AND WAIVER AGREEMENT

 

                                                                    Exhibit 10.5

EXECUTION VERSION

                       FIFTH AMENDMENT TO LOAN DOCUMENTS
                              AND WAIVER AGREEMENT

      THIS FIFTH AMENDMENT TO LOAN DOCUMENTS AND WAIVER AGREEMENT (this "FIFTH
AMENDMENT") is made as of the 29th day of September, 2004, among INTELLIGROUP,
INC., a corporation organized under the laws of the State of New Jersey and
EMPOWER, INC., a corporation organized under the laws of the State of Michigan
(each a "BORROWER" and collectively "BORROWERS"), the financial institutions
which are now or which hereafter become a party hereto (collectively, the
"LENDERS" and individually a "LENDER") and PNC BANK, NATIONAL ASSOCIATION
("PNC"), as agent for Lenders (PNC, in such capacity, the "AGENT").

                                   BACKGROUND

      A.    Borrowers have executed and delivered to PNC, in its capacity as the
Agent and sole Lender with respect to this transaction, one or more promissory
notes, letter agreements, loan agreements, security agreements, mortgages,
pledge agreements, collateral assignments, and other agreements, instruments,
certificates and documents, some or all of which are more fully described on
attached Exhibit A, which is made a part of this Fifth Amendment (collectively,
as amended from time to time, the "LOAN DOCUMENTS"), which Loan Documents
evidence or secure some or all of Borrowers' obligations to Lenders for one or
more loans or other extensions of credit (the "OBLIGATIONS").

      B.    Borrowers, Agent and Lenders desire to amend the Loan Documents as
provided for in this Fifth Amendment.

      NOW, THEREFORE, in consideration of the mutual covenants herein contained
and intending to be legally bound hereby, the parties hereto agree as follows:

      1.    Certain of the Loan Documents are amended as set forth in Exhibit A.
Any and all references to any Loan Document in any other Loan Document shall be
deemed to refer to such Loan Document as amended by this Fifth Amendment. This
Fifth Amendment is deemed incorporated into each of the Loan Documents. Any
initially capitalized terms used in this Fifth Amendment without definition
shall have the meanings assigned to those terms in the Loan Documents. To the
extent that any term or provision of this Fifth Amendment is or may be
inconsistent with any term or provision in any Loan Document, the terms and
provisions of this Fifth Amendment shall control.

      2.    Borrowers hereby certify that, except as otherwise waived as set
forth in Exhibit A: (a) all of their representations and warranties in the Loan
Documents, as amended by this Fifth Amendment, are, except as may otherwise be
stated in this Fifth Amendment: (i) true and correct as of the date of this
Fifth Amendment, (ii) ratified and confirmed without condition as if made anew,
and (iii) incorporated into this Fifth Amendment by reference; (b) no Event of
Default or event which, with the passage of time or the giving of notice or
both, would constitute an Event of Default, exists under any Loan Document which
will not be cured by the execution and effectiveness of this Fifth Amendment;
(c) no consent, approval, order or authorization of, or registration or filing
with, any third party is required in connection with the execution, delivery and
carrying out of this Fifth Amendment or, if required, has been obtained; and (d)
this Fifth Amendment has been duly authorized, executed and delivered so that it
constitutes the legal, valid and binding obligation of Borrowers, enforceable in
accordance with its terms. Borrowers confirm that the Obligations remain
outstanding without defense, set off, counterclaim, discount or charge of any
kind as of the date of this Fifth Amendment.

      3.    Borrowers hereby confirm that any collateral for the Obligations,
including liens, security interests, mortgages, and pledges granted by Borrowers
or third parties (if applicable), shall continue unimpaired and in full force
and effect, and shall cover and secure all of Borrowers' existing and future
Obligations, as modified by this Fifth Amendment.

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

      5.    This Fifth Amendment may be signed in any number of counterpart
copies and by the parties to this Fifth Amendment on separate counterparts, but
all such copies shall constitute one and the same instrument. Delivery of an
executed counterpart of a signature page to this Fifth Amendment by facsimile
transmission shall be effective as delivery of a manually executed counterpart.
Any party so executing this Fifth Amendment by facsimile transmission shall
promptly deliver a manually executed counterpart, provided that any failure to
do so shall not affect the validity of the counterpart executed by facsimile
transmission.

      6.    This Fifth Amendment will be binding upon and inure to the benefit
of Borrowers, Agent and Lenders and their respective successors and assigns.

      7.    This Fifth Amendment will be interpreted and the rights and
liabilities of the parties hereto determined in accordance with the laws of the
State of New Jersey, excluding its conflict of laws rules.

      8.    Except as amended hereby, the terms and provisions of the Loan
Documents remain unchanged, are and shall remain in full force and effect unless
and until modified or amended in writing in accordance with their terms, and are
hereby ratified and confirmed. Except as expressly provided herein, this Fifth
Amendment shall not constitute an amendment, waiver, consent or release with
respect to any provision of any Loan Document, a waiver of any default or Event
of Default under any Loan Document, or a waiver or release of any of Agent's or
Lenders' rights and remedies (all of which are hereby reserved). BORROWERS
EXPRESSLY RATIFY AND CONFIRM THE WAIVER OF JURY TRIAL PROVISIONS CONTAINED IN
THE LOAN DOCUMENTS.

                            [SIGNATURE PAGE FOLLOWS]

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

                                             INTELLIGROUP, INC.

                                             By:
                                                --------------------------------
                                             Name:  David J. Distel
                                             Title: Chief Financial Officer and
                                                    Treasurer

                                             499 Thornall Street
                                             Edison, New Jersey 08837

                                             EMPOWER, INC.

                                             By:
                                                --------------------------------
                                             Name:  David J. Distel
                                             Title: Treasurer

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

                                             PNC BANK, NATIONAL ASSOCIATION,
                                             as Lender and as Agent

                                             By:
                                                --------------------------------
                                             Name:  Marc J. Hansen
                                             Title: Vice President

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

                                             Commitment Percentage:  100%

                                  EXHIBIT A TO
                       FIFTH AMENDMENT TO LOAN DOCUMENTS
                        DATED AS OF SEPTEMBER 29TH, 2004

A.    The "Loan Documents" that are the subject of this Fifth Amendment include
      the following (as any of the foregoing have previously been amended,
      modified or otherwise supplemented):

      1.    The Amended and Restated Revolving Credit Loan and Security
            Agreement dated May 31, 2000, as amended by the First Amendment to
            Loan Documents and Waiver Agreement dated March 27, 2002, as amended
            by the Second Amendment to Loan Documents and Waiver Agreement dated
            January 6, 2003, as amended by the Third Amendment to Loan Documents
            dated July 31, 2003, as amended by the Fourth Amendment to Loan
            Documents and Waiver Agreement dated October 2, 2003, and as further
            amended by this Fifth Amendment (as amended, the "Loan Agreement");
            and

      2.    All other documents, instruments (including, without limitation,
            promissory notes), agreements, and certificates executed and
            delivered in connection with the Loan Documents.

B.    The Loan Documents are hereby amended as follows:

      1.    Section 1.2 of the Loan Agreement, "General Terms" is hereby amended
            to add the definitions of "Average Undrawn Availability" and "Fixed
            Charge Coverage" as new material, which definitions shall be deemed
            inserted in proper alphabetical order:

                  "Average Undrawn Availability" shall mean Undrawn Availability
            (but unlimited as to the Maximum Revolving Advance Amount)
            calculated monthly as of the close of business each Friday in each
            calendar month and divided by the number of Fridays in such calendar
            month.

                  "Fixed Charge Coverage" shall mean the ratio of (i) EBITDA
            minus the total of unfinanced capital expenditures and cash taxes
            paid to (ii) the current portion of Borrowers' long term debt plus
            interest expense, whether, but without duplication, due or paid.

      2.    Section 7.18, 7.19, 7.20 of Article VII of the Loan Agreement,
            "Negative Covenants", are hereby amended and restated as follows:

                  7.18. Total Stockholders Equity. Cause, suffer or permit Total
            Stockholders Equity to be or become: (a) as at September 30, 2004,
            not less than Twenty Six Million Two Hundred Eighteen Thousand
            Dollars ($26,218,000.00), (b) as at December 31, 2004, not less than
            Twenty Five Million Eight Hundred Forty One Thousand Dollars
            ($25,841,000.00), and (c) (i) commencing with the quarter ending
            March 31, 2005, as at the end of the first three fiscal quarters in
            each fiscal year, not less than ninety-five percent (95%) of actual
            Total Stockholders Equity for the immediately preceding fiscal
            year-end; and (ii) as at the end of the fourth fiscal quarter in any
            fiscal year, not less than one hundred five percent (105%) of actual
            Total Stockholders Equity as of the prior fiscal year end; provided
            also, however, that this covenant shall be tested only for any
            fiscal quarters, in which Average Undrawn Availability for any month
            is less than Five Million Dollars ($5,000,000.00).

                  7.19. Unconsolidated Stockholders Equity. Cause, suffer or
            permit Unconsolidated Stockholders Equity to be or become: (a) as at
            September 30, 2004, Twenty Four Million Six Hundred Seventy Seven
            Thousand Dollars ($24,677,000.00), (b) as at December 31, 2004, not
            less than Twenty Two Million Six Hundred Seventy Seven Thousand
            Dollars ($22,677,000.00), and (c) (i) commencing with the quarter
            ending March 31, 2005, as at the end of the first three fiscal
            quarters in each fiscal year, not less than ninety-five percent
            (95%) of actual Unconsolidated Stockholders Equity for the
            immediately preceding fiscal year-end; and (ii) as at the end of the
            fourth fiscal quarter in any fiscal year, not less than one hundred
            five percent (105%) of actual Unconsolidated Stockholders Equity as
            of the prior fiscal year end; provided also, however, that this
            covenant shall be tested only for any fiscal quarters, in which
            Average Undrawn Availability for any month is less than Five Million
            Dollars ($5,000,000.00).

                  7.20 Intentionally omitted.

      3.    Article VII of the Loan Agreement, "Negative Covenants", is hereby
            amend to add Section 7.21 "Fixed Charge Coverage Ratio" as new
            material, as follows:

                  7.21 Fixed Charge Coverage Ratio. Cause suffer or permit Fixed
            Charge Coverage, calculated on a rolling four quarter basis, to
            become less than 1.0 to 1.0 as at the end of any fiscal quarter
            commencing with the quarter ending September 30, 2004; provided
            also, however, that this covenant shall be tested only for any
            fiscal quarters, in which Average Undrawn Availability for any month
            is less than Five Million Dollars ($5,000,000.00).

C.    Waiver Agreement:

      1.    Borrowers hereby acknowledge and disclose that:

            (a)   Under the terms of the Loan Agreement, Borrowers agreed to
                  comply with certain covenants, terms and conditions. Borrowers
                  have failed to comply or anticipate that they shall fail to
                  comply with a number of such covenants, terms and conditions,
                  as enumerated on Schedule A attached hereto and made a part
                  hereof.

            (b)   These existing and prospective failures to comply constitute
                  existing or prospective Events of Default under the terms and
                  conditions of the Loan Agreement.

      2.    Borrowers have requested that Lenders waive:

            (a)   the existing and prospective Events of Default enumerated on
                  Schedule A; and

            (b)   the rights and remedies available as a result of the existence
                  or future occurrence of the existing and prospective Events of
                  Default enumerated on Schedule A.

      3.    Lenders hereby waive:

            (a)   the existing and prospective Events of Default enumerated on
                  Schedule A; and

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

      4.    It is hereby agreed and acknowledged, as follows:

            (a)   These waivers are specific to the Events of Default enumerated
                  on Schedule A.

            (b)   These waivers are not intended and shall not be deemed to
                  extend to any other Default or Event of Default whether known
                  or unknown which may presently exist under the Loan Agreement
                  or which may occur hereafter.

            (c)   These waivers shall not obligate the Agent or any Lender, or
                  be construed to require the Agent or any Lender, to waive any
                  other Defaults or Events of Default, whether now existing or
                  which may occur after the date of this waiver.

            (d)   These waivers shall not relieve or release Borrowers in any
                  way from any of their duties, obligations, covenants or
                  agreements under the Loan Agreement or the other Loan
                  Documents or from the consequences of any Defaults or Events
                  of Default thereunder, except as expressly described above.

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

      1.    Borrowers' payment to Agent of a fee in the sum of Twenty Thousand
            Dollars ($20,000.00) which fee, shall be due and payable in full,
            and deemed non-refundable upon the execution and delivery of this
            Fifth Amendment. Such fee may be paid by Agent's charging an Advance
            against the Borrowers' Revolving Loan and paying the proceeds of
            such Advance to Lenders. Borrowers hereby consent to Agent's making
            such charge.

      2.    Agent's receipt of a fully executed counterpart of (a) this Fifth
            Amendment, (b) a corporate resolution by each Borrower, in form and
            substance acceptable to Agent, authorizing this Fifth Amendment, and
            (c) each other document and instrument as may be required by Agent
            in conjunction with this Fifth Amendment, in form and substance
            satisfactory to Agent.

      3.    Borrowers shall maintain Average Undrawn Availability of at least
            Five Million Dollars ($5,000,000.00) for each month prior to the
            issuance of the quarterly financial statements for the quarter
            ending September 30, 2004 ("3rd Quarter Financial Statements");

      4.    Borrowers shall submit the 3rd Quarter Financial Statements to Agent
            and Lender within sixty (60) days of the end of such quarter.

      5.    (a) Borrowers shall deliver to Agent and Lender a fully and finally
            executed copy of the Common Stock Purchase Agreement by and among
            Intelligroup, Inc. and SB Asia Infrastructure Fund, L.P. and Venture
            Tech Assts, Ltd. (collectively, "Purchasers"), which shall be
            substantially similar to, in all material respects, the draft
            disseminated September 29, 2004 delivered to Agent for review (the
            "Purchase Agreement"), together with all related documents and
            instruments, (b) the Purchase Price (as hereinafter defined) shall
            be paid, and (c) all other acts and things required to be done on or
            prior to the closing of the Purchase Agreement, in conjunction with
            such Purchase Agreement shall be completed.

      6.    Immediately upon receipt of the purchase price in the sum of Fifteen
            Million Dollars ($15,000,000.00) (the "Purchase Price") to be paid
            by Purchasers pursuant to the Purchase Agreement Borrowers shall
            cause the Purchase Price to be allocated as follows: (a) a
            sufficient portion of the Purchase Price shall be applied to
            Borrowers' Revolving Loan Obligations under the Loan Agreement so as
            to cause Undrawn Availability to be not less than Five Million
            Dollars ($5,000,000.00), (ii) the balance of the Purchase Price
            shall be deposited in a controlled account at BlackRock, Inc. opened
            in Agent's name for the benefit of Borrowers (the "BlackRock
            Account") and provided that, so long as no Default or Event of
            Default has occurred and is continuing, Borrowers shall exercise the
            investment options available for the BlackRock Account and give
            written directions to Agent setting forth the options selected from
            time to time. Borrowers shall also execute and deliver to Agent such
            pledge or control agreements as may be reasonably required to
            perfect Agent's security interest in and to the funds on deposit in
            the BlackRock Account.

      7.    Borrowers' payment to Agent's counsel, immediately upon presentation
            of an invoice, of all reasonable fees and expenses of such counsel
            incurred in conjunction with the preparation and execution of this
            Fifth Amendment. Such fees and expenses may be paid by Agent's
            charging an Advance against the Borrowers' Revolving Loan and
            retaining the proceeds of such Advance. Borrowers hereby consent to
            Agent's making such charge.

                     [END OF EXHIBIT A TO FIFTH AMENDMENT]

                                   SCHEDULE A
                        TO EXHIBIT A TO FIFTH AMENDMENT
                            WAIVED EVENTS OF DEFAULT

1.    Borrowers' failure to comply with the following Sections of the Loan
      Agreement: (i) Section 7.18, "Total Stockholders Equity", (ii) Section
      7.19, "Unconsolidated Stockholders Equity" and (iii) Section 7.20,
      "Minimum EBITDA" for the quarter ending June 30, 2004.

2.    Borrowers failure to comply with Sections 5.2(a), "Formation and
      Qualification" and Section 7.15, "Amendment of Articles of Incorporation,
      By-Laws" of the Loan Agreement, due to the amendment of Intelligroup,
      Inc.'s Certificate of Incorporation during June, 2004.

3.    Any Event of Default which would otherwise occur, if any, due to the
      failure to file or delay in filing reports on Form 10-Q with any
      applicable government agency or the NASDAQ Stock Market ("NASDAQ") for the
      second and third quarters of 2004 or the untimely filing of any other
      financial disclosures to any applicable government agency.

4.    Any Event of Default which would otherwise occur upon the issuance of
      restatements of Borrowers' previously issued financial statements for the
      fiscal quarter and fiscal year ends of fiscal years 2001, 2002 and 2003
      and for any fiscal quarter during fiscal year 2004, arising solely as a
      result of (a) the untimely delivery to Agent of financial statements which
      comply in all respects with the requirements of the Loan Agreement or (b)
      the recalculation of financial covenants based upon such restated
      financial statements, provided however, such waiver shall not extend to
      the delivery of incorrect information as a result of fraud, intentional
      misrepresentation or malfeasance on the part of Borrowers' officers,
      directors or shareholders.

5.    Any Event of Default which would otherwise occur, if any, as a result of
      the consummation of the Purchase Agreement.

6.    Any Event of Default which would otherwise occur, if any, as a result of a
      NASDAQ delisting proceeding or the delisting of Intelligroup, Inc.'s stock
      from NASDAQ, in each instance whether voluntarily on the part of
      Intelligroup, Inc. or as a result of a violation of NASDAQ's rules..

 

Basic Info X:

Name: AND WAIVER AGREEMENT
Type: Waiver
Date: Oct. 5, 2004
Company: INTELLIGROUP INC
State: New Jersey

Other info: