Document:

SERANOVA, INC.,

                                   AS BORROWER

                                       AND

                           FLEET CAPITAL CORPORATION,

                                    AS LENDER

                           LOAN AND SECURITY AGREEMENT

                              Dated: July 14, 2000

                                 $15,000,000.00

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               --------------------------------------------------

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                            FLEET CAPITAL CORPORATION

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<PAGE>

                                TABLE OF CONTENTS

SECTION 1.  CREDIT FACILITY.................................................1
        1.1     Revolving Credit Loans......................................1
        1.2     Letter of Credit; LC Guaranties.............................1

SECTION 2.  INTEREST, FEES AND CHARGES......................................2
        2.1     Interest....................................................2
        2.2     Computation of Interest and Fees............................2
        2.3     Letter of Credit and LC Guaranty Fees.......................2
        2.4     Facility Fee................................................3
        2.5     Collection Charges..........................................3
        2.6     Unused Line Fee.............................................3
        2.7     Audit and Appraisal Fees....................................3
        2.8     Waiver of Fees..............................................3
        2.9     Reimbursement of Expenses...................................3
        2.10    Bank Charges................................................4

SECTION 3.  LOAN ADMINISTRATION.............................................4
        3.1     Manner of Borrowing Revolving Credit Loans..................4
        3.2     Payments....................................................4
        3.3     Proceeds of Sale, Loss, Destruction or Condemnation
                of Collateral...............................................5
        3.4     Application of Payments and Collections.....................5
        3.5     All Loans to Constitute One Obligation......................5
        3.6     Loan Account................................................5
        3.7     Statements of Account.......................................6

SECTION 4.  TERM AND TERMINATION............................................6
        4.1     Term of Agreement...........................................6
        4.2     Termination.................................................6

SECTION 5.  SECURITY INTERESTS..............................................7
        5.1     Security Interest in Collateral.............................7
        5.2     Lien Perfection; Further Assurances.........................7
        5.3     Pledge of Stocks............................................8

SECTION 6.  COLLATERAL ADMINISTRATION.......................................8
        6.1     General.....................................................8
        6.2     Administration of Accounts..................................8
        6.3     Administration of Inventory................................10
        6.4     Administration of Equipment................................10
        6.5     Payment of Charges.........................................10

SECTION 7.  REPRESENTATIONS AND WARRANTIES.................................10
        7.1     General Representations and Warranties.....................10
        7.2     Continuous Nature of Representations and Warranties........15
        7.3     Survival of Representations and Warranties.................15

SECTION 8.  COVENANTS AND CONTINUING AGREEMENTS............................15
        8.1     Affirmative Covenants......................................15
        8.2     Negative Covenants.........................................17
        8.3     Specific Financial Covenants...............................20

                                      (i)
<PAGE>

SECTION 9.  CONDITIONS PRECEDENT...........................................20
        9.1     Documentation..............................................21
        9.2     No Default.................................................21
        9.3     Other Loan Documents.......................................21
        9.4     Availability...............................................21
        9.5     No Litigation..............................................21
        9.6     Spin-off...................................................21

SECTION 10. EVENTS OF DEFAULT; RIGHTS AND REMEDIES ON DEFAULT..............21
        10.1   Events of Default...........................................21
        10.2   Acceleration of the Obligations.............................23
        10.3   Other Remedies..............................................23
        10.4   Remedies Cumulative; No Waiver..............................24

SECTION 11. MISCELLANEOUS..................................................24
        11.1   Power of Attorney...........................................24
        11.2   Indemnity...................................................25
        11.3   Modification of Agreement; Sale of Interest.................25
        11.4   Severability................................................25
        11.5   Successors and Assigns......................................25
        11.6   Cumulative Effect; Conflict of Terms........................25
        11.7   Execution in Counterparts...................................26
        11.8   Notice......................................................26
        11.9   Lender's Consent............................................26
        11.10  Credit Inquiries............................................27
        11.11  Time of Essence.............................................27
        11.12  Entire Agreement............................................27
        11.13  Interpretation..............................................27
        11.14  Governing Law; Consent to Forum.............................27
        11.15  Waiver by Borrower..........................................28

                                      (ii)
<PAGE>

                           LOAN AND SECURITY AGREEMENT

     THIS LOAN AND SECURITY  AGREEMENT is made this 14th day of July,  2000,  by
and between FLEET CAPITAL  CORPORATION  ("Lender"),  a Rhode Island  corporation
with an  office  at 1125  Route 22 West,  Bridgewater,  New  Jersey  08807;  and
SERANOVA,  INC. ("Borrower"),  a New Jersey corporation with its chief executive
office and  principal  place of business at 499  Thornall  Street,  Edison,  New
Jersey  08837.  Capitalized  terms  used in this  Agreement  have  the  meanings
assigned  to them in  Appendix  A,  General  Definitions.  Accounting  terms not
otherwise specifically defined herein shall be construed in accordance with GAAP
consistently applied.

SECTION 1.    CREDIT FACILITY

     Subject  to  the  terms  and  conditions  of,  and  in  reliance  upon  the
representations  and  warranties  made in,  this  Agreement  and the other  Loan
Documents,  Lender  agrees  to make a Total  Credit  Facility  of up to  Fifteen
Million  ($15,000,000.00) Dollars available upon Borrower's request therefor, as
follows:

     1.1    Revolving Credit Loans.
            ----------------------

          1.1.1  Loans and Reserves.  Lender agrees, for  so long as no  Default
                 ------------------
or Event of Default exists, to make Revolving Credit Loans to Borrower from time
to time,  as requested by Borrower in the manner set forth in  subsection  3.1.1
hereof,  up to a maximum  principal amount at any time outstanding  equal to the
Borrowing Base at such time minus reserves,  if any. Lender shall have the right
to establish  reserves in such  amounts,  and with respect to such  matters,  as
Lender  shall deem  necessary  or  appropriate,  against the amount of Revolving
Credit Loans which Borrower may otherwise  request under this subsection  1.1.1,
including,  without limitation, with respect to (i) price adjustments,  damages,
unearned  discounts,  returned  products  or  other  matters  for  which  credit
memoranda are issued in the ordinary course of Borrower's  business;  (ii) other
sums chargeable  against Borrower's Loan Account as Revolving Credit Loans under
any section of this Agreement;  (iii) amounts owing by Borrower to any Person to
the extent  secured by a Lien on, or trust over,  any Property of Borrower;  and
(iv) such other matters, events, conditions or contingencies as to which Lender,
in its sole credit judgment, determines reserves should be established from time
to time hereunder.  In the event of any adjustment under this subsection  1.1.1,
Lender shall give Borrower five (5) Business Days' prior written notice.

          1.1.2  Use of  Proceeds.  The  Revolving  Credit  Loans  shall be used
                 ----------------
solely for Borrower's  general  operating  capital needs in a manner  consistent
with the provisions of this Agreement and all applicable laws.

     1.2    Letter of Credit; LC Guaranties.  Lender agrees, for so  long as  no
            --------------------------------
Default or Event of Default  exists and if requested by Borrower,  to (i) issue,
or cause to be issued by its  Affiliates,  Letters of Credit for the  account of
Borrower or (ii) execute LC Guaranties  by which Lender or its  Affiliate  shall
guaranty the payment or performance by Borrower of its reimbursement obligations
with respect to Letters of Credit, provided that the LC Amount at any time shall
                                   --------
not  exceed  $3,000,000.00.  No Letter of  Credit  or LC  Guarantee  may have an
expiration  date  that is after  the last day of the  Original  Term or the then
applicable  Renewal Term. Any amounts paid by Lender under any LC Guaranty or in
connection with any Letter of Credit shall be treated as Revolving Credit Loans,
shall be secured by all of the Collateral and shall bear interest and be payable
at the same rate and in the same manner as Revolving Credit Loans.

<PAGE>

SECTION 2.    INTEREST, FEES AND CHARGES

     2.1    Interest.
            --------

          2.1.1  Rates of Interest.  Interest  shall  accrue  on  the  principal
                 -----------------
amount of the  Revolving  Credit Loans  outstanding  at the end of each day at a
fluctuating rate per annum equal to one-half of one (1/2%) percent plus the Base
                                                                   ----
Rate.  The rate of interest shall increase or decrease by an amount equal to any
increase or decrease in the Base Rate, effective without notice to the Borrower,
as of the  opening of  business on the day that any such change in the Base Rate
occurs.

          2.1.2  Default Rate of Interest.  Upon and after the occurrence  of an
                 ------------------------
Event of Default,  and during the continuation  thereof, the principal amount of
all Loans shall bear  interest  at a rate per annum  equal to four (4%)  percent
above the Base Rate (the "Default Rate").

          2.1.3  Maximum  Interest.  In no event whatsoever shall the  aggregate
                 -----------------
of all amounts deemed  interest  hereunder and charged or collected  pursuant to
the terms of this Agreement  exceed the highest rate  permissible  under any law
which a court of competent  jurisdiction shall, in a final  determination,  deem
applicable  hereto.  If any provisions of this Agreement are in contravention of
any such law, such provisions shall be deemed amended to conform thereto.

     2.2    Computation of Interest and Fees.  Interest and unused line fees and
            --------------------------------
collection  charges hereunder shall be calculated daily and shall be computed on
the actual  number of days elapsed  over a year of 360 days.  For the purpose of
computing interest  hereunder,  all items of payment received by Lender shall be
deemed applied by Lender on account of the Obligations (subject to final payment
of such items) on the second  Business Day after receipt by Lender of such items
in Lender's account located in Bridgewater, New Jersey.

     2.3    Letter of Credit and LC Guaranty Fees. Borrower shall pay to Lender:
            -------------------------------------

                (i)     for   standby  Letters  of   Credit  and  LC  Guaranties
of standby Letters of Credit,  2% per annum of the aggregate face amount of such
Letters of Credit and LC  Guaranties  outstanding  from time to time  during the
term of this Agreement,  plus all normal and customary  charges  associated with
the issuance  thereof,  which fees and charges shall be deemed fully earned upon
issuance of each such Letter of Credit or LC Guaranty,  shall be due and payable
on the first  Business  Day of each  month and shall not be subject to rebate or
proration upon the termination of this Agreement for any reason; and

                (ii)    for  documentary  Letters of Credit and LC Guaranties of
documentary Letters of Credit, a fee equal to 1% per annum of the face amount of
each such Letter of Credit or LC  Guaranty,  payable  upon the  issuance of such
Letter of Credit or execution of such LC Guaranty and an additional fee equal to
1% per annum of the face amount of such Letter of Credit or LC Guaranty  payable
upon each  renewal  thereof  and each  extension  thereof  plus the  normal  and
customary charges  associated with the issuance and  administration of each such
Letter of Credit or LC Guaranty  (which fees and charges  shall be fully  earned
upon issuance,  renewal or extension (as the case may be) of each such Letter of
Credit or LC  Guaranty,  shall be due and payable on the first  Business  Day of
each month, and shall not be subject to rebate or proration upon the termination
of this Agreement for any reason).

                                      -2-
<PAGE>

     2.4    Facility Fee.  Subject  to  subsection 2.6,  Borrower  shall pay  to
            ------------
Lender a facility fee of $75,000,  which shall be fully earned and nonrefundable
on the Closing Date and paid in twelve (12) equal installments.

     2.5    Collection Charges.  If items of payment are received by Lender at a
            ------------------
time when there are no Revolving Credit Loans outstanding, such items of payment
shall be subject to a collection  charge equal to two (2) days'  interest on the
amount thereof at the rate then applicable to the Revolving  Credit Loan,  which
collection charges shall be payable on the first Business Day of each month.

     2.6    Unused Line Fee.  Subject to  subsection 2.6,  Borrower shall pay to
            -----------------
Lender a fee  equal to  three-eighths  of one  percent  (3/8%)  per annum of the
average monthly amount by which the Total Credit Facility exceeds the sum of the
outstanding principal balance of the Revolving Credit Loans. The unused line fee
shall be payable  monthly in  arrears  on the first day of each  calendar  month
hereafter.

     2.7    Audit and Appraisal Fees.  Borrower  shall pay to Lender  audit  and
            -------------------------
appraisal  fees  of  $750.00  per  man per day in  connection  with  audits  and
appraisals  of  Borrower's  books and records  and such other  matters as Lender
shall deem appropriate,  plus all reasonable  out-of-pocket expenses incurred by
Lender in connection  with such audits and appraisals;  provided,  that Borrower
shall not be  obligated  to pay any such  audit  fees in excess of $8,000  (this
limitation shall not include any pre-closing field  examinations,  or reasonable
out-of-pocket  expenses)  during any fiscal year in which no Default or Event of
Default shall have occurred. Audit fees shall be payable on the first day of the
month  following the date of issuance by Lender of a request for payment thereof
to Borrower.

     2.8    Waiver of Fees.  In the event the  Borrower has  a public  offering,
            --------------
during such time that the  Borrower  maintains  deposits of at least Ten Million
($10,000,000.00) Dollars with Fleet Bank, N.A., and has fully paid to the Lender
all of  Borrower's  Obligations,  the Borrower  shall not be required to pay any
fees due under subsections 2.5 and 2.6 of this Agreement.

     2.9    Reimbursement of Expenses.  If, at any time or times  regardless  of
            -------------------------
whether  or not an Event of Default  then  exists,  Lender or any  Participating
Lender incurs legal or accounting  expenses or any other costs or  out-of-pocket
expenses  in  connection  with  (i)  the  negotiation  and  preparation  of this
Agreement or any of the other Loan  Documents,  any amendment of or modification
of this Agreement or any of the other Loan  Documents,  or any sale or attempted
sale of any interest herein to a Participating  Lender;  (ii) the administration
of this  Agreement  or any of the  other  Loan  Documents  and the  transactions
contemplated hereby and thereby; (iii) any litigation,  contest,  dispute, suit,
proceeding  or action  (whether  instituted  by  Lender,  Borrower  or any other
Person) in any way  relating to the  Collateral,  this  Agreement  or any of the
other Loan  Documents  or  Borrower's  affairs;  (iv) any attempt to enforce any
rights of Lender  or any  Participating  Lender  against  Borrower  or any other
Person which may be  obligated  to Lender by virtue of this  Agreement or any of
the other Loan Documents, including, without limitation, the Account Debtors; or
(v) any attempt to inspect, verify, protect,  preserve,  restore, collect, sell,
liquidate or otherwise dispose of or realize upon the Collateral;  then all such
legal and accounting expenses,  other costs and out of pocket expenses of Lender
shall be charged to  Borrower.  All amounts  chargeable  to Borrower  under this
Section  2.9 shall be  Obligations  secured by all of the  Collateral,  shall be
payable on demand to Lender or to such Participating Lender, as the case may be,
and shall bear  interest from the date such demand is made until paid in full at
the rate applicable to Revolving Credit Loans from time to time.  Borrower shall
also reimburse Lender for expenses  incurred by Lender in its  administration of
the Collateral to the extent and in the manner provided in Section 6 hereof.

                                      -3-
<PAGE>

     2.10   Bank Charges.  Borrower  shall pay to Lender, on demand, any and all
            ------------
fees, costs or expenses which Lender or any Participating  Lender pays to a bank
or other similar institution  (including,  without limitation,  any fees paid by
Lender to any Participating Lender) arising out of or in connection with (i) the
forwarding  to Borrower or any other Person on behalf of Borrower,  by Lender or
any  Participating  Lender,  of  proceeds  of loans  made by Lender to  Borrower
pursuant to this Agreement and (ii) the depositing for collection,  by Lender or
any Participating  Lender, of any check or item of payment received or delivered
to Lender or any Participating Lender on account of the Obligations.

SECTION 3.    LOAN ADMINISTRATION.

     3.1    Manner of Borrowing Revolving Credit  Loans.  Borrowings  under  the
            ---------------------------------------------
credit facility established pursuant to Section 1 hereof shall be as follows:

          3.1.1  Loan Requests.  A request for a Revolving  Credit Loan shall be
                 -------------
made, or shall be deemed to be made, in the following  manner:  (i) Borrower may
give Lender notice of its intention to borrow,  in which notice  Borrower  shall
specify the amount of the proposed borrowing and the proposed borrowing date, no
later than 11:00 a.m. New York City time on the proposed borrowing date together
with the Borrowing Base Certificate, provided, however, that no such request may
                                     --------
be made at a time when there  exists a Default or an Event of Default;  and (ii)
the becoming due of any amount required to be paid under this Agreement, whether
as interest or for any other  Obligation,  shall be deemed  irrevocably  to be a
request  for a Revolving  Credit Loan on the due date in the amount  required to
pay such interest or other Obligation.  As an accommodation to Borrower,  Lender
may  permit  telephonic  requests  for  loans  and  electronic   transmittal  of
instructions,  authorizations,  agreements  or  reports  to Lender by  Borrower.
Unless Borrower specifically directs Lender in writing not to accept or act upon
telephonic  or electronic  communications  from  Borrower,  Lender shall have no
liability to Borrower for any loss or damage suffered by Borrower as a result of
Lender's honoring of any requests, execution of any instructions, authorizations
or agreements or reliance on any reports  communicated to it  telephonically  or
electronically and purporting to have been sent to Lender by Borrower and Lender
shall  have no duty to  verify  the  origin  of any  such  communication  or the
authority of the person sending it.

          3.1.2  Disbursement.  Borrower hereby irrevocably authorizes Lender to
                 ------------
disburse the proceeds of each Revolving  Credit Loan requested,  or deemed to be
requested,  pursuant to this  subsection  3.1.2 as follows:  (i) the proceeds of
each  Revolving  Credit  Loan  requested  under  subsection  3.1.1(i)  shall  be
disbursed  by  Lender  in  lawful  money of the  United  States  of  America  in
immediately available funds, in the case of the initial borrowing, in accordance
with the terms of the written disbursement letter from Borrower, and in the case
of each  subsequent  borrowing,  by wire transfer to such bank account as may be
agreed upon by Borrower and Lender from time to time or elsewhere if pursuant to
a written  direction  from  Borrower;  and (ii) the  proceeds of each  Revolving
Credit Loan requested under subsection 3.1.1(ii) shall be disbursed by Lender by
way of direct payment of the relevant interest or other Obligation.

          3.1.3  Authorization.  Borrower hereby  irrevocably authorizes Lender,
                 -------------
in Lender's sole discretion, to advance to Borrower, and to charge to Borrower's
Loan Account  hereunder as a Revolving  Credit Loan, a sum sufficient to pay all
interest accrued on the Obligations  during the immediately  preceding month and
to pay all  costs,  fees and  expenses  at any time owed by  Borrower  to Lender
hereunder.

     3.2    Payments.  Except  where  evidenced  by  notes or other  instruments
            --------
issued or made by Borrower to Lender specifically  containing payment provisions
which are in conflict with this

                                      -4-
<PAGE>

Section 3.2 (in which event the  conflicting  provisions  of said notes or other
instruments  shall  govern  and  control),  the  Obligation  shall be payable as
follows:

          3.2.1  Principal. Principal  payable on  account of  Revolving  Credit
                 ---------
Loans shall be payable by Borrower to Lender  immediately  upon the  earliest of
(i) the receipt by Lender or Borrower of any proceeds of any of the  Collateral,
to the extent of said  proceeds,  (ii) the  occurrence of an Event of Default in
consequence of which Lender elects to accelerate the maturity and payment of the
Obligations,  or (iii)  termination  of this  Agreement  pursuant  to  Section 4
hereof;  provided,  however,  that if an  Overadvance  shall  exist at any time,
         --------   -------
Borrower shall, on demand, repay the Overadvance.

          3.2.2  Interest.  Interest accrued on the Revolving Credit Loans shall
                 --------
be due on the  earliest  of (i) the first  calendar  day of each  month (for the
immediately  preceding  month),  computed  through the last  calendar day of the
preceding  month,  (ii) the  occurrence of an Event of Default in consequence of
which Lender elects to accelerate the maturity and payment of the Obligations or
(iii) termination of this Agreement pursuant to Section 4 hereof.

          3.2.3  Costs,  Fees  and  Charges.  Costs,  fees  and  charges payable
                 --------------------------
pursuant to this Agreement  shall be payable by Borrower as and when provided in
Section 2 hereof,  to Lender  or to any  other  Person  designated  by Lender in
writing.

          3.2.4  Other Obligations. The balance of the Obligations requiring the
                 -----------------
payment of money,  if any,  shall be payable by  Borrower  to Lender as and when
provided in this Agreement,  the Other Agreements or the Security Documents,  or
on demand, whichever is later.

     3.3    Proceeds of  Sale, Loss, Destruction  or Condemnation of Collateral.
            -------------------------------------------------------------------
Except as provided in  subsection  6.4.2  hereof,  if Borrower  sells any of the
Equipment  or if any of  the  Collateral  is  lost  or  destroyed  or  taken  by
condemnation,  Borrower shall pay to Lender,  unless otherwise agreed by Lender,
as and  when  received  by  Borrower  a sum  equal  to the  proceeds  (including
insurance  payments)  received by Borrower from such sale, loss,  destruction or
condemnation.

     3.4    Application of Payments  and  Collections.  All  items  of   payment
            -----------------------------------------
received by Lender by 12:00 noon,  New York City time, on any Business Day shall
be deemed  received on that  Business Day. All items of payment  received  after
12:00 noon, New York City time, on any Business Day shall be deemed  received on
the following Business Day. Borrower  irrevocably waives the right to direct the
application  of any  and all  payments  and  collections  at any  time or  times
hereafter  received by Lender from or on behalf of Borrower,  and Borrower  does
hereby  irrevocably agree that Lender shall have the continuing  exclusive right
to apply and reapply any and all such payments and  collections  received at any
time or times hereafter by Lender or its agent against the Obligations,  in such
manner as Lender may deem  advisable,  notwithstanding  any entry by Lender upon
any of its books and  records.  If as the result of  collections  of Accounts as
authorized  by  subsection  6.2.6  hereof a credit  balance  exists  in the Loan
Account, such credit balance shall not accrue interest in favor of Borrower, but
shall be available to Borrower at any time or times for so long as no Default or
Event of Default exists.

     3.5    All  Loans to Constitute One  Obligation. The Loans shall constitute
            ----------------------------------------
one general  Obligation of Borrower,  and shall be secured by Lender's Lien upon
all of the Collateral.

     3.6    Loan Account. Lender  shall enter all  Loans  as debits  to the Loan
            ------------
Account and shall also record in the Loan Account all payments  made by Borrower
on any  Obligations  and all  proceeds of  Collateral  which are finally paid to
Lender,  and  may  record  therein,  in  accordance  with  customary  accounting
practice,  other  debits and  credits,  including  interest  and all charges and
expenses properly chargeable to Borrower.

                                      -5-
<PAGE>

     3.7    Statements of Account.  Lender will account to Borrower monthly with
            ---------------------
a statement of Loans, charges and payments made pursuant to this Agreement,  and
such account  rendered by Lender shall be deemed final,  binding and  conclusive
upon  Borrower  unless Lender is notified by Borrower in writing to the contrary
within 30 days of the date each  accounting  is mailed to Borrower.  Such notice
shall  only be deemed an  objection  to those  items  specifically  objected  to
therein.

SECTION 4.     TERM AND TERMINATION

     4.1    Term of Agreement. Subject to Lender's right to cease making  Loans
            -----------------
to  Borrower upon  or after the  occurrence of any  Default or Event of Default,
this Agreement  shall be in effect for a period of three (3) years from the date
hereof,  through and including  July 14, 2003 (the  "Original  Term"),  and this
Agreement shall  automatically renew itself for one-year periods thereafter (the
"Renewal Terms"), unless terminated as provided in Section 4.2 hereof.

     4.2    Termination.
            -----------

          4.2.1  Termination  by  Lender.  Upon  at  least sixty (60) days prior
                 -----------------------
written  notice to Borrower,  Lender may terminate this Agreement as of the last
day of the  Original  Term or the  then  current  Renewal  Term and  Lender  may
terminate this Agreement without notice upon or after the occurrence of an Event
of Default.

          4.2.2  Termination by  Borrower.  Upon at least  sixty (60) days prior
                 ------------------------
written notice to Lender, Borrower may, at its option, terminate this Agreement;
provided,  however,  no such  termination  shall be effective until Borrower has
paid all of the  Obligations  in  immediately  available  funds.  Any  notice of
termination  given by Borrower  shall be  irrevocable  unless  Lender  otherwise
agrees in writing,  and Lender shall have no  obligation to make any Loans on or
after  the  termination  date  stated  in such  notice.  Borrower  may  elect to
terminate  this  Agreement in its entirety only. No section of this Agreement or
type of Loan available hereunder may be terminated singly.

          4.2.3  Termination Charges.  At  the effective date of termination  of
                 -------------------
this Agreement for any reason,  Borrower shall pay to Lender (in addition to the
then outstanding  principal,  accrued interest and other charges owing under the
terms of this  Agreement  and any of the other  Loan  Documents)  as  liquidated
damages  for the loss of the bargain  and not as a penalty,  an amount  equal to
2.0% of the  Total  Credit  Facility  if  termination  occurs  during  the first
twelve-month  period of the Original Term (July 14, 2000 through July 14, 2001);
1% of the Total Credit Facility if termination occurs during the second 12-month
period  of the  Original  Term  (July  14,  2001  through  July  14,  2002).  If
termination  occurs on or after July 14,  2002 or the  Revolving  Credit Loan is
transferred,  assigned, refinanced or purchased in any manner by an affiliate of
the Lender, no termination charge shall be payable.

          4.2.4  Effect  of  Termination.  All  of  the   Obligations  shall  be
                 -----------------------
immediately  due and payable upon the  termination  date stated in any notice of
termination  of  this  Agreement.  All  undertakings,   agreements,   covenants,
warranties and representations of Borrower contained in the Loan Documents shall
survive any such termination and Lender shall retain its Liens in the Collateral
and all of its rights and remedies under the Loan Documents notwithstanding such
termination  until  Borrower has paid the  Obligations  to Lender,  in full,  in
immediately available funds, together with the applicable termination charge, if
any. Notwithstanding the payment in full of the Obligations, Lender shall not be
required to terminate  its security  interests in the  Collateral  unless,  with
respect to any loss or damage Lender may incur as a result of dishonored  checks
or other items of payment received by Lender from Borrower or any Account Debtor
and applied to the Obligations, Lender shall, at its option, (i) have received a
written  agreement,  executed by Borrower and by any Person whose loans or other
advances  to Borrower  are used in

                                      -6-
<PAGE>

whole or in part to satisfy the Obligations,  indemnifying  Lender from any such
loss or damage;  or (ii) have retained  such monetary  reserves and Liens on the
Collateral for such period of time as Lender, in its reasonable discretion,  may
deem necessary to protect Lender from any such loss or damage.

SECTION 5.     SECURITY INTERESTS

     5.1    Security Interest in Collateral. To secure  the prompt  payment  and
            -------------------------------
performance to Lender of the Obligations, Borrower (and by way of clarification,
not any  Subsidiary)  hereby  grants  to  Lender a  continuing  Lien upon all of
Borrower's  assets,  including  all of the  following  Property and interests in
Property  of  Borrower,  whether now owned or  existing  or  hereafter  created,
acquired or arising and wheresoever located:

                (i)     Accounts;

                (ii)    Inventory;

                (iii)   Equipment;

                (iv)    General Intangibles;

                (v)     Deposit Accounts;

                (vi)    Investment Property;

                (vii)   Leasehold Improvements;

                (viii)  All  other  tangible and  intangible  assets of Borrower
currently owned and hereinafter acquired;

                (ix)    All  monies and other Property of any kind now or at any
time or times  hereafter in the  possession  or under the control of Lender or a
bailee or Affiliate of Lender;

                (x)     All   accessions   to,   substitutions   for   and   all
replacements, products and cash and non-cash proceeds of (i) through (ix) above,
including, without limitation, proceeds of and unearned premiums with respect to
insurance policies insuring any of the Collateral; and

                (xi)    All books and records  (including,  without  limitation,
customer lists, credit files, computer programs,  print-outs, and other computer
materials and records) of Borrower pertaining to any of (i) through (x) above.

     5.2    Lien Perfection; Further Assurances.  Borrower  shall  execute  such
            -----------------------------------
UCC-1  financing  statements  as  are  required  by  the  Code  and  such  other
instruments,  assignments or documents as are necessary to perfect Lender's Lien
upon any of the  Collateral  and shall take such other action as may be required
to perfect or to continue the  perfection of Lender's Lien upon the  Collateral.
Unless  prohibited by  applicable  law,  Borrower  hereby  authorizes  Lender to
execute and file any such financing  statement on Borrower's behalf. The parties
agree that a carbon,  photographic or other reproduction of this Agreement shall
be  sufficient  as a  financing  statement  and may be filed in any  appropriate
office in lieu  thereof.  At  Lender's  request,  Borrower  shall also  promptly
execute  or cause  to be  executed  and  shall  deliver  to  Lender  any and all
documents,  instruments and agreements deemed necessary by Lender to give effect
to or carry out the terms or intent of the Loan Documents.

                                      -7-
<PAGE>

     5.3    Pledge of Stocks.  As  further  security  for  the  Obligations   of
            ----------------
Borrower  hereunder,  the  Borrower  shall  pledge and assign to the  Lender,  a
continuing  security interest in sixty-six percent (66%) of the shares of stocks
of all first-tier  subsidiaries of Borrower (the "Pledged  Shares") set forth in
Exhibit Q annexed  hereto  and any  first-tier  subsidiaries  that may come into
existence after the Closing Date.

SECTION 6.    COLLATERAL ADMINISTRATION

     6.1    General
            -------

          6.1.1  Location of Collateral.  All  Collateral,  other than Inventory
                 ----------------------
in  transit  and motor  vehicles  and laptop  computers  owned by  Borrower  and
utilized  by its  employees,  will at all  times  be kept  by  Borrower  and its
Subsidiaries  at one or more of the  business  locations  set forth in Exhibit B
                                                                       ---------
hereto and shall not,  without the prior  written  approval of Lender,  be moved
therefrom except, prior to an Event of Default and Lender's  acceleration of the
maturity of the Obligations in consequence  thereof,  for (i) sales of Inventory
in the  ordinary  course of  business;  and (ii)  removals  in  connection  with
dispositions of Equipment that are authorized by subsection 6.4.2 hereof.

          6.1.2  Insurance of  Collateral.  Borrower  shall maintain and pay for
                 ------------------------
insurance  upon all Collateral  wherever  located and with respect to Borrower's
business,  covering casualty,  hazard,  public liability and such other risks in
such amounts and with such insurance companies as are reasonably satisfactory to
Lender.  Borrower  shall  deliver the  originals of such policies to Lender with
satisfactory  lender's  loss payable  endorsements,  naming  Lender as sole loss
payee,  assignee or additional  insured,  as appropriate (not including however,
errors and omissions or other policies covering Borrower's  employees or agent's
negligence).  Each policy of insurance  or  endorsement  shall  contain a clause
requiring  the  insurer  to give not less than 30 days prior  written  notice to
Lender in the event of cancellation of the policy for any reason  whatsoever and
a clause  specifying  that the  interest  of  Lender  shall not be  impaired  or
invalidated by any act or neglect of Borrower or the owner of the Property or by
the occupation of the premises for purposes more hazardous than are permitted by
said policy.  If Borrower  fails to provide and pay for such  insurance,  Lender
may, at its option,  but shall not be required  to,  procure the same and charge
Borrower therefor.  Borrower agrees to deliver to Lender,  promptly as rendered,
true copies of all reports made in any reporting forms to insurance companies.

          6.1.3  Protection  of Collateral. All expenses of protecting, storing,
                 -------------------------
warehousing,  insuring,  handling,  maintaining and shipping the Collateral, any
and all excise, property, sales, and use taxes imposed by any state, federal, or
local authority on any of the Collateral or in respect of the sale thereof shall
be borne and paid by  Borrower.  If Borrower  fails to promptly  pay any portion
thereof when due,  Lender may, at its option,  but shall not be required to, pay
the same and charge Borrower therefor. Lender shall not be liable or responsible
in any way for  the  safekeeping  of any of the  Collateral  or for any  loss or
damage  thereto  (except for  reasonable  care in the custody  thereof while any
Collateral is in Lender's actual  possession) or for any diminution in the value
thereof,  or for any act or default  of any  warehouseman,  carrier,  forwarding
agency,  or other person  whomsoever,  but the same shall be at Borrower's  sole
risk.

     6.2    Administration of Accounts.
            --------------------------

          6.2.1  Records, Schedules and Assignments of Accounts.  Borrower shall
                 ----------------------------------------------
keep  accurate  and  complete  records  of its  Accounts  and all  payments  and
collections  thereon and shall submit to Lender on such periodic basis as Lender
shall request a sales and collections  report for the preceding  period, in form
satisfactory  to Lender.  On or before the  fifteenth day of each month from and
after the date hereof,  Borrower shall deliver to Lender,  in form acceptable to
Lender,  a detailed aged trial  balance of all Accounts  existing as of the last
day of the preceding

                                      -8-
<PAGE>

month,  specifying the names,  addresses,  face value, dates of invoices and due
dates for each Account  Debtor  obligated on an Account so listed  ("Schedule of
Accounts"), and, upon Lender's request therefor, copies of proof of delivery and
the original copy of all documents,  including,  without  limitation,  repayment
histories and present status  reports  relating to the Accounts so scheduled and
such other  matters  and  information  relating  to the status of then  existing
Accounts as Lender shall reasonably request including without limitation, weekly
unbilled Accounts reports. In addition,  Accounts in an aggregate face amount in
excess of  $50,000.00  become  ineligible  because  they fall  within one of the
specified  categories of  ineligibility  set forth in the definition of Eligible
Accounts or otherwise  established  by Lender,  Borrower  shall notify Lender of
such  occurrence on the first  Business Day following  such  occurrence  and the
Borrowing  Base shall  thereupon  be adjusted  to reflect  such  occurrence.  If
requested by Lender, Borrower shall execute and deliver to Lender formal written
assignments  of all of its  Accounts  weekly or daily,  which shall  include all
Accounts that have been created since the date of the last assignment,  together
with copies of invoices or invoice registers related thereto.

          6.2.2  Discounts,   Allowances,  Disputes.   If  Borrower  grants  any
                 ----------------------------------
discounts,  allowances  or credits that are not shown on the face of the invoice
for the Account  involved,  Borrower shall report such discounts,  allowances or
credits,  as the case may be, to Lender as part of the next required Schedule of
Accounts.  If any amounts due and owing in excess of  $50,000.00  are in dispute
between  Borrower and any Account  Debtor,  Borrower  shall provide  Lender with
written  notice  thereof  at the  time of  submission  of the next  Schedule  of
Accounts,  explaining in detail the reason for the dispute,  all claims  related
thereto and the amount in controversy. Upon and after the occurrence of an Event
of Default,  Lender  shall have the right to settle or adjust all  disputes  and
claims  directly with the Account  Debtor and to compromise the amount or extend
the time for payment of the Accounts  upon such terms and  conditions  as Lender
may deem advisable, and to charge the deficiencies,  costs and expenses thereof,
including attorney's fees, to Borrower.

          6.2.3  Taxes.  If an Account includes a charge for any tax payable  to
                 -----
any governmental taxing authority, Lender is authorized, in its sole discretion,
to pay the amount  thereof to the proper  taxing  authority  for the  account of
Borrower and to charge Borrower  therefor,  provided,  however that Lender shall
not be liable for any taxes to any governmental taxing authority that may be due
by Borrower.

          6.2.4  Account  Verification.  Whether or not a Default or an Event of
                 ---------------------
Default has occurred,  any of Lender's officers,  employees or agents shall have
the right, at any time or times hereafter,  in the name of Lender,  any designee
of Lender  or  Borrower,  to verify  the  validity,  amount or any other  matter
relating to any Accounts by mail,  telephone,  telegraph or otherwise.  Borrower
shall  cooperate  fully  with  Lender in an effort to  facilitate  and  promptly
conclude any such verification process.

          6.2.5  Maintenance of  Dominion  Account.  Borrower  shall  maintain a
                 ---------------------------------
Dominion  Account  pursuant to a lockbox  arrangement  acceptable to Lender with
such banks as may be selected by Borrower and be acceptable to Lender.  Borrower
shall issue to any such banks an  irrevocable  letter of  instruction  directing
such banks to deposit all payments or other remittances  received in the lockbox
to the Dominion Account for application on account of the Obligations. All funds
deposited  in the  Dominion  Account  shall  immediately  become the property of
Lender and Borrower  shall obtain the agreement by such banks in favor of Lender
to waive any offset  rights  against the funds so deposited.  Lender  assumes no
responsibility for such lockbox arrangement,  including, without limitation, any
claim of accord and satisfaction or release with respect to deposits accepted by
any bank thereunder.

          6.2.6  Collection  of  Accounts,  Proceeds of Collateral.  To expedite
                 -------------------------------------------------
collection,  Borrower shall endeavor in the first instance to make collection of
its  Accounts for

                                      -9-
<PAGE>

Lender.  All remittances  received by Borrower on account of Accounts,  together
with the proceeds of any other Collateral, shall be held as Lender's property by
Borrower as trustee of an express trust for Lender's  benefit and Borrower shall
immediately  deposit same in kind in the Dominion  Account.  Lender  retains the
right at all times after the  occurrence  of a Default or an Event of Default to
notify Account Debtors that Accounts have been assigned to Lender and to collect
Accounts  directly  in its own name  and to  charge  the  collection  costs  and
expenses, including attorneys' fees to Borrower.

     6.3    Administration of Inventory.
            ---------------------------

          6.3.1  Records and Reports of Inventory.  Borrower shall keep accurate
                 --------------------------------
and complete  records of its  Inventory.  6.3.2 Returns of Inventory.  If at any
time or times hereafter any Account Debtor returns any Inventory to Borrower the
shipment of which generated an Account on which such Account Debtor is obligated
in excess of $50,000.00,  Borrower shall immediately  notify Lender of the same,
specifying  the reason for such return and the location,  condition and intended
disposition of the returned Inventory.

     6.4    Administration of Equipment.
            ---------------------------

          6.4.1  Records  and  Schedules  of  Equipment.  Borrower  shall   keep
                 --------------------------------------
accurate records itemizing and describing the kind, type, quality,  quantity and
value of its Equipment and all  dispositions  made in accordance with subsection
6.4.2 hereof,  and if requested by Lender,  shall furnish  Lender with a current
schedule containing the foregoing  information.  Promptly on request therefor by
Lender,  Borrower shall deliver to Lender any and all evidence of ownership,  if
any, of any of the Equipment.

          6.4.2  Dispositions  of Equipment.  Borrower  will not sell,  lease or
                 --------------------------
otherwise  dispose  of or  transfer  any of the  Equipment  or any part  thereof
without  the prior  written  consent  of  Lender;  provided,  however,  that the
                                                   --------   -------
foregoing  restriction  shall not  apply,  for so long as no Default or Event of
Default exists,  to (i) dispositions of Equipment which, in the aggregate during
any  consecutive  twelve-month  period,  has a fair market  value or book value,
whichever is less, of  $150,000.00 or less,  provided that all proceeds  thereof
are remitted to Lender for  application to the Loans,  or (ii)  replacements  of
Equipment that is substantially worn, damaged or obsolete with Equipment of like
kind,  function and value,  provided  that the  replacement  Equipment  shall be
acquired prior to or concurrently  with any disposition of the Equipment that is
to be replaced, the replacement Equipment shall be free and clear of Liens other
than Permitted Liens that are not Purchase Money Liens,  and Borrower shall have
given Lender at least 5 days prior written notice of such disposition.

     6.5    Payment of Charges. All amounts chargeable to Borrower under Section
            ------------------
6 hereof shall be Obligations secured by all of the Collateral, shall be payable
on demand and shall bear interest from the date such advance was made until paid
in full at the rate applicable to Revolving Credit Loans from time to time.

SECTION 7.     REPRESENTATIONS AND WARRANTIES

     7.1    General Representations and Warranties. To  induce Lender  to  enter
            --------------------------------------
into  this  Agreement  and  to  make  advances  hereunder,   Borrower  warrants,
represents and covenants to Lender that:

          7.1.1  Organization  and  Qualification.  Each  of  Borrower  and  its
                 --------------------------------
Subsidiaries  is a  corporation  duly  organized,  validly  existing and in good
standing  under  the  laws

                                      -10-
<PAGE>

of the jurisdiction of its incorporation.  Each of Borrower and its Subsidiaries
is duly  qualified and is authorized to do business and is in good standing as a
foreign corporation in each state or jurisdiction listed on Exhibit C hereto and
                                                            ---------
in all other states and  jurisdictions  where the character of its Properties or
the nature of its activities make such qualification  necessary and in which the
failure of Borrower or any of its  Subsidiaries  to be so qualified would have a
material  adverse effect on the financial  condition,  business or Properties of
Borrower or any of its Subsidiaries.

          7.1.2  Corporate  Power  and  Authority.  Each  of  Borrower  and  its
                 --------------------------------
Subsidiaries  is duly authorized and empowered to enter into,  execute,  deliver
and perform this Agreement and each of the other Loan Documents to which it is a
party. The execution, delivery and performance of this Agreement and each of the
other Loan Documents have been duly authorized by all necessary corporate action
and do not and will not (i)  require  any  further  consent or  approval  of the
shareholders of Borrower or any of its Subsidiaries;  (ii) contravene Borrower's
or any of its Subsidiaries' charter, articles or certificate of incorporation or
by-laws;  (iii) violate,  or cause Borrower or any of its  Subsidiaries to be in
default  under,  any  provision  of any  law,  rule,  regulation,  order,  writ,
judgment,   injunction,   decree,   determination  or  award  in  effect  having
applicability to Borrower or any of its Subsidiaries; (iv) result in a breach of
or constitute a default  under any indenture or loan or credit  agreement or any
other  agreement,   lease  or  instrument  to  which  Borrower  or  any  of  its
Subsidiaries  is a party  or by  which  it or its  Properties  may be  bound  or
affected;  or (v) result in, or require,  the creation or imposition of any Lien
(other than  Permitted  Liens) upon or with respect to any of the Properties now
owned or hereafter acquired by Borrower or any of its Subsidiaries.

          7.1.3  Legally Enforceable  Agreement.  This Agreement is, and each of
                 ------------------------------
the other Loan Documents  when delivered  under this Agreement will be, a legal,
valid  and  binding   obligation  of  each  of  Borrower  and  its  Subsidiaries
enforceable against it in accordance with its respective terms.

          7.1.4  Capital Structure. Exhibit D hereto states (i) the correct name
                 -----------------
of each of the Subsidiaries of Borrower,  its jurisdiction of incorporation  and
the  percentage of its Voting Stock owned by Borrower,  (ii) the name of each of
Borrower's  corporate  or  joint  venture  Affiliates  and  the  nature  of  the
affiliation,  (iii) the  number,  nature and  holders  of 5% of all  outstanding
Securities of Borrower and each  Subsidiary of Borrower,  and (iv) the number of
authorized,  issued and  treasury  shares of  Borrower  and each  Subsidiary  of
Borrower. Borrower has good title to all of the shares it purports to own of the
stock of each of its Subsidiaries, free and clear in each case of any Lien other
than Permitted  Liens.  All such shares have been duly issued and are fully paid
and non-assessable.

          7.1.5  Corporate   Names.   Neither   Borrower   nor   any   of    its
                 -----------------
Subsidiaries has been known as or used any corporate,  fictitious or trade names
except  those  listed on  Exhibit E hereto.  Except as set forth on  Exhibit  E,
                          ---------                                  ----------
neither Borrower nor any of its Subsidiaries has been the surviving  corporation
of a merger or consolidation or acquired all or substantially  all of the assets
of any Person.

          7.1.6  Business Locations; Agent for Process.  Each of  Borrower's and
                 -------------------------------------
its  Subsidiaries'  chief  executive  office and other places of business are as
listed on  Exhibit B hereto.  During  the  preceding  one-year  period,  neither
           ---------
Borrower  nor any of its  Subsidiaries  has had an office,  place of business or
agent for service of process  other than as listed on Exhibit B. Except as shown
                                                      ---------
on Exhibit B, no  inventory  is stored  with a bailee,  warehouseman  or similar
   ---------
party, nor is any Inventory consigned to any Person.

          7.1.7  Title to Properties;  Priority of Liens. Except as set forth on
                 ---------------------------------------
Exhibit O, each of Borrower  and its  Subsidiaries  has good,  indefeasible  and
marketable  title  to and fee  simple  ownership  of,  or valid  and  subsisting
leasehold  interests in, all of its real Property, and

                                      -11-
<PAGE>

good title to all of the Collateral and all of its other Property, in each case,
free  and  clear of all  Liens  except  Permitted  Liens.  Borrower  has paid or
discharged all lawful claims which,  if unpaid,  might become a Lien against any
of  Borrower's  Properties  that is not a Permitted  Lien.  The Liens granted to
Lender  under  Section  5 hereof  are  first  priority  Liens,  subject  only to
Permitted Liens.

          7.1.8  Accounts.  Lender may rely, in determining  which  Accounts are
                 --------
Eligible Accounts,  on all statements and representations  made by Borrower with
respect to any Account or  Accounts.  Unless  otherwise  indicated in writing to
Lender, with respect to each Account:

                 (i)    It  is genuine and  in all respects what  it purports to
be, and it is not evidenced by a judgment;

                 (ii)   It  arises  out  of  a  completed,  bona  fide  sale and
delivery of goods or rendition of services by Borrower in the ordinary course of
its business and in  accordance  with the terms and  conditions  of all purchase
orders,  contracts or other documents relating thereto and forming a part of the
contract between Borrower and the Account Debtor;

                 (iii)  It is for a liquidated  amount maturing as stated in the
duplicate  invoice covering such sale or rendition of services,  a copy of which
has been furnished or is available to Lender;

                 (iv)   Such Account, and Lender's security interest therein, is
not, and will not (by  voluntary  act or omission of Borrower) be in the future,
subject to any offset, Lien, deduction,  defense,  dispute,  counterclaim or any
other adverse  condition  except for disputes  resulting in returned goods where
the amount in controversy  is deemed by Lender to be  immaterial,  and each such
Account is absolutely  owing to Borrower and is not contingent in any respect or
for any reason;

                 (v)    Borrower has made no agreement  with any Account  Debtor
thereunder for any extension, compromise, settlement or modification of any such
Account or any deduction  therefrom,  except  discounts or allowances  which are
granted by Borrower in the ordinary  course of its  business for prompt  payment
and which are reflected in the  calculation of the net amount of each respective
invoice related thereto and are reflected in the Schedules of Accounts submitted
to Lender pursuant to subsection 6.2.1 hereof;

                 (vi)   There are no facts, events or  occurrences  which in any
way impair the validity or  enforceability of any Accounts or tend to reduce the
amount  payable  thereunder  from the face amount of the invoice and  statements
delivered to Lender with respect thereto;

                 (vii)  To  the best of Borrower's knowledge, the Account Debtor
thereunder  (1) had the  capacity to contract at the time any  contract or other
document  giving rise to the Account was executed and (2) such Account Debtor is
Solvent; and

                 (viii) To  the  best  of  Borrower's  knowledge,  there  are no
proceedings  or actions  which are  threatened  or pending  against  any Account
Debtor  thereunder  which might  result in any material  adverse  change in such
Account Debtor's financial condition or the collectibility of such Account.

          7.1.9  Equipment.  The  Equipment is in  good operating  condition and
                 ---------
repair,  and all necessary  replacements of and repairs thereto shall be made so
that the value and

                                      -12-
<PAGE>

operating  efficiency  of the  Equipment  shall  be  maintained  and  preserved,
reasonable wear and tear excepted.

          7.1.10 Financial  Statements;  Fiscal  Year.  The  balance  sheet   of
                 ------------------------------------
Borrower as of December 31, 1999, and the related statements of income,  changes
in stockholder's equity, and changes in financial position for the periods ended
on such dates,  have been prepared in accordance  with GAAP,  and present fairly
the  financial  position of Borrower at such dates and the results of Borrower's
operations for such periods. Since December 31, 1999, there has been no material
change in the condition,  financial or otherwise,  of Borrower, and no change in
the aggregate  value of Equipment and real  Property  owned by Borrower,  except
changes in the ordinary course of business, none of which individually or in the
aggregate  has been  materially  adverse.  The fiscal year of  Borrower  ends on
December 31st of each year.

          7.1.11 Full  Disclosure.  The  financial  statements  referred  to  in
                 ----------------
subsection  7.1.10  hereof do not, nor does this  Agreement or any other written
statement of Borrower to Lender, contain any untrue statement of a material fact
or omit a material fact  necessary to make the statements  contained  therein or
herein not misleading. There is no fact which Borrower has failed to disclose to
Lender in writing which materially  affects adversely or, so far as Borrower can
now  foresee,  will  materially  affect  adversely  the  Properties,   business,
prospects,  profits or condition  (financial or otherwise) of Borrower or any of
its  Subsidiaries or the ability of Borrower or its Subsidiaries to perform this
Agreement or the other Loan Documents.

          7.1.12 Solvent Financial Condition.  Borrower is now and, after giving
                 ---------------------------
effect to the Loans to be made, at all times will be, Solvent.

          7.1.13 Surety  Obligations.   Neither  Borrower   nor   any   of   its
                 -------------------
Subsidiaries  is obligated as surety or  indemnitor  under any surety or similar
bond or other contract  issued or entered into any agreement to assure  payment,
performance or completion of performance of any undertaking or obligation of any
Person.

          7.1.14 Taxes.  Borrower's  federal   tax  identification   number   is
                 -----
22-3677719.  The  federal  tax  identification  number  of  each  of  Borrower's
Subsidiaries is shown on Exhibit F hereto. Borrower and each of its Subsidiaries
                         ---------
has filed all  federal,  state and local tax  returns  and other  reports  it is
required by law to file and has paid, or made  provision for the payment of, all
taxes,  assessments,  fees, levies and other  governmental  charges upon it, its
income and  Properties  as and when such taxes,  assessments,  fees,  levies and
charges that are due and payable, unless and to the extent any thereof are being
actively  contested in good faith and by  appropriate  proceedings  and Borrower
maintains reasonable reserves on its books therefor.  The provision for taxes on
the books of Borrower and its Subsidiaries are adequate for all years not closed
by applicable statutes, and for its current fiscal year.

          7.1.15 Brokers.  There   are  no  claims  for  brokerage  commissions,
                 -------
finder's fees or investment  banking fees in  connection  with the  transactions
contemplated by this Agreement.

          7.1.16 Patents, Trademarks, Copyrights and Licenses.  Each of Borrower
                 --------------------------------------------
and its  Subsidiaries  owns or possesses  all the patents,  trademarks,  service
marks,  trade  names,  copyrights  and  licenses  necessary  for the present and
planned  future  conduct of its  business  without any known  conflict  with the
rights of others.  All such  patents,  trademarks,  service  marks,  tradenames,
copyrights, licenses and other similar rights are listed on Exhibit G hereto.
                                                            ---------

          7.1.17 Governmental  Consents.  Each  of Borrower and its Subsidiaries
                 ----------------------
has,  and is in good  standing  with  respect  to,  all  governmental  consents,
approvals,  licenses,  authorizations,  permits,  certificates,  inspections and
franchises  necessary  to  continue to conduct

                                      -13-
<PAGE>

its business as heretofore or proposed to be conducted by it and to own or lease
and operate its Properties as now owned or leased by it.

          7.1.18 Compliance  with  Laws.  Each of Borrower and its  Subsidiaries
                 ----------------------
has duly complied with, and its Properties,  business  operations and leaseholds
are in compliance in all material  respects with, the provisions of all federal,
state and local  laws,  rules and  regulations  applicable  to  Borrower or such
Subsidiary,  as  applicable,  its  Properties or the conduct of its business and
there  have been no  citations,  notices  or orders of  noncompliance  issued to
Borrower or any of its Subsidiaries under any such law, rule or regulation. Each
of Borrower  and its  Subsidiaries  has  established  and  maintains an adequate
monitoring  system to insure  that it remains in  compliance  with all  federal,
state and local laws,  rules and regulations  applicable to it. No Inventory has
been  produced in violation of the Fair Labor  Standards  Act (29  U.S.C.'201 et
                                                                              --
seq.), as amended.
---

          7.1.19 Restrictions.  Neither  Borrower nor any of its Subsidiaries is
                 ------------
a party or subject to any  contract,  agreement,  or charter or other  corporate
restriction,  which materially and adversely  affects its business or the use or
ownership of any of its Properties. Neither Borrower nor any of its Subsidiaries
is a party or subject to any contract or agreement  which restricts its right or
ability to incur Indebtedness, other than as set forth on Exhibit H hereto, none
                                                          ---------
of which  prohibit the  execution of or  compliance  with this  Agreement or the
other Loan Documents by Borrower or any of its Subsidiaries, as applicable.

          7.1.20 Litigation.  Except as set forth on Exhibit I hereto, there are
                 ----------                          ---------
no actions, suits, proceedings or investigations pending, or to the knowledge of
Borrower,  threatened, against or affecting Borrower or any of its Subsidiaries,
or the  business,  operations,  Properties,  prospects,  profits or condition of
Borrower  or  any  of  its  Subsidiaries.   Neither  Borrower  nor  any  of  its
Subsidiaries  is in  default  with  respect  to  any  order,  writ,  injunction,
judgment,  decree or rule of any court,  governmental  authority or  arbitration
board or tribunal.

          7.1.21 No Defaults.  No  event has  occurred and no  condition  exists
                 -----------
which  would,  upon or after the  execution  and  delivery of this  Agreement or
Borrower's performance  hereunder,  constitute a Default or an Event of Default.
Neither  Borrower nor any of its  Subsidiaries  is in default,  and no event has
occurred and no condition exists which constitutes, or which with the passage of
time or the giving of notice or both would constitute,  a default in the payment
of any Indebtedness to any Person for Money Borrowed.

          7.1.22 Leases.  Exhibit  J  hereto  is  a  complete  listing  of   all
                 ------   ----------
capitalized  leases of Borrower and its  Subsidiaries  and Exhibit K hereto is a
                                                           ---------
complete listing of all operating leases of Borrower and its Subsidiaries.  Each
of Borrower and its  Subsidiaries is in full compliance with all of the terms of
each of its respective capitalized and operating leases.

          7.1.23 Pension Plans. Except as disclosed on Exhibit L hereto, neither
                 -------------                         ---------
Borrower  nor any of its  Subsidiaries  has any Plan.  Borrower  and each of its
Subsidiaries  is in full  compliance  with the  requirements  of  ERISA  and the
regulations  promulgated  thereunder  with  respect  to  each  Plan.  No fact or
situation  that  could  result in a  material  adverse  change in the  financial
condition of Borrower or any of its  Subsidiaries  exists in connection with any
Plan. Neither Borrower nor any of its Subsidiaries has any withdrawal  liability
in connection with a Multiemployer Plan.

          7.1.24 Trade  Relations.  There   exists  no  actual   or   threatened
                 ----------------
termination,  cancellation  or limitation of, or any  modification or change in,
the business  relationship  between  Borrower or any of its Subsidiaries and any
customer  or any  group of  customers  whose  purchases  individually  or in the
aggregate  are material to the business of Borrower or any of its  Subsidiaries,
or with any material supplier, and there exists no present condition or state of
facts

                                      -14-
<PAGE>

or circumstances  which would materially affect adversely Borrower or any of its
Subsidiaries or prevent Borrower or any of its Subsidiaries from conducting such
business  after  the  consummation  of  the  transaction  contemplated  by  this
Agreement  in  substantially  the same  manner in which it has  heretofore  been
conducted.

          7.1.25 Labor  Relations.  Except as  described  on  Exhibit  M hereto,
                 ----------------                             ----------
neither  Borrower  nor  any of its  Subsidiaries  is a party  to any  collective
bargaining   agreement.   There  are  no   material   grievances,   disputes  or
controversies  with any union or any other  organization of Borrower's or any of
its  Subsidiaries'  employees,  or threats of  strikes,  work  stoppages  or any
asserted pending demands for collective bargaining by any union or organization.

     7.2    Continuous  Nature   of   Representations   and   Warranties.   Each
            --------------------------------------------------------------
representation  and  warranty  contained  in this  Agreement  and the other Loan
Documents shall be continuous in nature and shall remain accurate,  complete and
not  misleading  at all times  during  the term of this  Agreement,  except  for
changes in the nature of Borrower's or its Subsidiaries'  business or operations
that  would  render  the  information  in any  exhibit  attached  hereto  either
inaccurate,  incomplete or  misleading,  so long as Lender has consented to such
changes or such changes are expressly permitted by this Agreement.

     7.3    Survival of Representations and Warranties.  All representations and
            ------------------------------------------
warranties  of Borrower  contained  in this  Agreement  or any of the other Loan
Documents shall survive the execution, delivery and acceptance thereof by Lender
and the parties thereto and the closing of the transactions described therein or
related thereto.

SECTION 8.     COVENANTS AND CONTINUING AGREEMENTS

     8.1    Affirmative Covenants.  During  the term  of  this  Agreement,   and
            ----------------------
thereafter  for so long  as  there  are  any  Obligations  to  Lender,  Borrower
covenants that, unless otherwise consented to by Lender in writing, it shall:

          8.1.1  Visits and Inspections.  Permit representatives of Lender, from
                 ----------------------
time to time,  as often as may be reasonably  requested,  but only during normal
business  hours, to visit and inspect the Properties of Borrower and each of its
Subsidiaries,  inspect,  audit and make extracts from its books and records, and
discuss  with its  officers,  its  employees  and its  independent  accountants,
Borrower's  and  each  of  its  Subsidiaries'  business,  assets,   liabilities,
financial condition, business prospects and results of operations.

          8.1.2  Notices. Promptly notify Lender in writing of the occurrence of
                 -------
any event or the  existence  of any fact which  renders  any  representation  or
warranty  in this  Agreement  or any of the  other  Loan  Documents  inaccurate,
incomplete or misleading.

          8.1.3  Financial Statements.  Keep, and cause each Subsidiary to keep,
                 --------------------
adequate records and books of account with respect to its business activities in
which  proper  entries  are made in  accordance  with  GAAP  reflecting  all its
financial  transactions;  and cause to be prepared  and  furnished to Lender the
following  (all to be prepared in  accordance  with GAAP applied on a consistent
basis,  unless  Borrower's  certified  public  accountants  concur in any change
therein and such change is disclosed to Lender and is consistent with GAAP):

                (i)     not  later than one hundred  twenty (120) days after the
close of each fiscal year of Borrower,  unqualified audited financial statements
of Borrower and its  Subsidiaries  as of the end of such year, on a Consolidated
and  consolidating  basis,  certified by a firm of independent  certified public
accountants of recognized standing selected by Borrower but acceptable to Lender
(except for a qualification for a change in accounting principles with which the
accountant concurs);

                                      -15-
<PAGE>

                (ii)    not later  than  thirty  (30) days after the end of each
quarterly  period  hereafter,  including the last quarter of  Borrower's  fiscal
year, unaudited interim financial statements of Borrower and its Subsidiaries as
of the end of such quarter and of the portion of Borrower's  financial year then
elapsed,  on  a  Consolidated  and  consolidating  basis,   reviewed  under  the
Securities  and  Exchange  Commission  rules  and  regulations  (but  not  to be
construed as Reviewed in accordance with GAAP) by independent  certified  public
accountants of recognized standing, selected by Borrower and satisfactory to the
Lender,  certified by the principal financial officer of Borrower as prepared in
accordance with GAAP and fairly presenting the Consolidated  financial  position
and results of  operations of Borrower and its  Subsidiaries  for such month and
period  subject only to changes from audit and year-end  adjustments  and except
that such statements need not contain notes;

                (iii)   not  later than  thirty (30) days after  the end of each
calendar  month,  the Borrower's  balance sheet as of the end of such period and
the related  statements  of income and surplus,  all in reasonable  detail,  all
prepared in accordance with generally  accepted  accounting  principles,  by the
Borrower's  management,  and in addition to such statements,  any  supplementary
information to the financial reports as the Lender shall reasonably require.

                (iv)    promptly  after  the sending  or filing thereof,  as the
case may be,  copies of any proxy  statements,  financial  statements or reports
which Borrower has made available to its shareholders and copies of any regular,
periodic and special  reports or  registration  statements  which Borrower files
with the Securities and Exchange Commission or any governmental  authority which
may be substituted therefor, or any national securities exchange;

                (v)     promptly  after the filing thereof, copies of any annual
report to be filed with ERISA in connection with each Plan;

                (vi)    upon  each  request  for  a  Revolving Credit  Loan, the
Borrowing Base Certificate; and

                (vii)   such   other   data   and   information  (financial  and
otherwise) as Lender, from time to time, may reasonably request, bearing upon or
related to the Collateral or Borrower's and each of its Subsidiaries'  financial
condition or results of operations.

     Concurrently  with the delivery of the  financial  statements  described in
clause (i) of this subsection 8.1.3,  Borrower shall forward to Lender a copy of
the accountants' letter to Borrower's  management that is prepared in connection
with such  financial  statements  and also shall cause to be prepared  and shall
furnish to Lender a certificate of the aforesaid  certified  public  accountants
certifying  to Lender  that,  based  upon  their  examination  of the  financial
statements of Borrower and its  Subsidiaries  performed in connection with their
examination of said financial  statements,  they are not aware of any Default or
Event of  Default,  or, if they are aware of such  Default or Event of  Default,
specifying the nature thereof,  and acknowledging,  in a manner  satisfactory to
Lender, that they are aware that Lender is relying on such financial  statements
in making  its  decisions  with  respect  to the  Loans.  Concurrently  with the
delivery of the financial statements described in clauses (i), (ii) and (iii) of
this subsection 8.1.3, or more frequently if requested by Lender, Borrower shall
cause to be prepared and  furnished to Lender a  Compliance  Certificate  in the
form of Exhibit N hereto  certified by the Borrower's  Chief Executive  Officer,
        ---------
Chief Operating  Officer or  Secretary/Treasurer  as accurate and  affirmatively
stating that no Event of Default (or event which would, with the passage of time
or giving of notice or both, became an Event of Default) has occurred.

          8.1.4  Landlord  and  Storage Agreements.  In the event the Lender has
                 ---------------------------------
not obtained an acknowledgment  from Intelligroup,  Inc. with respect to the New
Jersey  property, in

                                      -16-
<PAGE>

form and  substance  acceptable  to the Lender  within  ninety  (90) days of the
closing  hereof,  the  Lender may  reserve up to three (3) months  rent for such
locations, out of Availability.

          8.1.5  [INTENTIONALLY OMITTED]

          8.1.6  Projections. No  later  than 30 days prior  to the end  of each
                 -----------
fiscal year of  Borrower,  deliver to Lender,  Projections  of Borrower  for the
forthcoming 3 years, year by year, and for the forthcoming fiscal year, month by
month;  any  revised  projections  are to be  provided  within  ten (10) days of
issuance.

          8.1.7  Equipment.  Borrower will  not permit  any of  the Equipment to
                 ---------
become  affixed to any real  Property  leased to  Borrower  so that an  interest
arises therein under the real estate laws of the applicable  jurisdiction unless
the landlord of such real  Property has executed a landlord  waiver or leasehold
mortgage in favor of and in form  acceptable  to Lender,  and Borrower  will not
permit any of the  Equipment to become an  accession  to any  personal  Property
other than  Equipment  that is subject to first  priority  (except for Permitted
Liens) Liens in favor of Lender.

     8.2    Negative  Covenants.   During  the   term  of  this  Agreement,  and
            ------------------
thereafter  for so long  as  there  are  any  Obligations  to  Lender,  Borrower
covenants that,  unless Lender has first consented  thereto in writing,  it will
not:

          8.2.1  Mergers; Consolidations; Acquisitions. Merge or consolidate, or
                 -------
permit any Subsidiary of Borrower to merge or consolidate,  with any Person; nor
acquire,  nor permit any of its Subsidiaries to acquire,  all or any substantial
part of the  Properties  of any  Person,  that is greater  than or equal to Five
Million ($5,000,000.00) Dollars, except any Subsidiary of Borrower may be merged
with or into Borrower or another  Subsidiary.  Any  acquisition  of a Person for
less than Five Million  ($5,000,000.00)  Dollars  shall be limited to payment in
Borrower's  stock  only.   Lender's   consent  to  acquisitions   shall  not  be
unreasonably withheld.

          8.2.2  Loans.  Make, or permit any Subsidiary of Borrower to make, any
                 -----
loans or other  advances of money to any Person  which  aggregate  more than Two
Hundred  Fifty  Thousand  ($250,000.00)  Dollars  at any  time  (other  than for
extensions of trade credit to customers and travel advances to shareholders, all
in the ordinary course of business), provided however, the Borrower shall not be
permitted to make any  advances to any  shareholders  of the Borrower  that owns
more than five (5%) percent of the outstanding stock of the Borrower.

          8.2.3  Total Indebtedness.  Create, incur, assume, or suffer to exist,
                 ------------------
or permit  Borrower  to  create,  incur or suffer  to exist,  any  Indebtedness,
except:

                (i)     Obligations owing to Lender;

                (ii)    Subordinated   Debt  existing   on  the   date  of  this
Agreement;

                (iii)   Indebtedness of any Subsidiary of Borrower to Borrower;

                (iv)    accounts   payable  to   trade  creditors   and  current
operating  expenses (other than for Money Borrowed) which are not aged more than
120 days from billing date or more than 30 days from the due date,  in each case
incurred in the  ordinary  course of business  and paid within such time period,
unless the same are being  actively  contested in good faith and by  appropriate
and lawful  proceedings;  and Borrower or such  Subsidiary  shall have set

                                      -17-
<PAGE>

aside such  reserves,  if any, with respect  thereto as are required by GAAP and
deemed adequate by Borrower or such Subsidiary and its independent accountants;

                (v)     Obligations  to  pay  Rentals  permitted  by  subsection
8.2.13;

                (vi)    Permitted Purchase Money Indebtedness;

                (vii)   contingent  liabilities  arising out of  endorsements of
checks  and other  negotiable  instruments  for  deposit  or  collection  in the
ordinary course of business (but not by way of guaranty of any Subsidiary);

                (viii)  Indebtedness owed to Intelligroup, Inc. in the principal
amount of $15,000,000.00  (it being understood that Borrower may make a one-time
$3,000,000.00  principal  payment to the holder thereof on or before  September,
2000);

                (ix)    Indebtedness  of a  Person which  becomes  a  Subsidiary
after the date hereof provided that:

                        (a)     such  Indebtedness  existed  at  the  time  such
                                Person  became a Subsidiary  and was not created
                                in anticipation of such acquisition;

                        (b)     immediately   after   giving   effect   to   the

                                acquisition  of such  Person by the  Borrower or
                                its Subsidiaries, no Default or Event of Default
                                shall occur and be continuing;

                        (c)     such  Indebtedness  is  not  guaranteed  by  the
                                Borrower or any Subsidiary;

                        (d)     such  Indebtedness  is  not  payable to  selling
                                shareholders  or Persons unless  subordinated to
                                the  Lender on terms  approved by the  Lender in
                                writing; and

                        (e)     such   Indebtedness  would  not  be  subject  to
                                acceleration  of maturity  or cause an  Event of
                                Default  under  existing  loan  documents  as  a
                                result of such acquisition  by the  Borrower  or
                                Subsidiary; and

                (x)     Indebtedness  existing  on  the  date  hereof  and   any
refinancings,  refundings,  swaps or exchanges  thereof (without any increase in
the principal amount thereof).

          8.2.4  Affiliate Transactions. Enter into, or be a party to, or permit
                 ----------------------
any Subsidiary of Borrower to enter into or be a party to, any transaction  with
any Affiliate of Borrower or  stockholder,  except in the ordinary course of and
pursuant to the  reasonable  requirements  of  Borrower's  or such  Subsidiary's
business and upon fair and reasonable  terms which are fully disclosed to Lender
and are no less  favorable to Borrower  than would obtain in a comparable  arm's
length  transaction with a Person not an Affiliate or stockholder of Borrower or
such Subsidiary.

          8.2.5  Limitation  on Liens.  Create or suffer to exist, or permit any
                 --------------------
Subsidiary  of Borrower  to create or suffer to exist,  any Lien upon any of its
Property, income or profits, whether now owned or hereafter acquired, except:

                                      -18-
<PAGE>

                (i)     Liens at any time granted in favor of Lender;

                (ii)    Liens for taxes (excluding any Lien imposed pursuant  to
any of the  provisions  of ERISA) not yet due, or being  contested in the manner
described in subsection 7.1.14 hereto;

                (iii)   Liens  arising  in  the  ordinary  course  of Borrower's
business by  operation of law or  regulation,  but only if payment in respect of
any  such  Lien is not at the  time  required  and  such  Liens  do not,  in the
aggregate,  materially  detract  from the value of the  Property  of Borrower or
materially impair the use thereof in the operation of Borrower's business;

                (iv)    Purchase  Money Liens securing  Permitted Purchase Money
Indebtedness;

                (v)     Liens   securing  Indebtedness  of  one  of   Borrower's
Subsidiaries to Borrower or another such Subsidiary;

                (vi)    such other Liens as appear on Exhibit O hereto;
                                                      ---------
                (vii)   Liens  on  the  property  or  assets of  a Person  which
becomes a Subsidiary  after the date hereof securing  Indebtedness  permitted by
paragraph  8.2.3(ix),  provided  that (1) such  Liens  existed  at the time such
Person  became  a  Subsidiary  and  were  not  created  in  anticipation  of the
acquisition,  (2) any such  Lien does not by its terms  cover  any  property  or
assets after the time such Person  becomes a  Subsidiary  which were not covered
immediately  prior  thereto,  and (3) any such Lien does not by its terms secure
any Indebtedness other than Indebtedness  existing immediately prior to the time
such Person becomes a Subsidiary; and

                (viii)  such  other  Liens  as Lender  may hereafter  approve in
writing.

          8.2.6  Subordinated Debt. Make,  or permit  any Subsidiary of Borrower
                 -----------------
to make,  any  payment of any part or all of any  Subordinated  Debt or take any
other  action or omit to take any other  action in respect  of any  Subordinated
Debt, except in accordance with a subordination agreement relative thereto.

          8.2.7  Distributions.  Declare  or make, or  permit any  Subsidiary of
                 -------------
Borrower  to declare  or make,  any  Distributions,  without  the prior  written
consent of Lender.

          8.2.8  Capital  Expenditures.  Make  unfinanced  Capital  Expenditures
                 ---------------------
(including,  without  limitation,  by way of capitalized  leases) which,  in the
aggregate,  as to Borrower and its  Subsidiaries,  exceed  $8,000,000.00  during
fiscal year  ending  December,  2000;  $3,000,000.00  during  fiscal year ending
December,  2001; and $3,000,000.00 during fiscal year ending December,  2002. At
no time shall any  proceeds of the  Revolving  Credit  Loans be used for Capital
Expenditures.

          8.2.9  Disposition of Assets.  Sell, lease or otherwise dispose of any
                 ---------------------
of, or permit any Subsidiary of Borrower to sell, lease or otherwise dispose any
of, its Properties,  including any disposition of Property as part of a sale and
leaseback  transaction,  to or in  favor  of any  Person,  except  (i)  sales of
Inventory in the ordinary  course of business for so long as no Event of Default
exists  hereunder,  (ii) a transfer of Property to Borrower by a  Subsidiary  of
Borrower or (iii) dispositions  expressly authorized by this Agreement,  or (iv)
worn out or obsolete Property disposed of in the ordinary course of business.

                                      -19-
<PAGE>

          8.2.10 Stock  of  Subsidiaries.  Permit  any  of its  Subsidiaries  to
                 -----------------------
issue any  additional  shares  of its  capital  stock,  if after  giving  effect
thereto,  would  result in the  Borrower  owning less than 66% of the issued and
outstanding shares of stock of such Subsidiary.

          8.2.11 Bill-and-Hold  Sales, Etc.  Make a  sale to any  customer on  a
                 -------------------------
bill-and-hold, guaranteed sale, sale and return, sale on approval or consignment
basis, or any sale on a repurchase or return basis.

          8.2.12 Restricted  Investment.  Make or have, or permit any Subsidiary
                 ----------------------
of Borrower to make or have, any Restricted Investment.

          8.2.13 Leases.  Become,  or permit any of its  Subsidiaries to become,
                 ------
a lessee under any operating  lease (other than a lease under which  Borrower or
any of its Subsidiaries is lessor) of Property if the aggregate  Rentals payable
during any current or future period of 12 consecutive  months under the lease in
question and all other leases under which Borrower or any of its Subsidiaries is
then lessee would exceed $50,000.00. The term "Rentals" means, as of the date of
determination, all payments which the lessee is required to make by the terms of
any lease.

          8.2.14 Tax  Consolidation.  File  or  consent  to  the  filing  of any
                 ------------------
consolidated    income   tax   return    with   any   Person    other   than   a
Subsidiary of Borrower.

          8.2.15 Management Changes.  The Borrower shall not make any change  to
                 ------------------
the officers of the Borrower  without  providing  the Lender with at least sixty
(60) days notice of such change and Lender consents thereto.

     8.3    Specific Financial Covenants. During the term of this Agreement, and
            -----------------------------
thereafter  for so long  as  there  are  any  Obligations  to  Lender,  Borrower
covenants that, unless otherwise consented to by Lender in writing, it shall:

          8.3.1  Debt to Tangible Net Worth Ratio. Maintain at all times a ratio
                 --------------------------------
of  Consolidated  Debt to Tangible  Net Worth of not more than 3.0 to 1.0 at all
times.

          8.3.2  Pre-Tax  Operating  Loss.  Not  incur a pre-tax  operating loss
                 ------------------------
greater than 10% in excess of the amount shown in the projections dated June 26,
2000.

          8.3.3  Minimum  Availability.  Maintain  at  all   times  Availability
                 ---------------------
calculated on a daily basis of not less than One Million ($1,000,000.00) Dollars
as of the Closing Date and at all times thereafter.

          8.3.4  Interest Coverage  Ratio.  Achieve,  at the end of each  fiscal
                 ------------------------
quarter  (commencing  with the third fiscal quarter,  2000) of the Borrower,  an
Interest  Coverage Ratio equal to or greater than 1.2 to 1.0 during the Original
Term.

          8.3.5  Fixed  Charge  Coverage Ratio.  Achieve,  at  the end  of  each
                 -----------------------------
fiscal quarter (commencing with the third fiscal quarter, 2000) of the Borrower,
a Fixed  Charge  Coverage  Ratio equal to or greater  than 1.1 to 1.0 during the
Original Term.

SECTION 9.      CONDITIONS PRECEDENT

     Notwithstanding  any other  provision of this Agreement or any of the other
Loan Documents,  and without  affecting in any manner the rights of Lender under
the other sections of this  Agreement,  Lender shall not be required to make any
Loan under this Agreement unless and until each of the following  conditions has
been and continues to be satisfied:

                                      -20-
<PAGE>

     9.1    Documentation.  Lender shall have  received, in  form and  substance
            -------------
satisfactory  to Lender and its counsel,  a duly executed copy of this Agreement
and  the  other  Loan  Documents,   together  with  such  additional  documents,
instruments  and  certificates  as  Lender  and its  counsel  shall  require  in
connection  therewith from time to time, all in form and substance  satisfactory
to Lender and its counsel.

     9.2    No Default.  No Default or Event of Default shall exist.
            ----------

     9.3    Other Loan Documents.  Each of the conditions precedent set forth in
            --------------------
the other Loan Documents shall have been satisfied.

     9.4    Availability.  Lender shall have determined that Availability is not
            ------------
be less than $1,000,000.00 as of the Closing Date.

     9.5    No Litigation.  No action, proceeding, investigation, regulation  or
            -------------
legislation shall have been instituted, threatened or proposed before any court,
governmental agency or legislative body to enjoin,  restrain or prohibit,  or to
obtain  damages  in  respect  of, or which is  related  to or arises out of this
Agreement or the consummation of the transactions contemplated hereby.

     9.6    Spin-off.  The Borrower shall no longer be a wholly-owned subsidiary
            --------
of Intelligroup,  Inc., including without limitation,  having separate ownership
and management from  Intelligroup,  Inc. The Borrower shall provide  evidence of
such divestiture in form and substance satisfactory to the Lender.

SECTION 10.     EVENTS OF DEFAULT; RIGHTS AND REMEDIES ON DEFAULT

     10.1   Events  of  Default.  The occurrence of one or more of the following
            -------------------
events shall constitute an "Event of Default":

          10.1.1   Payment of Revolving Credit Master Note.  Borrower shall fail
                   ---------------------------------------
to pay any principal, interest or premium, if any, owing on the Revolving Credit
Master Note on or within 10 days after the due date of such payment.

          10.1.2   Payment  of Other Obligations. Borrower shall fail to pay any
                   -----------------------------
of the other  Obligations  on or within ten (10) days after the due date thereof
(whether due at stated maturity, on demand, upon acceleration or otherwise).

          10.1.3   Misrepresentations.  Any  representation,  warranty  or other
                   ------------------
statement  made  or  furnished  to  Lender  by or on  behalf  of  Borrower,  any
Subsidiary of Borrower in this Agreement, any of the other Loan Documents or any
instrument,  certificate or financial  statement furnished in compliance with or
in reference  thereto  proves to have been false or  misleading  in any material
respect  when made or  furnished  or when  reaffirmed  pursuant  to Section  7.2
hereof.

          10.1.4   Breach of Specific Covenants.  Borrower shall fail or neglect
                   ----------------------------
to perform,  keep or observe any covenant contained in Sections 5.2, 6.1.1, 6.2,
8.1.1,  8.1.3,  8.2 or 8.3  hereof  on the date that  Borrower  is  required  to
perform, keep or observe such covenant.

          10.1.5   Breach  of Other  Covenants.  Borrower  shall fail or neglect
                   ---------------------------
to perform, keep or observe any covenant contained in this Agreement (other than
a covenant  which is dealt with  specifically  elsewhere in Section 10.1 hereof)
and the  breach of such other  covenant  is not cured to  Lender's  satisfaction
within 15 days after the sooner to occur of Borrower's receipt of notice of such
breach from Lender or the date on which such  failure or neglect  first  becomes
known to any officer of Borrower.

                                      -21-
<PAGE>

          10.1.6   Default Under Security Documents/Other Agreements.  Any event
                   -------------------------------------------------
of default shall occur under,  or Borrower  shall default in the  performance or
observance of any term,  covenant,  condition or agreement  contained in, any of
the Security Documents;  or the Other Agreements and such default shall continue
beyond any applicable grace period.

          10.1.7   Other  Defaults.  There  shall occur any  default or event of
                   ---------------
default on the part of Borrower under any  agreement,  document or instrument to
which  Borrower is a party or by which Borrower or any of its Property is bound,
creating or relating to any  Indebtedness  (other than the  Obligations)  if the
payment or maturity of such  Indebtedness  is accelerated in consequence of such
event of default or demand for payment of such Indebtedness is made.

          10.1.8   Uninsured  Losses.  Any  material  loss,  theft,  damage   or
                   -----------------
destruction  of any  of the  Collateral  not  fully  covered  (subject  to  such
deductibles as Lender shall have permitted) by insurance.

          10.1.9   Adverse Changes.  There  shall  occur  any  material  adverse
                   ---------------
change in the financial condition or business prospects of Borrower.

          10.1.10  Insolvency and Related  Proceedings.  Borrower shall cease to
                   -----------------------------------
be Solvent or shall suffer the appointment of a receiver,  trustee, custodian or
similar fiduciary,  or shall make an assignment for the benefit of creditors, or
any petition for an order for relief shall be filed by or against Borrower under
the Bankruptcy Code (if against  Borrower,  the  continuation of such proceeding
for  more  than 45  days),  or  Borrower  shall  make any  offer of  settlement,
extension or composition to its unsecured creditors generally.

          10.1.11  Business  Disruption;  Condemnation.  There  shall  occur   a
                   -----------------------------------
cessation of a substantial part of the business of Borrower or any Subsidiary of
Borrower  for a  period  which  significantly  affects  Borrower's  capacity  to
continue its business,  on a profitable  basis; or Borrower or any Subsidiary of
Borrower  shall suffer the loss or  revocation of any license or permit now held
or hereafter  acquired by Borrower which is necessary to the continued or lawful
operation of its business;  or Borrower shall be enjoined,  restrained or in any
way prevented by court, governmental or administrative order from conducting all
or any material part of its business affairs; or any material lease or agreement
pursuant to which  Borrower  leases,  uses or  occupies  any  Property  shall be
canceled or terminated  prior to the  expiration of its stated term; or any part
of the  Collateral  shall be taken  through  condemnation  or the  value of such
Property shall be impaired through condemnation.

          10.1.12  ERISA.  A Reportable Event shall occur  which Lender,  in its
                   -----
sole  discretion,  shall  determine  in good faith  constitutes  grounds for the
termination by the Pension Benefit  Guaranty  Corporation of any Plan or for the
appointment by the appropriate United States district court of a trustee for any
Plan,  or if any Plan shall be terminated or any such trustee shall be requested
or appointed,  or if Borrower or any  Subsidiary of Borrower is in "default" (as
defined  in  Section  4219(c)(5)  of  ERISA)  with  respect  to  payments  to  a
Multiemployer  Plan resulting from Borrower's or such  Subsidiary's  complete or
partial withdrawal from such Plan.

          10.1.13  Challenge  to  Agreement.  Borrower  or  any  Subsidiary   of
                   ------------------------
Borrower,  or any  Affiliate of any of them,  shall  challenge or contest in any
action, suit or proceeding the validity or enforceability of this Agreement,  or
any of the other Loan Documents,  the legality or  enforceability  of any of the
Obligations or the perfection or priority of any Lien granted to Lender.

                                      -22-
<PAGE>

          10.1.14  Criminal Forfeiture.  Borrower  or any Subsidiary of Borrower
                   -------------------
shall be  criminally  indicted or  convicted  under any law that could lead to a
forfeiture of any Property of Borrower, any Subsidiary of Borrower.

          10.1.15  Judgments.  Any money judgment, writ of attachment or similar
                   ---------
process in excess of $50,000.00 in the aggregate,  is filed against  Borrower or
any Subsidiary of Borrower, or any of their respective Property.

     10.2  Acceleration  of  the  Obligations.  Without in  any way limiting the
           ----------------------------------
right of Lender to demand payment of any portion of the  Obligations  payable on
demand in  accordance  with  Section 3.2  hereof,  upon or at any time after the
occurrence of an Event of Default,  all or any portion of the Obligations shall,
at the  option of Lender  and  without  presentment,  demand  protest or further
notice by Lender,  become at once due and payable and Borrower  shall  forthwith
pay to Lender,  the full  amount of such  Obligations,  provided,  that upon the
                                                        --------
occurrence of an Event of Default specified in subsection 10.1.10 hereof, all of
the Obligations shall become  automatically due and payable without declaration,
notice or demand by Lender.

     10.3  Other Remedies.  Upon  and  after  the  occurrence  of  an  Event  of
           --------------
Default,  Lender  shall have and may  exercise  from time to time the  following
rights and remedies:

          10.3.1   All  of the rights  and remedies of a secured party under the
Code or under other  applicable law, and all other legal and equitable rights to
which  Lender  may be  entitled,  all of  which  rights  and  remedies  shall be
cumulative and shall be in addition to any other rights or remedies contained in
this  Agreement or any of the other Loan  Documents,  and none of which shall be
exclusive.

          10.3.2   The right to take  immediate  possession  of the  Collateral,
and to (i) require Borrower to assemble the Collateral,  at Borrower's  expense,
and make it  available  to  Lender  at a place  designated  by  Lender  which is
reasonably  convenient to both parties, and (ii) enter any premises where any of
the  Collateral  shall be located and to keep and store the  Collateral  on said
premises until sold (and if said premises be the Property of Borrower,  Borrower
agrees not to charge Lender for storage thereof as long as such period shall not
exceed 90 days).

          10.3.3   The  right  to  sell  or  otherwise  dispose  of  all  or any
Collateral  in its  then  condition,  or  after  any  further  manufacturing  or
processing  thereof, at public or private sale or sales, with such notice as may
be required by law, in lots or in bulk, for cash or on credit, all as Lender, in
its sole  discretion,  may deem advisable.  Borrower agrees that 10 days written
notice  to  Borrower  of any  public or  private  sale or other  disposition  of
Collateral  shall be reasonable  notice thereof,  and such sale shall be at such
locations as Lender may designate in said notice. Lender shall have the right to
conduct such sales on Borrower's  premises,  without charge  therefor,  and such
sales may be adjourned  from time to time in  accordance  with  applicable  law.
Lender  shall  have the  right  to  sell,  lease  or  otherwise  dispose  of the
Collateral,  or any part thereof,  for cash, credit or any combination  thereof,
and  Lender  may  purchase  all or any part of the  Collateral  at public or, if
permitted by law,  private sale and, in lieu of actual  payment of such purchase
price,  may set off the  amount  of such  price  against  the  Obligations.  The
proceeds realized from the sale of any Collateral may be applied, after allowing
2 Business Days for collection, first to the costs, expenses and attorneys' fees
incurred by Lender in  collecting  the  Obligations,  in enforcing the rights of
Lender  under  the  Loan  Documents  and in  collecting,  retaking,  completing,
protecting,  removing, storing, advertising for sale, selling and delivering any
Collateral,  second to the interest due upon any of the Obligations;  and third,
to the principal of the  Obligations.  If any deficiency  shall arise,  Borrower
shall remain liable to Lender therefor.

                                      -23-
<PAGE>

          10.3.4   Lender  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,  tradenames,  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 Lender's benefit.

     10.4  Remedies   Cumulative;   No   Waiver.   All  covenants,   conditions,
           ------------------------------------
provisions,  warranties,  guaranties,  indemnities,  and other  undertakings  of
Borrower  contained in this  Agreement and the other Loan  Documents,  or in any
document referred to herein or contained in any agreement  supplementary  hereto
or in any  schedule  or  contained  in any other  agreement  between  Lender and
Borrower,  heretofore,  concurrently, or hereafter entered into, shall be deemed
cumulative  to and  not  in  derogation  or  substitution  of any of the  terms,
covenants,  conditions,  or agreements of Borrower herein contained. The failure
or delay of Lender to require strict performance by Borrower of any provision of
this Agreement or to exercise or enforce any rights,  Liens, powers, or remedies
hereunder  or  under  any of the  aforesaid  agreements  or other  documents  or
security or Collateral shall not operate as a waiver of such performance, Liens,
rights, powers and remedies,  but all such requirements,  Liens, rights, powers,
and  remedies  shall  continue in full force and effect  until all Loans and all
other  Obligations  owing or to become owing from  Borrower to Lender shall have
been  fully  satisfied.  None  of  the  undertakings,   agreements,  warranties,
covenants and  representations of Borrower contained in this Agreement or any of
the  other  Loan  Documents  and no Event of  Default  by  Borrower  under  this
Agreement or any other Loan Documents  shall be deemed to have been suspended or
waived by  Lender,  unless  such  suspension  or waiver is by an  instrument  in
writing  specifying such suspension or waiver and is signed by a duly authorized
representative of Lender and directed to Borrower.

SECTION 11.     MISCELLANEOUS

     11.1  Power of Attorney. Borrower hereby  irrevocably  designates,   makes,
           -----------------
constitutes  and  appoints  Lender  (and all  Persons  designated  by Lender) as
Borrower's true and lawful attorney (and  agent-in-fact) and Lender, or Lender's
agent,  may,  without  notice to Borrower and in either  Borrower's  or Lender's
name, but at the cost and expense of Borrower:

          11.1.1   At  such  time or times  upon or  after the  occurrence  of a
Default or an Event of Default as Lender or said agent, in its sole  discretion,
may  determine,  endorse  Borrower's  name on any  checks,  notes,  acceptances,
drafts,  money  orders or any other  evidence  of  payment  or  proceeds  of the
Collateral which come into the possession of Lender or under Lender's control.

          11.1.2   At  such time  or times  upon or  after the  occurrence of an
Event of Default as Lender or its agent in its sole  discretion  may  determine:
(i) demand payment of the Accounts from the Account Debtors,  enforce payment of
the Accounts by legal  proceedings or otherwise,  and generally  exercise all of
Borrower's  rights and remedies with respect to the  collection of the Accounts;
(ii)  settle,  adjust,  compromise,  discharge or release any of the Accounts or
other Collateral or any legal proceedings brought to collect any of the Accounts
or  other  Collateral;  (iii)  sell or  assign  any of the  Accounts  and  other
Collateral upon such terms, for such amounts and at such time or times as Lender
deems  advisable;  (iv) take control,  in any manner,  of any item of payment or
proceeds relating to any Collateral;  (v) prepare, file and sign Borrower's name
to a proof of claim in bankruptcy or similar document against any Account Debtor
or to any notice of lien, assignment or satisfaction of lien or similar document
in connection with any of the Collateral;  (vi) receive, open and dispose of all
mail  addressed  to  Borrower  and to notify  postal  authorities  to change the
address for  delivery  thereof to such  address as Lender may  designate;  (vii)
endorse  the name of  Borrower  upon any of the  items of  payment  or  proceeds
relating  to any  Collateral  and  deposit  the same to the account of Lender on

                                      -24-
<PAGE>

account of the Obligations; (viii) endorse the name of Borrower upon any chattel
paper, document,  instrument,  invoice,  freight bill, bill of lading or similar
document  or  agreement  relating  to the  Accounts,  Inventory  and  any  other
Collateral;  (ix) use  Borrower's  stationery  and sign the name of  Borrower to
verifications  of the Accounts and notices thereof to Account  Debtors;  (x) use
the information  recorded on or contained in any data  processing  equipment and
computer  hardware and software relating to the Accounts,  Inventory,  Equipment
and any  other  Collateral;  (xi)  make and  adjust  claims  under  policies  of
insurance;  and  (xii) do all  other  acts and  things  necessary,  in  Lender's
determination, to fulfill Borrower's obligations under this Agreement.

     11.2  Indemnity.  Borrower  hereby  agrees  to  indemnify  Lender and  hold
           ---------
Lender harmless from and against any liability,  loss,  damage,  suit, action or
proceeding suffered or incurred by Lender (including  reasonable  attorneys fees
and legal expenses) as the result of Borrower's  failure to observe,  perform or
discharge Borrower's duties hereunder, except as may be caused by Lender's gross
negligence  or willful  misconduct.  In addition,  Borrower  shall defend Lender
against and save it harmless  from all claims of any Person with  respect to the
Collateral.  Without limiting the generality of the foregoing, these indemnities
shall  extend to any claims  asserted  against  Lender by any  Person  under any
Environmental Laws or similar laws by reason of Borrower's or any other Person's
failure to comply with laws  applicable to solid or hazardous waste materials or
other  toxic  substances.   Notwithstanding   any  contrary  provision  in  this
Agreement,  the obligation of Borrower under this Section 11.2 shall survive the
payment in full of the Obligations and the termination of this Agreement.

     11.3  Modification of Agreement; Sale of Interest.  This  Agreement may not
           -------------------------------------------
be modified,  altered or amended,  except by an  agreement in writing  signed by
Borrower and Lender.  Borrower may not sell,  assign or transfer any interest in
this Agreement,  any of the other Loan Documents, or any of the Obligations,  or
any portion thereof,  including,  without limitation,  Borrower's rights, title,
interests, remedies, powers, and duties hereunder or thereunder. Borrower hereby
consents  to  Lender's  participation,   sale,  assignment,  transfer  or  other
disposition,  at any time or times  hereafter,  of this Agreement and any of the
other Loan Documents,  or of any portion hereof or thereof,  including,  without
limitation,  Lender's rights,  title,  interests,  remedies,  powers, and duties
hereunder or thereunder. In the case of an assignment,  the assignee shall have,
to the extent of such assignment,  the same rights,  benefits and obligations as
it would if it were  "Lender"  hereunder  and Lender  shall be  relieved  of all
obligations  hereunder upon any such  assignments.  Borrower agrees that it will
use its  best  efforts  to  assist  and  cooperate  with  Lender  in any  manner
reasonably  requested  by  Lender  to effect  the sale of  participations  in or
assignments  of any of the Loan  Documents  or any  portion  thereof or interest
therein,  including,  without  limitation,   assisting  in  the  preparation  of
appropriate  disclosure  documents.  Borrower  further  agrees  that  Lender may
disclose  credit  information  regarding  Borrower and its  Subsidiaries  to any
potential participant or assignee.

     11.4  Severability.  Wherever  possible,  each provision  of this Agreement
           ------------
shall  be  interpreted  in  such  manner  as to be  effective  and  valid  under
applicable law, but if any provision of this Agreement shall be prohibited by or
invalid under  applicable law, such provision  shall be ineffective  only to the
extent of such prohibition or invalidity,  without invalidating the remainder of
such provision or the remaining provisions of this Agreement.

     11.5  Successors and Assigns.  This Agreement, the Other Agreements and the
           ----------------------
Security  Documents  shall be  binding  upon and  inure  to the  benefit  of the
successors  and assigns of Borrower  and Lender  permitted  under  Section  11.3
hereof.

     11.6  Cumulative Effect; Conflict of Terms.  The provisions  of  the  Other
           ------------------------------------
Agreements  and the  Security  Documents  are hereby  made  cumulative  with the
provisions of this Agreement. Except as otherwise provided in Section 3.2 hereof
and except as otherwise  provided in any of

                                      -25-
<PAGE>

the other Loan Documents by specific  reference to the  applicable  provision of
this  Agreement,  if any  provision  contained  in this  Agreement  is in direct
conflict  with,  or  inconsistent  with,  any provision in any of the other Loan
Documents, the provision contained in this Agreement shall govern and control.

     11.7  Execution  in  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 to be an original
and all of which  counterparts  taken together shall  constitute but one and the
same instrument. Delivery of an executed counterpart of a signature page of this
document by  facsimile  shall be  effective  as delivery of a manually  executed
counterpart of this document.

     11.8  Notice. Except  as otherwise provided  herein, all  notices, requests
           ------
and demands to or upon a party hereto, to be effective,  shall be in writing and
shall be sent by certified or registered  mail,  return  receipt  requested,  by
personal  delivery  against receipt,  by overnight  courier or by facsimile and,
unless otherwise expressly provided herein, shall be deemed to have been validly
served,  given or delivered  immediately  when delivered  against  receipt,  one
Business Day after deposit in the mail,  postage  prepaid,  or with an overnight
courier or, in the case of facsimile notice, when sent, addressed as follows:

If to Lender:           Fleet Capital Corporation
                                1125 Route 22 West
                                Bridgewater, New Jersey 08807
                                Attention:  Allan R. Juleus
                                Facsimile No.: 908-253-4062

With a copy to:         Reed Smith Shaw & McClay LLP
                                136 Main Street, Suite 250
                                Princeton, New Jersey 08540
                                Attention:  Jeffrey M. Rosenthal
                                Facsimile No.:  609-951-0824

If to Borrower:         SeraNova, Inc.
                                499 Thornall Street
                                Edison, New Jersey 08837
                                Attention:  Mr. David Rogers
                                Facsimile No.:  732-362-2458

With a copy to:         Buchanan Ingersoll
                                500 College Road East
                                Princeton, New Jersey 08540
                                Attention:  Douglas Beimfohr
                                Facsimile No.:  609-520-0360

or to such other  address as each party may designate for itself by notice given
in  accordance  with this  Section  11.8;  provided,  however,  that any notice,
request or demand to or upon Lender pursuant to subsection 3.1.1 or 4.2.2 hereof
shall not be effective until received by Lender.

     11.9  Lender's  Consent.  Whenever  Lender's  consent  is  required  to  be
           -----------------
obtained  under  this  Agreement,  any of  the  Other  Agreements  or any of the
Security Documents as a condition to any action,  inaction,  condition or event,
Lender  shall be  authorized  to give or withhold  such  consent in its sole and
absolute  discretion  and to condition its consent upon the giving of additional
collateral  security  for the  Obligations,  the  payment  of money or any other
matter.

                                      -26-
<PAGE>

     11.10 Credit Inquiries.  Borrower  hereby  authorizes and permits Lender to
           ----------------
respond to usual and customary  credit  inquiries from third parties  concerning
Borrower or any of its Subsidiaries.

     11.11 Time of Essence.  Time is of the essence of this Agreement, the Other
           ---------------
Agreements and the Security Documents.

     11.12 Entire  Agreement.  This  Agreement  and  the  other  Loan Documents,
           -----------------
together with all other instruments, agreements and certificates executed by the
parties in connection  therewith or with  reference  thereto,  embody the entire
understanding  and agreement between the parties hereto and thereto with respect
to the subject  matter hereof and thereof and  supersede  all prior  agreements,
understandings and inducements, whether express or implied, oral or written.

     11.13 Interpretation.  No  provision of this  Agreement or any of the other
           --------------
Loan Documents shall be construed  against or interpreted to the disadvantage of
any party  hereto by any court or other  governmental  or judicial  authority by
reason of such party having or being deemed to have  structured or dictated such
provision.

     11.14 GOVERNING LAW; CONSENT TO FORUM. THIS AGREEMENT HAS BEEN  NEGOTIATED,
           -------------------------------
EXECUTED AND  DELIVERED AT AND SHALL BE DEEMED TO HAVE BEEN MADE IN  PLAINSBORO,
NEW JERSEY. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW JERSEY WITHOUT GIVING EFFECT TO THE CONFLICT OF LAW
RULES  OF THE  STATE  OF  NEW  JERSEY:  PROVIDED,  HOWEVER,  THAT  IF ANY OF THE
                                        --------   -------
COLLATERAL SHALL BE LOCATED IN ANY JURISDICTION  OTHER THAN NEW JERSEY, THE LAWS
OF  SUCH  JURISDICTION  SHALL  GOVERN  THE  METHOD,  MANNER  AND  PROCEDURE  FOR
FORECLOSURE  OF  LENDER'S  LIEN  UPON SUCH  COLLATERAL  AND THE  ENFORCEMENT  OF
LENDER'S  OTHER  REMEDIES IN RESPECT OF SUCH  COLLATERAL  TO THE EXTENT THAT THE
LAWS OF SUCH  JURISDICTION  ARE DIFFERENT FROM OR INCONSISTENT  WITH THE LAWS OF
NEW JERSEY. AS PART OF THE CONSIDERATION FOR NEW VALUE RECEIVED,  AND REGARDLESS
OF ANY PRESENT OR FUTURE  DOMICILE OR PRINCIPAL PLACE OF BUSINESS OF BORROWER OR
LENDER,  BORROWER  HEREBY  CONSENTS  AND AGREES THAT THE  SUPERIOR  COURT OF NEW
JERSEY,  OR, AT  LENDER'S  OPTION,  THE  UNITED  STATES  DISTRICT  COURT FOR THE
DISTRICT OF NEW JERSEY, SHALL HAVE EXCLUSIVE  JURISDICTION TO HEAR AND DETERMINE
ANY CLAIMS OR DISPUTES BETWEEN BORROWER AND LENDER  PERTAINING TO THIS AGREEMENT
OR TO ANY MATTER ARISING OUT OF OR RELATED TO THIS AGREEMENT. BORROWER EXPRESSLY
SUBMITS  AND  CONSENTS  IN  ADVANCE TO SUCH  JURISDICTION  IN ANY ACTION OR SUIT
COMMENCED IN ANY SUCH COURT,  AND BORROWER  HEREBY  WAIVES ANY  OBJECTION  WHICH
BORROWER MAY HAVE BASED UPON LACK OF PERSONAL  JURISDICTION,  IMPROPER  VENUE OR
FORUM NON  CONVENIENS  AND  HEREBY  CONSENTS  TO THE  GRANTING  OF SUCH LEGAL OR
----- ---  ----------
EQUITABLE RELIEF AS IS DEEMED APPROPRIATE BY SUCH COURT.  BORROWER HEREBY WAIVES
PERSONAL SERVICE OF THE SUMMONS,  COMPLAINT AND OTHER PROCESS ISSUED IN ANY SUCH
ACTION OR SUIT AND AGREES  THAT  SERVICE OF SUCH  SUMMONS,  COMPLAINT  AND OTHER
PROCESS MAY BE MADE BY REGISTERED OR CERTIFIED MAIL ADDRESSED TO BORROWER AT THE
ADDRESS  SET FORTH IN THIS  AGREEMENT  AND THAT  SERVICE SO MADE SHALL BE DEEMED
COMPLETED UPON THE EARLIER OF BORROWER'S  ACTUAL RECEIPT THEREOF OR 3 DAYS AFTER
DEPOSIT IN THE U.S.  MAILS,  PROPER POSTAGE  PREPAID.  NOTHING IN THIS AGREEMENT
SHALL BE

                                      -27-
<PAGE>

DEEMED OR OPERATE TO AFFECT  THE RIGHT OF LENDER TO SERVE  LEGAL  PROCESS IN ANY
OTHER MANNER  PERMITTED BY LAW, OR TO PRECLUDE THE  ENFORCEMENT BY LENDER OF ANY
JUDGMENT OR ORDER  OBTAINED IN SUCH FORUM OR THE TAKING OF ANY ACTION UNDER THIS
AGREEMENT TO ENFORCE SAME IN ANY OTHER APPROPRIATE FORUM OR JURISDICTION.

     11.15 WAIVERS  BY  BORROWER. BORROWER WAIVES (i) THE RIGHT TO TRIAL BY JURY
           ---------------------
(WHICH  LENDER  HEREBY  ALSO  WAIVES)  IN  ANY  ACTION,   SUIT,   PROCEEDING  OR
COUNTERCLAIM OF ANY KIND ARISING OUT OF OR RELATED TO ANY OF THE LOAN DOCUMENTS,
THE  OBLIGATIONS OR THE  COLLATERAL:  (ii)  PRESENTMENT,  DEMAND AND PROTEST AND
NOTICE  OF  PRESENTMENT,  PROTEST,  DEFAULT,  NON  PAYMENT,  MATURITY,  RELEASE,
COMPROMISE,  SETTLEMENT,  EXTENSION OR RENEWAL OF ANY OR ALL  COMMERCIAL  PAPER,
ACCOUNTS,  CONTRACT RIGHTS, DOCUMENTS,  INSTRUMENTS CHATTEL PAPER AND GUARANTIES
AT ANY TIME HELD BY LENDER ON WHICH BORROWER MAY IN ANY WAY BE LIABLE AND HEREBY
RATIFIES AND CONFIRMS WHATEVER LENDER MAY DO IN THIS REGARD;  (iii) NOTICE PRIOR
TO TAKING  POSSESSION OR CONTROL OF THE COLLATERAL OR ANY BOND OR SECURITY WHICH
MIGHT BE  REQUIRED BY ANY COURT  PRIOR TO  ALLOWING  LENDER TO  EXERCISE  ANY OF
LENDER'S REMEDIES; (iv) THE BENEFIT OF ALL VALUATION, APPRAISEMENT AND EXEMPTION
LAWS;  AND (v)  NOTICE OF  ACCEPTANCE  HEREOF.  BORROWER  ACKNOWLEDGES  THAT THE
FOREGOING  WAIVERS  ARE A MATERIAL  INDUCEMENT  TO LENDER'S  ENTERING  INTO THIS
AGREEMENT  AND THAT LENDER IS RELYING UPON THE  FOREGOING  WAIVERS IN ITS FUTURE
DEALINGS WITH BORROWER.  BORROWER  WARRANTS AND REPRESENTS  THAT IT HAS REVIEWED
THE FOREGOING  WAIVERS WITH ITS LEGAL COUNSEL AND HAS KNOWINGLY AND  VOLUNTARILY
WAIVED ITS JURY TRIAL RIGHTS FOLLOWING  CONSULTATION WITH LEGAL COUNSEL.  IN THE
EVENT OF LITIGATION, THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL
BY THE COURT.

     IN WITNESS  WHEREOF, this  Agreement has  been duly executed in Plainsboro,
New Jersey, on the day and year specified at the beginning of this Agreement.

WITNESS:                            SERANOVA, INC.

------------------------------      By:
                                       -----------------------------------------
                                       RAJKUMAR KONERU, President

                                    Accepted in Plainsboro, New Jersey:

                                    FLEET CAPITAL CORPORATION

                                    By:
                                       -----------------------------------------
                                       ALLAN R. JULEUS,
                                       Senior Vice President

                                      -28-
<PAGE>

                                   APPENDIX A

                               GENERAL DEFINITIONS

     When used in the Loan and Security  Agreement dated as of July 14, 2000, by
and between Fleet Capital  Corporation  and SeraNova,  Inc., the following terms
shall have the  following  meanings  (terms  defined in the singular to have the
same meaning when used in the plural and vice versa):

     Account  Debtor - any  Person who is or may  become  obligated  under or on
     ---------------
account of an Account.

     Accounts - all accounts,  contract rights,  chattel paper,  instruments and
     --------
documents,  whether now owned or hereafter created or acquired by Borrower or in
which Borrower now has or hereafter acquired any interest.

     Affiliate  - a Person  (other  than a  Subsidiary):  (i) which  directly or
     ---------
indirectly through one or more intermediaries  controls, or is controlled by, or
is under common control with, a Person; (ii) which beneficially owns or holds 5%
or more of any class of the Voting Stock of a Person; or (iii) 5% or more of the
Voting Stock (or in the case of a Person which is not a corporation,  5% or more
of the equity interest) of which is beneficially  owned or held by a Person or a
Subsidiary of a Person.

     Agreement  - the Loan  and  Security  Agreement  referred  to in the  first
     ---------
sentence of this Appendix A, all Exhibits thereto and this Appendix A.

     Approved Customer List - the list of Borrower's customers,  approved by the
     ----------------------
Lender, in Lender's sole credit judgment, as having acceptable credit risk whose
Accounts may be included as an Eligible  Account.  The Approved Customer List is
annexed hereto as Exhibit P.

     Availability  - the amount of money  which  Borrower  is entitled to borrow
     ------------
from time to time as Revolving  Credit Loans,  such amount being the  difference
derived  when the sum of the  principal  amount of  Revolving  Credit Loans then
outstanding (including any amounts which Lender may have paid for the account of
Borrower  pursuant  to any  of the  Loan  Documents  and  which  have  not  been
reimbursed  by Borrower) is subtracted  from the  Borrowing  Base. If the amount
outstanding is equal to or greater than the Borrowing Base, Availability is Zero
($0) Dollars.

     Bank - Fleet National Bank.
     ----

     Base Rate - the rate of interest  announced  or quoted by Bank from time to
     ---------
time as its prime  rate for  commercial  loans,  whether or not such rate is the
lowest rate charged by Bank to its most preferred borrowers;  and, if such prime
rate for commercial  loans is discontinued  by Bank as a standard,  a comparable
reference  rate  designated by Bank as a substitute  therefor  shall be the Base
Rate.

     Borrowing Base - as at any date of determination  thereof,  an amount equal
     --------------
to the lesser of:

        (i)     $15,000,000.00; or

        (ii)    an  amount equal  to 75% of the  net amount of Eligible Accounts
outstanding at such date; less

                                      -29-
<PAGE>

        (iii)   the LC Amount.

     For purposes hereof,  the net amount of Eligible Accounts at any time shall
be the face amount of such Eligible Accounts less any and all returns,  rebates,
discounts  (which may, at Lender's  option,  be calculated  on shortest  terms),
credits,  allowances  or excise taxes of any nature at any time  issued,  owing,
claimed by Account Debtors,  granted,  outstanding or payable in connection with
such  Accounts at such time.  Further,  it is agreed that the Lender may, in its
sole  discretion,  increase  the advance rate  referred to in (ii) above,  up to
eighty-five (85%) percent.

     Borrowing Base Certificate - a certificate in the form of Exhibit R annexed
     --------------------------
hereto.

     Business Day - any day  excluding  Saturday,  Sunday and any day which is a
     ------------
legal  holiday  under the laws of the  State of New  Jersey or is a day on which
banking institutions located in such state are closed.

     Capital  Expenditures - expenditures  made or liabilities  incurred for the
     ---------------------
acquisition of any fixed assets or improvements,  replacements, substitutions or
additions thereto which have a useful life of more than one year,  including the
total principal portion of Capitalized Lease Obligations.

     Capitalized Lease Obligation - any Indebtedness  represented by obligations
     ----------------------------
under a  lease  that is  required  to be  capitalized  for  financial  reporting
purposes in accordance with GAAP.

     Closing Date - the date on which all of the conditions precedent in Section
     ------------
9 of the Agreement are satisfied and the initial Loan is made.

     Code - the Uniform  Commercial Code as adopted and in force in the State of
     ----
New Jersey, from time to time.

     Collateral  - all of the Property  and  interests in Property  described in
     ----------
Section 5 of the  Agreement,  and all other  Property and  interests in Property
that  now  or  hereafter  secure  the  payment  and  performance  of  any of the
Obligations.

     Consolidated - the consolidation in accordance with GAAP of the accounts or
     ------------
other items as to which such term applies.

     Consolidated  Debt - The  aggregate  of all  debt of the  Borrower  and its
     ------------------
subsidiaries that is not intercompany debt, or Subordinated Debt.

     Current  Assets - at any date means the amount at which all of the  current
     ---------------
assets of a Person  would be properly  classified  as current  assets shown on a
balance sheet at such date in  accordance  with GAAP except that any amounts due
from Affiliates and investments in Affiliates shall be excluded therefrom.

     Default - an event or condition  the  occurrence  of which would,  with the
     -------
lapse of time or the giving of notice, or both, become an Event of Default.

     Default Rate - as defined in subsection 2.1.2 of the Agreement.
     ------------

     Deposit  Account  - a  demand,  time,  savings,  passbook  or like  account
     ----------------
maintained  with a bank,  savings  and loan  association,  credit  union or like
organization, other than an account evidenced by a certificate of deposit.

                                      -30-
<PAGE>

     Distribution - in respect of any  corporation  means and includes:  (i) the
     ------------
payment  of any  dividends  or  other  distributions  on  capital  stock  of the
corporation  (except  distributions  in such stock) and (ii) the  redemption  or
acquisition of Securities unless made contemporaneously from the net proceeds of
the sale of Securities.

     Dominion  Account - a special  account of Lender  established  by  Borrower
     -----------------
pursuant to the  Agreement at a bank  selected by Borrower,  but  acceptable  to
Lender in its reasonable  discretion,  and over which Lender shall have sole and
exclusive access and control for withdrawal purposes.

     EBIT  -  with  respect  to  any  fiscal  period,   the  sum  of  Borrower's
     ----
Consolidated  net earnings (or loss) before interest  expense and taxes for said
period determined in accordance with GAAP.

     Eligible  Account - an Account arising in the ordinary course of Borrower's
     -----------------
business from the sale of goods or rendition of services  which  Lender,  in its
sole credit  judgment,  deems to be an Eligible  Account.  Without  limiting the
generality of the foregoing, no Account shall be an Eligible Account if:

        (i)     it  arises out of  a sale made by Borrower to a Subsidiary or an
Affiliate of Borrower or to a Person controlled by an Affiliate of Borrower; or

        (ii)    it is unpaid  for more than 90  days after the original due date
shown on the invoice; or

        (iii)   it is due or unpaid more than 90 days after the original invoice
date; or

        (iv)    50%  or more  of the  Accounts from  the Account  Debtor are not
deemed Eligible Accounts hereunder; or

        (v)     the  total unpaid Accounts  of the Account Debtor  exceed 20% of
the net amount of all Eligible Accounts,  except American Express or Volkswagen,
USA which exceed 35% of the net amount of all Eligible  Accounts,  to the extent
of such excess; or

        (vi)    any  covenant,  representation  or  warranty  contained  in  the
Agreement with respect to such Account has been breached; or

        (vii)   Account  Debtor is also  Borrower's creditor or supplier, or the
Account  Debtor has  disputed  liability  with respect to such  Account,  or the
Account  Debtor has made any claim with  respect to any other  Account  due from
such  Account  Debtor to  Borrower,  or the Account  otherwise  is or may become
subject to any right of setoff by the Account Debtor; or

        (viii)  the Account  Debtor has  commenced  a  voluntary  case under the
federal  bankruptcy  laws, as now constituted or hereafter  amended,  or made an
assignment  for the  benefit of  creditors,  or a decree or order for relief has
been  entered by a court having  jurisdiction  in the premises in respect of the
Account Debtor in an involuntary case under the federal  bankruptcy laws, as now
constituted or hereafter amended, or any other petition or other application for
relief  under the  federal  bankruptcy  laws has been filed  against the Account
Debtor, or if the Account Debtor has failed,  suspended  business,  ceased to be
Solvent,  or  consented  to or  suffered  a  receiver,  trustee,  liquidator  or
custodian  to be  appointed  for it or for all or a  significant  portion of its
assets or affairs; or

        (ix)    it arises from a sale to an Account  Debtor outside  the  United
States,  unless  the sale is on  letter  of  credit  terms,  or  foreign  credit
insurance collaterally assigned to the Lender, in each case acceptable to Lender
in its sole discretion; or

                                      -31-
<PAGE>

        (x)     it arises  from a sale to the Account Debtor on a bill-and-hold,
guaranteed  sale,  sale-or-return,  sale-on-approval,  consignment  or any other
repurchase or return basis; or

        (xi)    the  Account  Debtor  is  the  United  States of  America or any
department, agency or instrumentality thereof, unless Borrower assigns its right
to payment of such Account to Lender, in a manner  satisfactory to Lender, so as
to comply with the Assignment of Claims Act of 1940 (31 U.S.C.  '203 et seq., as
amended); or -- ---

        (xii)   the  Account is  subject to a  Lien other than the Lender's or a
Permitted Lien; or

        (xiii)  the goods giving rise to such Account have not been delivered to
and accepted by the Account  Debtor or the services  giving rise to such Account
have not been  performed by Borrower  and accepted by the Account  Debtor or the
Account otherwise does not represent a final sale; or

        (xiv)   the  Account is  evidenced by chattel paper  or an instrument of
any kind unless Lender has possession of such instrument, or has been reduced to
judgment; or

        (xv)    Borrower has made any agreement with the Account  Debtor for any
deduction  therefrom,  except for discounts or allowances  which are made in the
ordinary course of business for prompt payment and which discounts or allowances
are reflected in the  calculation  of the face value of each invoice  related to
such Account; or

        (xvi)   Borrower has made an agreement with the Account Debtor to extend
the time of payment thereof; or

        (xvii)  the Account  arises from a sale to an Account  Debtor that is an
internet ("dot-com")  company,  unless the sale is secured by a letter of credit
or insured by credit insurance acceptable to the Lender and the credit insurance
has been collaterally assigned to the Lender; or

        (xviii) the  Account arises from  a sale to an  Account Debtor that is a
Person not on the Approved Customer List, unless the sale is secured by a letter
of credit or insured by credit insurance acceptable to the Lender and the credit
insurance has been collaterally assigned to the Lender.

     Environmental Laws - all federal, state and local laws, rules, regulations,
     ------------------
ordinances, programs, permits, guidances, orders and consent decrees relating to
health, safety and environmental matters.

     Equipment  - all  machinery,  apparatus,  equipment,  fittings,  furniture,
     ---------
fixtures,  motor  vehicles  and other  tangible  personal  Property  (other than
Inventory) of every kind and description used in Borrower's  operations or owned
by Borrower or in which Borrower has an interest, whether now owned or hereafter
acquired  by Borrower  and  wherever  located,  and all parts,  accessories  and
special tools and all increases and  accessions  thereto and  substitutions  and
replacements therefor.

     ERISA - the Employee  Retirement  Income  Security Act of 1974, as amended,
     -----
and all rules and regulations from time to time promulgated thereunder.

     Event of Default - as defined in Section 10.1 of the Agreement.
     ----------------

                                      -32-
<PAGE>

     Fixed Charge Coverage Ratio - with respect to any fiscal period,  the ratio
     ---------------------------
of (i) Borrower's  Consolidated net earnings (or loss) before  interest,  taxes,
depreciation and amortization minus the total of unfinanced Capital Expenditures
                              -----
plus cash taxes paid for such period to (ii) Fixed Charges for such period,  all
----
determined in accordance with GAAP.

     Fixed Charges - for any  accounting  period,  the sum of interest  expense,
     -------------
plus current  maturities on long term debt and current Capital Lease Obligations
(excluding  a  $3,000,000.00  principal  payment  due to  Intelligroup,  Inc. in
 ---------
September 2000).

     GAAP - generally  accepted  accounting  principles  in the United States of
     ----
America in effect from time to time.

     General  Intangibles - all personal property of Borrower  (including things
     --------------------
in action) other than goods, Accounts, chattel paper, documents, instruments and
money, whether now owned or hereafter created or acquired by Borrower.

     Governmental  Authority.  - the government of the United States of America,
     -----------------------
any nation or any political subdivision thereof, whether state or local, and any
agency,  authority,  instrumentality,  regulatory body,  court,  central bank or
other entity exercising executive, legislative,  judicial, taxing, regulatory or
administrative powers or functions of or pertaining to government.

     Indebtedness  -  as  applied  to  a  Person  means,   without   duplication
     ------------

        (i)     all items which in accordance  with  GAAP  would be  included in
determining  total liabilities as shown on the liability side of a balance sheet
of such  Person  as at the date as of which  Indebtedness  is to be  determined,
including, without limitation, Capitalized Lease Obligations,

        (ii)    all   obligations  of  other   Persons  which  such  Person  has
guaranteed,

        (iii)   all  reimbursement  obligations  in  connection  with letters of
credit or letter of credit guaranties issued for the account of such Person, and

        (iv)    in the case of Borrower (without duplication), the Obligations.

     Interest Coverage Ratio - with respect to any period of determination,  the
     -----------------------
ratio of (i) EBIT for such period to (ii) Interest Expense for such period,  all
as determined in accordance with GAAP.

     Interest Expense - with respect to any fiscal period,  the interest expense
     ----------------
incurred for such period as determined  in accordance  with GAAP plus the Letter
of Credit and LC Guaranty fees owing for such period.

     Inventory - all of  Borrower's  inventory,  whether now owned or  hereafter
     ---------
acquired including,  but not limited to, all goods intended for sale or lease by
Borrower,  or for  display  or  demonstration;  all  work  in  process;  all raw
materials and other materials and supplies of every nature and description  used
or which might be used in connection with the  manufacture,  printing,  packing,
shipping, advertising, selling, leasing or furnishing of such goods or otherwise
used or  consumed in  Borrower's  business;  and all  documents  evidencing  and
General  Intangibles  relating  to any of the  foregoing,  whether  now owned or
hereafter acquired by Borrower.

     Investment   Property  -  means  a  security,   whether   certificated   or
     ---------------------
uncertificated,  a security  entitlement,  a  securities  account,  a  commodity
contract, or a commodity account.

                                      -33-
<PAGE>

     LC Amount - at any time,  the aggregate  undrawn face amount of all Letters
     ---------
of Credit and LC Guaranties then outstanding.

     LC Guaranty - any  guaranty  pursuant to which  Lender or any  Affiliate of
     -----------
Lender  shall   guaranty  the  payment  or   performance   by  Borrower  of  its
reimbursement obligation under any letter of credit.

     Leasehold  Improvements  - any and all  improvements  made by  Borrower  to
     -----------------------
Property leased by the Borrower.

     Letter of Credit - all letters of credit  issued by Lender or any Affiliate
     ----------------
of Lender at the request of and for the account of the Borrower.

     Lien - any interest in Property  securing an obligation owed to, or a claim
     ----
by, a Person  other than the owner of the  Property,  whether  such  interest is
based on common law,  statute or  contract.  The term "Lien"  shall also include
reservations,  exceptions, encroachments,  easements, rights-of-way,  covenants,
conditions,  restrictions,  leases and other title  exceptions and  encumbrances
affecting Property.  For the purpose of the Agreement,  Borrower shall be deemed
to be the owner of any  Property  which it has  acquired  or holds  subject to a
conditional sale agreement or other  arrangement  pursuant to which title to the
Property  has been  retained  by or vested in some  other  Person  for  security
purposes.

     Loan Account - the loan account established on the books of Lender pursuant
     ------------
to Section 3.6 of the Agreement.

     Loan  Documents - the  Agreement,  the Other  Agreements  and the  Security
     ---------------
Documents.

     Loans - all loans and  advances of any kind made by Lender  pursuant to the
     -----
Agreement.

     Money Borrowed - means (i)  Indebtedness  arising from the lending of money
     --------------
by any Person to Borrower;  (ii)  Indebtedness,  whether or not in any such case
arising  from the  lending  by any  Person  of money to  Borrower,  (A) which is
represented  by notes payable or drafts  accepted  that  evidence  extensions of
credit, (B) which constitutes obligations evidenced by bonds, debentures,  notes
or similar instruments,  or (C) upon which interest charges are customarily paid
(other than  accounts  payable) or that was issued or assumed as full or partial
payment for Property;  (iii)  Indebtedness  that constitutes a Capitalized Lease
Obligation;  (iv) reimbursement obligations with respect to letters of credit or
guaranties  of letters  of credit and (v)  Indebtedness  of  Borrower  under any
guaranty of obligations  that would  constitute  Indebtedness for Money Borrowed
under clauses (i) through (iii) hereof, if owed directly by Borrower.

     Multiemployer  Plan - has the  meaning set forth in Section  4001(a)(3)  of
     -------------------
ERISA.

     Obligations  - all  Loans  and  all  other  advances,  debts,  liabilities,
     -----------
obligations,  covenants and duties,  together with all interest,  fees and other
charges thereon,  owing,  arising, due or payable from Borrower to Lender of any
kind or  nature,  present  or  future,  whether  or not  evidenced  by any note,
guaranty or other instrument,  whether arising under the Agreement or any of the
other Loan Documents or otherwise  whether direct or indirect  (including  those
acquired by assignment), absolute or contingent, primary or secondary, due or to
become due, now existing or hereafter arising and however acquired.

     Original Term - as defined in Section 4.1 of the Agreement.
     -------------

     Other Agreements - any and all agreements, instruments and documents (other
     ----------------
than the Agreement  and the Security  Documents),  heretofore,  now or hereafter
executed by Borrower,  any

                                      -34-
<PAGE>

Subsidiary  of  Borrower or any other  third  party and  delivered  to Lender in
respect of the transactions contemplated by the Agreement.

     Overadvance - the amount, if any, by which the outstanding principal amount
     -----------
of Revolving Credit Loans exceeds the Borrowing Base.

     Participating Lender - each Person who shall be granted the right by Lender
     --------------------
to participate in any of the Loans described in the Agreement and who shall have
entered into a  participation  agreement in form and substance  satisfactory  to
Lender.

     Permitted  Liens - any Lien of a kind specified in subsection  8.2.5 of the
     ----------------
Agreement.

     Permitted  Purchase  Money  Indebtedness  -  Non-recourse   Purchase  Money
     ----------------------------------------
Indebtedness  of Borrower  incurred  after the date hereof which is secured by a
Purchase  Money  Lien,  provided  however,  at no time  shall  the  proceeds  of
Revolving  Credit Loans be used to incur  Purchase Money  Indebtedness.  For the
purposes  of  this  definition,  the  principal  amount  of any  Purchase  Money
Indebtedness consisting of capitalized leases shall be computed as a Capitalized
Lease Obligation.

     Person  -  an  individual,  partnership,   corporation,  limited  liability
     ------
company,  joint stock company,  land trust,  business trust,  or  unincorporated
organization, or a government or agency or political subdivision thereof.

     Plan - an employee  benefit plan now or hereafter  maintained for employees
     ----
of Borrower that is covered by Title IV of ERISA.

     Projections - Borrower's forecasted (a) balance sheets, (b) profit and loss
     -----------
statements,  (c) cash flow statements,  and (d) capitalization  statements,  all
prepared on a consistent basis with Borrower's  historical financial statements,
together  with  appropriate  supporting  details and a statement  of  underlying
assumptions.

     Property - any  interest in any kind of property  or asset,  whether  real,
     --------
personal or mixed, or tangible or intangible.

     Purchase Money  Indebtedness - means and includes (i)  Indebtedness  (other
     ----------------------------
than the  Obligations)  for the payment of all or any part of the purchase price
of any fixed assets, (ii) any Indebtedness (other than the Obligations) incurred
at the time of or within 10 days prior to or after the  acquisition of any fixed
assets  for the  purpose  of  financing  all or any part of the  purchase  price
thereof, and (iii) any renewals, extensions or refinancings thereof, but not any
increases in the principal amounts thereof outstanding at the time.

     Purchase Money Lien - a Lien upon fixed assets which secures Purchase Money
     -------------------
Indebtedness, but only if such Lien shall at all times be confined solely to the
fixed assets the purchase price of which was financed  through the incurrence of
the Purchase Money Indebtedness secured by such Lien.

     Rentals - as defined in subsection 8.2.13 of the Agreement.
     -------

     Renewal Terms - as defined in Section 4.1 of the Agreement.
     -------------

     Reportable Event - any of the events set forth in Section 4043(b) of ERISA.
     ----------------

                                      -35-
<PAGE>

     Restricted  Investment  - any  investment  made in cash or by  delivery  of
     ----------------------
Property to any Person,  whether by acquisition of stock,  Indebtedness or other
obligation  or  Security,  or by  loan,  advance  or  capital  contribution,  or
otherwise, or in any Property except the following:

        (i)     investments  in  one  or more  Subsidiaries of  Borrower  to the
extent existing on the Closing Date;

        (ii)    Property to be used in the ordinary course of business;

        (iii)   Current  Assets  arising from  the sale of goods and services in
the ordinary course of business of Borrower and its Subsidiaries;

        (iv)    investments  in  direct  obligations of  the  United  States  of
America, or any agency thereof or obligations guaranteed by the United States of
America,  provided that such obligations mature within one year from the date of
acquisition thereof;

        (v)     investments in certificates of deposit  maturing within one year
from the date of acquisition  issued by a bank or trust company  organized under
the laws of the United States or any state thereof  having  capital  surplus and
undivided profits aggregating at least $100,000,000; and

        (vi)    investments in commercial  paper given  the highest  rating by a
national  credit rating agency and maturing not more than 270 days from the date
of creation thereof.

     Revolving Credit Loan - a Loan made by Lender as provided in Section 1.1 of
     ---------------------
the Agreement.

     Revolving  Loan Master Note - the Revolving  Loan Master Note, of even date
     ---------------------------
herewith, executed by the Borrower and evidencing the Revolving Credit Loan.

     Schedule of Accounts - as defined in subsection 6.2.1 of the Agreement.
     --------------------

     Security - shall have the same meaning as in Section 2(1) of the Securities
     --------
Act of 1933, as amended.

     Security Documents - all instruments,  filings and agreements now or at any
     ------------------
time hereafter securing the whole or any part of the Obligations.

     Solvent - as to any  Person,  such  Person  (i) owns  Property  whose  fair
     -------
saleable  value is greater than the amount  required to pay all of such Person's
Indebtedness  (including  contingent  debts),  (ii)  is  able  to pay all of its
Indebtedness as such  Indebtedness  matures and (iii) has capital  sufficient to
carry on its business and  transactions  and all  business and  transactions  in
which it is about to engage.

     Subordinated  Debt - Indebtedness  of Borrower that is  subordinated to the
     ------------------
Obligations in a manner satisfactory to Lender.

     Subsidiary - any corporation of which a Person owns, directly or indirectly
     ----------
through  one or more  intermediaries,  more than 50% of the Voting  Stock at the
time of determination.

     Tangible  Net  Worth -  shall  mean  as of the  time  of any  determination
     --------------------
thereof,  in accordance  with  generally  accepted  accounting  principles,  the
difference  between (a) the sum of (i) the par value (or the value stated on the
books of  Borrower) of the capital  stock of all classes of  Borrower,  plus (or
minus in the case of a  deficit),  and (ii) the amount of the  surplus,  whether

                                      -36-
<PAGE>

capital or earned of Borrower,  plus Subordinated  Debt, less (b) the sum of the
book value of treasury stock,  unamortized debt discount and expense, good will,
trademarks,  tradenames,  patents,  deferred charges, reserves and other similar
intangible  assets and any  write-up  after the date hereof of the book value of
any assets,  all  determined in accordance  with generally  accepted  accounting
principles.

     Total Credit Facility - $15,000,000.00.
     ---------------------

     UCP - means the 1993  Revision of the  Uniform  Customs  and  Practice  for
     ---
Documentary  Credits of the International  Chamber of Commerce  (Publication No.
500).

     Voting  Stock -  Securities  of any class or classes of a  corporation  the
     -------------
holders of which are ordinarily,  in the absence of  contingencies,  entitled to
elect a majority  of the  corporate  directors  (or Persons  performing  similar
functions).

     Other Terms.  All other terms  contained in the Agreement  shall have, when
     -----------
the context so  indicates,  the meanings  provided for by the Code to the extent
the same are used or defined therein.

     Certain  Matters  of  Construction.   The  terms  "herein",   "hereof"  and
     ----------------------------------
"hereunder"  and other words of similar import refer to the Agreement as a whole
and not to any particular  section,  paragraph or subdivision.  Any pronoun used
shall be deemed to cover all genders.  The section titles, table of contents and
list of exhibits appear as a matter of convenience only and shall not affect the
interpretation  of  the  Agreement.  All  references  to  statutes  and  related
regulations shall include any amendments of same and any successor  statutes and
regulations.  All references to any of the Loan Documents  shall include any and
all modifications thereto and any and all extensions or renewals thereof.

                                      -37-EXHIBIT 10.1
                                                                    ------------

                              EMPLOYMENT AGREEMENT
                              --------------------

     This  Employment  Agreement  ("Agreement")  is  made and entered into by DA
CONSULTING GROUP, INC., a Texas corporation (hereinafter the "Company") and JOHN
MITCHELL  (hereinafter  the  "Employee").

     In  consideration of the mutual promises set forth below and other good and
valuable  consideration,  the  receipt  and  sufficiency  of  which  the parties
acknowledge,  the  Company  and  Employee  agree  as  follows:

     1.     EMPLOYMENT.  The  Company  employs  Employee  and  Employee  accepts
            ----------
employment  on  the  terms  and  conditions  set  forth  in  this  Agreement.

     2.     NATURE  OF  EMPLOYMENT.  Employee shall serve as President and Chief
            ----------------------
Executive  Officer  and have such responsibilities and authority consistent with
such  position  as  may from time to time be reasonably assigned by the Board of
Directors  of  the  Company  (the "Board").  Employee shall report to the Board.
Employee  shall  devote  his full time and attention and best efforts to perform
successfully  his  duties  and  advance the Company's interests.  Employee shall
abide by Company policies, procedures, and practices as they may exist and be in
force  from  time  to  time.

     Employee  agrees  to  execute  the  attached  Non-Disclosure, Assignment of
Developments  and  Non-Solicitation  Agreement  and  the  attached  Separation
Agreement.

     3.     LOCATION  OF EMPLOYMENT.  Employee will perform his duties primarily
            -----------------------
at  the  Company's  offices in London, England; provided, however, that Employee
will  travel  to  the  Company's  Houston,  Texas  office on a regular basis, as
reasonably  requested  by  the  Company.  The Company will indemnify Employee in
full  for  any  additional  tax  cost  incurred if, as a result of the Company's
requirements,  Employee  becomes  subject to United States tax on his world wide
income.   Such  indemnification  shall  place Employee in the same net after-tax
position  that  Employee  would  have  been  in  if  he  had not been subject to
applicable  United  States  federal,  state  and  local  taxes.

     4.     COMPENSATION.
            ------------

          (a)     Salary.  Effective  April 4, 2000, compensation for Employee's
                  ------
services  under  this  Agreement  initially  shall  be  One  Hundred Ninety Five
Thousand  Pounds  (  195,000) per year, payable in equal monthly installments in
arrears.  The  Employee's  salary shall be reviewed annually by the Board (or by
the  Committee  thereof  charged  with  establishing  executive compensation) by
January 1 of each year and may be increased in the Board's (or such Committee's)
discretion  based  on  Employee's performance, provided that such salary for any
year  shall  not be reduced below the salary for the immediately preceding year.

<PAGE>
          (b)     Benefits.
                  --------

               (i)     Employee  may  participate  in  any  medical,  dental,
disability,  life insurance, and other employee benefit plans and programs which
may be made available from time to time to other Company employees at Employee's
level;  provided,  however,  that Employee's participation in such benefit plans
and  programs  is  subject  to the applicable terms, conditions, and eligibility
requirements  of  those  plans  and  programs, some of which are within the plan
administrator's  discretion,  as  they  may  exist  from  time  to  time.

               (ii)     Notwithstanding the preceding subparagraph (i), Employee
shall be provided with (A) life insurance with a death benefit of four times his
annual  salary;  and  (B)  a  car  allowance  of  13,200  per  year.

               (iii)     The  Company  will  credit each year an amount equal to
five  percent  (5%)  of Employee's annual salary to a pension fund of Employee's
choice.

          (c)     Performance  Bonus.  Employee  shall  be entitled to an annual
                  ------------------
performance bonus up to an amount determined by the Company which shall be based
on  goals  set  by the Company and communicated to Employee by January 31 of the
calendar  year  for  which  the  bonus  is potentially payable or, for any bonus
payable  in  2000,  within  60  days  of  execution of the Agreement.  The bonus
opportunity  for  2000  is  One  Hundred  Seventeen  Thousand Pounds ( 117,000).
Unless  otherwise agreed to in writing between the parties, the applicable bonus
period  for periods beginning after 2000 shall be the calendar year.  The annual
performance  bonus  shall  be paid in a lump sum amount on or before March 31 of
the  calendar  year  following the calendar year for which the bonus was earned.

          (d)     Reimbursement  of  Expenses.  The  Company  shall  reimburse
                  ---------------------------
Employee  for  all expenses reasonably incurred by him on behalf of the Company.
In  addition,  the Company shall reimburse Employee for all expenses incurred by
him  for  his  membership  and  participation  in  professional  associations,
continuing  education,  and  maintenance  of  professional  licenses.

     5.     TERM  OF  EMPLOYMENT.  This Agreement is effective April 4, 2000 and
            --------------------
may  be  terminated  pursuant  to  Section  6  (Termination)  below.

     6.     TERMINATION.
            -----------

          (a)     Termination  Upon Death or Permanent Disability.  In the event
                  -----------------------------------------------
that  Employee  dies,  this Agreement shall terminate upon the Employee's death.
If  the  Employee  becomes physically or mentally disabled and thereby unable to
perform  his  duties hereunder for a period of more than ninety (90) consecutive
days  or  for  more than one hundred twenty (120) days, in the aggregate, during
any  three  hundred  sixty-five (365) day period, the Company may terminate this
Agreement.  In  the event of termination upon death or disability, the Employee,
or  his  legal  representatives,  shall  be  entitled  to be paid his salary and
performance  bonus  earned  pro  rata  to  the  date  of  termination.
                            ---  ----

<PAGE>
          (b)     Termination  by  the  Company  for  Cause.  The  Company  may
                  -----------------------------------------
terminate  Employee's  employment  for "Cause."  For purposes of this Agreement,
Cause  shall  mean  the  Employee (i) has engaged in gross negligence or willful
misconduct  in  the performance of Employee's duties, (ii) has willfully refused
without  proper  legal reason to perform Employee's duties and responsibilities,
(iii)  has  materially  breached any material provision of any agreement between
the  Company  and  Employee, (iv) has materially breached any material corporate
policy  maintained  and  established  by  the  Company  that  is  of  general
applicability to the Company's executive employees, (v) has willfully engaged in
conduct  that  Employee  knows  or  should  know  is materially injurious to the
Company  or any of its affiliates, or (vi) has engaged in illegal conduct or any
act  of  serious  dishonesty which adversely affects, or reasonably could in the
future adversely affect, the value, reliability, or performance of Employee in a
material  manner;  provided,  however,  that  in no event shall a termination of
Employee's employment constitute a termination for Cause unless such termination
is  approved  by  at least two-thirds of the members of the Board after Employee
has  been  given  written  notice by the Company of the specific reason for such
termination  and  an opportunity for Employee, together with Employee's counsel,
to  be  heard  before  the  Board.  Members  of the Board may participate in any
hearing  that  is  required pursuant to this Section 6(b) by means of conference
telephone  or  similar  communications  equipment  by means of which all persons
participating  in  the  hearing  can  hear  and  speak  to each other; provided,
however,  that  at  least  one-half of the members of the Board shall attend the
hearing  in  person.

     In  the  event  of  termination  for  Cause,  the  Company's  obligation to
compensate  Employee  ceases on the termination date except as to the salary and
the  unpaid  performance  bonus,  if  any,  for  the calendar year preceding the
calendar  year  in  which  the  termination  date  occurs.

          (c)     Termination  by the Company Without Cause.  This Agreement may
                  -----------------------------------------
be terminated by the Company without Cause upon ninety (90) days' written notice
thereof given to Employee.  Upon the delivery of notice of such termination, the
Company  may, in its discretion, and notwithstanding any other provision of this
Agreement  to  the  contrary,  limit  Employee's continuing responsibilities and
access  to  confidential  information,  provided  that  the  effective  date  of
termination  shall  be a mutually-agreed date, but not earlier than the 90th day
following the Company's delivery of such notice.  In the event of termination by
the  Company  without  Cause:

               (i)     the  Company  shall  continue  to  pay  Employee his then
effective  salary  hereunder  for  eighteen (18) months, following the effective
date  of  termination of employment, including 100% of any bonus paid or payable
to Employee with respect to the calendar year immediately preceding termination,
and continue for such period to provide other benefits as provided for hereunder
on  the  same  basis  as  in  effect before the effective date of termination of
employment,  to  the  extent  permitted  by  the  terms  of the benefit plans or
arrangements  pursuant  to  which  such  benefits  are  provided;  and

<PAGE>
               (ii)     all  outstanding  stock  options  held by Employee shall
become  fully  vested  and  exercisable.

          (d)     Voluntary  Termination  by Employee for Good Reason.  Employee
                  ---------------------------------------------------
may  at  any  time  voluntarily  terminate this Agreement for "Good Reason" upon
thirty  (30)  days'  prior  written notice to the Company.  For purposes of this
Agreement, Good Reason shall mean the occurrence of any of the following events:
(i) a change materially adverse to the Employee in the Employee's status, title,
position,  or  responsibilities; (ii) the insolvency or the filing of a petition
for  bankruptcy  of  the  Company; (iii) the failure of the Company to obtain an
agreement,  satisfactory  to  the  Employee, from any successor or assign of the
Company  to  assume  and  agree  to perform this Agreement; or (iv) any material
breach  by  the  Company  of  this  Agreement.

     In  the  event  of  voluntary termination for Good Reason the Company shall
continue  to  pay  Employee his then effective salary and all benefits hereunder
for  twelve (12) months, including 100% of any bonus paid or payable to Employee
with  respect  to  the  calendar year immediately preceding termination, and all
outstanding  stock  options  held  by  Employee  shall  become  fully vested and
exercisable.

          (e)     Voluntary  Termination  by  Employee.
                  ------------------------------------

               (i)     Termination  With  One  Year's  Notice.  Employee  may
                       --------------------------------------
terminate  this  Agreement  upon one year's prior written notice to the Company.
Upon  the  delivery  of  notice  of  such  termination,  the Company may, in its
discretion,  and  notwithstanding  any  other provision of this Agreement to the
contrary,  limit  Employee's  continuing  responsibilities  and  access  to
confidential  information, provided that the effective date of termination shall
be  a  mutually-agreed  date,  but  not  earlier  than  one  year  following the
Employee's  delivery  of  such  notice.  In  the event of such a termination the
Company  shall  continue to pay Employee his then effective salary hereunder for
twelve  (12)  months, following the effective date of termination of employment,
including  100%  of  any  bonus  paid or payable to Employee with respect to the
calendar year immediately preceding termination, and continue for such period to
provide  other benefits as provided for hereunder on the same basis as in effect
before  the effective date of termination of employment, to the extent permitted
by  the  terms  of  the  benefit  plans  or  arrangements pursuant to which such
benefits  are  provided.

If,  after written notice of termination has been given pursuant to this Section
6(e)(i)  and  prior  to  the  termination date, a termination occurs pursuant to
Section  6(a),  or  the  Company  becomes  entitled  to  terminate the Agreement
pursuant  to  Section  6(a)  or (b), the provisions of Section 6(a) or (b) shall
apply  instead  of  this  Section  6(e)(i).

<PAGE>
               (ii)     Termination  Upon Less than One Year's Notice.  Employee
                        ---------------------------------------------
may  terminate  this  Agreement  at  any  time upon delivering ninety (90) days'
written  notice  of  resignation to the Company.  In the event of such voluntary
termination,  Employee  shall  be  entitled  only  to  his salary and the unpaid
performance  bonus, if any, for the calendar year preceding the calendar year in
which  the  termination  date  occurs.

     7.     COVENANT  NOT  TO  COMPETE.  Employee acknowledges that by virtue of
            --------------------------
his employment relationship, he shall have access to and control of confidential
and  proprietary  information  concerning  the  Company's  business and that the
Company's  business depends, to a considerable extent, on the individual skills,
efforts,  and  leadership  of Employee.  Accordingly and in consideration of the
Company's  commitments  to  Employee  under  this  Agreement, Employee expressly
covenants  and  agrees  that  during the term of this Agreement and for eighteen
(18) months following the termination of his employment (unless such termination
is  by  the  Company without Cause or by the Employee for Good Reason), Employee
will  not,  without  the  prior  written  consent  of  Company:

          (a)     on  Employee's own or another's behalf, whether as an officer,
director,  stockholder,  partner,  associate,  owner,  employee,  consultant  or
otherwise,  directly  or  indirectly:

               (i)     solicit  or do business which is the same, similar to, or
otherwise  in  competition  with the business engaged in by the Company, from or
with  persons  or entities who are clients or customers of the Company, who were
clients  or  customers  of  the  Company  at  any  time  during the last year of
Employee's  employment  with  the  Company,  or  to  whom  the  Company had made
proposals for business at any time during the last year of Employee's employment
with  the  Company;  or

               (ii)     offer  employment  to,  or  otherwise  solicit  for
employment,  any  employee  or other person who had been employed by the Company
during  the  last  year  of  Employee's  employment  with  the  Company;

          (b)     be employed (or otherwise engaged) in a management capacity by
any  person  or  entity  that  directly  competes  with  the  Company.

     Employee  further acknowledges that the covenants contained in this Section
7  are  reasonably necessary to protect the legitimate business interests of the
Company  and  are  reasonable with respect to scope, time, and territory and are
described  with sufficient accuracy and definiteness to enable him to understand
the  scope of the restrictions imposed on him.  The terms and conditions of this
Section  7  shall  survive  expiration  or  termination  of  this  Agreement  or
Employee's employment and shall not be affected by any change or modification of
this  Agreement  unless  specific  reference  is  made  to  this  Section  7.

<PAGE>
     It  is agreed that ownership, directly or indirectly, of not more than five
percent (5%) of the issued and outstanding stock of a corporation, the shares of
which  are  regularly  traded  on  a  national  securities  exchange  or  in the
over-the-counter  market, shall not be deemed to be in violation of this Section
7.

     8.     REMEDIES.  Employee agrees that his breach or violation of Section 7
            --------
(Covenant  Not to Compete), will result in immediate and irreparable harm to the
Company for which legal remedies would be inadequate.  Therefore, in addition to
any  legal or other relief to which the Company may be entitled, the Company may
seek  legal  and equitable relief, including but not limited to, preliminary and
permanent  injunctive  relief.

     9.     EMPLOYEE  REPRESENTATION.  Employee represents and warrants that his
            ------------------------
employment  and  obligations  under  this  Agreement will not breach any duty or
obligation  he  owes  to  another  person  or  entity.

     10.     COMPANY  REPRESENTATION.  Company  represents  and warrants that it
             -----------------------
has  no  obligation which would prohibit it from entering into this Agreement or
complying  with  its provisions and that it has the authority to enter into this
Agreement.

     11.     WAIVER OF BREACH.  The Company's or Employee's waiver of any breach
             ----------------
of  a  provision  of this Agreement shall not waive any subsequent breach by the
other  party.

     12.     ENTIRE AGREEMENT. This Agreement including any schedule, exhibit or
             ----------------
attachment hereto:  (i) supersedes all other understandings and agreements, oral
or  written,  between  the  parties  with  respect to the subject matter of this
Agreement  including  any  schedule,  exhibit  or  attachment  hereto;  and (ii)
constitutes  the sole agreement between the parties with respect to this subject
matter.  Each  party  acknowledges  that:  (i)  no representations, inducements,
promises  or  agreements,  oral  or  written,  have been made by any party or by
anyone  acting  on behalf of any party, which are not embodied in this Agreement
including  any  schedule,  exhibit  or attachment hereto; and (ii) no agreement,
statement  or promise not contained in this Agreement shall be valid.  No change
or  modification  of  this Agreement shall be valid  or binding upon the parties
unless  such  change or modification is in writing and is signed by the parties.

     13.     SEVERABILITY.  If  a court of competent jurisdiction holds that any
             ------------
provision or sub-part thereof contained in this Agreement is invalid, illegal or
unenforceable,  that invalidity, illegality or unenforceability shall not affect
any  other provision in this Agreement.  Additionally, if any of the provisions,
clauses or phrases in Section 7 (Covenant Not to Compete) are held unenforceable
by  a  court  of  competent  jurisdiction,  then the parties desire that they be
"blue-penciled" or rewritten by the court to the extent necessary to render them
enforceable.

<PAGE>
     14.     PARTIES  BOUND.  The  terms,  provisions,  covenants and agreements
             --------------
contained  in  this  Agreement  shall apply to, be binding upon and inure to the
benefit  of  the  Company's  successors and assigns; however the Company may not
assign  this  Agreement  without  the  Employee's  prior  written  consent.

     15.     GOVERNING  LAW.  This  Agreement  and  the  employment relationship
             --------------
created  by  it  shall  be  governed  by  Texas  law.

     IN WITNESS WHEREOF, the parties have entered into this Agreement on the day
and  year  written  below.

                         _________________________________     ____________
                         John  Mitchell                            Date

                         DA  CONSULTING  GROUP,  INC.

                         By:______________________________     ____________

<PAGE>

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