, including, without limitation,
updated Uniform Commercial Code and other searches with respect to Borrower,
corporate resolutions relating to such Equipment Loan and the Equipment to be
purchased with the proceeds thereof as Lender may reasonably request.
3.6 SHIPPED EQUIPMENT. When any Equipment is shipped from the place
of manufacture, Borrower shall deliver to Lender the ▇▇▇▇ of lading and other
shipping documents, other documents of title and other related documents to the
extent desirable to perfect Lender's security interest in such Collateral and
any other additional documents in connection therewith from time to time
reasonably requested by the Lender.
3.7 NOT A FIXTURE. Borrower does not intend the Equipment purchased
with the proceeds of any Equipment Loan to be, and shall not permit such
Equipment to become, a fixture to real estate under applicable law or an
accession to other property in which any Person other than Lender has a Lien and
such Equipment shall at all times remain personal property and not a fixture.
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3.8 USE OF PROCEEDS. Each Equipment Loan shall be used only to
purchase Eligible Equipment.
4. INTEREST RATE PROVISIONS, FEES, PAYMENTS, MONTHLY STATEMENTS
4.1 INTEREST RATES AND PAYMENT DATES.
(a) Interest shall accrue daily on the unpaid principal
amount of each of the Loans from time to time outstanding at the following
rates:
(i) Each Revolving Loan shall bear interest at a
fluctuating rate per annum equal to one-quarter of one percent (1/4
of 1%) per annum above the Prime Rate in effect from time to time,
each change in such fluctuating rate to take effect simultaneously
with the corresponding change in the Prime Rate, without notice to
Borrower.
(ii) Each Equipment Loan shall bear interest at a
fluctuating rate per annum equal to three-quarters of one percent
(3/4 of 1%) per annum above the Prime Rate in effect from time to
time, each change in such fluctuating rate to take effect
simultaneously with the corresponding change in the Prime Rate,
without notice to Borrower.
(b) Following the occurrence of an Event of Default, the
interest rate applicable to the Loans shall be increased to the Default Rate and
such interest shall be payable on demand.
(c) All accrued interest shall be payable as follows:
(i) Interest accruing on each Revolving Loan shall
be due and payable to Lender in arrears on the first (1st) Banking
Day of each calendar month, commencing on the first such date to
occur after such Revolving Loan is made, and on any Banking Day on
which any payment is made or such Revolving Loan is paid or payable
in full.
(ii) Interest on each Equipment Loan shall be due
and payable to Lender in arrears on the first (1st) Banking Day in
each calendar month, commencing on the first such date to occur after
such Equipment Loan is made, and on any Banking Day on which any
prepayment is made or such Equipment Loan is paid or payable in full.
4.2 PAYMENTS, CHARGES TO ACCOUNTS, AND COMPUTATIONS.
(a) All payments (including prepayments) to be made by
Borrower on account of principal, interest, fees or otherwise hereunder shall be
made without deduction, set-off or counterclaim to Lender, at Lender's office
specified in Section 15.2 hereof, in each case prior to 12:30 p.m. (eastern
standard time), in lawful money of the United States and in immediately
available funds. If any payment hereunder becomes due and payable on a day other
than a Banking Day, such payment may be made on the next succeeding Banking Day
and in each such case such extension of time shall be included in computation of
the interest or other payment due.
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(b) Lender, without demand, may charge and withdraw from
any checking, loan or other account that Borrower may then have with Lender or
with any affiliate of Lender, any amount that shall become due from Borrower to
Lender under this Agreement or any other Loan Document.
(c) Interest on the Loans shall be calculated on a daily
basis upon the unpaid principal balance, with each day representing 1/360th of a
year. If the interest rate calculated in accordance with any provision of this
Agreement for any Loan (including, without limitation, any application of the
Default Rate) would at any time exceed the maximum permitted by any law, then
for such period as such rate would exceed the maximum permitted by such law (and
no longer), the rate of interest payable on such Loan shall be reduced to the
maximum permitted by such law, and any excess amounts received by Lender shall
be treated as a partial payment or prepayment of principal, without premium or
penalty.
(d) In the event that any payment due and payable
hereunder is not received in full by Lender within ten (10) days of the date
such payment was due and payable, Borrower hereby agrees to pay to Lender, to
the extent not prohibited by applicable law and without demand and in addition
to any other amounts payable hereunder, a late charge equal to five percent (5%)
of the amount of such delinquent payment for the purpose of defraying the
expense incident to the handling of such delinquent payment.
(e) For the purpose of computing interest on the Loans and
other Obligations at any time when Borrower is required to take the actions set
forth in Section 6.4 hereof, interest shall continue to accrue on the amount of
any payment received by Lender's Commercial Finance Department for a period of
two (2) days following the day it is credited.
(f) In determining the outstanding balance of the Loans,
(i) domestic checks received by Lender's Commercial Finance Department before
12:30 p.m. of a Banking Day will be credited on that Banking Day, and thereafter
on the following Banking Day; (ii) any other form of funds received by Lender's
Commercial Finance Department will be credited on the Banking Day when that
Department has received notification of collection, if before 12:30 p.m., or on
the following Banking Day, if after 12:30 p.m.; and (iii) all credits shall be
conditional upon final payment to Lender in cash or solvent credits of the items
giving rise to them and, if any item is not so paid, the amount of any credit
given for it shall be charged to the balance of the Loans whether or not the
item is returned.
4.3 FACILITY FEE. Borrower shall pay to Lender a facility fee equal
to $75,000 as follows: (a) $56,250 shall be paid simultaneously with the
execution and delivery of this Agreement ($10,000 of which was paid prior to the
date hereof), and (b) $18,750 shall be paid on the first anniversary of this
Agreement.
4.4 REIMBURSEMENT OF INCREASED COST TO LENDER. If any law, regulation
or guideline, including, without limitation, any change in any law, regulation
or guideline and/or in the interpretation or application thereof, or any order
or ruling by any Governmental Authority, or compliance by Lender with any
request or directive (whether or not having the force of law) of any
Governmental Authority, shall impose, modify, or deem applicable to Lender any
reserve, capital, special deposit or other requirement or condition (including,
without limitation, under Regulation D issued by the Board of Governors of the
Federal Reserve System) in respect of this Agreement or any of the Loans which
results in an increased cost or reduced benefit to Lender in maintaining,
making, issuing or renewing any Loan (as determined by reasonable allocation of
the aggregate of such increased costs or reduced benefits to
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Lender resulting from such event), then Borrower shall pay to Lender from time
to time upon demand additional amounts sufficient to compensate Lender for such
increased costs or reduced benefits, together with interest on each such amount
from a date ten (10) days after the date of such demand until payment in full
thereof at the rate then applicable to such Loan. A certificate shall be
provided to Buyer setting forth in reasonable detail such increased cost
incurred or reduced benefit realized by Lender as a result of any such event and
such certificate shall be conclusive as to the amount thereof, absent manifest
error.
4.5 OPTIONAL PREPAYMENTS OF EQUIPMENT LOANS.
(a) Borrower may, at any time and from time to time,
prepay any Equipment Loan, in whole or in part, without premium or penalty, upon
at least three (3) Banking Days' notice to Lender, specifying the date and
amount of prepayment and which Equipment Loan(s), and if more than one, the
amount of payment allocable to each.
(b) If a notice of prepayment is given by Borrower
pursuant to Subsection 4.5(a) hereof, Borrower shall make such prepayment, and
the payment amount specified in such notice shall be due and payable on the date
specified therein, together with accrued interest to such date on the amount
prepaid. Partial prepayments pursuant to this Subsection 4.5(b) shall be in an
aggregate principal amount of $10,000 or a whole multiple of $10,000 in excess
thereof (or such lesser principal amount as may be outstanding with respect to
each Equipment Loan being prepaid). Optional prepayments of any Equipment Loan
shall be applied to installments of principal in the inverse order of the
scheduled maturity of such installments.
4.6 MANDATORY PREPAYMENTS OF LOANS.
(a) If the outstanding principal amount of Revolving Loans
on any date exceeds the Revolving Credit Limit on such date or if the
outstanding principal amount of Equipment Loans on any date exceeds the
Equipment Credit Limit on such date, (i) such excess shall nevertheless
constitute Obligations, be secured by the Collateral and be subject to the terms
of this Agreement and (to the extent applicable) the other Loan Documents, and
(ii) Borrower shall make a prepayment of Loans in an amount equal to such
excess.
(b) In the event that the Revolving Line of Credit is
terminated in accordance with this Agreement, Borrower shall prepay the
outstanding principal amount of all Equipment Loans.
(c) Each mandatory prepayment of a Loan shall be
accompanied by payment in full of all accrued interest thereon to and including
the date of such prepayment. Mandatory prepayments of any Equipment Loan shall
be applied to installments of principal in the inverse order of their scheduled
maturity.
4.7 TERMINATION OF REVOLVING LINE OF CREDIT.
(a) Borrower shall have the right to terminate the
Revolving Line of Credit only upon (i) giving thirty (30) days' prior written
notice to Lender of the intended termination date, (ii) paying to Lender in full
the principal and interest on the Loans and all other Obligations (which shall
become due and payable on the stated termination date without presentment,
demand, protest, or further notice of any kind, all of which are hereby
expressly waived by Borrower), and (iii) paying to Lender any
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amounts due hereunder or under the other Loan Documents in connection with the
prepayment of the Loans, including, without limitation, amounts due under
Subsection 4.7(b) hereof.
(b) If Borrower elects to terminate the Revolving Line of
Credit, Borrower shall pay to lender an additional fee equal to two percent
(2%), if the Revolving Line of Credit is terminated prior to the first
anniversary hereof, or one percent (1%), if the Revolving Line of Credit is
terminated after the first but prior to the second anniversary hereof, of the
average unpaid principal balance of the Revolving Loans during the six (6)
months preceding such termination.
4.8 MONTHLY STATEMENTS. Once each month Lender shall render a
statement of account to Borrower showing the current status of principal and
interest with respect to the outstanding Loans. The statement of account
rendered by Lender shall be considered correct, accepted by Borrower and
conclusively binding upon Borrower, unless Borrower gives Lender written notice
to the contrary within ten (10) Banking Days after the sending of the statement
by Lender. If Borrower disputes the correctness of Lender's statement,
Borrower's notice shall specify in reasonable detail the particulars of its
basis for contending that Lender's statement is incorrect.
5. CONDITIONS PRECEDENT
5.1 CONDITIONS TO INITIAL LOANS. The obligation of Lender to make the
first Revolving Loan and to consider making any Equipment Loan is subject to the
satisfaction of each of the conditions precedent listed on Exhibit C hereto.
5.2 CONDITIONS TO ALL LOANS. The obligation of Lender to make each
Revolving Loan after the first Revolving Loan and to make any Equipment Loan (in
the event that, in its sole discretion, it agrees to make such Equipment Loan),
is subject to the satisfaction of each of the following conditions precedent as
of the date of the making of such Loan:
(a) Representations and Warranties. The representations
and warranties made by Borrower in or pursuant to this Agreement or any other
Loan Document, including any contained in any certificate or financial or other
statement or other Document furnished at any time hereunder or thereunder or in
connection herewith or therewith, shall be true and correct in all material
respects on and as of the date such Loan is requested to be made and is to be
made (or if expressly applicable only to an earlier date, such as financial
statements, as of such date).
(b) No Event of Default or Default. No Event of Default or
event which, with the giving of notice, the lapse of time or both, would
constitute an Event of Default, shall have occurred and be continuing (after
giving effect to the Loans requested to be made) on the date such Loan is
requested to be made and is to be made.
(c) Equipment Loans. With respect to each Equipment Loan
that Lender has agreed to make, (i) Lender shall have received an Equipment
Note, payable to the order of Lender conforming to requirements hereof and
executed by a duly authorized officer of Borrower, and (ii) the other conditions
specified in Subsection 3.5 hereof shall have been satisfied.
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6. SECURITY INTERESTS; CROSS COLLATERALIZATION AND CROSS DEFAULT
6.1 GRANT OF SECURITY INTERESTS. As security for the full and
punctual payment and performance when due (whether at the stated maturity, by
acceleration or otherwise) of all of the Obligations, whether pursuant to this
Agreement or otherwise, Borrower hereby pledges, transfers and assigns to Lender
(and its successors and assigns), and grants to Lender (and its successors and
assigns) security interests in, (a) all of the Collateral now or hereafter owned
by Borrower, wherever located and whether now existing or hereafter created, and
(b) all accessions and additions thereto, replacements and substitutions
therefor, and all proceeds and products thereof. The security interest granted
hereby, and all remedies and other rights stated or referred to in this
Agreement or any other Loan Document, shall continue in full force and effect
until the later of (i) the termination of the Revolving Line of Credit or (ii)
the full, final and indefeasible payment and performance of the Obligations.
Upon the termination of the security interest granted hereby in accordance with
the terms hereof, Lender shall, promptly after requested in writing to do so by
Borrower, execute and deliver to Borrower UCC-3 Termination Statements
terminating all UCC-1 Financing Statements filed in connection with such
security interest.
6.2 CROSS DEFAULT; CROSS COLLATERALIZATION. Borrower hereby agrees
that (a) all other agreements between Borrower and Lender or any of its
affiliates are hereby amended so that a default under this Agreement is a
default under all such other agreements, and a default under any one of such
other agreements is a default under this Agreement, and (b) the Collateral under
this Agreement and the other Loan Documents secures the Obligations and all
other obligations now or hereafter outstanding under all other agreements
between Borrower and Lender or any of its affiliates, and the collateral pledged
under any such other agreement with Lender or any of its affiliates secures the
Obligations.
6.3 FURTHER ASSURANCES. Without limiting the generality of Section
8.14 hereof, Borrower shall execute and deliver such financing statements and
other Documents (in form and substance reasonably satisfactory to Lender) and
take such other actions as Lender may request from time to time in order to
create, perfect or continue the security interests and other Liens provided for
by this Agreement and the other Loan Documents under the UCC or other laws of
the State of New Jersey or under any other state or federal law, including,
without limitation, the filing of any financing or continuation statements under
the Uniform Commercial Code in effect in any jurisdiction with respect to the
Liens created hereby or thereby. Borrower also hereby authorizes Lender to file
any such financing or continuation statement, and all other types of Documents
required to be filed to perfect any of the Liens granted herein, without the
signature of Borrower to the extent permitted by applicable law. A carbon,
photographic or other reproduction of this Agreement shall be sufficient as a
financing statement for filing in any jurisdiction.
6.4 COLLECTION AND REMITTANCE. Borrower covenants and agrees that at
any time after being requested to do so by Lender (and at any time after the
occurrence and during the continuance of an Event of Default, whether or not
requested to do so by Lender), Borrower shall (a) receive in trust for and as
the property of Lender all payments on Accounts, whether for the sale of goods
or performance of services or otherwise, all other similar payments on
Inventory, and all similar payments, in each case whether cash, checks, drafts,
notes, acceptances or other forms of payment, and all chattel paper and (b)
deliver such payments and chattel paper to Lender forthwith in the identical
form in which received (except for its endorsement when required). Without
limiting the generality of the preceding sentence, Borrower agrees that at any
time after Lender requests Borrower to do so (and at any time after the
occurrence and during the continuance of an Event of Default, whether or not
requested to do so by Lender), Borrower shall deposit all cash, checks and other
instruments related to an Account or otherwise
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related to the sale of products or the performance of services by Borrower into
a blocked checking account at a branch of Lender local to Borrower on a daily
basis and such deposits shall be applied to the balance of the Loans in such
order as Lender elects.
7. REPRESENTATIONS AND WARRANTIES
Borrower represents and warrants to Lender, knowing and intending
that Lender will rely thereon in making the Loans, that the following statements
are true and accurate:
7.1 ORGANIZATION AND QUALIFICATION.
(a) Borrower is a corporation duly organized, validly
existing and in good standing under the laws of the State of New Jersey.
(b) Borrower has the power and authority, and all
necessary licenses and other authorizations, to own, lease, operate and encumber
its properties and to carry on its business as now conducted or as reasonably
anticipated to be conducted, and is duly qualified and in good standing in each
jurisdiction wherein the nature of the property owned, leased or used or of the
business conducted by Borrower requires such qualification.
7.2 DUE AUTHORIZATION; NO DEFAULT.
(a) The execution, delivery and performance by Borrower of
this Agreement, the Notes and the other Loan Documents are within Borrower's
power and authority, have been duly authorized by all necessary action on the
part of Borrower, and do not and will not (i) violate Borrower's Organizational
Documents or any applicable regulation or law, or any judgment, order or decree
of any Governmental Authority, (ii) constitute a material breach of, or other
default under, any agreement or other Document to which Borrower is a party or
by which Borrower may be subject, affected or bound (any consents required
thereby having previously been obtained), or (iii) result in the imposition of
any Lien or restriction on any assets of Borrower (except in favor of Lender).
(b) Borrower has delivered to Lender true and complete
copies of Borrower's resolutions necessary to authorize the transactions
contemplated by this Agreement, and of Borrower's Organizational Documents in
effect on the date hereof, in each case certified by a duly authorized officer
of Borrower.
(c) This Agreement, the Notes and each other Loan Document
to which Borrower is a party have been duly executed and delivered on behalf of
Borrower. This Agreement, the Notes and the other Loan Documents to which
Borrower is a party are legal, valid and binding obligations of Borrower,
enforceable against Borrower in accordance with their respective terms.
7.3 NO GOVERNMENTAL CONSENT NECESSARY. Except as set forth on
Schedule 11 hereto and those which have been obtained or made and are in full
force and effect, no consent, authorization, approval or other action by, and no
notice to or filing with, any Governmental Authority is required for the due
execution, delivery and performance by Borrower of, or the validity or
enforceability of, this Agreement, the Notes or any other Loan Document.
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7.4 NO PROCEEDINGS. There are no pending or, to the best of
Borrower's knowledge, threatened, claims, actions, proceedings or investigations
before any arbitrator or Governmental Authority that may, singly or in the
aggregate, have a Material Adverse Effect.
7.5 FINANCIAL STATEMENTS.
(a) Each of the consolidated balance sheets (including
related notes and schedules, if any) of Borrower as of December 31, 1994,
December 31, 1995 and September 30, 1996, and the related statements of income,
changes in stockholders' equity and cash flows (including related notes and
schedules, if any) for the nine months ended September 30, 1996, and for each of
the two fiscal years ended December 31, 1994 and December 31, 1995, contained in
documents filed, or required to be filed, by Borrower with the SEC, complied as
to form in all material respects with the applicable published rules and
regulations of the SEC with respect thereto, were prepared in accordance with
GAAP applied consistently throughout the periods involved, and fairly presented
the consolidated financial position of Borrower and Oxford as at the respective
dates and the consolidated results of operations and cash flows for the periods
indicated, except that the unaudited interim financial statements were or are
subject to normal and recurring year-end adjustments which were not or are not
expected to be material in amount or effect.
(b) Except as set forth in the consolidated balance sheet
of Borrower and Oxford as at September 30, 1996 (the "Balance Sheet"), Borrower
does not have any liabilities or obligations of any nature (whether accrued,
absolute, contingent or otherwise) which would be required to be reflected on a
consolidated balance sheet of Borrower, or in the notes thereto, prepared in
accordance with GAAP, except for liabilities and obligations incurred in the
ordinary course of business since the date of the Balance Sheet which would not,
individually or in the aggregate, have a Material Adverse Effect.
(c) The one year projections of Borrower (copies of which
are to be delivered to Lender pursuant to Section 8.15 hereof) will be based
upon all information which is pertinent thereto, and to the best knowledge of
Borrower, no facts will exist at the date of delivery thereof which would result
in any material change in any of such projections or in any estimate reflected
therein. Such projections will be based upon reasonable estimates and
assumptions, all of which are fair in light of current conditions, and will
reflect the reasonable estimate of Borrower of the results of operations and
other information projected therein. Subject to Section 15.10 hereof, Lender
shall hold such projections confidential in accordance with its customary
procedures in respect of confidential information.
(d) All other financial information, reports and other
Documents furnished by Borrower to Lender prior to the date hereof are, and all
other financial information, reports and other Documents hereafter furnished
will be at the time the same are so furnished, true, accurate and complete in
all material respects.
7.6 NO CHANGE IN CONDITION; SOLVENCY.
(a) There has been no material adverse change in
Borrower's condition (financial or otherwise), results of operations, assets or
operations since September 30, 1996.
(b) After giving effect to the Loans to be made by Lender
on the date hereof, Borrower's assets, at a fair valuation, exceed Borrower's
liabilities (including, without limitation,
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contingent liabilities). Borrower is paying its debts as they become due and
Borrower has capital and assets sufficient to carry on its business as now
conducted and as reasonably anticipated to be conducted.
7.7 COMPLIANCE WITH LAWS. Except as set forth in Schedule 13 hereto,
Borrower is in compliance with all federal, state and local statutes, rules,
regulations, orders and other provisions or requirements of law applicable to
its ownership, lease or use of properties and its other assets, the conduct of
its business and otherwise; Borrower has not received any written notice of
violation of any of the foregoing; and Borrower is not in violation of any
judgment, order or decree of any Governmental Authority or any arbitrator.
7.8 NO OTHER VIOLATIONS. Borrower is not in violation of any term of
its Organizational Documents, and no event or condition has occurred and is
continuing which constitutes or results in (or would constitute or result in,
with the giving of notice, lapse of time or both, or the occurrence of any other
condition) (a) a breach of, or other default under, any agreement, undertaking,
instrument or other Document to which Borrower is a party or by which Borrower
or any of its property may be subject, affected or bound, except for failures
which individually or in the aggregate would not have a Material Adverse Effect,
or (b) the imposition of any Lien or restriction on any asset of Borrower.
7.9 TAXES AND ASSESSMENTS. Except as set forth in Schedule 13 hereto,
Borrower has filed all federal, state and local tax returns and other reports it
is required to file on or prior to the date hereof (or has obtained valid,
written extensions which are in full force and effect as to any not so filed).
Borrower has paid all taxes, assessments and other governmental charges due and
payable on or prior to the date hereof, and has made adequate provision for the
payment of taxes, assessments and charges accrued but not yet payable, which
provisions are reflected in the Balance Sheet. To the best of Borrower's
knowledge, there is no deficiency or additional assessment in connection with
any taxes, assessments or other governmental charges.
7.10 ACCOUNTS. The amount represented by Borrower to Lender from time
to time as owing by each Account debtor and by all Account debtors in respect of
the Accounts and the proper aging therefor was, and at such time as it is
hereafter given to Lender will be, the correct amount actually owing by each
such Account debtor or debtors thereunder, with the aging therefor accurate in
all material respects. No amount payable to Borrower under or in connection with
any of the Accounts is evidenced by an instrument or chattel paper which has not
been delivered to Lender and endorsed by Borrower in form and substance
satisfactory to Lender. Each of the Accounts listed on the list of Accounts
dated December 31, 1996, delivered to Lender meets the criteria for a Qualified
Account, except as set forth in such list.
7.11 BOOKS AND RECORDS. Borrower maintains its books and records
relative to its Accounts, its Inventory, its Equipment and all other Collateral
at the location listed on Schedule 1 hereto.
7.12 LOCATION OF COLLATERAL. The Equipment (other than Portable
Computer Equipment) and other tangible property constituting part of the
Collateral is kept at the locations listed on Schedule 1 hereto. None of the
Equipment or other tangible property constituting part of the Collateral is or
will be, (a) located in or on any premises other than those identified in
Schedule 1 hereto, except that Portable Computer Equipment may be temporarily
located in or on another premises, or (b) in the possession or under the control
of a warehouseman or other Person. Schedule 1 hereto contains an accurate record
of all landlords of premises leased by Borrower and of all mortgagees and
similar holders of Liens in or on such premises. Borrower owns no real property
except as set forth in Schedule 2 hereto.
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7.13 PLACES OF BUSINESS. The principal place of business and chief
executive office of Borrower is located at the location specified as such in
Schedule 2 hereto. Borrower has not at any time within the past six (6) months
preceding the execution of this Agreement maintained its principal place of
business and chief executive office at any other location. Schedule 2 hereto
lists all of the other offices or locations in or from which Borrower conducts
any of its business or operations.
7.14 OTHER NAME OR ENTITIES. Except as disclosed on Schedule 3
hereto, no part of Borrower's business is conducted through any corporate
subsidiary, unincorporated association or other entity and Borrower has not,
within the five (5) years preceding the date of this Agreement (a) changed its
name, (b) used any name other than the name stated at the beginning of this
Agreement, or (c) merged or consolidated with, or acquired the assets of, any
other Person or business.
7.15 TITLE AND LIENS. Borrower has good and marketable title to all
of the Collateral as sole owner thereof, free and clear of any Lien, except the
Liens created by this Agreement and any Liens identified on Schedule 4 hereto.
None of the Collateral is subject to any prohibition against encumbering,
pledging, hypothecating or assigning the same or requires notice or consent in
connection therewith (other than those which have been made or obtained prior to
the date hereof).
7.16 PERFECTED FIRST PRIORITY LIENS. Upon the (a) filing of UCC-1
financing statements in the jurisdictions and offices listed on Schedule 5
hereto and the filing of the Trademark Security Agreement in the United States
Patent and Trademark Office, the Liens granted in favor of Lender pursuant to
this Agreement and pursuant to the other Loan Documents shall constitute
perfected Liens on the Collateral in favor of Lender, which are prior to all
other Liens on such Collateral (other than Permitted Liens) and which are
enforceable as such against all creditors of and purchasers from Borrower,
against any owner or occupier of the real property (subject to state law) where
any of the Collateral is located and against any present or future creditor
obtaining a Lien on such real property or personal property.
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7.17 ERISA AND OSHA.
(a) Borrower is in compliance in all material respects
with the provisions of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), and the related provisions of the Internal Revenue Code, as
amended and/or recodified from time to time (the "Code") and with all
regulations and published interpretations issued thereunder by the United States
Treasury Department, the United States Department of Labor and the Pension
Benefit Guaranty Corporation ("PBGC"). Except for occurrences that individually
or in the aggregate would result in a liability of Borrower less than $25,000,
neither a "reportable event" as defined in Section 4043 of ERISA, nor a
non-exempt "prohibited transaction" as defined in Section 406 of ERISA or
Section 4975 of the Code, has occurred and is continuing with respect to any
employee benefit plan subject to ERISA established or maintained, or to which
contributions have been made, by Borrower or by any trade or business (whether
or not incorporated) which together with Borrower would be treated as a single
employer under Section 4001 of ERISA (any such trade or business being referred
to hereinafter as an "ERISA Affiliate," and any such employee benefit plan being
referred to hereinafter as a "Plan"). No notice of intention to terminate a Plan
has been filed nor has any Plan been terminated; the PBGC has not instituted
proceedings to terminate, or to appoint a trustee to administer, any Plan, nor
do circumstances exist that constitute grounds for any such proceedings; and
neither Borrower nor any ERISA Affiliate has completely or partially withdrawn
from any multiemployer Plan described in Section 4001(a)(3) of ERISA, which
withdrawal would result in a liability of Borrower in excess of $25,000.
Borrower and each ERISA Affiliate has met the minimum funding standards under
ERISA with respect to each of its Plans; no Plan of Borrower or of any ERISA
Affiliate has an accumulated funding deficiency or waived funding deficiency
within the meaning of ERISA; and no material unpaid liability to the PBGC under
ERISA has been incurred by Borrower or any ERISA Affiliate.
(b) Borrower has duly complied with, and its facilities,
business, leaseholds, equipment and other assets are in compliance with, in all
material respects, the provisions of the federal Occupational Safety and Health
Act and all rules and regulations thereunder and all similar state and local
laws, rules and regulations; and there are no outstanding citations, notices or
orders of non-compliance issued to Borrower or relating to its facilities,
business, leaseholds, equipment or other property under any such law, rule or
regulation.
7.18 INSURANCE. The information respecting insurance listed on
Schedule 6 hereto, consisting of the name of the insurer, the face amount of
such policy, the type of coverage provided for in such policy and the deductible
therefor, is true and complete in all material respects. Each such insurance
policy is in full force and effect and complies with the provisions of
Subsections 8.7(a)(ii), (iii) and (iv) hereof.
7.19 ENVIRONMENTAL MATTERS. Except as disclosed on Schedule 7 hereto,
neither Borrower nor, to the best knowledge of Borrower, any other Person has
ever caused or permitted any Hazardous Substance to be placed, held, located or
disposed of, or otherwise engaged in any Environmental Activity from, on, under
or at any real property owned, leased or otherwise occupied by Borrower, or any
part thereof, in violation of any applicable Environmental Law, and none of such
real property has been used (whether by Borrower or, to the best of Borrower's
knowledge, by any other Person) as a dump site or storage site (whether
permanent or temporary) for any Hazardous Substance or any other Environmental
Activity, except in compliance with applicable Environmental Laws. Except as
disclosed on Schedule 7 hereto, there are no pending claims or litigation or
other Environmental Complaints, and Borrower has not received any written
communication from any Person concerning the
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presence or possible presence of any Hazardous Substance or any other
Environmental Activity at any of such real property or concerning any violation
or alleged violation of any applicable Environmental Law.
7.20 FEDERAL REGULATIONS. No part of the proceeds of any Revolving
Loan or the Term Loan will be used, directly or indirectly, to purchase or carry
any "margin stock" (as defined in Regulation U issued by the Board of Governors
of the Federal Reserve System), to extend credit to others for the purpose of
purchasing or carrying any such margin stock, or for any purpose that violates
any provision of Regulations G, T, U or X issued by the Board of Governors of
the Federal Reserve System. Borrower is not an "investment company" registered
or required to be registered under the Investment Company Act of 1940, as
amended, nor is Borrower controlled by any such company.
7.21 PROPRIETARY RIGHTS. Borrower owns, or has a valid license or
sublicense in, all Patents, patent and know-how licenses, inventions, technology
permits, Trademarks, copyrights, product designs, applications, formulae,
processes and other intellectual property rights (collectively, "proprietary
rights") used or useful in the operation of its business in the manner in which
it is currently being or proposed to be conducted. Schedule 8 hereto lists all
Patents owned by Borrower in its own name as of the date hereof. Schedule 9
hereto lists all Trademarks owned by Borrower in its own name as of the date
hereof. To the best of Borrower's knowledge, there is no existing or threatened
infringement or misappropriation of any proprietary rights of others by Borrower
or of any proprietary rights of Borrower by others. Each Patent and Trademark of
Borrower has not been abandoned and is subsisting, unexpired, and, to Borrower's
knowledge, valid and enforceable. No Patent or Trademark is the subject of any
licensing or franchise agreement. To Borrower's knowledge, no holding, decision
or judgment has been rendered by any Governmental Authority which would, or
which seeks to, limit, cancel or question the validity of any of the Patents or
Trademarks, and no such action or proceeding is pending.
7.22 REPRESENTATIONS AND WARRANTIES TRUE, ACCURATE AND COMPLETE;
CONFIRMATION.
(a) None of the representations, warranties or statements
to Lender contained in this Agreement, in any of the other Loan Documents or in
any other Document delivered to Lender in connection with the Collateral, this
Agreement, any other Loan Document or any of the transactions contemplated
hereby and thereby (including, without limitation, all forms, reports, and
documents filed by Borrower with the SEC) contains or will contain any untrue
statement of a material fact or omits or will omit to state a material fact
necessary to make such representation, warranty or statement not misleading in
light of the circumstances under which it is made. All of such representations,
warranties and statements shall survive until full and final and indefeasible
payment and performance of the Obligations.
(b) Borrower's acceptance of each Loan under this
Agreement shall constitute a reaffirmation of the representations and warranties
set forth in this Article 7 as of the date of such Loan. If requested by Lender,
Borrower shall, as a precondition to such Loan, further confirm such matters by
delivery of a certificate dated the day of such Loan and signed by a duly
authorized officer of Borrower satisfactory to Lender.
7.23 STOCK; SUBSIDIARIES. Since September 30, 1996, Borrower has not
issued any other shares of its capital stock or any securities convertible into
shares of its capital stock or any options, warrants or other rights to acquire
such shares, except for options and stock purchase rights issued pursuant to and
in accordance with the Company's Non-Employee Director Stock Option Plan and the
Company's 1996 Stock Plan. Borrower has no subsidiaries except those listed in
Schedule 12 hereto.
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7.24 CONSUMMATION OF MERGER. The Merger of Oxford with and into
Borrower has been duly consummated in accordance with the merger agreement
executed in connection therewith and the plan of merger relating thereto, true
and complete copies of which have been delivered to Lender.
7.25 SEC FILINGS. Borrower has heretofore delivered to Lender true
and complete copies of (i) Amendment No. 3 to Form SB-2, as filed with the SEC
on August 30, 1996, Form SB-2, as filed with the SEC on November 21, 1996,
Amendment No. 1 to Form SB-2, as filed with the SEC on November 26, 1996, a
Prospectus dated September 27, 1996, and Form 10-QSB for the quarterly period
ended September 30, 1996, all filed by Borrower, and (ii) all other reports or
registration statements filed with the SEC, in each case as filed with the SEC.
Borrower has filed all required forms, reports and documents with the SEC, all
of which were prepared in accordance with the requirements of the Securities Act
of 1933, as amended and the Securities Exchange Act of 1934, as amended.
8. AFFIRMATIVE COVENANTS
Borrower covenants and agrees that, until full and final payment and
performance of the Obligations and so long as the Revolving Line of Credit
remains in effect, Borrower shall:
8.1 MAINTENANCE OF EXISTENCE AND QUALIFICATIONS. Maintain and
preserve in full force and effect its existence and good standing and all other
rights, powers, franchises, licenses and qualifications (including proprietary
rights) necessary or desirable for its ownership, lease or use of properties or
the conduct of its business.
8.2 PAYMENT OF TAXES AND OTHER OBLIGATIONS.
(a) Pay before they become delinquent, all taxes,
assessments and governmental charges imposed upon it or any of its property or
required to be collected by it, other than taxes, assessments and governmental
charges being contested in good faith by appropriate proceedings and with
respect to which Borrower has maintained adequate reserves in accordance with
GAAP.
(b) Perform in all material respects all of its
obligations under the terms of each mortgage, security agreement, debt
instrument and other Contract by which it is bound or to which it is a party,
other than obligations for the payment of money under Contracts with
subcontractors of Borrower that are being contested in good faith and provided
that the failure to timely satisfy such payment obligations could not,
individually or in the aggregate, have a Material Adverse Effect.
8.3 MAINTENANCE OF PROPERTIES. Maintain its properties and other
assets in overall good working order and condition (ordinary wear and tear
excepted).
8.4 NOTICE OF ADVERSE EVENTS. Promptly notify Lender, in writing, of
the occurrence or existence of any of the following: (a) any Event of Default or
any event which, with the giving of notice, the lapse of time, or both, would
become an Event of Default, (b) any matter or event which has resulted in, or
may result in, a material adverse change in the condition (financial or
otherwise), results of operations, assets or operations of Borrower, (c) any
material claim, action, proceeding or investigation filed or instituted against,
or relating to the operations of, Borrower, or any adverse determination in any
material action, proceeding or investigation affecting Borrower, (d) any loss
from casualty or theft in
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excess of $50,000, whether or not insured, affecting the assets of Borrower, or
(e) if any of the representations and warranties made by Borrower contained in
this Agreement, or in any other Loan Document or any other Document delivered to
Lender by or on behalf of Borrower in connection with this Agreement or any of
the transactions contemplated hereby, ceases to be true, correct and complete.
8.5 INFORMATION AND DOCUMENTS TO BE FURNISHED TO LENDER. Furnish to
Lender in form and substance satisfactory to Lender:
(a) Annual Financial Statements. As soon as available, but
in no event later than ninety (90) days after the end of each fiscal year of
Borrower, a consolidated and consolidating balance sheet of Borrower as of the
end of such year, a consolidated and consolidating statement of income for such
year, and consolidated and consolidating statements of changes in cash flows and
changes in stockholders' equity for such year (all in reasonable detail and with
all notes and supporting schedules), audited by an independent certified public
accountant reasonably satisfactory to Lender and certified by such independent
certified public accountant, without qualification or exception, as presenting
fairly the financial condition of Borrower and its consolidated subsidiaries as
of the dates and the results of operations, changes in cash flow and changes in
stockholders equity for the periods indicated and as having been prepared in
accordance with GAAP. For purposes of this Agreement, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP shall
be deemed to be a certified public accountant satisfactory to Lender.
(b) Quarterly Financial Statements. As soon as available,
but in no event later than forty-five (45) days after the end of the first three
fiscal quarters of each fiscal year of Borrower, a consolidated and
consolidating balance sheet of Borrower as of the end of such quarter,
consolidated and consolidating statements of income for the three-month period
and the portion of the fiscal year of Borrower ending at the end of such
quarter, and consolidated and consolidating statements of changes in cash flows
and changes in stockholders' equity for the three-month period and the portion
of the fiscal year of Borrower ending at the end of such quarter (all in
reasonable detail and with all notes and supporting schedules to the extent
required to be included in Borrower's Form 10-Q or 10-QSB, as applicable), to
the extent that they relate to dates or periods on or before June, 1998,
reviewed by an independent certified public accountant reasonably satisfactory
to Lender and in all cases prepared in accordance with GAAP.
(c) Monthly Financial Statements and Aging Schedules. As
soon as available, but in no event later than twenty (20) days after the end of
each month, (i) Borrower's monthly internally-generated balance sheet, income
statement and statement of changes in cash flows (all prepared in reasonable
detail and in accordance with GAAP); and (ii) Account and account payable aging
reports (all prepared in reasonable detail and on a form acceptable to Lender).
Subject to Section 15.10 hereof, Lender shall hold such monthly financial
statements and Account and account payable aging reports confidential in
accordance with its customary procedures in respect of confidential information.
(d) Borrowing Base Certificates. Within fifteen (15) days
after the end of each month, a Borrowing Base Certificate as of the last Banking
Day of such month, and at any time upon the request of Lender, a Borrowing Base
Certificate as of the most recent date that such Borrowing Base Certificate may
be calculated.
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(e) Certificates Regarding Financial Statements.
(i) Concurrently with the delivery of the
financial statements referred to in Subsection 8.5(a) and (b) hereof,
and any other financial statement, report, compilation, tax return or
other document with respect to which an independent certified public
accountant performed services and rendered an opinion, a certificate
of such independent certified public accountant in form and substance
satisfactory to Lender stating that such independent certified public
accountant acknowledges that Lender will rely on such financial
statement, report, compilation, tax return or other document and that
Borrower knows of the intended reliance by Lender.
(ii) Concurrently with the delivery of the
financial statements referred to in Subsections 8.5(a) through 8.5(c)
hereof, a certificate of the chief financial officer of Borrower (A)
stating that to the best of his knowledge (after due inquiry of the
responsible officers and employees of Borrower) no Event of Default
or no default or other event which, with the giving of notice, the
lapse of time, or both, would become an Event of Default has occurred
except as specified in such certificate, (B) stating that all such
financial statements (1) are complete and correct in all material
respects (subject, in the case of interim statements, to normal
year-end audit adjustments), (2) present fairly the financial
condition of Borrower as of the dates indicated and the results of
operations, changes in cash flow and changes in stockholders' equity
for the periods indicated, as appropriate, and (3) have been prepared
in accordance with GAAP, and (C) showing in detail the calculations
supporting compliance with the covenants contained in Sections 9.18
9.19 hereof and any other Section respecting financial covenants
requested by Lender.
(f) ERISA Documents. Upon the request of Lender, any ERISA
report, notice, return or other Documents filed as required by or in compliance
with ERISA, whether to the Internal Revenue Service, the Department of Labor,
the PBGC or any other appropriate Governmental Authority.
(g) Other Documents. Promptly after requested:
(i) a certificate executed by a the President or
the Chief Financial Officer of Borrower satisfactory to Lender
stating that to the best knowledge of such person (after due inquiry
of the responsible officers and employees of Borrower) there then
exists no Event of Default hereunder and no default or other event
which, with the giving of notice, or the lapse of time, or both,
would constitute an Event of Default;
(ii) all original and other Documents evidencing a
right to payment, including, but not limited to, invoices, original
orders, and shipping and delivery receipts;
(iii) at any time after requested to do so by Lender
(and at any time after the occurrence and during the continuance of
an Event of Default, whether or not requested to do so by Lender),
daily reports of all of Borrower's Accounts, sales and collections in
form satisfactory to Lender with such supporting Documents as Lender
may reasonably require; and
(iv) such other Documents or information as Lender
may reasonably request, including, without limitation, financial
projections and cash flow analysis
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(h) SEC Documents. As soon as available, true and complete
copies of any report or statement mailed by Borrower to its stockholders
generally or filed by Borrower with the SEC subsequent to the date hereof.
8.6 ACCESS TO RECORDS AND PROPERTY. At any time and from time to time
(and provided no Event of Default has occurred and is continuing, upon
reasonable prior notice from Lender), at the request of Lender, give Lender
and/or any representative of Lender access during normal business hours to
inspect any of Borrower's assets (including, without limitation, all Collateral)
and to examine, copy and make abstracts from any and all books, records and
Documents in the possession of Borrower or any independent contractor relating
to Borrower's affairs or the Collateral (including, without limitation, returns
for federal income tax and other taxes).
8.7 INSURANCE AT BORROWER'S EXPENSE.
(a) Liability and Property Insurance. Maintain at
Borrower's expense with financially sound and reputable insurers, insurance in
such amounts, with such deductibles and covering such risks (including, without
limitation, fire, theft, public liability, property damage, business
interruption, employee fidelity and workers' compensation insurance) as are
sufficient and as are usually carried by companies engaged in the same or a
similar business in the same general area; provided that the amount of such
insurance in effect from time to time shall in no event be less than the
replacement value of the insurable assets of Borrower. Such insurance shall be
evidenced by policies (i) in form and substance reasonably satisfactory to
Lender, (ii) designating Lender and its assigns as additional insureds or loss
payees, as their interests may appear from time to time, with acceptable
endorsements, (iii) containing a "breach of warranty clause" whereby the insurer
agrees that a breach of the insuring conditions or any warranties or any
negligence of Borrower or any other Person or any other action or omission shall
not invalidate the insurance as to Lender and its assigns and (iv) requiring at
least thirty (30) days' prior written notice to Lender and its assigns before
cancellation or any material change shall be effective.
(b) Copies of Policies. Upon demand, deliver to Lender the
original of each policy evidencing insurance required by this Section 8.7,
together with evidence of payment of all premiums therefor.
(c) Notice and Proof of Loss. In the event of loss or
damage, forthwith notify Lender and file proofs of loss satisfactory to Lender
with the appropriate insurer, but without limiting the rights of Lender pursuant
to Subsection 10.1(j) hereof.
(d) Use of Insurance Proceeds. Without limiting the rights
of Lender pursuant to Subsection 10.1(j) hereof, (i) if no Event of Default has
occurred and is continuing, forthwith upon receipt, endorse and deliver to
Lender insurance proceeds relating to a loss in excess of $50,000, and (ii) if
an Event of Default has occurred and is continuing, forthwith upon receipt,
endorse and deliver to Lender insurance proceeds relating to any loss.
(e) No Obligation to Verify Policies. In no event shall
Lender be required to ascertain the existence of or examine any insurance
policy.
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8.8 PROCEEDS OF COLLATERAL. At any time when Borrower is required to
take the actions set forth in Section 6.4 hereof, and subject to Lender's rights
under any insurance policies maintained by Borrower pursuant to Subsection
8.7(a) hereof or any other Loan Document, forthwith upon receipt, pay to Lender
all proceeds of Collateral, whereupon such proceeds shall become Lender's sole
property.
8.9 RECORDS. Maintain complete and accurate books and records of all
its operations and assets, including, without limitation, records of the
Collateral and the status of each of the Accounts.
8.10 MAINTENANCE OF ACCOUNT AND BANKING RELATIONSHIPS. Borrower shall
maintain a demand deposit account with Lender from which Lender shall be
authorized, at its election and without demand or notice, to charge and withdraw
all amounts that are then due to Lender as provided in Section 4.2 hereof.
Borrower agrees to maintain its primary local banking deposits, including
operating and/or checking accounts, with Lender for as long as a
borrowing/lending relationship exists between Borrower and Lender.
8.11 DELIVERY OF DOCUMENTS. If any proceeds of the Accounts shall
include, or any of the Accounts shall be evidenced by, notes, trade acceptances
or instruments or documents, or if any Inventory is covered by documents of
title or chattel paper, whether or not negotiable, immediately deliver them to
Lender appropriately endorsed in a manner satisfactory to Lender. Borrower
waives protest regardless of the form of the endorsement. If Borrower fails to
endorse any instrument or document, Lender is authorized to endorse it on
Borrower's behalf.
8.12 UNITED STATES CONTRACTS. If any of the Accounts arises out of a
contract with the United States or any of its departments, agencies or
instrumentalities, immediately notify Lender and if requested by Lender execute
any Documents reasonably required by Lender in order that all money due or to
become due under such contract shall be effectively assigned to Lender and
proper notice of the assignment shall be given under the Federal Assignment of
Claims Act.
8.13 COMPLIANCE WITH LAWS. Comply in all material respects with all
laws applicable to it and/or its assets.
8.14 FURTHER ASSURANCES. From time to time, execute and deliver such
further Documents and take such further actions as Lender may reasonably request
in order to carry out the purposes of this Agreement, the Notes and the other
Loan Documents.
8.15 PROJECTIONS. Borrower shall deliver to Lender, not later than
(a) January 31, 1997, consolidated income statement and cash flow projections
for Borrower with respect to Borrower's 1997 fiscal year, and (b) January 31,
1998, consolidated income statement and cash flow projections for Borrower with
respect to Borrower's 1998 fiscal year. Subject to Section 15.10 hereof, Lender
shall hold such projections confidential in accordance with its customary
procedures in respect of confidential information.
9. NEGATIVE COVENANTS
Borrower covenants and agrees that, until full and final payment and
performance of the Obligations and so long as the Revolving Line of Credit
remains in effect, Borrower shall not, directly or indirectly:
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9.1 NO CONSOLIDATION, MERGER, ACQUISITION, LIQUIDATION. Enter into
any merger, consolidation, reorganization or recapitalization; take any steps in
contemplation of dissolution or liquidation; conduct any part of Borrower's
business through any corporate subsidiary (other than the subsidiaries listed on
Schedule 12 hereto), unincorporated association or other entity; or acquire the
stock or assets of any Person, whether by merger, consolidation, purchase of
stock or otherwise. Notwithstanding the foregoing, Borrower may make investments
(by way of contributions to capital, acquisitions of stock (other than Margin
Stock) or other equity interests or transfers of property), including those
previously made (which Lender, based upon Borrower's representation,
acknowledges totalled $513,000 as of December 31, 1996), in the subsidiaries
listed on Schedule 12 hereto, in any new wholly-owned subsidiaries formed by
Borrower after the date hereof and in Intelligroup Asia Private Limited in an
aggregate amount not to exceed $2,000,000 (less the aggregate amount of loans
and advances made pursuant to Section 9.5 hereof) at any time.
9.2 DISPOSITION OF ASSETS OR COLLATERAL. Sell, lease, license, or
otherwise transfer or dispose of any or all of the Collateral or other assets of
Borrower other than (a) the sale or license of Inventory in the ordinary course
of business, and (b) the disposition of used, worn-out or surplus property in
the ordinary course of business.
9.3 OTHER LIENS. Incur, create or permit to exist any Lien upon or
with respect to any of the Collateral, whether now owned or hereafter acquired,
except (a) the Liens created by this Agreement and the other Loan Documents, (b)
Liens identified on Schedule 4 hereto; provided that no such Lien is extended to
cover any additional property after the date hereof and that the amount of
indebtedness secured thereby, if any, is not increased after the date hereof,
(c) Liens for taxes, assessments or governmental charges not yet due or which
are being contested in good faith by appropriate proceedings and with respect to
which Borrower has maintained adequate reserves in accordance with GAAP, (d)
pledges or deposits and liens under bonds required in connection with worker's
compensation, unemployment insurance and other social security legislation, and
(e) additional Liens securing indebtedness permitted by Subsection 9.4(d) hereof
(collectively, "Permitted Liens").
9.4 OTHER LIABILITIES. Incur, create, assume or permit to exist any
indebtedness or liability on account of either borrowed money or the deferred
purchase price of property or services, except (a) Obligations to Lender, (b)
indebtedness and liabilities existing on the date of this Agreement and
disclosed on Schedule 10 hereto, (c) trade and other accounts payable incurred
in the ordinary course of business in accordance with customary trade terms and
which are not overdue for a period of more than ninety (90) days, and (d)
additional indebtedness for borrowed money incurred in the ordinary course of
business and not exceeding $250,000 in an aggregate principal amount at any time
outstanding.
9.5 LOANS. Make loans, advances or other extensions of credit to any
Person except (a) extensions of trade credit in the ordinary course of business,
(b) loans or advances to officers and employees of Borrower in the ordinary
course of business in an aggregate amount not to exceed $250,000 at any time
outstanding, and (c) loans or advances to the subsidiaries listed on Schedule 12
hereto, any new wholly-owned subsidiaries formed by Borrower after the date
hereof or Intelligroup Asia Private Limited in the ordinary course of business
in an aggregate amount not to exceed $2,000,000 (less the aggregate amount of
investments made by Borrower pursuant to the last sentence of Section 9.1
hereof) at any time outstanding. For the avoidance of doubt, payment of amounts
due to any of the Persons described in clause (c) above on account of services
performed for Borrower or goods delivered to
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Borrower by such Persons in the ordinary course of business and otherwise in
compliance with Section 9.8 hereof shall not be deemed to be loans or advances.
9.6 GUARANTIES; CONTINGENT LIABILITIES. (a) assume, guarantee,
endorse, contingently agree to purchase or otherwise become liable upon the
obligation of any Person, except (i) by the endorsement of negotiable
instruments for deposit or collection or similar transactions in the ordinary
course of business and (ii) that Borrower may guaranty, in accordance with
Borrower's past practice, the relocation and similar start-up obligations of new
employees of Borrower who have come to the United States to work for Borrower,
in an aggregate amount not to exceed $100,000 (including those guarantees
disclosed on Schedule 10 hereto), or (b) agree to maintain the working capital
or net worth of any Person or to make investments in any Person (except for
short-term investments of excess cash in instruments which are guaranteed in
full, directly or indirectly, by the United States Government or the FDIC, or in
United States government securities, which investments shall be made in
instruments maturing less than 90 days from the date of such investment).
9.7 DIVIDENDS AND OTHER DISTRIBUTIONS. Declare or pay any cash
dividend or make any distribution on, or redeem, retire or otherwise acquire
directly or indirectly, any share of its stock, or make any distribution of
assets to its stockholders.
9.8 TRANSACTIONS WITH AFFILIATES. Enter into any transactions,
including, without limitation, the purchase, sale or exchange of property or the
rendering of any services, with any Affiliate of Borrower unless such
transactions are otherwise permitted under this Agreement, are in the ordinary
course of Borrower's business and are upon fair and reasonable terms no less
favorable to Borrower than it would obtain in a comparable arm's-length
transaction with a Person not an Affiliate of Borrower, or pay any fees or
expenses to, or reimburse or assume any obligation for the reimbursement of any
expenses incurred by, any Affiliate of Borrower (other than reimbursement of
travel and entertainment expenses incurred in the ordinary course of business to
directors, officers or employees of Borrower).
9.9 SALE OF INVENTORY. Sell any of the Inventory on a ▇▇▇▇-and-hold,
guaranteed sale, sale-and-return, sale on approval or consignment basis, or any
other basis subject to a repurchase obligation or return right.
9.10 REMOVAL OF COLLATERAL. Remove, or cause or permit to be removed,
any of the Collateral or other assets from the premises identified on Schedule 1
hereto, except for sales of Inventory in the ordinary course of business or the
transfer of Collateral to another premises identified on Schedule 1 hereto.
9.11 RESTRICTIONS REGARDING NOTES AND ACCOUNTS. Sell, assign,
transfer, discount or otherwise dispose of any Accounts or any promissory note
or other instrument payable to it with or without recourse, except for
collection without recourse in the ordinary course of business, or, other than
in the ordinary course of business, grant any extension of the time of payment
of any of the Accounts, release, wholly or partially, any Person liable for the
payment thereof, or allow any credit or discount whatsoever thereon.
9.12 SETTLEMENTS. Compromise, settle or adjust any claim relating to
any of the Collateral in a material amount, except as permitted by Section 9.11
hereof.
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9.13 MODIFICATION OF ORGANIZATIONAL DOCUMENTS. Change, alter or
modify, or permit any change, alteration or modification of, its Organizational
Documents in any manner that would adversely affect the rights of Lender
hereunder and under the other Loan Documents or the ability of Borrower to
perform its obligations hereunder and thereunder. Borrower shall provide at
least five (5) days prior written notice to Lender of any change, alteration or
modification permitted by this Section 9.13.
9.14 CHANGE BUSINESS. Cause or permit a material change in the nature
of its business as conducted on the date of this Agreement.
9.15 CHANGE OF LOCATION OR NAME. Change any of the following prior to
giving Lender thirty (30) days written notice thereof: (a) the location stated
in Schedule 1 hereto for the maintenance of the books and records relative to
the Accounts and the other Collateral, (b) the location of the principal place
of business and chief executive office of Borrower as stated in Schedule 2
hereto, or (c) the name under which Borrower conducts any of its business or
operations.
9.16 CHANGE OF ACCOUNTING PRACTICES. Change its present accounting
principles or practices in any material respect, except as may be required by
changes in GAAP.
9.17 INCONSISTENT AGREEMENT. Enter into any agreement or other
Document containing any provision that would be violated by the performance of
any of Borrower's obligations under this Agreement or any other Loan Document.
9.18 WORKING CAPITAL. Cause or permit Borrower's Working Capital (a)
at each fiscal year end of Borrower subsequent to December 31, 1996 to be less
than one hundred five percent (105%) of Borrower's Working Capital at the end of
the previous fiscal year of Borrower, or (b) at any time to be less than ninety
percent (90%) of Borrower's Working Capital at the end of the previous fiscal
year of Borrower.
9.19 MINIMUM TANGIBLE NET WORTH. Cause or permit Borrower's Tangible
Net Worth (a) at the end of each fiscal year of Borrower to be less than one
hundred eight percent (108%) of Borrower's Tangible Net Worth at the end of the
previous fiscal year of Borrower, or (b) at any time to be less than ninety five
percent (95%) of Borrower's Tangible Net Worth at the end of the previous fiscal
year of Borrower.
9.20 CAPITAL EXPENDITURES. Enter into any agreement to purchase
and/or pay for, or become obligated to pay for, capital expenditures, long term
leases, Capital Leases or sale lease-backs, in an amount at any time outstanding
aggregating in excess of $750,000 (for Borrower, without its consolidated
subsidiaries) during any fiscal year of Borrower.
9.21 HAZARDOUS SUBSTANCES. Release, discharge or otherwise dispose
of, or permit the manufacture, storage, transmission or presence of, any
Hazardous Substances, or otherwise cause or permit any Environmental Activity to
be conducted or exist at, over or upon any real property owned, leased or
otherwise occupied by Borrower (a) which constitutes a violation of any
Environmental Law or (b) which may be harmful or create a foreseeable risk of
unreasonable harm to public health or welfare or to natural resources.
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10. ADDITIONAL POWERS OF LENDER
10.1 POWERS OF ATTORNEY. Borrower hereby constitutes and appoints
Lender (and any employee or agent of Lender), with full power of substitution,
its true and lawful attorney and agent in fact to take any or all of the actions
described below in Lender's or Borrower's name and at Borrower's expense:
(a) Evidence of Liens. Lender may execute such financing
statements and other documents and take such other actions as Lender deems
necessary or proper in order to create, perfect or continue the security
interests and other Liens provided for by this Agreement or any other Loan
Document, and Lender may file the same (or a photocopy of this Agreement or of
any financing statement signed by Borrower) in any appropriate governmental
office.
(b) Preservation of Collateral. Lender may take any and
all action that it deems necessary or proper to preserve its interest in the
Collateral, including, without limitation, the payment of debts of Borrower that
might impair any of the Collateral or Lender's security interest therein
(including the priority of Lender's security interest therein), the purchase of
insurance on any Collateral, any amounts paid to any landlord of Borrower
arising from or otherwise relating to any Document executed by any such landlord
in connection with this Agreement, the repair or safeguarding of any Collateral,
or the payment of taxes, assessments or other Liens thereon. All sums so
expended by Lender shall constitute Obligations, shall be secured by the
Collateral, and shall be payable on demand with interest at the Default Rate
from the respective dates such sums are expended.
(c) Lender's Right to Cure. In the event Borrower fails to
perform any of its Obligations, then Lender may perform the same but shall not
be obligated to do so. All sums expended by Lender under this Subsection 10.1(c)
shall constitute Obligations, shall be secured by the Collateral, and shall be
payable on demand with interest at the Default Rate from the respective dates
such sums are expended.
(d) Verification of Accounts. Lender may make test
verifications of any and all Accounts and Inventory in any manner and through
any medium Lender considers advisable, and Borrower shall render any assistance
reasonably requested by Lender.
(e) Collections; Modification of Terms. Upon the
occurrence and during the continuance of any Event of Default, Lender may
demand, ▇▇▇ for, collect and give receipts for any money, instruments or
property payable or receivable on account of or in exchange for any of the
Collateral, or make any compromises it deems necessary or proper, including,
without limitation, extending the time of payment, permitting payment in
installments, or otherwise modifying the terms or rights relating to any of the
Collateral, all of which may be effected without notice to or consent by
Borrower and without otherwise discharging or affecting the Obligations, the
Collateral or the Liens granted under any of the Loan Documents.
(f) Notification of Account Debtors. Borrower, at the
request of Lender, shall notify the Account debtors of Lender's security
interest in its Accounts. Upon the occurrence and during the continuance of any
Event of Default, Lender may notify the Account debtors on any of the Accounts
to make payment directly to Lender (including pursuant to the form of letter
delivered by Borrower to Lender), and Lender may endorse all items of payment
received by it that are payable to Borrower; until
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such time as Lender elects to exercise such right of notification (and subject
to Lender's rights under Section 6.4 hereof), Borrower is authorized to collect
and enforce the Accounts.
(g) Notification as to Inventory. Lender may notify any
bailee of any Inventory of Lender's security interest therein.
(h) Endorsements. Lender may endorse Borrower's name on
checks, notes, acceptances, drafts, invoices, bills of lading and any other
Documents requiring Borrower's endorsement.
(i) Mails. Upon the occurrence and during the continuance
of any Event of Default, Lender may notify the postal authorities to deliver all
mail, parcels, and other material addressed to Borrower to Lender at such
address as Lender may direct, and Lender may open and deal with same as it deems
necessary or proper.
(j) Insurance. Lender may file proofs of loss and claim
with respect to any of the Collateral with the appropriate insurer, and may
endorse its own name and Borrower's name on any checks or drafts constituting
insurance proceeds.
10.2 IRREVOCABILITY; LENDER'S DISCRETION. Borrower covenants and
agrees that any action described in Section 10.1 hereof may be taken at Lender's
sole and absolute discretion, at any time and from time to time, and (except as
may be stated specifically to the contrary in Section 10.1 hereof with respect
to any power) whether prior or subsequent to an Event of Default, and Borrower
hereby ratifies and confirms all actions so taken. Borrower further covenants
and agrees that the powers of attorney granted by Section 10.1 hereof are
coupled with an interest and shall be irrevocable until full and final payment
and performance of the Obligations and until the Line of Credit in no longer in
effect; that said powers are granted solely for the protection of Lender's
interest and Lender shall have no duty to exercise any thereof; that the
decision whether to exercise any of such powers, and the manner of exercise,
shall be solely within Lender's discretion; and that neither Lender nor any of
its directors, officers, employees or agents shall be liable for any act of
omission or commission, or for any mistake or error of judgment, in connection
with any such powers.
11. EVENTS OF DEFAULT
The occurrence of any of the following shall constitute an "Event of
Default":
11.1 FAILURE TO PAY. Borrower fails to pay when due (a) any principal
of or interest on any Loan, whether on any principal payment date, required
prepayment dates, by acceleration or otherwise and any fees and expenses, or (b)
any other Obligation, which failure to pay any other Obligation continues after
any applicable grace period.
11.2 FAILURE TO PERFORM OR OBSERVE COVENANTS. Borrower fails to
perform or observe any other covenant, term or condition contained in this
Agreement or any other Loan Document (other than those described in Section 11.1
hereof).
11.3 FALSE REPRESENTATION OR WARRANTY. Any representation, warranty
or statement by Borrower contained in this Agreement, any other Loan Document or
any other Document delivered to Lender in connection with the Collateral, this
Agreement or any of the transactions contemplated hereby
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or reaffirmed (or hereby deemed reaffirmed) is or was when made or reaffirmed
(or deemed reaffirmed) incorrect in any material respect.
11.4 SECURITY. Lender shall not have as of the date hereof or shall
at any time hereafter cease to have a valid and perfected first priority Lien in
all of the Collateral (subject, as to first priority, to the Permitted Liens),
including, without limitation, that the grant of the security interests in this
Agreement or the Trademark Security Agreement shall never have been effective or
shall cease to be effective to grant to Lender (or Lender shall otherwise not
have obtained or cease to have) a first priority lien in all of the Collateral
(subject, as to first priority, to the Permitted Liens).
11.5 LOAN DOCUMENTS. Any of the following occurs: (a) this Agreement
or any other Loan Document shall not have been, as of the date hereof or ceases
to be, valid, effective and enforceable in any material respect, as reasonably
determined by Lender; or (b) Borrower asserts that this Agreement or any other
Loan Document shall not have been as of the date hereof, or shall have ceased to
be, valid, effective and enforceable in any material respect.
11.6 CROSS DEFAULT; DEFAULT ON OTHER DEBT. (a) Any other default
(which has not been waived) by any other Person on or with respect to any of the
Obligations (other than under the Loan Documents) occurs, or (b) any default
(which has not been waived) occurs under any other indebtedness or other
obligation of Borrower, or of any guarantor of any of the Obligations, in an
aggregate principal amount of $250,000 or more to any one or more third parties,
that entitles any such third party to declare such indebtedness or other
obligation due prior to its date of maturity.
11.7 CESSATION OF BUSINESS. (a) Borrower ceases to do business as a
going concern; or (b) the termination, suspension or loss of any license or
leasehold interest which results in Borrower having to cease a substantial part
of its operations by reason of such termination, suspension or loss for a period
of more than thirty (30) consecutive days.
11.8 CHANGE IN CONDITION. There occurs any material change in the
condition or affairs, financial or otherwise, of Borrower or of any endorser,
guarantor or surety for any of the Obligations, which in the opinion of Lender
impairs Lender's security or materially and adversely affects its risks
(including, without limitation, the termination of any one or more material
Contracts with respect to Borrower's business).
11.9 LIQUIDATION OR DISSOLUTION. Without limiting the generality of
Section 11.10 hereof, Borrower takes any action to authorize its liquidation or
dissolution or suffers any liquidation or dissolution.
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11.10 INABILITY TO PAY DEBTS; BANKRUPTCY OR INSOLVENCY. Any one or
more of the following occur: (a) Borrower shall commence any case, proceeding or
other action (collectively, "Proceeding") (i) under any existing or future law
of any jurisdiction, domestic or foreign, relating to bankruptcy, insolvency,
reorganization or relief of debtors, seeking to have an order for relief entered
with respect to it, or seeking to adjudicate it a bankrupt or insolvent, or
seeking reorganization, arrangement, adjustment, winding-up, liquidation,
dissolution, composition with creditors or other similar relief with respect to
it or its debts, or (ii) seeking appointment of a receiver, trustee, custodian
or other similar official for it or for all or any substantial part of its
assets, or Borrower shall make a general assignment for the benefit of its
creditors or a bulk sale; (b) there shall be commenced against Borrower any
Proceeding of a nature referred to in clause (i) above which (A) results either
in the entry of an order for relief ("Order") or an appointment and any such
Order or appointment remains undismissed in a manner reasonably satisfactory to
Lender ("Undismissed") for a period of sixty (60) days; the foregoing shall
include the commencement against Borrower of any Proceeding seeking issuance of
a warrant of attachment, execution, distraint or similar process against all or
any substantial part of its assets which results in the entry of an Order for
any such relief which remains Undismissed in a manner reasonably satisfactory to
Lender for sixty (60) days; or (c) Borrower takes any action substantially in
furtherance of, or expressly authorizing or indicating its consent to, approval
of or acquiescence in or expressly proposes to take any of the acts set forth in
clause (a) or (b) above; or (d) Borrower shall generally not be able to or fail
to, or shall expressly admit in writing its inability to, pay its debts
generally as they become due.
11.11 JUDGMENTS. One or more judgments or orders for the payment of
money exceeding $100,000 in the aggregate are rendered against Borrower, and any
such judgment or order continues unsatisfied and not effectively and
continuously stayed within thirty (30) days of such judgment or order.
11.12 ERISA. With respect to any Plan, there occurs or exists any of
the events or conditions described in the following clauses (a) through (h) and
such event or condition, together with all like events or conditions, could in
the opinion of Lender subject Borrower to any tax, penalty or other liability
that might, singly or in the aggregate, have a Material Adverse Effect: (a) a
"reportable event" as defined in Section 4043 of ERISA, (b) a "prohibited
transaction" as defined in Section 406 of ERISA or Section 4975 of the Code, (c)
the termination of any Plan or filing of notice of intention to terminate, (d)
the institution by the PBGC of proceedings to terminate, or to appoint a trustee
to administer, any Plan, or circumstances that constitute grounds for any such
proceedings, (e) the complete or partial withdrawal from a multiemployer Plan,
or the reorganization, insolvency or termination of a multiemployer Plan, (f) an
accumulated funding deficiency within the meaning of ERISA, (g) violation of the
reporting, disclosure or fiduciary responsibility requirements of ERISA or the
Code, or (h) any act or condition which could result in direct, indirect or
contingent liability to any Plan or the PBGC.
11.13 CHANGE IN MANAGEMENT OR OWNERSHIP. (a) Mr. ▇▇▇▇▇ ▇▇▇▇▇▇ or
either of ▇▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ or ▇▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ shall cease to hold
the office with Borrower that he currently holds and shall cease to be directly
involved in the day-to-day operations and management of Borrower, or (b) at any
time Mr. ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ and ▇▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ cease
to collectively own less than thirty-eighty percent (38%) of each class of the
issued and outstanding voting stock of Borrower or any such person owns less
than ten percent (10%) of each class of the issued and outstanding voting stock
of Borrower.
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12. REMEDIES
12.1 RIGHTS IN GENERAL. Automatically upon the occurrence of an Event
of Default described in Section 11.10 hereof, and at the option of Lender, upon
the occurrence of any other Event of Default, (a) the Revolving Line of Credit
and all provisions for the making of additional Revolving Loans under this
Agreement shall terminate, (b) the principal and interest of the Loans and all
other Obligations shall become and be immediately due and payable, without
presentment, demand, protest, or further notice of any kind, all of which are
hereby expressly waived by Borrower, and (c) Lender shall be entitled to
exercise forthwith (to the extent and in such order as Lender may elect, in its
sole and absolute discretion) any or all rights and remedies provided for in
this Agreement and any other Loan Document, all rights and remedies of a secured
party under the UCC, and all other rights and remedies that may otherwise be
available to Lender by agreement or at law or in equity. The phrase "upon
occurrence and during the continuance of any Event of Default" and similar
phrases shall not imply in any manner that Borrower have the right to cure any
Event of Default after Lender has declared an Event of Default.
12.2 SPECIFIC RIGHTS REGARDING COLLATERAL. In addition to the rights
as stated generally in Section 12.1 hereof (and without limitation thereof),
Borrower agrees that, upon the occurrence of an Event of Default, Lender shall
be entitled to the rights and remedies, and Borrower shall have the obligations,
set forth below:
(a) Lender may enter upon the premises where any of the
Collateral is located and take possession thereof and, at Lender's option,
remove or sell in place any or all thereof.
(b) Upon notice from Lender, Borrower shall promptly at
its expense assemble any or all of the Collateral and make it available at a
reasonably convenient place designated by Lender.
(c) Lender may, with or without judicial process, sell,
lease or otherwise dispose of any or all of the Collateral at public or private
sale or proceedings, by one or more contracts, in one or more parcels, at the
same or different times and places, with or without having the Collateral at the
place of sale or other disposition, to such Persons, for cash or credit or for
future delivery and upon such other terms, as Lender may in its discretion deem
best in each such matter. The purchaser of any of the Collateral at any such
sale shall hold the same free of any equity of redemption or other right or
claim of Borrower, all of which, together with all rights of stay, exemption or
appraisal under any statute or other law now or hereafter in effect, Borrower
hereby unconditionally waives to the fullest extent permitted by law. If any of
the Collateral is sold on credit or for future delivery, Lender shall not be
liable for the failure of the purchaser to pay for same and, in the event of
such failure, Lender may resell such Collateral if it retains the right to do
so.
(d) Borrower hereby further agrees that notice of the time
and place of any public sale, or of the time after which any private sale or
other intended disposition or action relating to any of the Collateral is to be
made or taken, shall be deemed commercially reasonable notice thereof, and shall
satisfy the requirements of any applicable statute or other law, if such notice
(i) is delivered not less than five (5) Banking Days prior to the date of the
sale, disposition or other action to which the notice relates, or (ii) is mailed
(by ordinary first class mail, postage prepaid) not less than five (5) Banking
Days prior thereto. Lender shall not be obligated to make any sale or other
disposition or take other action pursuant to such notice and may, without other
notice or publication, adjourn or postpone any public or private sale or other
disposition or action by announcement at the time and place previously fixed
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therefor, and such sale, disposition or action may be held or accomplished at
any times or places to which the same may be so adjourned or postponed.
(e) Lender may purchase any or all of the Collateral at
any public sale. Lender may purchase at private sale any of the Collateral that
is of a type customarily sold in a recognized market or the subject of widely
distributed price quotations or otherwise unless prohibited by law. Lender may
make payment of the purchase price for any Collateral by credit against the then
outstanding amount of the Obligations.
(f) Lender may at its discretion retain any or all of the
Collateral and apply the same in satisfaction of part or all of the Obligations.
(g) Any cash proceeds of sale, lease or other disposition
of Collateral shall be applied as follows:
First: To the expenses of collecting, enforcing,
safeguarding, holding and disposing of the Collateral, and to other
expenses of Lender in connection with the enforcement of this
Agreement and any other Loan Document (including, without limitation,
court costs and the fees and expenses of accountants, appraisers and
in-house and outside attorneys), together with interest at the
Default Rate from the respective dates such sums are expended;
Second: Any surplus then remaining to the payment of
interest and principal of the Loans and other sums payable as part of
the Obligations, in such order as Lender elects; and
Third: Any surplus then remaining to Borrower or whoever
may be lawfully entitled thereto.
12.3 SET-OFF. Borrower further agrees that:
(a) Upon the occurrence of an Event of Default, Lender is
hereby authorized at any time and from time to time, without notice to Borrower
(any such notice being expressly waived by Borrower), to set off and apply (or
cause any affiliate of Lender to set off and apply) any and all deposits
(general or special, time or demand, provisional or final) at any time held and
other indebtedness at any time owing by Lender or such affiliate to or for the
credit or the account of Borrower, against any or all of the Obligations now or
hereafter existing under this Agreement, any Note or otherwise, irrespective of
whether or not Lender shall have made any demand and although such Obligations
may be unmatured.
(b) If any other lender has participated or hereafter
participates with Lender with respect to any of the Obligations, Borrower hereby
authorizes such participating lender disclosed to them prior to set-off, upon
the occurrence of any Event of Default, immediately and without notice or other
action, at the request of Lender, to set off against any of Borrower's
Obligations to Lender any deposits held or money owed by such participating
lender in any capacity to Borrower, whether or not due, and to remit the money
set off to Lender.
(c) The rights stated in this Section 12.3 are in addition
to other rights and remedies (including, without limitation, other rights of
set-off or lien) that Lender or any participating lender may have.
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12.4 CUMULATIVE REMEDIES; NO WAIVER BY LENDER. No remedy referred to
in this Agreement is intended to be exclusive, but each shall be cumulative and
in addition to any other remedy referred to in this Agreement or otherwise
available to Lender by agreement or at law or in equity. No express or implied
waiver by Lender of any default or Event of Default shall in any way be, or be
construed to be, a waiver of any future or subsequent default or Event of
Default. The failure or delay of Lender in exercising any rights granted it
hereunder and/or under any other Loan Document upon any occurrence of any of the
contingencies set forth herein shall not constitute a waiver of any such right
upon the continuation or recurrence of any such contingency or similar
contingencies, and any single or partial exercise of any particular right by
Lender shall not exhaust the same or constitute a waiver of any other right.
12.5 WAIVERS AND CONSENTS RELATING TO REMEDIES. In connection with
any action or proceeding arising out of or relating in any way to this
Agreement, any other Loan Document, any of the Loans, any of the Collateral, or
any act or omission relating to any of the foregoing:
(a) BORROWER AND LENDER WAIVE THE RIGHT TO TRIAL BY JURY;
(b) Borrower and Lender consent to the non-exclusive
jurisdiction of any court of the State of New Jersey and of any federal court
located in New Jersey, and waive any right to object to such court as an
inconvenient forum;
(c) Borrower waives personal service of any summons,
complaint or other process in connection with any such action or proceeding and
agrees that service thereof may be made, as Lender may elect, by certified mail
directed to Borrower at the location provided for notices to Borrower under this
Agreement or, in the alternative, in any other form or manner permitted by law;
(d) Borrower agrees that all of the Collateral constitutes
equal security for all of the Obligations, and agrees that Lender shall be
entitled to sell, retain or otherwise deal with any or all of the Collateral, in
any order or simultaneously as Lender shall determine in its sole and absolute
discretion, free of any requirement for the marshalling of assets or other
restriction upon Lender in dealing with the Collateral; and
(e) Borrower agrees that Lender may at Lender's election
proceed directly against Borrower for collection of any or all of the
Obligations without first selling, retaining or otherwise dealing with any of
the Collateral.
12.6 ADDITIONAL WAIVERS AND CONSENTS OF BORROWER To the fullest
extent permitted by law, Borrower (a) waives demand, presentment, notice of
dishonor or protest under any Document evidencing or otherwise relating to the
Collateral and/or under or in connection with this Agreement and/or any other
Loan Document; and (b) consents to any of the following by Lender: (i) any
extension, postponement of time of payment or other indulgence, (ii) any
substitution, exchange or release of Collateral, (iii) any addition to, or
release of, any Person primarily or secondarily liable for any of the
Obligations, and (iv) after the occurrence and during the continuance of an
Event of Default, any acceptance of partial payments on any Accounts or
Documents and the settlement, compromising or adjustment thereof.
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13. COSTS, EXPENSES AND TAXES
(a) Borrower agrees to pay to Lender, upon the closing of
this Agreement, and otherwise on demand, all costs and expenses incurred by
Lender in connection with (i) the preparation, negotiation and delivery of this
Agreement and the other Loan Documents, and any amendments or modifications
thereto, and (ii) collecting any Loan or instituting, maintaining, preserving,
enforcing and foreclosing the security interest in any of the Collateral,
whether through judicial proceedings or otherwise, or in defending or
prosecuting any actions or proceedings arising out of or relating to this
Agreement or any other Loan Document, including reasonable fees and expenses of
counsel (which may include costs of in-house counsel), expenses for auditors,
appraisers and environmental consultants, lien searches, recording and filing
fees and taxes.
(b) Borrower agrees to pay any and all stamp, excise and
other taxes payable or determined to be payable in connection with the
execution, delivery or performance of this Agreement or any other Loan Document,
and to pay on demand all liabilities to which Lender may become subject as the
result of delay in paying or omission to pay such taxes.
14. INDEMNIFICATION BY BORROWER
Borrower agrees to indemnify each of Lender, its directors, officers
and employees and each legal entity, if any, who controls Lender (the
"Indemnified Parties") and to hold each Indemnified Party harmless from and
against any and all claims, damages, losses, liabilities and expenses
(including, without limitation, all reasonable fees of counsel with whom any
Indemnified Party may consult and all expenses of litigation or preparation
therefor) which any Indemnified Party may incur or which may be asserted against
any Indemnified Party in connection with or arising out of the matters referred
to in this Agreement or any other Loan Document by any Person (including any
person or entity claiming derivatively on behalf of Borrower), whether (a)
arising from or incurred in connection with any breach of a representation,
warranty or covenant by Borrower, or (b) arising out of or resulting from any
suit, action, claim, proceeding or governmental investigation, pending or
threatened, whether based on statute, regulation or order, or tort, or contract
or otherwise, before any court or governmental authority, which arises out of or
relates to this Agreement, any other Loan Document, or the use of the proceeds
of any Loan; provided, however, that the foregoing indemnity agreement shall not
apply to the extent such claims, damages, losses, liabilities and expenses are
solely attributable to an Indemnified Party's gross negligence or willful
misconduct. Borrower's obligations under this Article 14 shall survive the
repayment of the Obligations and the termination of this Agreement and the other
Loan Documents.
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15. MISCELLANEOUS
15.1 ENTIRE AGREEMENT; AMENDMENTS; LENDER'S CONSENT. This Agreement
(including the Exhibits and Schedules hereto) and the other Loan Documents
supersede, with respect to their subject matter, all prior and contemporaneous
agreements, understandings, inducements or conditions among the respective
parties, whether express or implied, oral or written. No amendment or waiver of
any provision of this Agreement or any other Loan Document, nor consent to any
departure by Borrower therefrom, shall in any event be effective unless the same
shall be in writing and signed by Lender (and Borrower, in the case of
amendments), and then such waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given. To the extent
this Agreement and any other Loan Document are actually inconsistent, this
Agreement shall control.
15.2 NOTICES. All notices and other communications relating to this
Agreement or any other Loan Document (unless otherwise specified therein) to be
effective shall be in writing (including by telecopy), and shall be deemed to
have been duly given or made when delivered by hand, or five (5) days after
being deposited in the United States mail, postage prepaid certified mail,
return receipt requested, or one business day after delivery to a nationally
recognized overnight courier service (against a signed receipt) or, in the case
of telecopy notice, when sent and confirmed as received, addressed as follows:
If to Lender: PNC Bank, National Association
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Commercial Finance Department
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to: ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Tischman ▇▇▇▇▇▇▇ & ▇▇▇▇▇, P.A.
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
If to Borrower: Intelligroup, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Chief
Financial Officer
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to: ▇▇▇▇▇▇▇▇ Ingersoll
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇, Esq.
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
38
40
or to such other address as the respective party or its successors or assigns
may subsequently designate by proper notice. Notwithstanding the foregoing,
notices and other communications to Lender pursuant to Subsections 2.3, 3.4 and
4.7 hereof shall not be effective until received.
15.3 BINDING EFFECT; GOVERNING LAW. This Agreement shall be binding
upon and inure to the benefit of Borrower and Lender and their respective
successors and assigns, except that Borrower shall not have the right to assign
its rights hereunder or any interest herein without the prior written consent of
Lender. Borrower consents to Lender's sale of participations, assignment,
transfer or other disposition, at any time or times, of this Agreement, any Note
or any other Loan Document or any portion hereof or thereof, or of any right,
obligation or other interest herein or therein. This Agreement and the other
Loan Documents shall be governed by, and construed in accordance with, the laws
of the State of New Jersey without giving effect to the principles of conflicts
of laws.
15.4 EXECUTION IN COUNTERPARTS. This Agreement may be executed in any
number of counterparts, each of which when so executed shall be deemed to be an
original and all of which taken together shall constitute but one and the same
agreement.
15.5 SEVERABILITY OF PROVISIONS. Any provision of this Agreement or
any other Loan Document that is prohibited or unenforceable in any jurisdiction
shall, as to such jurisdiction, be ineffective to the extent of such prohibition
or unenforceability without invalidating the remaining provisions of this
Agreement or such other Loan Document or affecting the validity or
enforceability of such provision in any other jurisdiction and each provision
which is not wholly enforceable shall be enforced to the maximum extent
permitted by law.
15.6 TABLE OF CONTENTS; HEADINGS; TERMINOLOGY. The table of contents
and headings preceding the text of this Agreement are inserted solely for
convenience of reference and shall not constitute a part of this Agreement nor
affect its meaning, construction or effect. Amendments of Documents shall
include extensions, renewals and consolidations thereof.
15.7 EXHIBITS AND SCHEDULES. All of the Exhibits and Schedules to
this Agreement are hereby incorporated by reference herein and made a part
hereof.
15.8 LIMITATION OF LIABILITY. No claim may be made by Borrower or any
other Person against Lender and/or any director, officer, employee, attorney, or
agent of Lender for any special, indirect or consequential damages in respect of
any claim for breach of contract arising out of or relating to the transactions
contemplated by this Agreement or any other Loan Document, or any act, omission
or event occurring in connection herewith or therewith; and Borrower hereby
waives, releases and agrees not to ▇▇▇ upon any claim for any such damages,
whether or not accrued and whether or not known or suspected to exist in its
favor.
15.9 FURTHER ACKNOWLEDGMENTS AND AGREEMENTS OF BORROWER AND LENDER.
Borrower and Lender acknowledge and agree that they (i) have independently
reviewed and approved each and every provision of this Agreement, including the
Exhibits attached hereto and any and all other documents and items as they or
their counsel have deemed appropriate, and (ii) have entered into this Agreement
and have executed the closing documents voluntarily, without duress or coercion,
and have done all of the above with the advice of their legal counsel,
including, without limitation with respect to the risks and benefits of the
waiver of the right to a jury trial and the other waivers of rights contained in
this Agreement.
39
41
15.10 DISCLOSURE OF FINANCIAL INFORMATION. Lender and its affiliates
are hereby authorized to disclose any financial or other information about
Borrower to any regulatory body or agency having jurisdiction over Lender or any
such affiliate or to any present, future or prospective participant or successor
in interest in any loan or other financial accommodation made by Lender or any
such affiliate to Borrower or pursuant to legal process.
IN WITNESS WHEREOF, the undersigned have caused these presents to be
executed by their proper corporate officers and sealed with their seal the day
and year first above written.
ATTEST: INTELLIGROUP, INC.
By: By:
------------------------------- --------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇, President and
Secretary Chief Executive Officer
PNC BANK, NATIONAL
ASSOCIATION
By:
--------------------------------
▇▇▇▇▇ Raphaels,
Vice President
40
42
TABLE OF CONTENTS
1. DEFINITIONS....................................................................................................1
1.1 DEFINED TERMS......................................................................................1
1.2 OTHER DEFINITIONAL PROVISIONS......................................................................8
2. REVOLVING LOANS................................................................................................8
2.1 AMOUNT OF REVOLVING LOANS..........................................................................8
2.2 REVOLVING NOTE.....................................................................................8
2.3 PROCEDURE FOR REVOLVING LOAN BORROWINGS............................................................9
2.4 OVERDRAFTS.........................................................................................9
2.5 USE OF PROCEEDS....................................................................................9
3. EQUIPMENT LOANS................................................................................................9
3.1 AMOUNT ............................................................................................9
3.2 EQUIPMENT NOTES....................................................................................9
3.3 PRINCIPAL PAYMENTS.................................................................................9
3.4 PROCEDURE FOR EQUIPMENT LOAN BORROWINGS...........................................................10
3.5 CERTAIN CONDITIONS TO EQUIPMENT LOAN BORROWINGS...................................................10
3.6 SHIPPED EQUIPMENT.................................................................................10
3.7 NOT A FIXTURE.....................................................................................10
3.8 USE OF PROCEEDS...................................................................................11
4. INTEREST RATE PROVISIONS, FEES, PAYMENTS, MONTHLY
STATEMENTS............................................................................................11
4.1 INTEREST RATES AND PAYMENT DATES..................................................................11
4.2 PAYMENTS, CHARGES TO ACCOUNTS, AND COMPUTATIONS...................................................11
4.3 FACILITY FEE......................................................................................12
4.4 REIMBURSEMENT OF INCREASED COST TO LENDER.........................................................12
4.5 OPTIONAL PREPAYMENTS OF EQUIPMENT LOANS...........................................................13
4.6 MANDATORY PREPAYMENTS OF LOANS....................................................................13
4.7 TERMINATION OF REVOLVING LINE OF CREDIT...........................................................13
4.8 MONTHLY STATEMENTS................................................................................14
5. CONDITIONS PRECEDENT..........................................................................................14
5.1 CONDITIONS TO INITIAL LOANS.......................................................................14
5.2 CONDITIONS TO ALL LOANS...........................................................................14
6. SECURITY INTERESTS; CROSS COLLATERALIZATION AND CROSS
DEFAULT...............................................................................................15
6.1 GRANT OF SECURITY INTERESTS.......................................................................15
6.2 CROSS DEFAULT; CROSS COLLATERALIZATION............................................................15
6.3 FURTHER ASSURANCES................................................................................15
6.4 COLLECTION AND REMITTANCE.........................................................................15
7. REPRESENTATIONS AND WARRANTIES................................................................................16
43
7.1 ORGANIZATION AND QUALIFICATION....................................................................16
7.2 DUE AUTHORIZATION; NO DEFAULT.....................................................................16
7.3 NO GOVERNMENTAL CONSENT NECESSARY.................................................................16
7.4 NO PROCEEDINGS....................................................................................17
7.5 FINANCIAL STATEMENTS..............................................................................17
7.6 NO CHANGE IN CONDITION; SOLVENCY..................................................................17
7.7 COMPLIANCE WITH LAWS..............................................................................18
7.8 NO OTHER VIOLATIONS...............................................................................18
7.9 TAXES AND ASSESSMENTS.............................................................................18
7.10 ACCOUNTS.........................................................................................18
7.11 BOOKS AND RECORDS................................................................................18
7.12 LOCATION OF COLLATERAL...........................................................................18
7.13 PLACES OF BUSINESS...............................................................................19
7.14 OTHER NAME OR ENTITIES...........................................................................19
7.15 TITLE AND LIENS..................................................................................19
7.16 PERFECTED FIRST PRIORITY LIENS...................................................................19
7.17 ERISA AND OSHA...................................................................................20
7.18 INSURANCE........................................................................................20
7.19 ENVIRONMENTAL MATTERS............................................................................20
7.20 FEDERAL REGULATIONS..............................................................................21
7.21 PROPRIETARY RIGHTS...............................................................................21
7.22 REPRESENTATIONS AND WARRANTIES TRUE, ACCURATE AND COMPLETE;
CONFIRMATION...............................................................................21
7.23 STOCK; SUBSIDIARIES..............................................................................21
7.24 CONSUMMATION OF MERGER...........................................................................22
7.25 SEC FILINGS......................................................................................22
8. AFFIRMATIVE COVENANTS.........................................................................................22
8.1 MAINTENANCE OF EXISTENCE AND QUALIFICATIONS.......................................................22
8.2 PAYMENT OF TAXES AND OTHER OBLIGATIONS............................................................22
8.3 MAINTENANCE OF PROPERTIES.........................................................................22
8.4 NOTICE OF ADVERSE EVENTS..........................................................................22
8.5 INFORMATION AND DOCUMENTS TO BE FURNISHED TO LENDER...............................................23
8.6 ACCESS TO RECORDS AND PROPERTY....................................................................25
8.7 INSURANCE AT BORROWER'S EXPENSE...................................................................25
8.8 PROCEEDS OF COLLATERAL............................................................................26
8.9 RECORDS...........................................................................................26
8.10 MAINTENANCE OF ACCOUNT AND BANKING RELATIONSHIPS.................................................26
8.11 DELIVERY OF DOCUMENTS............................................................................26
8.12 UNITED STATES CONTRACTS..........................................................................26
8.13 COMPLIANCE WITH LAWS.............................................................................26
8.14 FURTHER ASSURANCES...............................................................................26
8.15 PROJECTIONS......................................................................................26
9. NEGATIVE COVENANTS............................................................................................26
9.1 NO CONSOLIDATION, MERGER, ACQUISITION, LIQUIDATION................................................27
9.2 DISPOSITION OF ASSETS OR COLLATERAL...............................................................27
9.3 OTHER LIENS.......................................................................................27
9.4 OTHER LIABILITIES.................................................................................27
9.5 LOANS ...........................................................................................27
9.6 GUARANTIES; CONTINGENT LIABILITIES................................................................28
ii
44
9.7 DIVIDENDS AND OTHER DISTRIBUTIONS.................................................................28
9.8 TRANSACTIONS WITH AFFILIATES......................................................................28
9.9 SALE OF INVENTORY.................................................................................28
9.10 REMOVAL OF COLLATERAL............................................................................28
9.11 RESTRICTIONS REGARDING NOTES AND ACCOUNTS........................................................28
9.12 SETTLEMENTS......................................................................................28
9.13 MODIFICATION OF ORGANIZATIONAL DOCUMENTS.........................................................29
9.14 CHANGE BUSINESS..................................................................................29
9.15 CHANGE OF LOCATION OR NAME.......................................................................29
9.16 CHANGE OF ACCOUNTING PRACTICES...................................................................29
9.17 INCONSISTENT AGREEMENT...........................................................................29
9.18 WORKING CAPITAL..................................................................................29
9.19 MINIMUM TANGIBLE NET WORTH.......................................................................29
9.20 CAPITAL EXPENDITURES.............................................................................29
9.21 HAZARDOUS SUBSTANCES.............................................................................29
10. ADDITIONAL POWERS OF LENDER..................................................................................30
10.1 POWERS OF ATTORNEY...............................................................................30
10.2 IRREVOCABILITY; LENDER'S DISCRETION..............................................................31
11. EVENTS OF DEFAULT............................................................................................31
11.1 FAILURE TO PAY...................................................................................31
11.2 FAILURE TO PERFORM OR OBSERVE COVENANTS..........................................................31
11.3 FALSE REPRESENTATION OR WARRANTY.................................................................31
11.4 SECURITY.........................................................................................32
11.5 LOAN DOCUMENTS...................................................................................32
11.6 CROSS DEFAULT; DEFAULT ON OTHER DEBT.............................................................32
11.7 CESSATION OF BUSINESS............................................................................32
11.8 CHANGE IN CONDITION..............................................................................32
11.9 LIQUIDATION OR DISSOLUTION.......................................................................32
11.10 INABILITY TO PAY DEBTS; BANKRUPTCY OR INSOLVENCY................................................33
11.11 JUDGMENTS.......................................................................................33
11.12 ERISA...........................................................................................33
11.13 CHANGE IN MANAGEMENT OR OWNERSHIP...............................................................33
12. REMEDIES.....................................................................................................34
12.1 RIGHTS IN GENERAL................................................................................34
12.2 SPECIFIC RIGHTS REGARDING COLLATERAL.............................................................34
12.3 SET-OFF..........................................................................................35
12.4 CUMULATIVE REMEDIES; NO WAIVER BY LENDER.........................................................36
12.5 WAIVERS AND CONSENTS RELATING TO REMEDIES........................................................36
12.6 ADDITIONAL WAIVERS AND CONSENTS OF BORROWER......................................................36
13. COSTS, EXPENSES AND TAXES....................................................................................37
14. INDEMNIFICATION BY BORROWER..................................................................................37
iii
45
15. MISCELLANEOUS................................................................................................38
15.1 ENTIRE AGREEMENT; AMENDMENTS; LENDER'S CONSENT...................................................38
15.2 NOTICES..........................................................................................38
15.3 BINDING EFFECT; GOVERNING LAW....................................................................39
15.4 EXECUTION IN COUNTERPARTS........................................................................39
15.5 SEVERABILITY OF PROVISIONS.......................................................................39
15.6 TABLE OF CONTENTS; HEADINGS; TERMINOLOGY.........................................................39
15.7 EXHIBITS AND SCHEDULES...........................................................................39
15.8 LIMITATION OF LIABILITY..........................................................................39
15.9 FURTHER ACKNOWLEDGMENTS AND AGREEMENTS OF BORROWER AND LENDER....................................39
15.10 DISCLOSURE OF FINANCIAL INFORMATION.............................................................40
EXHIBITS
Exhibit A - Revolving Note
Exhibit B - Form of Equipment Note
Exhibit C - Conditions Precedent
Exhibit D - Trademark Security Agreement
Exhibit E - Letter to Account Debtors
Exhibit F - Opinion of Borrower's Counsel
Exhibit G - Chief Financial Officer's Certificate
Exhibit H - Initial Borrowing Certificate
SCHEDULES
Schedule 1 - Locations of Books and Records and Collateral
Schedule 2 - Offices and Business Locations
Schedule 3 - Other Names and Subsidiaries
Schedule 4 - Permitted Liens
Schedule 5 - Filing Jurisdictions
Schedule 6 - Insurance
Schedule 7 - Environmental Matters
Schedule 8 - Patents
Schedule 9 - Trademarks
Schedule 10 - Existing Liabilities
Schedule 11 - Governmental Consents
Schedule 12 - Subsidiaries
Schedule 13 - Exceptions
iv
46
REVOLVING NOTE
$7,500,000 January 22, 1997
Newark, New Jersey
FOR VALUE RECEIVED, the undersigned, INTELLIGROUP, INC., a New Jersey
corporation ("Borrower"), hereby absolutely and unconditionally promises to pay
to the order of PNC BANK, National Association ("Lender"), the principal amount
of the lesser of (a) SEVEN MILLION FIVE HUNDRED THOUSAND DOLLARS ($7,500,000),
and (b) the aggregate unpaid principal amount of all Revolving Loans made by
Lender to Borrower pursuant to the Agreement referred to below, as hereinafter
provided, and to pay interest as hereinafter provided on the unpaid principal
balance of this Note from time to time, from the date each such Revolving Loan
is made until the principal thereof is paid in full. Both principal and interest
hereunder shall be payable in lawful money of the United States of America, and
in immediately available funds, at the office of Lender located at ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, or at such other place as
Lender may from time to time designate in writing.
Interest on the principal balance of each Revolving Loan shall be due
and payable monthly on the first (1st) Banking Day in each calendar month,
commencing on the first such date to occur after such Revolving Loan was made,
and on any Banking Day on which any prepayment is made or such Revolving Loan is
paid or payable in full, until the principal balance hereof has been paid in
full, at a fluctuating rate per annum equal to one-quarter of one percent (1/4
of 1%) per annum above the Prime Rate (as hereinafter defined) in effect from
time to time, each change in such fluctuating rate to take effect simultaneously
with the corresponding change in the Prime Rate, without notice to Borrower;
provided that if any amount of principal (or, to the extent permitted by law, of
interest) payable hereunder is not paid when due (whether at stated maturity, by
acceleration or otherwise and whether before or after judgment) or any other
Event of Default has occurred, the principal balance hereof shall bear interest,
payable on demand, from the day when said amount becomes due as aforesaid or
from the day when such other Event of Default occurs, as the case may be, at an
interest rate per annum equal at all times to two percent (2%) per annum above
the otherwise applicable rate in effect from time to time. The "Prime Rate"
applicable to this Note shall be the rate of interest announced from time to
time by Lender as its "prime rate" or "prime lending rate," which rate is
determined from time to time by Lender as a means of pricing some loans to its
customers and it is neither tied to any external rate of interest or index nor
necessarily reflects the lowest rate of interest actually charged by Lender to
any particular class or category of customers.
Borrower authorizes Lender, without demand, to charge and withdraw from
any checking, loan or other account that Borrower may then have with Lender or
with any affiliate of Lender, any amount that shall become due from Borrower to
Lender under this Note or any other Loan Document. Such authorization shall not
affect Borrower's obligation to pay when due all amounts payable hereunder
whether or not there are sufficient funds in any such
47
accounts. The foregoing shall be in addition to, and not in limitation of, any
rights of set-off which Lender may have.
This Note (a) is the Revolving Note referred to in the Loan and
Security Agreement dated as of January 22, 1997 (as amended, supplemented or
otherwise modified from time to time, the "Agreement"), between Borrower and
Lender, (b) is entitled to the benefits thereof, (c) is secured as provided
therein and (d) is subject to optional and mandatory prepayment in whole or in
part as provided therein; provided, that any prepayment hereof shall be
accompanied by any amount due pursuant to Subsection 4.7(b) of the Agreement.
Capitalized terms used herein and not otherwise defined are used herein as
defined in the Agreement. All provisions of the Agreement are incorporated
herein by reference and, in the event of ambiguity or inconsistency between any
provisions of the Agreement and this Note, the provisions of the Agreement shall
prevail.
Borrower (and any endorser or guarantor of this Note by endorsing this
Note or executing a guaranty with respect to the obligations under this Note)
hereby to the fullest extent permitted by law (a) waives presentment for
payment, demand, notice of dishonor, protest, notice of protest and all other
demands and notices in connection with the delivery, performance and enforcement
of this Note, except as may be specifically otherwise provided in the Agreement,
and (b) consents that, without notice to or release of the liability of any such
party, the obligations of Borrower or any other Person may from time to time, in
whole or part, be renewed, extended, modified, accelerated, compromised, settled
or released by Lender.
Upon the occurrence and during the continuance of any one or more of
the Events of Default specified in the Agreement, all amounts then remaining
unpaid on this Note shall become, or may be declared to be, immediately due and
payable, all as provided therein.
This Note shall be governed by and construed in accordance with the
laws of the State of New Jersey without giving effect to principles of conflicts
of law. This Note may not be changed orally but only by an instrument in writing
signed by Borrower and Lender.
48
IN WITNESS WHEREOF, and intending to be legally bound hereby, Borrower
has caused this Note to be duly executed and delivered as of the date first
above written.
ATTEST: INTELLIGROUP, INC.
By: By:
------------------------------- --------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Secretary ▇▇▇▇▇ ▇▇▇▇▇▇, President and
Chief Executive Officer
49
STATE OF NEW JERSEY )
: ss.:
COUNTY OF ESSEX )
On the 22nd day of January, 1997, before me personally came ▇▇▇▇▇
▇▇▇▇▇▇, to me known who, being by me duly sworn, did depose and say that he is
the President and Chief Executive Officer of INTELLIGROUP, INC., the corporation
described in and which executed the foregoing instrument; that he, in such
capacity, being authorized to do so, executed the foregoing instrument as such
entity's voluntary act and deed for the purposes therein contained by signing on
behalf of said corporation.
-----------------------------
Notary Public
My commission expires on
----------------------------.
50
FORM OF EQUIPMENT NOTE
$__________ ____________, 19__
______, New Jersey
FOR VALUE RECEIVED, the undersigned, INTELLIGROUP, INC., a New Jersey
corporation ("Borrower"), hereby absolutely and unconditionally promises to pay
to the order of PNC BANK, NATIONAL ASSOCIATION ("Lender"), the principal amount
of DOLLARS ($___________) as hereinafter provided, and to pay interest as
hereinafter provided on the unpaid principal balance of this Note from time to
time, from the date hereof until the principal hereof is paid in full. Both
principal and interest hereunder shall be payable in lawful money of the United
States of America, and in immediately available funds, at the office of Lender
located at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, or at
such other place as Lender may from time to time designate in writing.
The principal hereof shall be repaid in _______________ (___) consecutive
monthly installments of DOLLARS ($___________), and a final payment in the
_______________ (___) month of the entire unpaid principal balance hereof, all
payments to be made on the first (1st) Banking Day in each calendar month,
commencing on .
Interest on the principal balance hereof shall be due and payable monthly
on the first (1st) Banking Day in each calendar month, commencing on ,
and on any Banking Day on which any prepayment is made or the
Equipment Loan evidenced hereby is paid or payable in full, until the principal
balance hereof has been paid in full at a fluctuating rate per annum equal to
three-quarters of one percent (3/4 of 1%) per annum above the Prime Rate (as
hereinafter defined) in effect from time to time, each change in such
fluctuating rate to take effect simultaneously with the corresponding change in
the Prime Rate, without notice to Borrower; provided that if any amount of
principal (or, to the extent permitted by law, of interest) payable hereunder is
not paid when due (whether at stated maturity, by acceleration or otherwise and
whether before or after judgment) or any other Event of Default has occurred,
the principal balance hereof shall bear interest, payable on demand, from the
day when said amount becomes due as aforesaid or from the day when such other
Event of Default occurs, as the case may be, at an interest rate per annum equal
at all times to two percent (2%) per annum above the otherwise applicable rate
in effect from time to time. The "Prime Rate" applicable to this Note shall be
the rate of interest announced from time to time by Lender as its "prime rate"
or "prime lending rate," which rate is determined from time to time by Lender as
a means of pricing some loans to its customers and it is neither tied to any
external rate of interest or index nor necessarily reflects the lowest rate of
interest actually charged by Lender to any particular class or category of
customers.
Borrower authorizes Lender, without demand, to charge and withdraw from
any checking, loan or other account that Borrower may then have with Lender or
with any affiliate of Lender, any amount that shall become due from Borrower to
Lender under this Note or any other Loan Document. Such authorization shall not
affect Borrower's obligation to pay when due all amounts payable hereunder
whether or not there are sufficient funds in any such
51
accounts. The foregoing shall be in addition to, and not in limitation of, any
rights of set-off which Lender may have.
This Note (a) is one of the Equipment Notes referred to in the Loan and
Security Agreement dated as of January 22, 1997 (as amended, supplemented or
otherwise modified from time to time, the "Agreement"), between Borrower and
Lender, (b) is entitled to the benefits thereof, (c) is secured as provided
therein and (d) is subject to optional and mandatory prepayment in whole or in
part as provided therein. Capitalized terms used herein and not otherwise
defined are used herein as defined in the Agreement. All provisions of the
Agreement are incorporated herein by reference and, in the event of ambiguity or
inconsistency between any provisions of the Agreement and this Note, the
provisions of the Agreement shall prevail.
Borrower (and any endorser or guarantor of this Note by endorsing this
Note or executing a guaranty with respect to the obligations under this Note)
hereby to the fullest extent permitted by law (a) waives presentment for
payment, demand, notice of dishonor, protest, notice of protest and all other
demands and notices in connection with the delivery, performance and enforcement
of this Note, except as may be specifically otherwise provided in the Agreement,
and (b) consents that, without notice to or release of the liability of any such
party, the obligations of Borrower or any other Person may from time to time, in
whole or part, be renewed, extended, modified, accelerated, compromised, settled
or released by Lender.
Upon the occurrence and during the continuance of any one or more of the
Events of Default specified in the Agreement, all amounts then remaining unpaid
on this Note shall become, or may be declared to be, immediately due and
payable, all as provided therein.
This Note shall be governed by and construed in accordance with the laws
of the State of New Jersey without giving effect to principles of conflicts of
law. This Note may not be changed orally but only by an instrument in writing
signed by Borrower and Lender.
52
IN WITNESS WHEREOF, and intending to be legally bound hereby, Borrower has
caused this Note to be duly executed and delivered as of the date first above
written.
ATTEST: INTELLIGROUP, INC.
By: By:
------------------------------- ----------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Secretary ▇▇▇▇▇ ▇▇▇▇▇▇, President and
Chief Executive Officer