Exhibit 10.1


	
       

      REVOLVING CREDIT AND SECURITY AGREEMENT

       

      between

       

      Intelligroup, Inc. and Empower,
      Inc.

       

      "Borrower"

      and

       

      HSBC BANK USA, NATIONAL ASSOCIATION

       

      "Bank"

       

       

      Dated: May 22, 2008

       








TABLE OF CONTENTS 

						Page 
	1. 	    
    	Definitions 		1  
	 
	2. 		The Loan 		
			2.1. 	     	Revolving
      Loan 		1 
  
			2.2. 		Revolving Note 		1  
			2.3. 		Collections
      Account 		1 
  
			2.4. 	 	Advances 		2  
			2.5 
    		Repayment of
      Loan 		2 
  
			2.6. 		Overdue Amounts 		3  
			2.7. 		Calculation of
      Interest 		3 
  
			2.8. 		Sales Tax 		3  
			2.9. 		Fees 		3 
  
			2.10. 		Statement of Account 		3  
	 
	3. 		Conditions Precedent to Borrowing 		
			3.1. 		Conditions
      Precedent to Initial Advance 		3 
  
			3.2. 		Conditions Precedent to Each Advance 		5  
	 
	4. 		Representations and Warranties  		
			4.1. 		Valid Existence
      and Power 		5 
  
			4.2. 		Authority 		5  
			4.3. 		Financial
      Condition 		6 
  
			4.4. 		Litigation 		6  
			4.5. 		Agreements,
      Etc. 		6 
  
			4.6. 		Authorizations 		6  
			4.7. 		Title 		6 
  
			4.8. 		Collateral 		6  
			4.9. 		Jurisdiction of
      Organization; Location 		7  
			4.10. 		Taxes 		7  
			4.11. 		Labor Law
      Matters 		7 
  
			4.12. 		Accounts 		7  
			4.13. 		Judgment
      Liens 		7 
  
			4.14. 		Subsidiaries 		7  
			4.15. 		Environmental 		7 
  
			4.16. 		ERISA 		8  
			4.17. 		Investment
      Company Act 		8 
  
			4.18. 		Names 		8  
			4.19. 		Insider
    		8 
  
			4.20. 		Compliance with Covenants; No Default 		8  
			4.21. 		Full
      Disclosure 		8 
  
			4.22. 		Additional Representations 		8  
	 
	5. 		Affirmative Covenants of Borrower 		
			5.1. 		Use of Loan
      Proceeds 		8 
  
			5.2. 		Maintenance of Business and Properties 		8  
			5.3. 		Insurance
    		9 
  
			5.4. 		Notice of Default 		9  
			5.5. 		Inspections 		9 
  
			5.6. 		Financial Information 		9  
			5.7. 		Maintenance of
      Existence and Rights 		10 
    
			5.8. 		Payment of Taxes, Etc. 		10  
			5.9. 		Subordination 		10 
    



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    	5.10.
    	    
    	Compliance;
      Hazardous Materials 		11
    	
			5.11. 		Compliance with Assignment
      Laws 		11 	
			5.12.
    		Further
      Assurances 		11
    	
			5.13. 		Covenants Regarding
      Collateral 		11 	
			5.14
    		Additional
      Security 		11
    	
			5.15 		Post Closing
      Obligations 		12
      	
	 	
	6. 		Negative Covenants of Borrower 			
			6.1. 		Debt 		12 	
			6.2.
    		Liens 		12
    	
			6.3. 		Dividends 		12 	
			6.4.
    		Loans and
      Other Investments 		12
    	
			6.5. 		Change in Business
    		12 	
			6.6.
    		Accounts 		12
    	
			6.7. 		Transactions with
      Affiliates 		12 	
			6.8.
    		No Change
      in Name, Offices or Jurisdiction of Organization; 			
					Removal of
      Collateral; Use of Additional Name  		12
    	
			6.9. 		No Sale, Leaseback
    		13 	
			6.10.
    		Margin
      Stock 		13
    	
		 	6.11. 		Tangible Collateral
    		13 	
			6.12.
    		Subsidiaries 		13
    	
			6.13. 		Change of Ownership
    		13 	
			6.14.
    		Liquidation, Mergers, Consolidations and Dispositions
      of   			
					Substantial Assets 		13 	
			6.15. 		Change of Fiscal
      Year or Accounting Methods   		13 	
	 	
	7. 		Other Covenants of Borrower 		13
    	
	 	
	8. 		Default 			
			8.1. 		Events of Default
		14 	
			8.2.
    		Remedies 		15
    	
			8.3. 		Receiver 		15 	
			8.4.
    		Deposits;
      Insurance 		16
    	
	 	
	9. 		Security Agreement 			
			9.1. 		Security Interest
		16 	
			9.2.
    		Power of
      Attorney 		16
    	
			9.3. 		Entry 		17 	
			9.4.
    		Other
      Rights 		17
    	
			9.5. 		Accounts 		17 	
			9.6.
    		Waiver of
      Marshalling 		17
    	
			9.7. 		Control 		17
      	
	 	
	10. 		Miscellaneous 			
			10.1. 		No Waiver, Remedies
      Cumulative 		17 	
			10.2.
    		Survival of
      Representations 		17
    	
			10.3. 		Indemnity By Borrower;
      Expenses 		18 	
			10.4.
    		Notices 		18
    	
			10.5. 		Governing Law 		19 	
			10.6.
    		Successors
      and Assigns 		19
    	
			10.7. 		Counterparts 		19 	
			10.8.
    		No
      Usury 		19
    	
			10.9. 		Powers 		19 	
			10.10. 	 	Approvals 		19
    	
			10.11. 		Participations 	  	19 	  



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	          	10.12. 	    
    	Dealings with Multiple Borrowers 	19 	
		10.13.
      		Waiver of
      Certain Defenses 	20 	
	 	10.14. 		Integration 	 20 	
		10.15.
      		Limitation On
      Liability; Waiver Of Punitive Damages 	 20 	
		10.16. 		Waiver of Jury Trial 	20 	
		10.17.
      		Other
      Provisions 	 20 	
	 				 
		Schedule of Exhibits 	22 	 




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REVOLVING CREDIT AND SECURITY AGREEMENT 

     THIS
AGREEMENT (the "Agreement"), dated as of May 22,2008 between Intelligroup, Inc.
(“Intelligroup”), a New Jersey corporation and Empower, Inc.(“Empower”), a
Michigan corporation (Intelligroup and Empower hereinafter collectively referred
to as "Borrower"), and HSBC Bank USA, National Association, a national banking
association ("Bank"); 

W I T N E S S E T H : 

     In
consideration of the premises and of the mutual covenants herein contained and
to induce Bank to extend credit to Borrower, the parties agree as follows:


     1.
Definitions. Capitalized terms that are not otherwise defined herein
shall have the meanings set forth in Exhibit 1 hereto. 

     2.
The Loan. 

          2.1. Revolving Loan Credit
Facility. Bank agrees, on the terms and
conditions set forth in this Agreement, to make Advances from time to time
during the Revolving Credit Period in amounts such that the aggregate principal
amount of Advances at any one time outstanding will not exceed the lesser of (i)
the Maximum Loan Amount or (ii) the Borrowing Base (the "Loan"). Notwithstanding
the foregoing, the aggregate amount of the Advances by Bank from time to time
shall be subject to any Reserves that Bank in its sole and absolute discretion
may deem proper and/or necessary under the Borrowing Base. Within the foregoing
limit, Borrower may borrow, prepay and reborrow Advances at any time during the
Revolving Credit Period without penalty, subject to the payment of any Yield
Maintenance Fee. 

          2.2. Revolving
Note. The Loan shall be evidenced by a
promissory note in the face amount of the Maximum Loan Amount dated May 22, 2008
(the "Note") and shall be payable in accordance with the terms of the Note and
this Agreement. 

          2.3.
Collections Account. 

           (a) If required
by Bank in its reasonable discretion, all payments on Accounts and other
Collateral shall be forwarded by Borrower to the Collections Account; provided,
however, Bank, in its reasonable discretion, may require Borrower to establish a
lockbox under the control of Bank to which all Account Debtors shall forward
payments on the Accounts. Borrower shall pay all of Bank's standard fees and
charges in connection with such lockbox arrangement (if any) and Collections
Account as such fees and charges may change from time to time. In the event Bank
requires a lockbox arrangement hereunder, Borrower shall notify Account Debtors
on the Accounts to forward payments on the Accounts to the lockbox; provided,
however, that Bank shall have the right to directly contact Account Debtors at
any time to ensure that payments on the Accounts are directed to the lockbox.
All payment items received by Borrower on Accounts and sale of Inventory and
other Collateral shall be held by Borrower in trust for Bank and not commingled
with Borrower's funds and shall be deposited promptly by Borrower to the
Collections Account. Borrower hereby grants to Bank a security interest in and
lien upon all items and balances held in the lockbox and the Collections Account
as collateral for the Indebtedness. 

          (b) Borrower hereby irrevocably appoints Bank (and any duly
authorized Person designated by Bank) as Borrower's attorney-in-fact to endorse
Borrower's name on any checks, drafts, money orders or other media of payment
which come into Bank's possession or control; this power being coupled with an
interest is irrevocable so long as any of the Indebtedness remain outstanding.
Such endorsement by Bank under power of attorney shall, for all purposes, be
deemed to have been made by Borrower (prior to any subsequent endorsement by
Bank) in negotiation of the item. 

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          (c) For the purpose of calculating interest due under this
Agreement, payment items received into the Collections Account shall be deemed
applied on the date of receipt by Bank on account of the Loan as collected by
Bank, subject to chargebacks for uncollected payment items. No payment item
received by Bank shall constitute payment to Bank until such item is actually
collected by Bank and credited to the Collections Account; provided, however,
Bank shall have the right to charge back to the Collections Account (or any
other account of Borrower maintained at Bank) any item which is returned for
inability to collect, plus accrued interest during the period of Bank's
provisional credit for such item prior to receiving notice of
dishonor.

          2.4.
Advances.

          (a) Bank shall require from Borrower a signed written request
for an Advance in form satisfactory to Bank, which request shall be delivered to
Bank, at 1 HSBC Center, Buffalo, New York 14203, Attention: Bernadice Smoot, no
later than 1:00 p.m. (local time Parsippany, New Jersey) on the date of the
requested Advance, and shall specify the date (which shall be a Business Day)
and the amount of the proposed Advance and provide such other information as
Bank may require. Bank's acceptance of such a request shall be indicated by its
making the Advance requested. Such an Advance shall be made available to
Borrower in immediately available funds at Bank's address referred to in Section
10.4.

          (b) Notwithstanding the foregoing, Bank may, in its sole and
absolute discretion, make or permit to remain outstanding Advances under the
Loan in excess of the original principal amount of the Note, and all such
amounts shall (i) be part of the Indebtedness evidenced by the Note, (ii) bear
interest as provided herein, (iii) be payable upon demand by Bank, and (iv) be
entitled to all rights and security as provided under the Loan
Documents.

          (c) All Advance Requests shall be made by Intelligroup, as the
designated agent for Advances of Borrower and all Advances shall be made
available, as set forth in 2.4(b), above, to Intelligroup.

          2.5.
Repayment of Loan.

          (a) Interest on the Loan shall accrue and be payable as set
forth in the Note. The Loan shall mature, and the principal amount thereof and
all accrued and unpaid interest, fees, expenses and other amounts payable under
the Loan Documents shall be due and payable, on the Termination Date.

          (b) Bank may debit the Collections Account and/or make
Advances to Borrower (whether or not in excess of the lesser of the Maximum Loan
Amount and the Borrowing Base) and apply such amounts to the payment of
interest, fees, expenses and other amounts to which Bank may be entitled from
time to time and Bank is hereby irrevocably authorized to do so without the
consent of Borrower.

          (c) Borrower shall make each payment of principal of and
interest on the Loan and fees hereunder not later than 1:00 p.m. (local time
Parsippany, New Jersey) on the date when due, without set off, counterclaim or
other deduction, in immediately available funds to Bank at its address referred
to in Section 10.4. Whenever any payment of principal of, or interest on, the
Loan or of fees shall be due on a day which is not a Business Day, the date for
payment thereof shall be extended to the next succeeding Business Day. If the
date for any payment of principal is extended by operation of law or otherwise,
interest thereon shall be payable for such extended time.

          (d) To the extent that the aggregate amount of all Advances
exceeds the Borrowing Base, the amount of such excess will be paid immediately
to Bank upon Bank's demand.

2




          (e) Any prepayment shall not affect Borrower’s obligation to
continue making payments under any swap agreement (as defined in 11 U.S.C. §
101), which shall remain in full force and effect notwithstanding such
prepayment, subject to the terms of such swap agreement. 

          2.6. Overdue
Amounts. Any payments not made as and when
due shall bear interest from the date due until paid at the Default Rate, in
Bank's discretion. 

          2.7. Calculation of
Interest. All interest under the Note or
hereunder shall be calculated on the basis of the Actual/360 Computation, as
defined in the Note. 

          2.8.
Sales Tax.
Borrower shall notify Bank if any Account includes any sales or other similar
tax and Bank may, but shall not be obligated to, remit any such taxes directly
to the taxing authority and make Advances or charge the Collections Account
therefor. In no event shall Bank be liable for any such taxes. 

          2.9.
Fees.


          (a) Borrower shall pay to Bank a non-refundable upfront fee in
the total amount of Twenty Five Thousand and 00/XX ($25,000.00) Dollars. One
half of the upfront fee (Twelve Thousand Five Hundred and 00/XX ($12,500.00)
Dollars) has been paid by Borrower and the second half of the upfront fee
(Twelve Thousand Five Hundred and 00/XX ($12,500.00) Dollars) shall be payable
on the date of this Agreement. 

          (b) Borrower shall pay to Bank an unused fee for each day at a
rate per annum equal to the product of (i) twenty (25) basis points multiplied
by (ii) the difference between (A) the Maximum Loan Amount and (B) the aggregate
outstanding amount of the Advances on such day, payable quarterly on the first
day of each calendar quarter with respect to the immediately preceding quarter.


          (c) If Borrower elects to prepay Indebtedness, in whole or in
part, which is subject to a LIBOR Rate Interest Period other than at the end of
the applicable Interest Period, Borrower shall pay to Bank on demand any Yield
Maintenance Fee. 

          2.10. Statement of
Account. If Bank provides Borrower with a
statement of account on a periodic basis, such statement will be presumed
complete and accurate and will be definitive and binding on Borrower, unless
objected to with specificity by Borrower in writing within forty-five (45) days
after receipt. 

     3.
Conditions Precedent to
Borrowing. Prior to any Advance, the following conditions shall have been satisfied,
in the sole opinion of Bank and its counsel: 

          3.1. Conditions Precedent to
Initial Advance. In addition to any other
requirement set forth in this Agreement, Bank will not make the initial Advance
under the Loan unless and until the following conditions shall have been
satisfied: 

          (a) Loan
Documents. Borrower and each other party to
any Loan Document, as applicable, shall have executed and delivered this
Agreement, the Note, and other required Loan Documents, all in form and
substance satisfactory to Bank. 

          (b) Supporting
Documents. Borrower shall cause to be
delivered to Bank the following documents: 

          (i) A copy of the governing instruments of Borrower and each
Subsidiary, and a good standing certificate of Borrower and each Subsidiary,
certified by the appropriate official of its state or country of incorporation
and the State of New Jersey, if different; 

3 





          (ii) Incumbency certificate and certified resolutions of the
board of directors (or other appropriate governing body) of Borrower and each
other Person executing any Loan Documents, signed by the Secretary or another
authorized officer of Borrower or such other Person, authorizing the execution,
delivery and performance of the Loan Documents;

          (iii) The legal opinion of Borrower's and any Subsidiary's
legal counsel addressed to Bank regarding such matters as Bank and its counsel
may reasonably request;

          (iv) A satisfactory Borrowing Base Certificate duly completed
by Borrower, together with all supporting statements, schedules and
reconciliations as required by Bank;

          (v) Satisfactory evidence of payment of all fees due and
reimbursement of all costs incurred by Bank, and evidence of payment to other
parties of all fees or costs which Borrower is required under this Agreement to
pay by the date of the initial Advance;

          (vi) UCC-11 searches and other Lien searches showing no
existing security interests in or Liens on the Collateral other than Permitted
Liens or liens being terminated on or before the date of the initial Advance;
and

          (vii)
Any lien waivers requested by Bank pursuant to section 5.13(c)
hereof.

          (c) Insurance. Borrower shall have
delivered to Bank satisfactory evidence of insurance meeting the requirements of
Section 5.3.

          (d) Perfection of
Liens. UCC-1 financing statements covering
the Collateral executed by Borrower shall duly have been recorded or filed in
the manner and places required by law to establish, preserve, protect and
perfect the interests and rights created or intended to be created by the
Security Agreement; and all taxes, fees and other charges in connection with the
execution, delivery and filing of the Security Agreement and the financing
statements shall duly have been paid.

          (e) Pledge
Agreements. Borrower shall have delivered to
bank the Pledge Documents from each Subsidiary required by law to establish,
preserve, protect and perfect the interests and rights created or intended to be
created by each Pledge Agreement.

          (f) Subordinations. Bank shall have
received subordinations satisfactory to it from (i) the lessor of its facility
in Edison, New Jersey; (ii) any and all lessors under any lease entered into
with Borrower subsequent to the date of this Agreement that might have
landlord's Liens on any Collateral located at a facility occupied by Borrower,
if requested by Bank (iii) the lessor of any existing facility, other than
Edison, New Jersey, that might have landlord's Liens on any Collateral located
at such facility if requested by Bank after the date of this Agreement and (iv)
all Guarantors and Affiliates as required by Section 5.9.

          (g) Additional
Documents. Borrower shall have delivered to
Bank all additional opinions, documents, certificates and other assurances that
Bank or its counsel may require.

          (h) Payment of
Fees. Borrower shall have paid all fees,
costs and expenses as required by the Loan Documents in connection with the
Closing.

          (i) Collateral
Audit. An audit of Collateral satisfactory to
Bank, in Bank’s discretion, at Borrower’s cost and expense.

          (j) Establishment of
Accounts. Borrower shall establish and
maintain their primary depository and cash management accounts with Bank for the
term of the Loan.

4




          3.2. Conditions Precedent to
Each Advance. The following conditions, in
addition to any other requirements set forth in this Agreement, shall have been
met or performed by the Advance Date with respect to any Advance Request
and each Advance Request (whether or not a written Advance Request is required)
shall be deemed to be a representation that all such conditions have been
satisfied: 

          (a) Advance
Request. Borrower shall have delivered to
Bank an Advance Request and other information, as required under Section 2.4(a).

          (b) No
Default. No Default shall have occurred and
be continuing or could occur upon the making of the Advance in question and, if
Borrower is required to deliver a written Advance Request, Borrower shall have
delivered to Bank an officer's certificate to such effect, which may be
incorporated in the Advance Request. 

          (c) Correctness of
Representations. All representations and
warranties made by Borrower herein or otherwise in writing in connection
herewith shall be true and correct in all material respects with the same effect
as though the representations and warranties had been made on and as of the
proposed Advance Date, and, if Borrower is required to deliver a written Advance
Request, Borrower shall have delivered to Bank an officer's certificate to such
effect, which may be incorporated in the Advance Request. 

          (d) No Adverse
Change. There shall have been no change which
could have a Material Adverse Effect on Borrower and its Subsidiaries, taken as
a whole, since the date of the most recent financial statements of such Person
delivered to Bank from time to time. 

          (e) Limitations Not
Exceeded. The proposed Advance shall not
cause the outstanding principal balance of the Loan to exceed the lesser of the
Maximum Loan Amount and the Borrowing Base. If Borrower is required to deliver a
written Advance Request, Bank shall have received a current Accounts Receivable
Report (as required by Section 5.6) sufficient in form and substance to
calculate and verify the Borrowing Base. 

          (f) Further
Assurances. Borrower shall have delivered
such further documentation or assurances as Bank may reasonably require.


     4.
Representations and
Warranties. In order to induce Bank to enter into this Agreement and to
make the Loan provided for herein, Borrower makes the following representations
and warranties, all of which shall survive the execution and delivery of the
Loan Documents. Unless otherwise specified, such representations and warranties
shall be deemed made as of the date hereof and as of the Advance Date of any
Advance by Bank to Borrower: 

          4.1. Valid Existence and
Power. Each of Borrower and each Subsidiary
is a corporation duly organized, validly existing and in good standing under the
laws of the jurisdiction of its organization and is duly qualified or licensed
to transact business in all places where the failure to be so qualified would
have a Material Adverse Effect on it. Each of Borrower and each other Person
which is a party to any Loan Document (other than Bank) has the power to make
and perform the Loan Documents executed by it and all such instruments will
constitute the legal, valid and binding obligations of such Person, enforceable
in accordance with their respective terms, subject only to bankruptcy and
similar laws affecting creditors' rights generally. Intelligroup is organized
under the laws of the State of New Jersey and has not changed the jurisdiction
of its organization within the five years preceding the date hereof. Empower is
organized under the laws of the State of Michigan and has not changed the
jurisdiction of its organization within the five years preceding the date
hereof. 

          4.2. Authority. The execution, delivery and
performance thereof by Borrower and each other Person (other than Bank)
executing any Loan Document have been duly authorized by all necessary action of
such Person, and do not and will not violate any provision of law or regulation,
or any writ, order or decree of any court or governmental or regulatory
authority or agency or any provision of the governing instruments of such
Person, and do not and will not, with the passage of time or the giving of
notice, result in a breach of, or constitute a default or require any consent
under, or result in the creation of any Lien upon any property or assets of such
Person pursuant to, any law, regulation, instrument or agreement to which any
such Person is a party or by which any such Person or its respective properties
may be subject, bound or affected. 

5 




          4.3. Financial
Condition. Other than as disclosed in
financial statements delivered on or prior to the date hereof to Bank, neither
Borrower nor any Subsidiary has any direct or contingent obligations or
liabilities (including any guarantees or leases) or any material unrealized or
anticipated losses from any commitments of such Person except as described on
Exhibit 4.3 (if any). All such financial statements have been prepared in
accordance with GAAP and fairly present the financial condition of Borrower or
Subsidiary, as the case may be, as of the date thereof. Borrower is not aware of
any material adverse fact (other than facts which are generally available to the
public and not particular to Borrower, such as general economic or industry
trends) concerning the conditions or future prospects of Borrower or any
Subsidiary which has not been fully disclosed to Bank, including any adverse
change in the operations or financial condition of such Person since the date of
the most recent financial statements delivered to Bank. Borrower is Solvent, and
after consummation of the transactions set forth in this Agreement and the other
Loan Documents, Borrower will be Solvent. 

          4.4. Litigation. Except as disclosed on
Exhibit 4.4 (if any), there are no suits or proceedings pending, or to the
knowledge of Borrower threatened, before any court or by or before any
governmental or regulatory authority, commission, bureau or agency or public
regulatory body against or affecting Borrower or any Subsidiary, or their
assets, which if adversely determined would have a Material Adverse Effect on
the financial condition or business of Borrower or such Subsidiary. 

          4.5. Agreements,
Etc. Neither Borrower nor any Subsidiary is a
party to any agreement or instrument or subject to any court order, governmental
decree or any charter or other corporate restriction, adversely affecting its
business, assets, operations or condition (financial or otherwise), nor is any
such Person in default in the performance, observance or fulfillment of any of
the material obligations, covenants or conditions contained in any agreement or
instrument to which it is a party, or any law, regulation, decree, order or the
like. 

          4.6. Authorizations. All authorizations,
consents, approvals and licenses required under applicable law or regulation for
the ownership or operation of the property owned or operated by Borrower or any
Subsidiary or for the conduct of any business in which it is engaged have been
duly issued and are in full force and effect, and it is not in default, nor has
any event occurred which with the passage of time or the giving of notice, or
both, would constitute a default, under any of the terms or provisions of any
part thereof, or under any order, decree, ruling, regulation, closing agreement
or other decision or instrument of any governmental commission, bureau or other
administrative agency or public regulatory body having jurisdiction over such
Person, which default would have a Material Adverse Effect on such Person.
Except as noted herein, no approval, consent or authorization of, or filing or
registration with, any governmental commission, bureau or other regulatory
authority or agency is required with respect to the execution, delivery or
performance of any Loan Document. 

          4.7. Title. Each of Borrower and each Subsidiary has good title to all
of the assets shown in its financial statements free and clear of all Liens,
except Permitted Liens. Borrower alone has full ownership rights in all
Collateral. 

          4.8. Collateral. The security interests
granted to Bank herein and pursuant to any other Security Agreement (a)
constitute and, as to subsequently acquired property included in the Collateral
covered by the Security Agreement, will constitute, security interests under the
Code entitled to all of the rights, benefits and priorities provided by the Code
and (b) are, and as to such subsequently acquired Collateral will be, fully
perfected, superior and prior to the rights of all third persons, now existing
or hereafter arising, subject only to Permitted Liens. All of the Collateral is
intended for use solely in Borrower's business. 

6 





          4.9. Jurisdiction of Organization; Location. The jurisdiction in which
Borrower is organized, existing and in good standing, the chief executive office
of Borrower where Borrower's business records are located, all of Borrower's
other places of business and any other places where any Collateral is
kept, are all correctly and completely indicated on Exhibit 4.9. The Collateral
is located and shall at all times be kept and maintained only at Borrower's
location or locations as described on Exhibit 4.9 herein No such Collateral is
attached or affixed to any real property so as to be classified as a fixture
unless Bank has otherwise agreed in writing. Borrower has not changed it legal
status or the jurisdiction in which it is organized or moved its chief executive
office within the five (5) years preceding the date hereof. Borrower shall
provide Bank with thirty (30) days’ written notice prior to the relocation of
any Collateral from the location or locations as described on Exhibit 4.9
herein. In the event of any such relocation of Collateral, Borrower shall
provide Bank with such further assurances, including but not limited to
subordinations as set forth at Section3.1(f), as Bank may reasonably require.


          4.10. Taxes. Borrower and each Subsidiary have filed all federal and
state income and other tax returns which are required to be filed, and have paid
all taxes as shown on said returns and all taxes, including withholding, FICA
and ad
valorem
taxes, shown on all assessments received by it to the extent that such taxes
have become due. Neither Borrower nor any Subsidiary is subject to any federal,
state or local tax Liens nor has such Person received any notice of deficiency
or other official notice to pay any taxes. Borrower and each Subsidiary have
paid all sales and excise taxes due and payable by it.

          4.11. Labor Law
Matters. No goods or services have been or
will be produced by Borrower or any Subsidiary in violation of any applicable
labor laws or regulations or any collective bargaining agreement or other labor
agreements or in violation of any minimum wage, wage-and-hour or other similar
laws or regulations. 

          4.12. Accounts. Each Account, Instrument,
Chattel Paper and other writing constituting any portion of the Collateral (a)
is genuine and enforceable in accordance with its terms except for such limits
thereon arising from bankruptcy and similar laws relating to creditors' rights;
(b) is not subject to any deduction or discount (other than as stated in the
invoice and disclosed to Bank), defense, set off, claim or counterclaim of a
material nature against Borrower except as to which Borrower has notified Bank
in writing; (c) is not subject to any other circumstances that would impair the
validity, enforceability or amount of such Collateral except as to which
Borrower has notified Bank in writing; (d) arises from a bona fide sale of goods or
delivery of services in the ordinary course and in accordance with the terms and
conditions of any applicable purchase order, contract or agreement; (e) is free
of all Liens other than Permitted Liens; and (f) is for a liquidated amount
maturing as stated in the invoice therefor. Each Account included in any Advance
Request, Borrowing Base Certificate, report or other document as an Eligible
Account meets all the requirements of an Eligible Account set forth herein.


          4.13. Judgment
Liens. Neither Borrower nor any Subsidiary,
nor any of their assets, are subject to any unpaid judgments (whether or not
stayed) or any judgment liens in any jurisdiction except to the extent same
would not constitute an Event of Default under Section 8.1(g). 

          4.14. Subsidiaries. If Borrower has any
Subsidiaries as of the date hereof they are listed on Exhibit 4.14. Borrower
shall immediately notify Bank of the creation or acquisition of any new foreign
or domestic Subsidiary and shall comply with Section 5.14 hereof. 

          4.15. Environmental. Except as disclosed on
Exhibit 4.15, neither Borrower, nor to Borrower's best knowledge any other
previous owner or operator of any real property currently owned or operated by
Borrower, has generated, stored or disposed of any Regulated Material on any
portion of such property, or transferred any Regulated Material from such
property to any other location in violation of any applicable Environmental
Laws. Except as disclosed on Exhibit 4.15, no Regulated Material has been
generated, stored or disposed of on any portion of the real property currently
owned or operated by Borrower by any other Person, or is now located on such
property. Except as disclosed on Exhibit 4.15, Borrower is in full compliance
with all applicable Environmental Laws and Borrower has not been notified of any
action, suit, proceeding or investigation which calls into question compliance
by Borrower with any Environmental Laws or which seeks to suspend, revoke or
terminate any license, permit or approval necessary for the generation,
handling, storage, treatment or disposal of any Regulated Material. 

7 




          4.16. ERISA. Borrower has furnished to Bank true and complete copies of
the latest annual report required to be filed pursuant to Section 104 of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"), with
respect to each employee benefit plan or other plan maintained for employees of
Borrower or any Subsidiary and covered by Title IV of ERISA (a "Plan"), and no Termination
Event (as hereinafter defined) with respect to any Plan has occurred and is
continuing. For the purposes of this Agreement, a "Termination Event" shall mean a
"reportable event" as defined in Section 4043(b) of ERISA, or the filing of a
notice of intent to terminate under Section 4041 of ERISA. Neither Borrower nor
any Subsidiary has any unfunded liability with respect to any such Plan.


          4.17. Investment Company
Act. Neither Borrower nor any Subsidiary is
an "investment company" as defined in the Investment Company Act of 1940, as
amended. 

          4.18. Names. Borrower currently conducts all business only under its
legal name as set forth above in the introductory section of this Agreement.
Except as disclosed on Exhibit 4.18, during the preceding five (5) years
Borrower has not (i) been known as or used any other corporate, fictitious or
trade name, (ii) been the surviving entity of a merger or consolidation or (iii)
acquired all or substantially all of the assets of any Person. 

          4.19. Insider. Borrower is not, and no
Person having "control" (as that term is defined in 12 U.S.C. §375(b)(5) or in
regulations promulgated pursuant thereto) of Borrower is, an "executive
officer," "director," or "principal shareholder" (as those terms are defined in
12 U.S.C. §375(b) or in regulations promulgated pursuant thereto) of Bank, of a
bank holding company of which Bank is a subsidiary, or of any subsidiary of a
bank holding company of which Bank is a subsidiary. 

          4.20. Compliance with
Covenants; No Default. Borrower is, and upon
funding of the Loan will be, in compliance with all of the covenants hereof. No
Default has occurred, and the execution, delivery and performance of the Loan
Documents and the funding of the Loan will not cause a Default.

          4.21. Full
Disclosure. There is no material fact which
is known or which should be known by Borrower that Borrower has not disclosed to
Bank which could have a Material Adverse Effect. No Loan Document, nor any
agreement, document, certificate or statement delivered by Borrower or any
Subsidiary to Bank, contains any untrue statement of a material fact or omits to
state any material fact which is known or which should be known by Borrower
necessary to keep the other statements from being misleading. 

          4.22. Additional
Representations. Any additional
representations or warranties set forth on Exhibit 4.22 (if any) hereto are true
and correct in all material respects. 

     5. Affirmative Covenants of Borrower.
Borrower covenants and agrees that from the date hereof and until payment in
full of the Indebtedness and the formal termination of this Agreement, Borrower
and each Subsidiary: 

          5.1. Use of Loan
Proceeds. Shall use the proceeds of the Loan
only for working capital to be used in the operation of Borrower's business and
general corporate purposes, and furnish Bank all evidence that it may reasonably
require with respect to such use. 

          5.2. Maintenance of Business
and Properties. Shall at all times maintain,
preserve and protect all Collateral and all the remainder of its material
property used or useful in the conduct of its business, and keep the same in
good repair, working order and condition, and from time to time make, or cause
to be made, all material needful and proper repairs, renewals, replacements,
betterments and improvements thereto so that the business carried on in
connection therewith may be conducted properly and in accordance with standards
generally accepted in businesses of a similar type and size at all times, and
maintain and keep in full force and effect all licenses and permits necessary to
the proper conduct of its business. 

8 






          5.3. Insurance. Shall maintain such
liability insurance, workers' compensation insurance, business interruption
insurance and casualty insurance as may be required by law, customary and usual
for prudent businesses in its industry or as may be reasonably required by Bank
and shall insure and keep insured all Collateral and other properties in good
and responsible insurance companies satisfactory to Bank. All hazard insurance
covering Collateral shall be in amounts and shall contain co-insurance and
deductible provisions approved by Bank, shall name and directly insure Bank as
secured party and loss payee under a long-form loss payee clause acceptable to
Bank, or its equivalent, and shall not be terminable except upon 30 days' (or
less if required by applicable law) written notice to Bank. Borrower shall
furnish to Bank copies of all such policies. 

          5.4. Notice of
Default. Shall provide to Bank immediate
notice of (a) the occurrence of a Default and what action (if any) Borrower is
taking to correct the same, (b) any litigation or material changes in existing
litigation or any judgment against it or its assets, in excess of $100,000.00
(c) any material damage or loss to property, (d) any notice from taxing
authorities as to claimed deficiencies or any tax lien or any notice relating to
alleged ERISA violations, (e) any Reportable Event, as defined in ERISA, (f) any
rejection, return, offset, dispute, loss or other circumstance having a Material
Adverse Effect on any Collateral, (g) the cancellation or termination of, or any
default under, any material agreement to which Borrower is a party or by which
any of its properties are bound, or any acceleration of the maturity of any Debt
of Borrower; and (h) any loss or threatened loss of material licenses or
permits. 

          5.5. Inspections. Shall at reasonable times
upon reasonable prior notice (except no such notice shall be required following
the occurrence of or during the continuation of an Event of Default) permit
inspections of the Collateral and the records of such Person pertaining thereto
and verification of the Accounts, and in such manner as may be reasonably
required by Bank and shall further permit such inspections, reviews and field
examinations of its other records and its properties (with such reasonable
frequency and at such reasonable times as Bank may desire) by Bank as Bank may
deem necessary or desirable from time to time provided, that so long as no Event
of Default has occurred, and further provided that Bank has received
satisfactory results of all inspections, Borrower shall only be required to pay
the cost of (a) two (2) such inspections during the first twelve (12) months
following the date hereof and (b) one (1) such inspection during each twelve
(12) month period following the first anniversary of the date hereof. Subject to
the foregoing sentence, the cost of such field examinations, reviews,
verifications and inspections shall be borne by Borrower. 

          5.6. Financial
Information. Shall maintain books and records
in accordance with GAAP and shall furnish to Bank the following periodic
financial information: 

          (a) Periodic Borrowing Base
Information. Within fifteen (15) days of the
end of each month (or more frequently if required by Bank), a completed
Borrowing Base Certificate in such form as Bank shall require (a "Borrowing Base
Certificate"). Borrower shall attach the following to the Borrowing Base
Certificate, which shall be certified by the chief financial officer or
president of Borrower to be accurate and complete and in compliance with the
terms of the Loan Documents: (i) a report listing all Accounts and all Eligible
Accounts of Borrower as of the last Business Day of such month (an "Accounts
Receivable Report") which shall include the amount and age of each Account, the
name and mailing address of each Account Debtor, a detailing of all credits due
such Account Debtor by Borrower stated in the number of days which have elapsed
since the date each such credit was issued by Borrower, and such other
information as Bank may require in order to verify the Eligible Accounts, all in
reasonable detail and in form acceptable to Bank, (ii) a report listing all
unbilled Accounts and Eligible Unbilled Accounts of Borrower as of the last
Business Day of such month (an "Unbilled Accounts Receivable Report"), which
shall include the amount of each Unbilled Account, the name and mailing address
of each Unbilled Account Debtor, a detailing of all credits due such Account
Debtor by Borrower stated in the number of days which have elapsed since the
date each such credit was issued by Borrower, and such other information as Bank
may require in order to verify the Eligible Unbilled Accounts, all in reasonable
detail and in form acceptable to and (iii) a report reconciling (x) the Accounts
and Unbilled Accounts of Borrower as set forth on the Accounts Receivable Report
and the Unbilled Accounts Receivable Report attached to the Borrowing Base
Certificate to (y) the aggregate Accounts and Unbilled Accounts set forth in the
financial statements delivered to Bank pursuant to Section 5.6(b) (which shall
be based upon Borrower's general ledger).

9 




          (b) Interim
Statements. Within sixty (60) days after the
end of each quarter, a consolidated and consolidating balance sheet of Borrower
at the end of that period and a consolidated and consolidating income statement
and statement of cash flows for that period (and for the portion of the fiscal
year ending with such period), together with all supporting schedules, setting
forth in comparative form the figures for the same period of the preceding
fiscal year, and certified by the chief financial officer of Borrower as true
and correct and fairly representing the financial condition of Borrower and that
such statements are prepared in accordance with GAAP, except without footnotes
and subject to normal year-end audit adjustments; 

          (c) Annual
Statements. Within one hundred twenty (120)
days after the end of each fiscal year, a detailed audited financial report of
Borrower containing a consolidated and consolidating balance sheet at the end of
that period and a consolidated and consolidating income statement and statement
of cash flows for that period, setting forth in comparative form the figures for
the preceding fiscal year, together with all supporting schedules and footnotes,
and containing an audit opinion of independent certified public accountants
acceptable to Bank that the financial statements were prepared in accordance
with GAAP. Borrower shall obtain such written acknowledgments from Borrower's
independent certified public accountants as Bank may require permitting Bank to
rely on such annual financial statements. Any management letter, supplemental
letter, or other document accompanying the report will also be provided to Bank.
In addition, promptly upon receipt, one copy of each written report submitted to
Borrower by independent accountants for any other annual, quarterly or special
audit will be provided to Bank; 

          (d) Compliance
Certificates. Together with each report
required by Subsections (b) and (c), a compliance certificate in form attached
hereto as Exhibit 5.6 and a certificate of its president or chief financial
officer that no Default then exists or if a Default exists, the nature and
duration thereof and Borrower's intention with respect thereto, and in addition,
shall cause Borrower's independent auditors (if applicable) to submit to Bank,
together with its audit report, a statement that, in the course of such audit,
it discovered no circumstances which it believes would result in a Default or if
it discovered any such circumstances, the nature and duration
thereof;

          (e) Auditor's Management
Letters. Promptly upon receipt thereof,
copies of each report submitted to Borrower by independent public accountants in
connection with any annual, interim or special audit made by them of the books
of Borrower including, without limitation, each report submitted to Borrower
concerning its accounting practices and systems and any final comment letter
submitted by such accountants to management in connection with the annual audit
of Borrower; 

          (f) Other
Information. Such other information
reasonably requested by Bank from time to time concerning the business,
properties or financial condition of Borrower and Subsidiaries; and 

          (g) Projections. Not later than the one
hundred twenty (120) days after the commencement of each fiscal year, deliver
Projections to Bank for Borrower for such fiscal year. 

          5.7. Maintenance of
Existence and Rights. Shall preserve and
maintain its corporate existence, authorities to transact business, rights and
franchises, trade names, patents, trademarks and permits necessary to the
conduct of its business.

          5.8. Payment of Taxes,
Etc. Shall pay before delinquent all of its
debts and taxes, except nonpayment of debts and taxes being actively contested
in accordance with law (provided that Bank may require bonding or other
assurances). 

          5.9. Subordination. Shall cause all debt
and other obligations now or hereafter owed to any Guarantor or Affiliate to be
subordinated in right of payment and security to the Indebtedness in accordance
with subordination agreements satisfactory to Bank. 

10 





          5.10. Compliance; Hazardous
Materials. Shall strictly comply with all
laws, regulations, ordinances and other legal requirements, specifically
including, without limitation, ERISA, all securities laws and all laws relating
to hazardous materials and the environment. Unless approved in writing by Bank,
neither Borrower nor any Subsidiary shall engage in the storage, manufacture,
disposition, processing, handling, use or transportation of any hazardous or
toxic materials, whether or not in compliance with applicable laws and
regulations. 

          5.11. Compliance with
Assignment Laws. Shall if required by Bank
comply with the Federal Assignment of Claims Act and any other applicable law
relating to assignment of government contracts. 

          5.12. Further
Assurances. Shall take such further action
and provide to Bank such further assurances as may be reasonably requested to
ensure compliance with the intent of this Agreement and the other Loan
Documents. 

          5.13. Covenants Regarding
Collateral. Borrower makes the following
covenants with Bank regarding the Collateral for itself and each Subsidiary.
Borrower and each Subsidiary: 

          (a) will use the Collateral only in the ordinary course of its
business and will not permit the Collateral to be used in violation of any
applicable law or policy of insurance;

          (b) as agent for Bank, will defend the Collateral against all
claims and demands of all Persons, except for Permitted Liens; 

          (c) will, at Bank's request, for all Collateral located within
the United States, obtain and deliver to Bank such waivers as Bank may require
waiving the landlord's, mortgagee's or other lien holder’s enforcement rights
against the Collateral and assuring Bank's access to the Collateral in exercise
of its rights hereunder; 

          (d) will promptly deliver to Bank all promissory notes,
drafts, trade acceptances, chattel paper, Instruments or documents of title
which are Collateral in tangible form in excess of $10,000.00 in value,
appropriately endorsed to Bank's order, and Borrower will not create or permit
any Subsidiary to create any Electronic Chattel Paper without taking all steps
deemed necessary by Bank to confer control of the Electronic Chattel Paper upon
Bank in accordance with the Code; 

          (e) Except for sales of Inventory in the ordinary course of
business, the disposal of obsolete or worn out assets and Permitted Liens, will
not sell, assign, lease, transfer, pledge, hypothecate or otherwise dispose of
or encumber any Collateral or any interest therein;

          (f) shall promptly notify Bank of any future patents,
trademarks or copyrights owned by Borrower or any Subsidiary and any license
agreements entered into by Borrower or any Subsidiary authorizing said Person to
use any patents, trademarks or copyrights owned by third parties; and


          (g) shall give Bank at least thirty (30) days prior written
notice of any new trade or fictitious name. Borrower's or any Subsidiary’s use
of any trade or fictitious name shall be in compliance with all laws regarding
the use of such names. 

          5.14 Additional
Security. The Indebtedness shall also be
secured by a first priority security interest in and lien on all assets of all
domestic Subsidiaries of Borrower created or acquired after the date of this
Agreement and a pledge of 65% of capital stock in all foreign Subsidiaries of
Borrower created or acquired after the date of this Agreement. Borrower shall
delivered to Bank a guaranty and security agreement in a form acceptable to
Bank, UCC financing statement(s) and/or Pledge Documents, as applicable, for
each new domestic Subsidiary and/or foreign Subsidiary within thirty (30) days
of Borrower’s creation or acquisition of such Subsidiary. 

11 





          5.15 Post Closing
Obligations. Borrower shall comply with any
and all post closing obligations within the time provided for compliance as set
forth on Exhibit 10.17. 

     6. Negative Covenants of
Borrower. Borrower covenants and agrees
that from the date hereof and until payment in full of the Indebtedness and the
formal termination of this Agreement, Borrower and each Subsidiary: 

          6.1. Debt. Shall not create or permit to exist any Debt, including any
guaranties or other contingent obligations, except Permitted Debt. 

          6.2. Liens. Shall not create or permit any Liens on any of its property
except Permitted Liens. 

          6.3. Dividends. Shall not pay or declare
any dividends (other than stock dividends) or other distribution or purchase,
redeem or otherwise acquire any stock or other equity interests or pay or
acquire any debt subordinate to the Indebtedness unless, at the time and after
giving effect thereto, there shall be no Default hereunder and such payment or
acquisition is specifically permitted by Exhibit 6.3 hereto (if any); provided,
however, that any Subsidiary or Borrower may pay dividends to a Borrower or
another Subsidiary wholly-owned by Borrower, except that Borrower may buy back
on a one time basis its own stock provided that there is no Event of Default
existing at that time and after giving effect to the buy back there is a minimum
borrowing availability of $2,000,000.00. 

          6.4. Loans and Other
Investments. Shall not make or permit to
exist any advances or loans to, other than loans to its foreign Subsidiaries, or
guarantee or become contingently liable, directly or indirectly, in connection
with the obligations, leases, stock or dividends of, or own, purchase or make
any commitment to purchase any stock, bonds, notes, debentures or other
securities of, or any interest in, or make any capital contributions to (all of
which are sometimes collectively referred to herein as "Investments") any Person
except for (a) purchases of direct obligations of the federal government, (b)
deposits in commercial banks, (c) commercial paper of any U.S. corporation
having the highest ratings then given by the Moody's Investors Services, Inc. or
Standard & Poor's Corporation, (d) existing investments in Subsidiaries, (e)
endorsement of negotiable instruments for collection in the ordinary course of
business, and (f) advances to employees for business travel and other expenses
incurred in the ordinary course of business which do not at any time exceed
$500,000.00 in the aggregate. 

          6.5. Change in
Business. Shall not enter into any business
which is substantially different from the business in which it is presently
engaged. 

          6.6. Accounts. (a) Shall not sell, assign
or discount any of its Accounts, Chattel Paper or any promissory notes held by
it other than the discount of such notes in the ordinary course of business for
collection; and (b) shall notify Bank promptly in writing of any discount,
offset or other deductions not shown on the face of an Account invoice and any
dispute over an Account, and any information relating to an adverse change in
any Account Debtor's financial condition or ability to pay its obligations.


          6.7. Transactions with
Affiliates. With the exception of the
existing related party transactions disclosed in the Borrower’s SEC reports,
shall not directly or indirectly purchase, acquire or lease any property from,
or sell, transfer or lease any property to, pay any management fees to or
otherwise deal with, in the ordinary course of business or otherwise, any
Affiliate (other than a Subsidiary); provided, however, that any acts or
transactions prohibited by this Section may be performed or engaged in after
written notice to Bank if upon terms not less favorable to Borrower or such
Subsidiary than if no such relationship existed as determined by disinterested
members of the Borrower’s board of directors. [Note: Notice only, not consent, is required] 

          6.8. No Change in Name,
Offices or Jurisdiction of Organization; Removal of Collateral. Shall not, unless it shall have given 30 days' advance written notice
thereof to Bank, (a) change its name or the location of its chief executive
office or other office where books or records are kept, or change the
jurisdiction in which the Borrower is organized, or (b) permit any Inventory or
other tangible Collateral to be located at any location other than as specified
in Section 4.9. In the event of any such change, Borrower shall comply with
Section 4.9 and provide such further assurances to Bank. 

12 





          6.9. No Sale,
Leaseback. Shall not enter into any
sale-and-leaseback or similar transaction. 

          6.10. Margin
Stock. Shall not use any proceeds of the Loan
to purchase or carry any margin stock (within the meaning of Regulation U of the
Board of Governors of Federal Reserve System) or extend credit to others for the
purpose of purchasing or carrying any margin stock. 

          6.11. Tangible
Collateral. Shall not, except as otherwise
provided herein, allow any Inventory or other tangible Collateral to be
commingled with, or become an accession to or part of, any property of any other
Person so long as such property is Collateral; nor allow any tangible Collateral
to become a fixture unless Bank shall have given its prior written
authorization. 

          6.12. Subsidiaries. Shall not acquire, form
or dispose of all or any portion of any Subsidiaries or permit any Subsidiary to
issue capital stock except to its parent, except that Borrower may form a new
Subsidiary provided that if the new Subsidiary is a foreign Subsidiary it
pledges 65% of its capital stock or if the new Subsidiary is a domestic
Subsidiary it becomes a guarantor under the Loan Documents and provides a
security agreement as required by Section 5.14. 

          6.13. Liquidation, Mergers,
Consolidations and Dispositions of Substantial Assets. Except for a merger or combination with its Subsidiaries or between
Subsidiaries upon reasonable prior notice to Bank, shall not dissolve or
liquidate, or become a party to any merger or consolidation, or acquire by
purchase, lease or otherwise, all or a substantial part (more than 10% in the
aggregate during the term hereof) of the assets of any Person, or sell,
transfer, lease or otherwise dispose of all or a substantial part (more than 10%
in the aggregate during the term hereof) of its property or assets, except for
the sale of Inventory in the ordinary course of business, or sell or dispose of
any equity ownership interests in any Subsidiary. In the event of such a merger
or combination Borrower shall provide such further assurances as Bank may
reasonably require with respect to the Collateral and/or the terms and
conditions of the Loan Documents .

           6.14. Change of Fiscal Year
or Accounting Methods. Shall not change its
fiscal year or its accounting methods. 

     7.
Other Covenants of
Borrower. Borrower covenants and agrees
that from the date hereof and until payment in full of the Indebtedness and the
formal termination of this Agreement, Borrower and each Subsidiary shall comply
with the following additional covenants: 

          Fixed Charge Coverage Ratio. Borrower shall, at all times, maintain a Ratio of not less than 1.2 to
1.00, tested quarterly on a rolling trailing four quarter basis. "Fixed Charge
Coverage Ratio" shall mean the ratio of earnings before interest expense, tax
expense, depreciation expense and amortization expense (“EBITDA”) to the sum of
(i) payments of principal on indebtedness other than the Loan; (ii) capital
lease obligations; (iii) interest expense; (iv) cash taxes paid; (v) dividends
and distributions paid; and (vi) unfunded capital expenditures. 

          Leverage Ratio. Borrower
shall, at all times, maintain a Leverage Ratio of not more than 2.5 to 1.00
tested quarterly on a rolling trailing four quarter basis. "Leverage Ratio"
shall mean the ratio of all Funded Debt to EBITDA. "Funded Debt" shall mean, as
applied to any person, the sum of all indebtedness for borrowed money
(including, without limitation, capital lease obligations, subordinated debt,
and issued letters of credit) or evidenced by a note, bond, debenture or similar
instrument of that person. 

13 





          Positive Net Income.
Borrower shall, at all times, maintain a positive net income on an annual
consolidated basis tested quarterly on a rolling trailing four quarter
basis.

          Deposit Relationship. Borrower shall maintain its primary depository account and cash
management account with Bank. 

     8. Default.


          8.1.
Events of Default. Each of the following shall constitute an Event of Default: 

          (a) Borrower shall fail to make any payment of any principal
on the Note, when due; or 

          (b) Borrower shall fail to make any payment, within three (3)
business days of its due date, of interest on the Note, any amounts due
hereunder or any other Loan Document, or any other Indebtedness, other than
payments of principal; or 

          (c) Borrower, any Subsidiary or any other party to any Loan
Document (other than Bank) shall default in the performance of any agreement,
covenant or obligation contained in this Agreement or such Loan Document not
provided for elsewhere in this Section 8, and such default shall continue for
more than thirty (30) days, provided, however, that the thirty (30) day period
set forth herein shall not apply to any default of a negative covenant set forth
in Section 6, a financial covenant set forth at Section 7, insurance
requirements set forth at Section 5.3, and any requirement of notice set forth
in this Agreement and Borrower’s default shall immediately consitute an Event of
Default; or 

          (d) Any representation or warranty made by Borrower or any
other party to any Loan Document (other than Bank) herein or therein or in any
certificate or report furnished in connection herewith or therewith shall prove
to have been untrue or incorrect in any material respect when made; or


          (e) Any other obligation now or hereafter owed by Borrower or
any Subsidiary to Bank or any affiliate of Bank shall be in default and not
cured within the grace period, if any, provided therein, or any such Person
shall be in default under any obligation in excess of $250,000.00 in the
aggregate owed to any other obligee, which default entitles the obligee to
accelerate any such obligations or exercise other remedies with respect thereto;
or 

          (f) Borrower or any Subsidiary shall (A) voluntarily dissolve,
liquidate or terminate operations or apply for or consent to the appointment of,
or the taking of possession by, a receiver, custodian, trustee or liquidator of
such Person or of all or of a substantial part of its assets, (B) admit in
writing its inability, or be generally unable, to pay its debts as the debts
become due, (C) make a general assignment for the benefit of its creditors, (D)
commence a voluntary case under the federal Bankruptcy Code (as now or hereafter
in effect) or any similar law in any other jurisdiction, (E) file a petition
seeking to take advantage of any other law relating to bankruptcy, insolvency,
reorganization, winding-up, or composition or adjustment of debts, (F) fail to
controvert in a timely and appropriate manner, or acquiesce in writing to, any
petition filed against it in an involuntary case under Bankruptcy Code or any
similar law in any other jurisdiction, or (G) take any corporate action for the
purpose of effecting any of the foregoing; or 

          (g) An involuntary petition or complaint shall be filed
against Borrower or any Subsidiary seeking bankruptcy relief or reorganization
or the appointment of a receiver, custodian, trustee, intervenor or liquidator
of Borrower or any Subsidiary, of all or substantially all of its assets, and
such petition or complaint shall not have been dismissed within sixty (60) days
of the filing thereof; or an order, order for relief, judgment or decree shall
be entered by any court of competent jurisdiction or other competent authority
approving or ordering any of the foregoing actions; or 

14 





          (h) A judgment in excess of $250,000.00 in the aggregate with
any other judgments shall be rendered against Borrower or any Subsidiary and
shall remain undischarged, undismissed and unstayed for more than
forty-five days (except judgments validly covered by insurance with a deductible
of not more than $100,000.00) or there shall occur any levy upon, or attachment,
garnishment or other seizure of, any material portion of the Collateral or other
assets of Borrower or any Subsidiary by reason of the issuance of any tax levy,
judicial attachment or garnishment or levy of execution; or 

          (i) Borrower or any Subsidiary shall fail to pay, on demand,
any returned or dishonored draft, check, or other item which has been deposited
to the Collections Account or otherwise presented to Bank and for which Borrower
has received provisional credit; or 

          (j) Loss, theft, damage or destruction of any material portion
of the tangible Collateral for which there is either no insurance coverage or
for which, in the reasonable opinion of Bank, there is insufficient insurance
coverage; or 

          (k) There shall occur any change in the condition (financial
or otherwise) of Borrower which, in the reasonable opinion of Bank, could have a
Material Adverse Effect; or 

          (l) Borrower shall fail to give any required notice of Default
under Section 5.4 of this Agreement; or 

          8.2.
Remedies.
If an Event of Default shall occur, Bank may, without notice to Borrower, at its
option, withhold further Advances to Borrower. If an Event of Default shall have
occurred and be continuing, Bank may at its option take any or all of the
following actions: 

          (a) Bank may declare any or all Indebtedness (other than
Indebtedness under any swap agreements, as defined in 11 U.S.C §101, between
Borrower and Bank or any affiliate of Bank, which shall be governed by the
default and termination provisions of said swap agreements) to be immediately
due and payable (if not earlier demanded), terminate its obligation to make
Advances to Borrower, bring suit against Borrower to collect the Indebtedness,
exercise any remedy available to Bank hereunder or at law and take any action or
exercise any remedy provided herein or in any other Loan Document or under
applicable law. No remedy shall be exclusive of other remedies or impair the
right of Bank to exercise any other remedies. 

          (b) Without waiving any of its other rights hereunder or under
any other Loan Document, Bank shall have all rights and remedies of a secured
party under the Code (and the Uniform Commercial Code of any other applicable
jurisdiction) and such other rights and remedies as may be available hereunder,
under other applicable law or pursuant to contract. If requested by Bank,
Borrower will promptly assemble the Collateral and make it available to Bank at
a place to be designated by Bank. Borrower agrees that any notice by Bank of the
sale or disposition of the Collateral or any other intended action hereunder,
whether required by the Code or otherwise, shall constitute reasonable notice to
Borrower if the notice is mailed to Borrower by certified mail, postage prepaid,
at least three (3) business days before the action to be taken. Borrower shall
be liable for any deficiencies in the event the proceeds of the disposition of
the Collateral do not satisfy the Indebtedness in full. 

          (c) Bank may demand, collect and sue for all amounts owed
pursuant to Accounts, General Intangibles, Chattel Paper, Instruments, Documents
or for proceeds of any Collateral (either in Borrower's name or Bank's name at
the latter's option), with the right to enforce, compromise, settle or discharge
any such amounts.

          8.3. Receiver. In addition to any other
remedy available to it, Bank shall have the absolute right, upon the occurrence
and during the continuation of an Event of Default, to seek and obtain the
appointment of a receiver to take possession of and operate and/or dispose of
the business and assets of Borrower and any costs and expenses incurred by Bank
in connection with such receivership shall bear interest at the Default Rate, at
Bank's option, and shall be secured by all Collateral. 

15 





          8.4. Deposits;
Insurance. After the occurrence and during
the continuation of an Event of Default, Borrower authorizes Bank to collect and
apply against the Indebtedness when due any cash or deposit accounts in its
possession, and any refund of insurance premiums or any insurance proceeds
payable on account of the loss or damage to any of the Collateral and
irrevocably appoints Bank as its attorney-in-fact to endorse any check or draft
or take other action necessary to obtain such funds. 

     9. Security Agreement. 

          9.1.
Security Interest. 

          (a) As security for the payment and performance of any and all
Indebtedness and the performance of all obligations and covenants of Borrower to
Bank and its affiliates, whether hereunder and under the other Loan Documents or
otherwise, certain or contingent, now existing or hereafter arising, which are
now, or may at any time or times hereafter be owing by Borrower to Bank or any
of Bank’s affiliates, Borrower hereby grants to Bank (for itself and its
affiliates) a continuing security interest in and general lien upon and right of
set-off against, all right, title and interest of Borrower in and to the
Collateral, whether now owned or hereafter acquired by Borrower. 

          (b) Except as herein or by applicable law otherwise expressly
provided, Bank shall not be obligated to exercise any degree of care in
connection with any Collateral in its possession, to take any steps necessary to
preserve any rights in any of the Collateral or to preserve any rights therein
against prior parties, and Borrower agrees to take such steps. In any case Bank
shall be deemed to have exercised reasonable care if it shall have taken such
steps for the care and preservation of the Collateral or rights therein as
Borrower may have reasonably requested Bank to take and Bank's omission to take
any action not requested by Borrower shall not be deemed a failure to exercise
reasonable care. No segregation or specific allocation by Bank of specified
items of Collateral against any liability of Borrower shall waive or affect any
security interest in or Lien against other items of Collateral or any of Bank's
options, powers or rights under this Agreement or otherwise arising. 

          (c) Bank may at any time and from time to time, with or
without notice to Borrower, (i) transfer into the name of Bank or the name of
Bank's nominee any of the Collateral, (ii) notify any Account Debtor or other
obligor of any Collateral to make payment thereon direct to Bank of any amounts
due or to become due thereon and (iii) receive and after a Default direct the
disposition of any proceeds of any Collateral. 

          9.2. Financing Statements;
Power of Attorney. Borrower authorizes Bank
at Borrower's expense to file any financing statements and/or amendments thereto
relating to the Collateral (without Borrower's signature thereon) which Bank
deems appropriate that (a) indicate the Collateral (i) as “all assets” of
Borrower or words of similar effect, if appropriate, regardless of whether any
particular asset comprised in the Collateral falls within the scope of Article 9
of the Code, or (ii) by specific Collateral category, and (b) provide any other
information required by part 5 of Article 9 of the Code for the sufficiency or
filing office acceptance of any financing statement or amendment. Borrower
irrevocably appoints Bank as its attorney-in-fact to execute any such financing
statements and/or control agreements in Borrower's name and to perform all other
acts, at Borrower’s expense, which Bank deems appropriate to perfect and to
continue perfection of the security interest of Bank. Borrower hereby appoints
Bank as Borrower's attorney-in-fact to endorse, present and collect on behalf of
Borrower and in Borrower's name any draft, checks or other documents necessary
or desirable to collect any amounts which Borrower may be owed. Bank is hereby
granted a license or other right to use, without charge, Borrower's labels,
patents, copyrights, rights of use of any name, trade secrets, trade names,
trademarks and advertising matter, or any Property of a similar nature, as it
pertains to the Collateral, in advertising for sale and selling any Collateral,
and Borrower's rights under all licenses and all franchise agreements shall
inure to Bank's benefit, provided that such license and right to use shall only
be utilized in the event of an occurrence of an Event of Default. The proceeds
realized from the sale or other disposition of any Collateral may be applied,
after allowing two (2) Business Days for collection, first to the reasonable
costs, expenses and attorneys' fees and expenses incurred by Bank for collection
and for acquisition, completion, protection, removal, storage, sale and
delivering of the Collateral; secondly, to interest due upon any of the
Indebtedness; and thirdly, to the principal amount of the Indebtedness. If any
deficiency shall arise, Borrower and each Guarantor shall remain jointly and
severally liable to Bank therefor. 

16 





          9.3. Entry. Following the occurrence of an Event of Default Borrower
hereby irrevocably consents to any act by Bank or its agents in entering upon
any premises for the purposes of either (i) inspecting the Collateral or (ii)
taking possession of the Collateral and Borrower hereby waives its right to
assert against Bank or its agents any claim based upon trespass or any similar
cause of action for entering upon any premises where the Collateral may be
located. 

          9.4. Other
Rights. Borrower authorizes Bank without
affecting Borrower's obligations hereunder or under any other Loan Document from
time to time (i) to take from any party and hold additional Collateral or
guaranties for the payment of the Indebtedness or any part thereof, and to
exchange, enforce or release such collateral or guaranty of payment of the
Indebtedness or any part thereof and to release or substitute any endorser or
guarantor or any party who has given any security interest in any collateral as
security for the payment of the Indebtedness or any part thereof or any party in
any way obligated to pay the Indebtedness or any part thereof; and (ii) upon the
occurrence of any Event of Default to direct the manner of the disposition of
the Collateral and the enforcement of any endorsements, guaranties, letters of
credit or other security relating to the Indebtedness or any part thereof as
Bank in its sole discretion may determine. 

          9.5. Accounts. In the event of an
occurrence of an Event of Default, Bank may notify any Account Debtor of Bank's
security interest and may direct such Account Debtor to make payment directly to
Bank for application against the Indebtedness. Any such payments received by or
on behalf of Borrower shall be the property of Bank, shall be held in trust for
Bank and not commingled with any other assets of any Person (except to the
extent they may be commingled with other assets of Borrower in an account with
Bank) and shall be immediately delivered to Bank in the form received. Bank
shall have the right to apply any proceeds of Collateral to such of the
Indebtedness in the manner set forth in Section 9.2. 

          9.6. Waiver of
Marshaling. Borrower hereby waives any right
it may have to require marshaling of its assets. 

          9.7 Control. Borrower will cooperate with Bank in obtaining control of, or
control agreements with respect to, Collateral for which control or a control
agreement is required for perfection of the Bank’s security interest under the
Code. 

     10.
Miscellaneous. 

          10.1. No Waiver, Remedies
Cumulative. No failure on the part of Bank to
exercise, and no delay in exercising, any right hereunder or under any other
Loan Document shall operate as a waiver thereof, nor shall any single or partial
exercise of any right hereunder preclude any other or further exercise thereof
or the exercise of any other right. The remedies herein provided are cumulative
and are in addition to any other remedies provided by law, any Loan Document or
otherwise. 

          10.2. Survival of
Representations. All representations and
warranties made herein shall survive the making of the Loan hereunder and the
delivery of the Note, and shall continue in full force and effect so long as any
Indebtedness is outstanding, there exists any commitment by Bank to Borrower,
and until this Agreement is formally terminated in writing. 

17 





          10.3. Indemnity By Borrower;
Expenses. In addition to all other Indebtedness,
Borrower agrees to defend, protect, indemnify and hold harmless Bank and its
Affiliates and all of their respective officers, directors, employees,
attorneys, consultants and agents from and against any and all losses, damages,
liabilities, obligations, penalties, fees, costs and expenses (including,
without limitation, attorneys' and paralegals' reasonable fees, costs and
expenses) incurred by such indemnitees, whether prior to or from and after the
date hereof, as a result of or arising from or relating to (i) the due diligence
effort (including, without limitation, public record search, recording fees,
examinations and investigations of the properties of Borrower and Borrower's
operations), negotiation, preparation, execution and/or performance of any of
the Loan Documents or of any document executed in connection with the
transactions contemplated thereby and the perfection of Bank's Liens in the
Collateral, maintenance of the Loan by Bank, and any and all amendments,
modifications, and supplements of any of the Loan Documents or restructuring of
the Indebtedness, (ii) any suit, investigation, action or proceeding by any
Person (other than Borrower), whether threatened or initiated, asserting a claim
for any legal or equitable remedy against any Person under any statute,
regulation or common law principle, arising from or in connection with Bank's
furnishing of funds to Borrower under this Agreement, (iii) Bank's preservation,
administration and enforcement of its rights under the Loan Documents and
applicable law, including the reasonable fees and disbursements of counsel for
Bank in connection therewith, whether suit be brought or not and whether
incurred at trial or on appeal, and all costs of repossession, storage,
disposition, protection and collection of Collateral, (iv) periodic field exams,
audits and appraisals performed by Bank; and/or (v) any matter relating to the
financing transactions contemplated by the Loan Documents or by any document
execution in connection with the transactions contemplated thereby, other than
for such loss, damage, liability, obligation, penalty, fee, cost or expense
arising from such indemnitee's gross negligence or willful misconduct. If
Borrower should fail to pay any tax or other amount required by this Agreement
to be paid or which may be reasonably necessary to protect or preserve any
Collateral or Borrower's or Bank's interests therein, Bank may make such payment
and the amount thereof shall be payable on demand, shall bear interest at the
Default Rate from the date of demand until paid and shall be deemed to be
Indebtedness entitled to the benefit and security of the Loan Documents. In
addition, Borrower agrees to pay and save Bank harmless against any liability
for payment of any state documentary stamp taxes, intangible taxes or similar
taxes (including interest or penalties, if any) which may now or hereafter be
determined to be payable in respect to the execution, delivery or recording of
any Loan Document or the making of any Advance, whether originally thought to be
due or not, and regardless of any mistake of fact or law on the part of Bank or
Borrower with respect to the applicability of such tax. Borrower's obligation
for indemnification for all of the foregoing losses, damages, liabilities,
obligations, penalties, fees, costs and expenses of Bank shall be part of the
Indebtedness, secured by the Collateral, chargeable against Borrower's loan
account, and shall survive termination of this Agreement.


          10.4.
Notices.
Any notice or other communication hereunder under the Note to any party hereto
or thereto shall be by hand delivery, overnight delivery via nationally
recognized overnight delivery service, facsimile with receipt confirmed,
telegram, telex or registered or certified United States mail and unless
otherwise provided herein shall be deemed to have been given or made when
delivered, telegraphed, telexed, faxed or three (3) Business Days after having
been deposited in the United States mail, postage prepaid, addressed to the
party at its address specified below (or at any other address that the party may
hereafter specify to the other parties in writing): 

	 
            Bank: 	          	HSBC Bank USA,
      NA  
		 	3219 Route 46 East,  
	  		Suite 201 
  
		 	Parsippany, NJ 07054  
	  		Attn: Thomas J.
      Sweeney  
	  
	Borrower: 		Intelligroup,
      Inc.  
	  		499 Thornall
      Street  
	  		Edison, New Jersey
      08837  
	  		Attn: Shri Ram Bhaskar
      Cherukumilli  
	  
	 
           Borrower: 		Empower, Inc. 
    
	  		499 Thornall
      Street  
	  		Edison, New Jersey
      08837  
	Attn: [_________________________________]
  



18 





          10.5. Governing
Law. This Agreement and the Loan Documents
shall be deemed contracts made under the laws of the State of the Jurisdiction
and shall be governed by and construed in accordance with the laws of said state
(excluding its conflict of laws provisions if such provisions would require
application of the laws of another jurisdiction) except insofar as the laws of
another jurisdiction may, by reason of mandatory provisions of law, govern the
perfection, priority and enforcement of security interests in the Collateral.


          10.6. Successors and
Assigns. This Agreement shall be binding upon
and shall inure to the benefit of Borrower and Bank, and their respective
successors and assigns; provided, that Borrower may not assign any of its rights
hereunder without the prior written consent of Bank, and any such assignment
made without such consent will be void. 

          10.7. Counterparts. This Agreement may be
executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed and delivered shall be
deemed an original and all of which when taken together shall constitute but one
and the same instrument. 

          10.8. No
Usury. Regardless of any other provision of
this Agreement, the Note or in any other Loan Document, if for any reason the
effective interest should exceed the maximum lawful interest, the effective
interest shall be deemed reduced to, and shall be, such maximum lawful interest,
and (i) the amount which would be excessive interest shall be deemed applied to
the reduction of the principal balance of the Note and not to the payment of
interest, and (ii) if the loan evidenced by the Note has been or is thereby paid
in full, the excess shall be returned to the party paying same, such application
to the principal balance of the Note or the refunding of excess to be a complete
settlement and acquittance thereof.

          10.9. Powers. All powers of attorney granted to Bank are coupled with an
interest and are irrevocable so long as the Indebtedness remains outstanding or
this Loan Agreement has not been terminated. 

          10.10. Approvals. If this Agreement calls for
the approval or consent of Bank, such approval or consent may be given or
withheld in the discretion of Bank unless otherwise specified herein.


          10.11 Participations. Bank shall have the
right to enter into one or more participation with other lenders with respect to
the Indebtedness. Upon prior notice to Borrower of such participation, Borrower
shall thereafter furnish to such participant any information furnished by
Borrower to Bank pursuant to the terms of the Loan Documents. Nothing in this
Agreement or any other Loan Document shall prohibit Bank from pledging or
assigning this Agreement and Bank's rights under any of the other Loan
Documents, including collateral therefor, to any Federal Reserve Bank in
accordance with applicable law. 

          10.12. Dealings with
Multiple Borrowers. If more than one Person
is named as Borrower hereunder, all Indebtedness, representations, warranties,
covenants, agreements and indemnities set forth in the Loan Documents to which
such Person is a party shall be joint and several. Any and all references to
Borrower (regardless of whether preceded by the term a, any, each of, all,
and/or, or any other similar term) shall be deemed to refer to each and every
(and/or any one or all) parties constituting a Borrower, individually and/or in
the aggregate. Bank shall have the right to deal with any individual of any
Borrower with regard to all matters concerning the rights and obligations of
Bank hereunder and pursuant to applicable law with regard to the transactions
contemplated under the Loan Documents. All actions or inactions of the officers,
managers, members and/or agents of any Borrower with regard to the transactions
contemplated under the Loan Documents shall be deemed with full authority and
binding upon all Borrowers hereunder. Each Borrower hereby appoints each other
Borrower as its true and lawful attorney-in-fact, with full right and power, for
purposes of exercising all rights of such Person hereunder and under applicable
law with regard to the transactions contemplated under the Loan Documents. The
foregoing is a material inducement to the agreement of Bank to enter into the
terms hereof and to consummate the transactions contemplated hereby. 

19 





          10.13. Waiver of Certain
Defenses. To the fullest extent permitted by
applicable law, upon the occurrence of any Event of Default, neither Borrower
nor anyone claiming by or under Borrower will claim or seek to take advantage of
or any other law requiring Bank to attempt to realize upon any Collateral or
collateral of any surety or guarantor, or any appraisement, evaluation, stay,
extension, homestead, redemption or exemption laws now or hereafter in force in
order to prevent or hinder the enforcement of this Agreement. Borrower, for
itself and all who may at any time claim through or under Borrower, hereby
expressly waives to the fullest extent permitted by law the benefit of all such
laws. All rights of Bank and all obligations of Borrower hereunder shall be
absolute and unconditional irrespective of (i) any change in the time, manner or
place of payment of, or any other term of, all or any of the Indebtedness, or
any other amendment or waiver of or any consent to any departure from any
provision of the Loan Documents, (ii) any exchange, release or non-perfection of
any other collateral given as security for the Indebtedness, or any release or
amendment or waiver of or consent to departure from any guaranty for all or any
of the Indebtedness, or (iii) any other circumstance which might otherwise
constitute a defense available to, or a discharge of, Borrower or any third
party, other than payment and performance in full of the
Indebtedness.

          10.14. Integration. This Agreement and the
other Loan Documents constitute the sole agreement of the parties with respect
to the subject matter hereof and thereof and supersede all oral negotiations and
prior writings with respect to the subject matter hereof and
thereof. 

          10.15.
LIMITATION ON LIABILITY; WAIVER OF
PUNITIVE DAMAGES. EACH OF THE PARTIES HERETO, INCLUDING BANK BY ACCEPTANCE
HEREOF, AGREES THAT IN ANY JUDICIAL, MEDIATION OR
ARBITRATION PROCEEDING OR ANY CLAIM OR CONTROVERSY BETWEEN OR AMONG THEM (A
"DISPUTE") THAT MAY ARISE OUT OF OR BE IN ANY WAY
CONNECTED WITH THIS AGREEMENT, THE LOAN DOCUMENTS
OR ANY OTHER AGREEMENT OR DOCUMENT BETWEEN OR AMONG THEM OR THE INDEBTEDNESS AND OBLIGATIONS EVIDENCED HEREBY OR RELATED
HERETO, IN NO
EVENT SHALL ANY PARTY HAVE A REMEDY OF, OR BE LIABLE TO THE OTHER FOR, (1)
INDIRECT, SPECIAL OR CONSEQUENTIAL DAMAGES OR (2) PUNITIVE OR EXEMPLARY DAMAGES.
EACH OF THE PARTIES HEREBY EXPRESSLY WAIVES ANY RIGHT OR CLAIM TO PUNITIVE OR EXEMPLARY
DAMAGES THEY MAY HAVE OR WHICH MAY ARISE IN THE FUTURE IN CONNECTION WITH ANY
DISPUTE, WHETHER THE DISPUTE IS RESOLVED BY ARBITRATION, MEDIATION, JUDICIALLY
OR OTHERWISE. 

          10.16
WAIVER OF JURY TRIAL. TO THE EXTENT PERMITTED BY
APPLICABLE LAW, EACH OF BORROWER BY EXECUTION HEREOF AND BANK BY ACCEPTANCE
HEREOF, KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES ANY RIGHT EACH MAY HAVE
TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED ON, OR ARISING OUT OF,
UNDER OR IN CONNECTION WITH THIS AGREEMENT, THE LOAN DOCUMENTS OR ANY AGREEMENT
CONTEMPLATED TO BE EXECUTED IN CONNECTION WITH THIS AGREEMENT OR ANY COURSE OF
CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF
ANY PARTY WITH RESPECT HERETO. THIS PROVISION IS A MATERIAL INDUCEMENT TO BANK
TO ENTER INTO AND ACCEPT THIS AGREEMENT. EACH OF THE PARTIES AGREES THAT THE
TERMS HEREOF SHALL SUPERSEDE AND REPLACE ANY PRIOR AGREEMENT RELATED TO
ARBITRATION OF DISPUTES BETWEEN THE PARTIES CONTAINED IN ANY LOAN DOCUMENT OR
ANY OTHER DOCUMENT OR AGREEMENT HERETOFORE EXECUTED IN CONNECTION WITH, RELATED
TO OR BEING REPLACED, SUPPLEMENTED, EXTENDED OR MODIFIED BY, THIS AGREEMENT.


          10.17. Other
Provisions. Any other or additional terms and
conditions set forth in Exhibit 10.17 (if any) are hereby incorporated herein.


[ Signatures on Next Page] 

20






     IN WITNESS WHEREOF, the parties
hereto have caused this Agreement to be duly executed as of the day and year
first above written. 


	
      HSBC Bank USA, National
      Association 

	 
	 
	By____/s/ Thomas
      J. Sweeney ______________________  
	Name:  	Thomas J.
      Sweeney  
	Its:  	Vice
      President  
	  
	  
	Intelligroup,
      Inc.  
	  
	  
	By_______/s/
      Alok Bajpai___________________________  
	Name:  	Alok
      Bajpai  
	Its:  	CFO, Treasurer
      and Secretary  
	  
	  
	Empower,
      Inc.  
	  
	  
	By_____/s/ Alok
      Bajpai_____________________________  
	Name:  	Alok
      Bajpai  
	Its:  	Treasurer and
      Secretary  




21





SCHEDULE OF
EXHIBITS

	Exhibit  	Section Reference  	Title  
	 1 
    	1 
    	("Definitions")  	 Definitions  
	 1.1A  	1.1 
    	("Collateral")  	 Additional
      Collateral  
	 1.1B  	1.1 
    	("Eligible
      Accounts")  	 Ineligible
      Accounts  
	 1.1C  	1.1 
    	("Permitted
      Debt")  	 Permitted
      Debt  
	 1.1D  	1.1 
    	("Permitted
      Liens")  	 Permitted
      Liens  
	 4.3 
    	4.3 
    	("Financial
      Condition")  	 Contingent
      Liabilities  
	 4.4 
    	4.4 
    	("Litigation")  	 Litigation  
	 4.9 
    	4.9 
    	("Location")  	 Offices of
      Borrower  
	 4.14  	4.14
    	("Subsidiaries")  	 List of
      Subsidiaries  
	 4.15  	4.15
    	("Environmental")  	 Environmental
      Disclosures  
	 4.18  	4.18
    	("Names")  	 Names; Mergers;
      Acquisitions  
	 4.22  	4.22 	("Additional
      Representations")  	 Additional
      Representations  
	 5.6 
    	5.6 	(“Financial
      Information”)  	 Compliance
      Certificate  
	 6.3 
    	6.3 	("Dividends")  	 Permitted
      Dividends and Distributions 
      
	10.15  	10.15  	("Other Provisions") 
    	 Additional
      Terms  



22




EXHIBIT 1

Definitions


1.1 Defined Terms: 

     “Accession” has the meaning set
forth in the Code. 

     "Account" has the meaning set forth in the Code, together with
any guaranties, letters of credit, Letter-of-Credit Right, and other security
therefore, including Supporting Obligations. 

     "Account Debtor" means a Person who is obligated under any Account,
Chattel Paper, General Intangible or Instrument. 

     "Advance" means an advance of
proceeds of the Loan to Borrower pursuant to this Agreement. 

     "Advance Date" means the date on
which an Advance is made. 

     "Advance Request" means the written request for an Advance under the Loan
as identified in Subsection 2.4(a) hereof. 

     "Affiliate" of a Person means (a) any Person directly or indirectly
owning 10% or more of the voting stock or rights of such named Person or of
which the named Person owns 10% or more of such voting stock or rights; (b) any
Person controlling, controlled by or under common control with such named
Person; (c) any officer, director or employee of such named Person or any
Affiliate of the named Person; and (d) any family member of the named Person or
any Affiliate of such named Person. 

     "Borrowing Base" means at any time the sum of (i) 85% of the total
amount of Eligible Accounts, plus (ii) the lesser of (a) 50%
of the total amount of Eligible Unbilled Accounts or (b) $2,000,000.00
minus any Reserves. 

     "Borrowing Base Certificate" has
the meaning set forth in Subsection 5.6.(a). 

     "Business Day" means a weekday on which commercial banks are open for
business in Parsippany, New Jersey. 

     "Chattel Paper" has the meaning set forth in the Code, including
Electronic Chattel Paper, together with any guaranties, letters of credit,
Letter-of-Credit Right, and other security therefore, including Supporting
Obligations. 

     "Code" means the Uniform Commercial Code, as presently and
hereafter enacted in the Jurisdiction. Any term used in this Agreement and in
any financing statement filed in connection herewith which is defined in the
Code and not otherwise defined in this Agreement or in any other Loan Document
has the meaning given to the term in the Code.

1




     "Collateral" means all property of
Borrower, wherever located and whether now owned by Borrower or hereafter
acquired, including but not limited to: (a) all Inventory; (b) all General
Intangibles; (c) all Accounts; (d) all Chattel Paper; (e) all Instruments and
Documents and any other instrument or intangible representing payment for goods
or services; (f) all Equipment; (g) all Investment Property; (h) all Deposit
Accounts and funds on deposit therein, including but not limited to the
Collections Account or funds otherwise on deposit with or under the control of
Bank or its agents or correspondents;(i) all Fixtures; and all parts,
replacements, substitutions, profits, products, Accessions and cash and non-cash
proceeds and Supporting Obligations of any of the
foregoing (including insurance proceeds payable by reason of loss or damage
thereto) in any form and wherever located. The foregoing fixtures
collateral is located at or affixed to the real property know as 499 Thornall
Street, Edison, New Jersey. Collateral shall include all written or
electronically recorded books and records relating to any such Collateral and
other rights relating thereto. Notwithstanding anything herein to the contrary,
in no event shall the Collateral include or the security interest granted
hereunder attach to (a) any lease, license, contract, property rights or
agreement to which Borrower is a party or any of its rights or interests
thereunder if and for so long as the grant of such security interest shall
constitute or result in (i) the abandonment, invalidation or unenforceability of
any right, title or interest of Borrower therein or (ii) in a breach or
termination pursuant to the terms of, or a default under, any such lease,
license, contract property rights or agreement (other than to the extent that
any such term would be rendered ineffective pursuant to Sections 9-406, 9-407,
9-408 or 9-409 of the UCC (or any successor provision or provisions) of any
relevant jurisdiction or any other applicable law (including the Bankruptcy
Code) or principles of equity); provided, however, that the Collateral shall
include and such security interest shall attach immediately at such time as the
condition causing such abandonment, invalidation or unenforceability shall be
remedied and to the extent severable, shall attach immediately to any portion of
such lease, license, contract, property rights or agreement that does not result
in any of the consequences specified in (i) or (ii) above; (b) the outstanding
capital stock of a foreign entity in excess of 65% of the capital stock of such
foreign entity; and (c) motor vehicles and other assets evidenced by
certificates of title.

     "Collections
Account" means the controlled
disbursement account maintained by Borrower at Bank to which collections,
deposits and other payments on or with respect to Collateral may be made
pursuant to the terms hereof, to which only Bank shall have access. 

     "Debt" means all liabilities of a Person as determined under
GAAP and all obligations which such Person has guaranteed or endorsed or is
otherwise secondarily or jointly liable for, and shall include, without
limitation (a) all obligations for borrowed money or purchased assets, (b)
obligations secured by assets whether or not any personal liability exists, (c)
the capitalized amount of any capital or finance lease obligations, (d) the
unfunded portion of pension or benefit plans or other similar liabilities, (e)
obligations as a general partner, (f) contingent obligations pursuant to
guaranties, endorsements, letters of credit and other secondary liabilities, (g)
obligations for deposits, and (h) obligations under swap agreements, as defined
in 11 U.S. C. §101. 

     "Default Rate" means the highest lawful rate of interest per annum
specified in any Note to apply after a default under such Note or, if no such
rate is specified, a rate equal to the lesser of (a) the Prime Rate plus three
percent (3%) per annum and (b) the highest rate of interest allowed by law.


     “Deposit Account” has the meaning
set forth in the Code. 

     "Dispute" has the meaning set
forth in Section 10.15. 

     “Electronic Chattel Paper” has the
meaning set forth in the Code. 

2




     "Eligible Accounts" means all
Accounts evidenced by an invoice (valued at the face amount of such invoice,
less maximum discounts, credits and allowances which may be taken by Account
Debtors on such Accounts, and net of any sales tax, finance charges or late
payment charges or included in the invoiced amount) created or acquired by
Borrower arising from the provision of certain services in Borrower's ordinary
course of business (as approved by Bank) in which Bank has a first priority,
perfected security interest (subject only to Permitted Liens), but excluding (a)
Accounts outstanding for longer than the sooner of (i) ninety (90) days from the
date of original invoice or (ii) sixty (60) days from the original due date; (b)
all Accounts owed by an Account Debtor if more than fifty percent (50%) of the
Accounts owed by such Account Debtor to Borrower are deemed ineligible
hereunder; (c) Accounts owing from any Affiliate of Borrower; (d) Accounts owed
by a creditor of Borrower to the extent of the amount of the indebtedness of
Borrower to such creditor; (e) Accounts which are in dispute or subject to any
counterclaim, contra-account or offset to the extent of such dispute,
counterclaim, contra-account or offset; (f) Accounts owing by any Account Debtor
which is not Solvent; (g) Accounts arising from a sale on a
bill-and-hold, guaranteed sale, sale-or-return, sale-on-approval, consignment or
similar basis or which is subject to repurchase, return, rejection,
repossession, loss or damage; (h) Accounts owed by an Account Debtor located
outside of the continental United States of America, unless in Bank's sole and
absolute discretion, such Account is supported by a letter of credit or credit
insurance assigned to Bank and which is issued by a financial institution and in
an amount which is acceptable to Bank in its reasonable discretion,; (i)
Accounts owed by the United States of America or other governmental or
quasi-governmental unit to the extent Borrower fails to comply with any
applicable requirement to properly assign any such Account or (k) Accounts
evidenced by a note or other Instrument or Chattel Paper or reduced to judgment;
(l) Accounts for which the total of all Accounts from an Account Debtor
(together with the Affiliates of the Account Debtor) exceed ten percent (10%) of
the total Accounts of Borrower (to the extent of such excess); (m) Accounts
which, by contract, subrogation, mechanics' lien laws or otherwise, are subject
to claims by Borrower's creditors or other third parties or which are owed by
Account Debtors as to whom any creditor of Borrower (including any bonding
company) has lien or retainage rights; (n) Accounts of the type described in
Exhibit 1.1B (if any) and any and all other Accounts the validity,
collectibility, or amount of which is determined in good faith by Borrower to be
doubtful; (o) Accounts owed by an Account Debtor which is located in a
jurisdiction where Borrower is required to qualify to transact business or to
file reports, unless Borrower has so qualified or filed; (p) Accounts owed by an
Account Debtor who disputes the liability therefor to the extent of such
disputer; (q) Accounts owed by an Account Debtor that shall be the subject of
any proceeding of the type described in Section 8.1(e) or (f); and (r) any other
Account which Bank otherwise in its sole and absolute discretion deems to be
ineligible. For purposes of determining the eligibility of Accounts owing from
any Account Debtor, the gross amount of Accounts which exceed the aging
limitations set forth above shall not be reduced by any credit due such Account
Debtor by Borrower which is outstanding for longer than the earlier of (i)
ninety (90) days from the date of original invoice or sixty (60)]days from the
original due date. No Account shall be an Eligible Account if any
representation, warranty or covenant herein relating thereto shall be untrue,
misleading or in default. Bank may determine, on a daily basis, whether any
Account constitutes an Eligible Account, and if an Eligible Account subsequently
becomes ineligible its ineligibility shall be immediate. 

     "Eligible Unbilled Accounts"
means, as defined under GAAP, Accounts arising from services provided which are
billed subsequent to the period end in accordance with the contract terms for
such services. All unbilled amounts are expected to be billed and collected
within the following 12 months

     "Environmental
Laws" means, collectively the following
acts and laws, as amended: the Comprehensive Environmental Response,
Compensation and Liability Act of 1980; the Superfund Amendments and
Reauthorization Act of 1986; the Resource Conservation and Recovery Act; the
Toxic Substances Act; the Clean Water Act; the Clean Air Act; the Oil Pollution
and Hazardous Substances Control Act of 1978; and any other "Superfund" or
"Superlien" law or any other federal, state or local statute, law, ordinance,
code, rule, regulation, order or decree relating to, or imposing liability or
standards of conduct concerning, any hazardous, toxic or dangerous waste,
substance or material, as now or at any time hereafter in effect. 

     "Equipment" has the meaning set
forth in the Code. 

     "Event of Default" means any event specified as such in Section 8.1 hereof
("Events of Default"), provided that there shall have been satisfied any
requirement in connection with such event for the giving of notice or the lapse
of time, or both; "Default" or "default" means any
of such events, whether or not any such requirement for the giving of notice or
the lapse of time or the happening of any further condition, event or act shall
have been satisfied. 

     “Fixtures” has the meaning set
forth in the Code. 

     "GAAP" means generally accepted accounting principles as in
effect in the Unites States from time to time. 

3




     "General
Intangibles" has the meaning set forth
in the Code, together with any guaranties, letters of credit, Letter-of-Credit
Right, and other security therefore, including Supporting Obligations.


     "Indebtedness" means all
obligations now or hereafter owed to Bank or any affiliate of Bank by Borrower,
whether related or unrelated to the Loan, including, without limitation, amounts
owed or to be owed under the terms of the Loan Documents, or arising out of the
transactions described therein, including, without limitation, the Loan, sums
advanced to pay overdrafts on any account maintained by Borrower with Bank,
reimbursement obligations for outstanding letters of credit or banker's
acceptances issued for the account of Borrower or its Subsidiaries, amounts paid
by Bank under letters of credit or drafts accepted by Bank for the account of
Borrower or its Subsidiaries, together with all interest accruing thereon, all
existing and future obligations under any swap agreements as defined in 11
U.S.C.§101 between Bank or any affiliate of Bank and Borrower whenever executed,
all fees, all costs of collection, attorneys' fees and expenses of or advances
by Bank which Bank pays or incurs in discharge of obligations of Borrower or to
inspect, repossess, protect, preserve, store or dispose of any Collateral,
whether such amounts are now due or hereafter become due, direct or indirect and
whether such amounts due are from time to time reduced or entirely extinguished
and thereafter re-incurred. 

     “Instrument” has the meaning set
forth in the Code. 

     “Interest Period” shall have the
meaning set forth in the Note 

     "Inventory" has the meaning set
forth in the Code.

     “Investment Property” has the
meaning set forth in the Code. 

     "Item" means any "item" as defined in Section 4-104 of the
Code, and shall also mean and include checks, drafts, money orders or other
media of payment. 

     “Jurisdiction” means the State of
New Jersey. 

     “Letter-of-Credit Right” has the
meaning set forth in the Code. 

     “LIBOR Rate” shall have the
meaning set forth in the Note.

     "Lien" means any mortgage, pledge, statutory lien or other
lien arising by operation of law, security interest, trust arrangement, security
deed, financing lease, collateral assignment or other encumbrance, conditional
sale or title retention agreement, or any other interest in property designed to
secure the repayment of Indebtedness, whether arising by agreement or under any
statute or law or otherwise. 

     "Loan" means the revolving credit
facility identified in Section 2.1 hereof.

     "Loan Documents" means this Agreement, any other Security Agreement, any
Note, any Pledge Agreement, the Advance Requests, Borrowing Base Certificates,
UCC-1 financing statements and all other documents and instruments now or
hereafter evidencing, describing, guaranteeing or securing the Indebtedness
contemplated hereby or delivered in connection herewith, as they may be
modified, amended, extended, renewed or substituted from time to time, but does
not include swap agreements (as defined in 11 U.S.C. § 101) . 

     "Material Adverse
Effect" means any (i) material adverse
effect upon the validity, performance or enforceability of any of the Loan
Documents or any of the transactions contemplated hereby or thereby, (ii)
material adverse effect upon the properties, business, or condition (financial
or otherwise) of Borrower and/or any other Person obligated under any of the
Loan Documents, or (iii) material adverse effect upon the ability of Borrower or
any other Person to fulfill any obligation under any of the Loan Documents.


     "Maximum Loan Amount" means
$10,000,000. 

4




     "Note" shall have the meaning set forth in Section 2.2 and any
other promissory note now or hereafter evidencing any Indebtedness, and all
modifications, extensions and renewals thereof. 

     "Permitted Debt" means (a) the Indebtedness; and (b) any other Debt
listed on Exhibit 1.1C hereto (if any) and any extensions, renewals,
replacements, modifications and refundings of any such Debt if, and to the
extent, permitted by Exhibit 1.1C; provided, however, that the aggregate amount
of such Debt may not exceed $1,000,000.00.

     "Permitted Liens" means (a) Liens securing the Indebtedness; (b) Liens
for taxes and other statutory Liens, landlord's Liens and similar Liens arising
out of operation of law (provided they are subordinate to Bank's Liens on the
Collateral) so long as the obligations secured thereby are not past due or are
being contested and the proceedings contesting such obligations have the effect
of preventing the forfeiture or sale of the property subject to such Lien; (c)
Liens described on Exhibit 1.1D hereto (if any), provided, however, that no debt
not now secured by such Liens shall become secured by such Liens hereafter and
such Liens shall not encumber any other assets. 

     "Person" means any natural person, corporation, unincorporated
organization, trust, joint-stock company, joint venture, association, company,
limited or general partnership, limited liability company, any government or any
agency or political subdivision of any government, or any other entity or
organization. 

     “Pledge Documents” means a Pledge Agreement, duly endorsed stock
certificate or such other documents as may be required to evidence, confirm or
secure a pledge of stock in accordance with a Pledge Agreement. 

     "Prime Rate" shall have the
meaning set forth in the Note. 

     "Projections" means Borrower's forecasted consolidated and
consolidating (i) balance sheets, (ii) profit and loss statements, (iii) cash
flow statements, and (iv) capitalization statements, all prepared on a month by
month basis and on a consistent basis with Borrower's historical financial
statements, together with appropriate supporting details and a statement of
underlying assumptions. 

     "Regulated
Materials" means any hazardous, toxic or
dangerous waste, substance or material, the generation, handling, storage,
disposal, treatment or emission of which is subject to any Environmental Law.


     “Reserves” means such amounts as may be reasonably required by Bank
at any time and from time to time in Bank’s reasonable discretion without prior
notice to Borrower, to reserve against Borrower’s obligations to Bank or its
affiliates or any other obligations by Borrower, whether direct or contingent.


     "Revolving Credit
Period" means the period from and
including the date of this Agreement to but not including the Termination Date.


     "Security
Agreement" means this Agreement as it
relates to a security interest in the Collateral, and any other mortgage
instrument, security agreement or similar instrument now or hereafter executed
by Borrower or other Person granting Bank a security interest in any Collateral
to secure the Indebtedness. 

     "Solvent" means, as to any Person, that such Person has capital
sufficient to carry on its business and transactions in which it is currently
engaged and all business and transactions in which it is about to engage, is
able to pay its debts as they mature, and has assets having a fair valuation
greater than its liabilities, at fair valuation. 

5




     "Subsidiary" means any corporation, partnership or other entity in
which Borrower, directly or indirectly, owns more than fifty percent (50%) of
the stock, capital or income interests, or other beneficial interests, or which
is effectively controlled by such Person. 

     “Supporting Obligation” has the
meaning set forth in the Code. 

     "Termination Date" means three (3)
years from the date of this Agreement, or May 21, 2011. 

     “Yield Maintenance Fee” shall have
the meaning set forth in the Note. 

1.2. Financial Terms. All financial terms used herein
shall have the meanings assigned to them under GAAP unless another meaning shall
be specified. 

6




EXHIBIT 1.1A 

Additional
Collateral 

NONE 

1




EXHIBIT 1.1B 

Additional Ineligible
Accounts 

NONE. 

1




EXHIBIT 1.1C

Permitted
Debt 

     The
following shall be additional Permitted Debt, provided that in no event shall
the aggregate of all Permitted Debt, as set forth in items 1 through 12 below,
exceed $1,000,000.00 at any time during the term of the Loan: 

     1. Debt incurred to purchase
Equipment, provided that the amount of such debt shall not at any time exceed
the purchase price of the Equipment purchased. 

     2. Debt payable to suppliers and
other trade creditors in the ordinary course of business on ordinary and
customary trade terms and which is not past due. 

     3. Debt of any Subsidiary to
Borrower or another Subsidiary. 

     4. Endorsement of checks for
collection in the ordinary course of business.

     5. Debt of any Borrower to another
Borrower.

     6. Debt of any Subsidiary of
Borrower to any Borrower.

     7. Debt of any Borrower to any
Subsidiary of Borrower. 

     8. Purchase money Indebtedness,
including Capitalized Lease Obligations

     9.
Deferred taxes and other expenses incurred in the ordinary course of Borrower’s
business;

     10.
Operational expenses which are included on a balance sheet as liabilities
pursuant to GAAP, and which are incurred in the ordinary course of Borrower’s
business;

     11. Debt arising under operating
leases, and

     12.
Other Indebtedness existing on the Closing Date and listed in the most recent
financial statement delivered to Lender or otherwise disclosed to Lender in
writing prior to the Closing Date. 

1




EXHIBIT 1.1D 

Permitted
Liens 

     The following shall be additional
Permitted Liens: 

     1. Deposits made in the ordinary
course of business in connection with workers' compensation, unemployment
insurance, social security and similar laws. 

     2. Attachment, judgment and other
similar non-tax Liens arising in connection with court proceedings but only if
and for so long as (a) the execution or enforcement of such Liens is and
continues to be effectively stayed and bonded on appeal, (b) the validity and/or
amount of the claims secured thereby are being actively contested in good faith
by appropriate legal proceedings and (c) such Liens do not, in the aggregate,
materially detract from the value of the assets of the Person whose assets are
subject to such Lien or materially impair the use thereof in the operation of
such Person's business. 

     3. Liens securing Permitted Debt
incurred solely for the purpose of financing the acquisition of Equipment,
provided that such Lien does not secure more than the purchase price of such
Equipment and does not encumber property other than the purchased property.


1





EXHIBIT 4.3 

Contingent
Liabilities 

NONE. 

1




EXHIBIT 4.4 

Litigation

Indus Partners v. Intelligroup, Inc.


1




EXHIBIT 4.9

Offices of
Borrower

499 Thornall Street,
11th floor, Edison, NJ 08837

1




EXHIBIT 4.14 

List of
Subsidiaries

Intelligroup Asia Private, Ltd., a
corporation formed pursuant to the laws of India 

Intelligroup Europe Limited, a
corporation formed pursuant to the laws of the United Kingdom

Intelligroup Japan Co., Ltd. a
corporation formed pursuant to the laws of Japan

Intelligroup Nordic A/S a corporation
formed pursuant to the laws of Denmark 

1




EXHIBIT 4.15

Environmental
Disclosures

NONE.

1




EXHIBIT 4.18 

Names; Mergers;
Acquisitions

Empower, Inc. uses the name “Empower
Solutions” in certain markets 

1




EXHIBIT 4.22

Additional
Representations

None.

1




EXHIBIT 5.6

COMPLIANCE
CERTIFICATE

To: HSBC Bank USA, National Association
(the “Bank”) 

The undersigned, on behalf of
INTELLIGROUP, INC. and EMPOWER,
INC. (collectively, the “Borrower”), hereby
certifies to the Bank that: (i) he is an officer authorized to execute and
deliver this certificate on behalf of the Borrower, and is familiar with the
business and financial condition of the Borrower; (ii) the financial statements
delivered with this Certificate fairly present in all material respects the
combined results of operations and financial condition of the Borrower; and
(iii) to the best of my knowledge and belief, after reasonable investigation,
each of the following statements is true and correct as of the date hereof: (a)
no Event of Default, or event which with the giving of notice, passage of time,
or both, would constitute and Event of Default, has occurred or is continuing,
(b) no material adverse change in the financial condition of the Borrower has
occurred or is continuing, and (c) the attached annexations, which are hereby
incorporated herein by reference, are accurate, true and correct, and do not
fail to state any material fact known (or should have been known) to the
Borrower which would, but for the lapse of time, make any such statement or
calculation false in any respect. 

Date: ___________________

	Signature (for each Borrower)  
	 
	Printed
      Name  
	 
	Title 
  



INSTRUCTIONS: IN ACCORDANCE WITH THE
TERMS OF THAT CERTAIN REVOLVING CREDIT AND SECURITY AGREEMENT BETWEEN THE
BORROWER AND THE BANK (TO WHICH THIS ORIGINAL FORM OF COMPLIANCE CERTIFICATE IS
ATTACHED AS EXHIBIT 5.6 (THE “LOAN AGREEMENT”)), THIS COMPLIANCE CERTIFICATE AND
THE ATTACHED ANNEXATIONS MUST BE COMPLETED BY YOU. 

1




LEVERAGE RATIO
ANNEX TO COMPLIANCE CERTIFICATE
(Exhibit 5.6 to Loan
Agreement) 

Borrower’s “Leverage Ratio” shall not
be greater than 2.50 to 1.00

For purposes hereof, “Leverage Ratio”
shall mean the ratio of all Funded Debt to EBITDA. "Funded Debt" shall mean, as
applied to any person, the sum of all indebtedness for borrowed money
(including, without limitation, capital lease obligations, subordinated debt,
and issued letters of credit) or evidenced by a note, bond, debenture or similar
instrument of that person as determined in accordance with GAAP and on a
trailing four quarter basis (in each case, the ratio shall be determined on the
day indicated or as of the last day of the period indicated for the four quarter
period ending on such day).

As of ____________________ (insert
measuring end date) for the prior trailing four quarter period: 

	(a) total Funded Debt for borrowed
      money	 	$____________
	net after-tax income	$____________	
	taxes (+)	$____________	
	interest (+)	$____________	
	depreciation (+)	$____________	
	amortization (+)	$____________	
	other non-cash charges (+)	$____________	
	 		
	(b) EBITDA (=)		$____________



Funded Debt to EBITDA Ratio (a/b)
_____________ to

In Compliance?    
Yes/No

1




FIXED CHARGE COVERAGE RATIO
ANNEX TO
COMPLIANCE CERTIFICATE
(Exhibit 5.6 to Loan
Agreement) 

Borrower’s "Fixed Charge Coverage
Ratio" shall be not less than 1.20 to 1.00 on a combined basis. For purposes
hereof, "Fixed Charge Coverage Ratio" shall have the meaning given to such term
in the Loan Agreement. 

As of _________________ (insert
quarterly end date):

Net after-tax income
$_______________

taxes (+) $_______________

interest expense(+)
$_______________

depreciation (+)
$_______________

amortization (+)
$_______________

(a) Total EBITDA (=)
$_______________

payments of principal on indebtedness
other than the Loan (+) $_______________

taxes paid in cash (+)
$_______________

interest expense (+)
$_______________

capital lease obligations (+)
$_______________

dividends and distributions paid (+)
$_______________

unfunded capital expenditures (+)
$_______________

(b) Total fixed charges (=)
$_______________

Fixed Charge Coverage Ratio (a/b)
__________ to 1. 

In Compliance?    
Yes / No 

2




POSITIVE NET INCOME
ANNEX TO COMPLIANCE CERTIFICATE
(Exhibit 5.6 to Loan
Agreement)

     Borrower shall maintain a positive
net income on an annual consolidated basis tested quarterly on a rolling trailing four quarter basis. 

     As of_________________ (insert
quarterly end date)

     Quarterly net income
$__________________________


In Compliance?    
Yes / No 




EXHIBIT 6.3

Permitted Dividends and
Distributions

NONE.




EXHIBIT 10.17

Additional
Terms

1. Post Closing Obligations: 

     (a) Within ninety (90) days from the
date of this Agreement, Borrower shall provide Bank with an Opinion of Counsel
satisfactory to Bank as to each of the foreign Subsidiaries of Borrower listed
on Exhibit 4.14 and the Pledge Documents, pledging 65% of the stock of each
foreign Subsidiary. 

     (b) Within ninety (90) days from the
date of this Agreement, Borrower shall provide Bank with the following, as to
each of the foreign Subsidiaries of Borrower listed on Exhibit 4.14: (i) a
certificate of good standing, or similar document; (ii) a corporate resolution,
or similar document; (iii) a Secretary’s Certificate, or similar document; (iv)
a certified copy of the Certificate of Incorporation; and (v) bylaws, or similar
document. 

     (c) Within five (5) business days
from the date of this Agreement, Borrower shall provide Bank with original
executed, properly acknowledged signature pages for all of the Loan Documents,
Organizational documents of Borrower and any and all other documents executed in
connection with the Loan. 

     (d) Within five (5) business days
from the date of this Agreement, Borrower shall provide Bank with a certified
copy of the Certificate of Incorporation for each Borrower. 

     (e) Within two (2) business days
from the date of this Agreement, Borrower shall provide Bank with an original
fully executed Landlord Waiver and Agreement and original insurance
certificate(s). 

     (f) Borrower shall provide Bank with
such additional assurances as may be requested by Bank subsequent to Bank’s
receipt and review of each of the requirements set forth in Section 1(a) through
1(e) of this Exhibit 10.17. 

2. Payment of Additional Costs: In the
event that Bank incurs any cost, fee, expense or charge of any kind, including
reasonable attorneys fees, (collectively “Costs”) (a) as a result of Bank’s or
Borrower’s obligations pursuant to the Payoff Letter from Steel City Capital
Funding dated May 21, 2008, or the PNC Blocked Account Agreement dated May 22,
2008; or (b) in connection with the Post Closing Obligations set forth at
Section 1 of this Exhibit 10.17, Borrower shall immediately reimburse Bank for
all such Costs upon demand by Bank. Borrower’s failure to reimburse Bank for the
Costs, upon demand, shall be an Event of Default hereunder and Bank, at its
option, in addition to the remedies available to Bank at Section 8.2.