SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------
FORM 10-QSB
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1997
Commission File No. 0-20943
Intelligroup, Inc.
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(Exact Name of Small Business Issuer as Specified in Its Charter)
New Jersey 11-2880025
- ------------------------------- ------------------------------------
(State or Other Jurisdiction of (I.R.S. Employer Identification No.)
Incorporation or Organization)
517 Route One South, Iselin, New Jersey 08830
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(Address of Principal Executive Offices) (Zip Code)
(908) 750-1600
---------------------------
(Issuer's Telephone Number,
Including Area Code)
Check whether the Issuer: (1) filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the past 12
months (or for such shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for the past 90
days.
Yes: X No:
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Indicate the number of shares outstanding of each of the Registrant's
classes of common stock, as of October 31, 1997:
Class Number of Shares
----- ----------------
Common Stock, $.01 par value 11,976,983
Transitional Small Business Disclosure Format:
Yes: No: X
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<PAGE>
INTELLIGROUP, INC. AND SUBSIDIARIES
TABLE OF CONTENTS
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Page
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PART I. FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements....................... 1
Consolidated Balance Sheets
as of September 30, 1997 (unaudited)
and December 31, 1996 .................................. 2
Consolidated Statements of Income
for the Three Months and Nine Months Ended
September 30, 1997 and 1996 (unaudited)................. 3
Consolidated Statements of Cash Flows
for the Nine Months Ended
September 30, 1997 and 1996 (unaudited)................. 4
Notes to Consolidated Financial Statements (unaudited).. 5
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations........... 7
PART II. OTHER INFORMATION
Item 1. Legal Proceedings....................................... 14
Item 5. Other Information....................................... 15
Item 6. Exhibits and Reports on Form 8-K........................ 16
SIGNATURES............................................................. 17
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<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements
- 1 -
<PAGE>
<TABLE>
INTELLIGROUP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
September 30, 1997 and December 31, 1996
<CAPTION>
September 30, December 31,
1997 1996
------------ ------------
(unaudited)
Assets
<S> <C> <C>
Current Assets:
Cash and cash equivalents .................................................... $ 11,176,000 $ 7,479,000
Accounts receivable, less allowance for doubtful accounts of $886,000
at September 30, 1997 and $546,000 at December 31, 1996 ............... 14,186,000 8,538,000
Unbilled services ............................................................ 8,027,000 2,916,000
Deferred income taxes ........................................................ 331,000 331,000
Other current assets ......................................................... 591,000 492,000
------------ ------------
Total current assets .................................................. 34,311,000 19,756,000
Property and equipment, less accumulated depreciation of $530,000
at September 30, 1997 and $243,000 at December 31, 1996 ...................... 3,062,000 1,281,000
Other assets ......................................................................... 293,000 225,000
------------ ------------
$ 37,666,000 $ 21,262,000
============ ============
Liabilities and Shareholders' Equity
Current Liabilities:
Accounts payable ............................................................. $ 1,613,000 $ 406,000
Accrued payroll and related taxes ............................................ 2,596,000 1,814,000
Accrued expenses and other liabilities ....................................... 1,107,000 1,268,000
Income taxes payable ......................................................... 909,000 535,000
Current portion of obligations under capital leases .......................... 20,000 20,000
------------ ------------
Total current liabilities ............................................. 6,245,000 4,043,000
------------ ------------
Obligations under capital leases, less current portion ............................... 51,000 57,000
------------ ------------
Commitments and contingencies
Shareholders' Equity
Preferred stock, $.01 par value, 5,000,000 shares authorized, none outstanding -- --
Common stock, $.01 par value, 25,000,000 shares authorized;
11,976,983 and 10,735,600 shares issued and outstanding
at September 30, 1997 and December 31, 1996, respectively ............. 120,000 107,000
Additional paid-in capital ................................................... 29,809,000 19,201,000
Retained earnings (deficit) .................................................. 1,441,000 (2,146,000)
------------ ------------
Total shareholders' equity ............................................ 31,370,000 17,162,000
------------ ------------
$ 37,666,000 $ 21,262,000
============ ============
See accompanying notes to consolidated financial statements.
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</TABLE>
<PAGE>
<TABLE>
INTELLIGROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
For the Three Months and Nine Months Ended September 30, 1997 and 1996
(unaudited)
<CAPTION>
Three Months Ended September 30, Nine Months Ended September 30,
-------------------------------- -------------------------------
1997 1996 1997 1996
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Revenue .................................... $ 21,903,000 $ 13,845,000 $ 56,797,000 $ 33,471,000
Cost of sales .............................. 14,338,000 9,825,000 38,631,000 23,972,000
------------ ------------ ------------ ------------
Gross profit ................... 7,565,000 4,020,000 18,166,000 9,499,000
Selling, general and administrative
expenses ............................. 5,197,000 2,831,000 12,670,000 6,896,000
------------ ------------ ------------ ------------
Operating income ............... 2,368,000 1,189,000 5,496,000 2,603,000
------------ ------------ ------------ ------------
Other expenses (income):
Interest expense (income), net ....... (143,000) 181,000 (266,000) 310,000
Factor charges ....................... -- 381,000 -- 954,000
------------ ------------ ------------ ------------
(143,000) 562,000 (266,000) 1,264,000
------------ ------------ ------------ ------------
Income before provision for income taxes ... 2,511,000 627,000 5,762,000 1,339,000
Provision for income taxes ................. 930,000 193,000 2,175,000 410,000
------------ ------------ ------------ ------------
Income before extraordinary charge ......... 1,581,000 434,000 3,587,000 929,000
Extraordinary charge-loss on early
extinguishment of debt, net of
income tax benefit of $410,000 ....... -- (1,034,000) -- (1,034,000)
------------ ------------ ------------ ------------
Net income (loss) .......................... $ 1,581,000 $ (600,000) $ 3,587,000 $ (105,000)
============ ============ ============ ============
Earnings (loss) per share:
Income before extraordinary charge ... $ 0.13 $ 0.05 $ 0.31 $ 0.09
Extraordinary charge, net of
income tax benefit ............. -- (0.12) -- (0.10)
------------ ------------ ------------ ------------
Net income (loss) per share .......... $ 0.13 $ (0.07) $ 0.31 $ (0.01)
============ ============ ============ ============
Shares used in per share calculation . 12,327,000 8,877,000 11,555,000 10,825,000
============ ============ ============ ============
See accompanying notes to consolidated financial statements.
</TABLE>
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<TABLE>
INTELLIGROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Nine Months Ended September 30, 1997 and
September 30, 1996
(unaudited)
<CAPTION>
September 30, September 30,
1997 1996
------------- -------------
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) .................................................. $ 3,587,000 $ (105,000)
Adjustments to reconcile net income (loss) to net cash
used in operating activities:
Depreciation and amortization .................................. 287,000 160,000
Provision for doubtful accounts ................................ 340,000 515,000
Extraordinary charge ........................................... -- 1,444,000
Changes in assets and liabilities:
Restricted cash deposited in escrow ............................ -- 100,000
Accounts receivable ............................................ (5,988,000) (5,347,000)
Unbilled services .............................................. (5,111,000) (1,890,000)
Other current assets ........................................... (99,000) (148,000)
Other assets ................................................... (68,000) (179,000)
Cash overdraft ................................................. -- 1,003,000
Accounts payable ............................................... 1,207,000 391,000
Accrued payroll and related taxes .............................. 782,000 (694,000)
Income taxes payable ........................................... 374,000 --
Accrued expenses and other liabilities ......................... (161,000) 29,000
------------ ------------
Net cash used in operating activities ...................... (4,850,000) (4,721,000)
------------ ------------
Cash flows from investing activities:
Purchase of property and equipment ................................. (2,068,000) (524,000)
------------ ------------
Cash flows from financing activities:
Proceeds from issuance of common stock, net of issuance costs ...... 9,900,000 --
Proceeds from subordinated debt and warrants, net of issuance costs. -- 5,888,000
Repurchase of common stock ......................................... -- (1,500,000)
Proceeds from the exercise of stock options ........................ 721,000 --
Loans from factor, net ............................................. -- 976,000
Repayments of lines of credit, net ................................. -- (5,000)
Principal payments under capital leases ............................ (6,000) (16,000)
------------ ------------
Net cash provided by financing activities .................. 10,615,000 5,343,000
------------ ------------
Net increase in cash and cash equivalents ................. 3,697,000 98,000
Cash and cash equivalents at beginning of period ........................ 7,479,000 71,000
------------ ------------
Cash and cash equivalents at end of period .............................. $ 11,176,000 $ 169,000
============ ============
Supplemental disclosures of cash flow information:
Cash paid for interest ............................................. $ -- $ 15,000
============ ============
Cash paid for income taxes ......................................... $ -- $ --
============ ============
Noncash transactions:
Subscriptions receivable ........................................... $ -- $ 19,065,000
============ ============
See accompanying notes to consolidated financial statements.
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</TABLE>
<PAGE>
INTELLIGROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
(1) BASIS OF PRESENTATION
- -------------------------
The consolidated financial statements and accompanying financial
information as of September 30, 1997 and for the three and nine months ended
September 30, 1997 and 1996 are unaudited and, in the opinion of management,
include all adjustments (consisting only of normal recurring adjustments) which
the Company considers necessary for a fair presentation of the financial
position of the Company at such dates and the operating results and cash flows
for those periods. The financial statements included herein have been prepared
in accordance with generally accepted accounting principles and the instructions
of Form 10-QSB and Rule 10-01 of Regulation S-X. Accordingly, certain
information and footnote disclosures normally included in financial statements
prepared in accordance with generally accepted accounting principles have been
condensed or omitted. These financial statements should be read in conjunction
with the Company's audited financial statements for the year ended December 31,
1996, which were included as part of the Company's Form 10-KSB.
Results for interim periods are not necessarily indicative of results for
the entire year.
(2) EARNINGS PER SHARE
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Net income per share is computed using the weighted average number of
common and dilutive common equivalent shares outstanding during the period after
giving retroactive effect to an 81,351.1111-for-1 stock split effected in July
1996. Pursuant to the requirements of the Securities and Exchange Commission,
stock options and warrants issued by the Company during the twelve months
immediately preceding the Company's initial public offering consummated in
October 1996 have been included in computing net income (loss) per share as if
they were outstanding for all periods prior to the initial public offering using
the treasury stock method.
On March 31, 1997, the Financial Accounting Standards Board issued SFAS No.
128, "Earnings Per Share" ("Statement 128"). Statement 128 is effective for
fiscal years ending after December 15, 1997, and, when adopted, it will require
restatement of prior years' earnings per share. If the Company had adopted
Statement 128 for the period ending September 30, 1997, there would have been no
effect on earnings per share, on either the basic or diluted basis, except basic
earnings per share would have been $0.32 for the nine months ended September 30,
1997.
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(3) FOLLOW-ON PUBLIC OFFERING
- -----------------------------
On July 2, 1997, the Company consummated a follow-on public offering (the
"Offering") of 1,000,000 shares of its Common Stock at a price to the public of
$9.50 per share. On July 15, 1997 and as part of the Offering, an additional
150,000 shares at a price to the public of $9.50 per share were issued and sold
by the Company to cover overallotments. The net proceeds to the Company from the
Offering, after underwriting discounts and commissions and other expenses of the
Offering, were approximately $9.9 million.
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<PAGE>
Item 2. Management's Discussion And Analysis Of Financial Condition And
Results Of Operations.
OVERVIEW
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The Company provides a wide range of information technology services,
including enterprise-wide business process solutions (ERP), systems integration
and custom software development based on leading technologies. The Company has
grown rapidly since 1994 when it made a strategic decision to diversify its
customer base by expanding the scope of its integration and development services
and to utilize SAP software as a primary tool to implement enterprise-wide
business process solutions. In 1995, the Company became a SAP National
Implementation Partner and also began to utilize Oracle products to diversify
its service offerings. In 1997, the Company achieved National Logo Partner
status with SAP. The Company's current contract with SAP expires on December 31,
1997 and provides for an automatic one-year renewal period unless either party
provides at least six weeks prior written notice of its intention not to renew.
This agreement contains no minimum revenue requirements or cost sharing
arrangements and does not provide for commissions or royalties to either party.
In July 1997, the Company achieved AcceleratedSAP Partner Status with SAP by
meeting certain performance criteria established by SAP. Also, in 1997, the
Company began to provide implementation services to PeopleSoft and Baan
licensees to further diversify its service offerings. The Company recently
expanded its Oracle applications implementation services practice and added
upgrade services to meet market demand of mid-size to large companies that are
implementing or upgrading Oracle applications. In July 1997, the Company was
awarded an implementation partnership status by PeopleSoft. In September 1997,
the Company was awarded an international consulting partnership status by Baan.
The Company generates revenue from professional services rendered to
customers. Revenue is recognized as services are performed. The Company's
services range from providing customers with a single consultant to
multi-personnel full-scale projects. The Company provides these services to its
customers primarily on a time and materials basis and pursuant to written
contracts which can be terminated with limited advance notice, typically not
more than 30 days, and without significant penalty, generally limited to fees
earned and expenses incurred by the Company through the date of termination. The
Company provides its services directly to end-user organizations or as a member
of a consulting team assembled by another information technology consulting firm
to Fortune 1000 and other large and mid-sized companies. The Company generally
bills its customers semi-monthly for the services provided by its consultants at
contracted rates. Where contractual provisions permit, customers also are billed
for reimbursement of expenses incurred by the Company on the customers' behalf.
The Company recently has provided services on certain projects in which it,
at the request of the clients, offered a fixed price for its services, however,
none of these projects are currently material to the Company's business,
financial condition and results of operations. The Company believes that, as it
pursues its strategy of making turnkey project management a larger portion of
its business, it will likely be required to offer fixed price projects to a
greater degree. The Company has had limited prior experience in pricing and
performing under fixed price arrangements and believes that there are certain
risks related thereto. There can be no assurance that the Company will be able
to complete such projects within fixed price timeframes. The
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<PAGE>
failure to perform within such fixed price contracts, if entered into, could
have a material adverse effect on the Company's business, financial condition
and results of operations.
The Company has derived and believes that it will continue to derive a
significant portion of its revenue from a limited number of customers and
projects. For the nine months ended September 30, 1997 and the year ended
December 31, 1996, the Company's ten largest customers accounted for
approximately 62% and 66% of its revenue, respectively. During the nine months
ended September 30, 1997, two customers each accounted for more than 10% of
revenue. During 1996, two customers each accounted for more than 10% of revenue.
For the nine months ended September 30, 1997 and the year ended December 31,
1996, 38% and 44% respectively, of the Company's revenue was generated by
serving as a member of consulting teams assembled by other information
technology consulting firms. There can be no assurance that such information
technology consulting firms will continue to engage the Company in the future at
current levels of retention, if at all. During the nine months ended September
30, 1997 and the year ended December 31, 1996, 69% and 74%, respectively, of the
Company's total revenue was derived from projects in which the Company
implemented software developed by SAP. During the nine months ended September
30, 1997, approximately 31% of the Company's revenue was derived from
engagements at which the Company had project management responsibilities,
compared to 16% during the year ended December 31, 1996.
The Company's most significant cost is project personnel expenses, which
consists of consultant salaries, benefits and payroll-related expenses. Thus,
the Company's financial performance is based primarily upon billing margin
(billable hourly rate less the cost to the Company of a consultant on an hourly
basis) and personnel utilization rates (billable hours divided by paid hours).
The Company believes that turnkey project management assignments typically carry
higher margins. The Company has been shifting to such higher-margin turnkey
management assignments and more complex projects by leveraging its reputation,
existing capabilities, proprietary implementation methodology, development tools
and offshore development capabilities with expanded sales and marketing efforts
and new service offerings to develop turnkey project sales opportunities with
both new and existing customers. The Company's inability to continue towards a
shift to higher-margin turnkey management assignments and more complex projects
may adversely impact the Company's future growth. Although the Company expects
that it will continue to utilize its proprietary implementation methodology in
an increasing number of projects, there can be no assurance that the Company
will continue to be engaged to do so.
Since late 1994, the Company has made substantial investments in its
infrastructure in order to support its rapid growth. For example, in 1994, the
Company established and funded an affiliated operation in India, the Advanced
Development Center (the "ADC"), and in 1995, established a sales office in
California. In addition, from 1994 to date, the Company has incurred expenses to
develop proprietary development tools and 4SIGHT and 4SIGHT Plus, its
proprietary accelerated implementation methodology and toolset. Commencing in
1995, the Company has been increasing its sales force and its marketing,
finance, accounting and administrative staff. The Company employed 93 such
personnel as of September 30, 1997 as compared to 41 such personnel as of
September 30, 1996. Most recently, during the quarter ended June 30, 1997, the
Company opened sales and operations offices and sales offices in Atlanta,
Boston, and Dallas. In addition to the Advanced Development Center in India, the
Company also has offices
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<PAGE>
in New Zealand and the United Kingdom. The Company is reviewing the adequacy of
its leased facilities in light of its expanded staff and expects to increase the
size of its leased facilities.
This Form 10-QSB contains forward-looking statements within the meaning of
Section 21E of the Securities Exchange Act of 1934, as amended, including,
without limitation, statements regarding the Company's intention to shift to
higher margin turnkey management assignments and more complex projects and to
utilize its proprietary implementation methodology in an increasing number of
projects. Such forward-looking statements include risks and uncertainties,
including, but not limited to: (i) the substantial variability of the Company's
quarterly operating results caused by a variety of factors, many of which are
not within the Company's control, including (a) seasonal patterns of hardware
and software capital spending by customers, (b) information technology
outsourcing trends, (c) the timing, size and stage of projects, (d) new service
introductions by the Company or its competitors and the timing of new product
introductions by the Company's ERP partners, (e) levels of market acceptance for
the Company's services, (f) the hiring of additional staff; (ii) changes in the
Company's billing and employee utilization rates; (iii) the Company's ability to
manage its growth effectively, which will require the Company (a) to continue
developing and improving its operational, financial and other internal systems,
as well as its business development capabilities, (b) to attract, train, retain,
motivate and manage its employees, (c) to continue to maintain high rates of
employee utilization at profitable billing rates and, (d) to maintain project
quality, particularly if the size and scope of the Company's projects increase;
(iv) the Company's ability to maintain an effective internal control structure;
(v) the Company's limited operating history within its current line of business;
(vi) the Company's reliance on a continued relationship with SAP America and the
Company's present status as a SAP National Logo Partner; (vii) the Company's
substantial reliance on key customers and large projects; (viii) the highly
competitive nature of the markets for the Company's services; (ix) the Company's
ability to successfully address the continuing changes in information
technology, evolving industry standards and changing customer objectives and
preferences; (x) the Company's reliance on the continued services of its key
executive officers and leading technical personnel; (xi) the Company's ability
to attract and retain a sufficient number of highly skilled employees in the
future; (xii) the progress the Company may have at continuing to diversify its
offerings, including growth in its Oracle, Baan and PeopleSoft services; and
(xiii) the Company's ability to protect its intellectual property rights. The
Company's actual results may differ materially from the results disclosed in
such forward-looking statements.
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<PAGE>
RESULTS OF OPERATIONS
- ---------------------
The following table sets forth for the periods indicated certain financial
data as a percentage of revenue:
<TABLE>
<CAPTION>
Percentage of Revenue
--------------------------------------------------
Three Months Ended Nine Months Ended
September 30, September 30,
----------------------- -------------------------
1997 1996 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
Revenue............................ 100.0% 100.0% 100.0% 100.0%
Cost of sales...................... 65.5 71.0 68.0 71.6
----- ----- ----- -----
Gross profit.................... 34.5 29.0 32.0 28.4
Selling, general and
administrative expenses............ 23.7 20.4 22.3 20.6
----- ----- ----- -----
Operating income................ 10.8 8.6 9.7 7.8
Factor fees / Interest expense
(income)........................... (0.7) 4.1 (0.4) 3.8
----- ----- ----- -----
Income before provision for income
taxes
and extraordinary charge......... 11.5 4.5 10.1 4.0
Provision for income taxes......... 4.3 1.4 3.8 1.2
----- ----- ----- -----
Income before extraordinary charge. 7.2 3.1 6.3 2.8
Extraordinary charge, net of
income tax benefit................. -- (7.4) -- (3.1)
----- ------ ----- -----
Net income (loss).................. 7.2% (4.3)% 6.3% (0.3)%
===== ===== ===== =====
</TABLE>
THREE MONTHS ENDED SEPTEMBER 30, 1997 COMPARED TO THREE MONTHS ENDED
SEPTEMBER 30, 1996
Revenue. Revenue increased by 58.2%, or $8.1 million, from $13.8 million
during the three months ended September 30, 1996 to $21.9 million during the
three months ended September 30, 1997. This increase was attributable primarily
to increased demand for the Company's implementation consulting services and, to
a lesser extent, to increased demand for the Company's systems integration,
custom software development services and training services.
Gross profit. The Company's cost of sales includes primarily the cost of
salaries to consultants and related employee benefits and payroll taxes. The
Company's cost of sales increased by 45.9%, or $4.5 million, from $9.8 million
during the three months ended September 30, 1996 to $14.3 million during the
three months ended September 30, 1997. The increase was due to increased
personnel costs resulting from the hiring of additional consultants to support
the increase in demand for the Company's services. The Company's gross profit
increased by 88.2%, or $3.6 million, from $4.0 million during the three months
ended September 30, 1996 to $7.6 million during the three months ended September
30, 1997. Gross profit margin increased from 29.0% of revenue during the three
months ended September 30, 1996 to 34.5% of revenue during the three months
ended September 30, 1997. The increase in such gross profit margin was
attributable to the increase in implementation services projects, including
certain performance incentives earned by the Company, and a combination of
improved billing margins and greater consultant utilization.
Selling, general and administrative expenses. Selling, general and
administrative expenses consist primarily of administrative salaries, sales
person compensation, travel and entertainment, the costs associated with the ADC
and related development costs and professional
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<PAGE>
fees. Selling, general and administrative expenses increased by 83.6%, or $2.4
million, from $2.8 million during the three months ended September 30, 1996 to
$5.2 million during the three months ended September 30, 1997, and increased as
a percentage of revenue from 20.4% to 23.7%. Such expenses were increased to
support the continued revenue growth of the Company in the United States and
abroad. In addition, such expenses increased due to increased sales and
management recruiting costs, support services, incentive compensation, and an
increase in the provision for doubtful accounts.
Factor fees/Interest expense (income), net. Factor fees in the 1996 period
were the charges incurred by the Company to finance its accounts receivable. On
October 10, 1996, the Company repaid the factor with a portion of the proceeds
from the Company's initial public offering, approximately $4.4 million,
consisting of all amounts outstanding under the agreement with its factor and
terminated its factor agreement.
Provision for income taxes. The Company's effective income tax rate was 37%
and 30.8% for the three months ended September 30, 1997 and 1996, respectively.
Such tax rates were favorably impacted in 1997 by the Company's Indian affiliate
where the Company is not obligated to pay tax for the next five years and plans
to permanently reinvest such funds and a reduction of the Company's valuation
allowance in 1996.
NINE MONTHS ENDED SEPTEMBER 30, 1997 COMPARED TO NINE MONTHS ENDED
SEPTEMBER 30, 1996
Revenue. Revenue increased by 69.7%, or $23.3 million, from $33.5 million
during the nine months ended September 30, 1996 to $56.8 million during the nine
months ended September 30, 1997. This increase was attributable primarily to
increased demand for the Company's implementation consulting services and, to a
lesser extent, to increased demand for the Company's systems integration and
custom software development services.
Gross profit. The Company's cost of sales increased by 61.1%, or $14.7
million, from $24.0 million during the nine months ended September 30, 1996 to
$38.6 million during the nine months ended September 30, 1997. The increase was
due to increased personnel costs resulting from the hiring of additional
consultants to support the increase in demand for the Company's services. The
Company's gross profit increased by 91.2%, or $8.7 million, from $9.5 million
during the nine months ended September 30, 1996 to $18.2 million during the nine
months ended September 30, 1997. Gross profit margin increased from 28.4% of
revenue during the nine months ended September 30, 1996 to 32.0% of revenue
during the nine months ended September 30, 1997. The increase in such gross
profit margin was attributable to the increase in implementation services
projects and a combination of improved billing margins and greater consultant
utilization.
Selling, general and administrative expenses. Selling, general and
administrative expenses increased by 83.7%, or $5.8 million, from $6.9 million
during the nine months ended September 30, 1996 to $12.7 million during the nine
months ended September 30, 1997, and increased as a percentage of revenue from
20.6% to 22.3%. Such expenses were increased to support the continued revenue
growth of the Company in the United States and abroad. In
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<PAGE>
addition, such expenses increased due to increased sales and management
recruiting costs, support services, incentive compensation, and an increase in
the provision for doubtful accounts.
Factor fees/Interest expense (income), net. Factor fees in the 1996 period
were the charges incurred by the Company to finance its accounts receivable. On
October 10, 1996, the Company repaid the factor with a portion of the proceeds
from the Company's initial public offering, approximately $4.4 million,
consisting of all amounts outstanding under the agreement with its factor and
terminated its factor agreement.
Provision for income taxes. The Company's effective income tax rate was
37.8% and 30.6% for the nine months ended September 30, 1997 and 1996
respectively. Such tax rates were favorably impacted in 1997 by the Company's
Indian affiliate where the Company is not obligated to pay tax for the next five
years and plans to permanently reinvest such funds and a reduction of the
Company's valuation allowance in 1997 and 1996.
BACKLOG
- -------
The Company generally enters into written contracts with its customers at
the time it commences work on a project. These written contracts contain varying
terms and conditions and the Company does not generally believe it is
appropriate to characterize such written contracts as creating backlog. In
addition, because these written contracts often provide that the arrangement can
be terminated with limited advance notice and without significant penalty, the
Company does not believe that projects in process at any one time are a reliable
indicator or measure of expected future revenue. In the event that a customer
terminates a project, the customer remains obligated to pay the Company for
services performed by it through the date of termination.
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
The Company funds its operations primarily from cash flow generated from
operations, and to a lesser extent, from cash balances generated from the
Company's initial and follow-on public offerings. In October 1996, the Company
consummated its initial public offering of its common stock resulting in net
proceeds to the Company of approximately $17.8 million. On July 2, 1997, the
Company consummated a follow-on public offering (the "Offering") of 1,000,000
shares of its Common Stock at a price to the public of $9.50 per share. On July
15, 1997 and as part of the Offering, an additional 150,000 shares at a price to
the public of $9.50 per share were issued to cover overallotments. The net
proceeds to the Company from the Offering, after underwriting discounts and
commissions and other expenses of the Offering, were approximately $9.9 million.
Cash used in operating activities was $4.8 million during the nine months
ended September 30, 1997, resulting primarily from the growth in accounts
receivable and unbilled services. Cash used in operating activities for the nine
months ended September 30, 1996 was $4.7 million.
The Company had working capital of $28.1 million at September 30, 1997 and
$15.7 million at December 31, 1996.
- 12 -
<PAGE>
In accordance with investment guidelines approved by the Company's Board of
Directors, cash balances in excess of those required to fund operations have
been invested in short-term U.S. Treasury securities and commercial paper with a
credit rating no lower than A1/P1.
The Company invested $2.1 million and $524,000 in computer equipment and
furniture during the nine months ended September 30, 1997 and 1996,
respectively. There are no material commitments for capital expenditures
currently outstanding.
In January 1997, and as later amended on August 18, 1997, the Company
entered into a two-year credit agreement with PNC Bank, National Association
(the "Bank"). The credit facility with the Bank has two components comprised of
(i) a revolving line of credit pursuant to which the Company may borrow up to
$7.5 million either at the Bank's prime rate per annum or the EuroRate plus 2%
(at the Company's option), and (ii) equipment term loans pursuant to which the
Company may borrow up to an aggregate of $350,000 (at the Bank's prime rate plus
1/4 of 1% per annum) to purchase equipment. The credit agreement contains
covenants which require the Company to (i) maintain its working capital during
the year at no less than 90% of the working capital at the end of the
immediately preceding fiscal year and at the end of each fiscal year at no less
than 105% of its working capital at the end of the immediately preceding fiscal
year; and (ii) maintain its tangible net worth during the year at no less than
95% of its tangible net worth at the end of the immediately preceding fiscal
year and at the end of each fiscal year at no less than 108% of tangible net
worth at the end of the immediately preceding fiscal year. The Company's
obligations under the credit agreement are collateralized by substantially all
of the Company's assets, including its accounts receivable and intellectual
property. The Company's obligations under the credit facility are payable at the
expiration of such facility on January 22, 1999. These terms are subject to the
Company maintaining an unsubordinated debt to tangible net worth ratio of no
greater than one to one and an earnings before interest and taxes to interest
expense ratio of no less than three to one. The Bank also agreed to release the
collateral securing the revolving line of credit if the Company meets certain
financial criteria at December 31, 1997.
As of September 30, 1997, there were no amounts outstanding under the
revolving line of credit and no equipment term loans outstanding.
The Company believes that its available funds, together with current credit
arrangements and the cash flows expected to be generated from operations, will
be adequate to satisfy its current and planned operations for the foreseeable
future.
- 13 -
<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
Oxford Systems Inc. ("Oxford"), a New Jersey corporation and formerly a
wholly-owned subsidiary of the Company which was merged into the Company in
December 1996, was named as a defendant in a civil complaint that was filed on
June 8, 1995, by Design Strategy Corp. ("Design Strategy"), in New York State
Supreme Court in the County of New York. Design Strategy alleges that another
named defendant, Citibank N.A. ("Citibank"), contracted with Design Strategy for
database administration services. Design Strategy claims that Citibank and
Oxford conspired to deprive it of commissions, tortiously interfered with
contract, engaged in unfair competition, damaged its reputation and
misappropriated services. Design Strategy settled its claims against Citibank.
Design Strategy then moved to amend its complaint to substitute the Company for
Oxford and to join Nagarjun Valluripalli, the Company's President of
International Operations, as defendants. At the same time, Oxford and another
defendant cross-moved for summary judgment. Thereafter, on September 9, 1997,
the New York State Supreme Court granted Design Strategy's motion to add the
Company and Mr. Valluripalli as defendants while simultaneously granting the
Company's cross-motion for summary judgment. On September 18, 1997, the Court
entered a decision and order (the "Decision") dismissing Design Strategy's
complaint in its entirety. Subsequently, on October 17, 1997, Design Strategy
filed a notice of motion of reargument of the Decision and a notice of appeal,
which will be pursued if the motion for reargument is not granted.
- 14 -
<PAGE>
Item 5. Other Information
A. Follow-On Offering
- -----------------------
On July 2, 1997, the Company consummated a follow-on public offering (the
"Offering") of 1,000,000 shares of its Common Stock at a price to the public of
$9.50 per share. On July 15, 1997 and as part of the Offering, an additional
150,000 shares at a price to the public of $9.50 per share were issued and sold
by the Company to cover overallotments. The net proceeds to the Company from the
Offering, after underwriting discounts and commissions and other expenses of the
Offering, were approximately $9.9 million.
The Company intends to utilize the net proceeds of this Offering for
general corporate purposes, including working capital and possible acquisitions.
B. Intelligroup Asia Private, Ltd.
- ------------------------------------
Intelligroup Asia Private Ltd. ("Intelligroup Asia") operates the Advanced
Development Center in Hyderabad, India. Intelligroup Asia is wholly-owned by
Messrs. Pandey, Koneru, and Valluripalli, the principal shareholders of the
Company. The Company and Messrs. Pandey, Koneru, and Valluripalli are parties to
a contract pursuant to which the Company will, subject to necessary Indian
government approvals, acquire the shares of Intelligroup Asia for nominal
consideration. Such Indian government approvals were received in September 1997
and the transfer of the shares to the Company is expected to be consummated by
year-end. Upon such transfer, Intelligroup Asia will be a wholly-owned
subsidiary of the Company.
C. Restructuring
- ------------------
Effective October 28, 1997, Rajkumar Koneru was elected to the offices of
Chief Executive Officer and President of U.S. Operations for the Company. Ashok
Pandey remains Chairman of the Board and was elected President of Corporate
Services. Nagarjun Valluripalli was elected President of International
Operations.
- 15 -
<PAGE>
Item 6. Exhibits And Reports On Form 8-K.
(a) Exhibits.
10.1 ASAP Partner Addendum to R/3 National Logo Partner Agreement
between SAP America, Inc. and the Company effective July 1,
1997 (amends existing R/3 National Logo Partner Agreement)
(incorporated by reference to the Company's registration
statement on Form SB-2 (Registration Statement No. 333-29119
declared effective on June 26, 1997)).
10.2 Implementation Partner Agreement between PeopleSoft, Inc.
and the Company effective July 15, 1997.
10.3 Consulting Alliance Agreement with Baan International B.V.
and the Company effective September 29, 1997.
10.4 Amendment to Loan and Security Agreement dated as of August
18, 1997 by and between PNC Bank, National Association and
the Company (amends Loan and Security Agreement dated as of
January 22, 1997 (incorporated by reference to the Company's
annual report on Form 10-KSB for the year ended December 31,
1996 filed with the SEC on March 28, 1997)).
11 Statement re: Computation of Per Share Earnings.
27 Financial Data Schedule.
(b) Reports on Form 8-K.
No reports on Form 8-K were filed during the quarter for which
this report on Form 10-QSB is filed.
- 16 -
<PAGE>
SIGNATURES
----------
Pursuant to the requirements of the Securities and Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Intelligroup, Inc.
DATE: November 12, 1997 By: /s/ Rajkumar Koneru
--------------------------------
Rajkumar Koneru,
Chief Executive Officer and
President, U.S. Operations
(Principal Executive Officer)
DATE: November 12, 1997 By: /s/ Robert Olanoff
--------------------------------
Robert Olanoff,
Chief Financial Officer, Secretary
and Treasurer
(Principal Financial and
Accounting Officer)
- 17 -
(partner/nip/asap)
ASAP PARTNER ADDENDUM
TO
R/3 NATIONAL LOGO PARTNER AGREEMENT ("NLP AGREEMENT")
BETWEEN
SAP AMERICA, INC. ("SAP") - INTELLIGROUP ("PARTNER")
EFFECTIVE JULY 1, 1997
A. WHEREAS, Partner desires to utilize SAP's rapid R/3 implementation
methodology and to become an AcceleratedSAP Partner ("ASAP Partner") by meeting
the performance criteria established by SAP.
B. WHEREAS, SAP desires to offer the opportunity to Partner to achieve such
status, subject to the terms below.
C. NOW THEREFORE, SAP and Partner agree as follows:
1. SAP hereby grants Partner the right to identify itself publicly as an
ASAP Partner for so long as the NLP Agreement is in effect and Partner complies
with SAP's then-current criteria for participation in its AcceleratedSAP Partner
Program.
2. SAP's current criteria for participation in the AcceleratedSAP Partner
Program are as follows:
(a) 70% of consultants that comprise Partner's SAP Practice must be
AcceleratedSAP certified by attending SAP's 3-day course (current release)
within the timeframe (6 months) established in the business plan.
(b) All Partner consultants assigned to an accelerated project must be
AcceleratedSAP certified.
(c) All Partner project managers must be certified through SAP's
Project Manager course within three (3) months after SAP's first public offering
of such course.
(d) Partner must utilize 100% of the AcceleratedSAP methodology as
identified from time to time by SAP.
(e) Any AcceleratedSAP Project will include quality assurance
monitoring by an SAP Project Executive.
(f) Partner must adhere to SAP's status reporting criteria established
by SAP on all ASAP projects.
3. Any AcceleratedSAP materials, including the ASAP CD, made available to
Partner pursuant to this Addendum shall be considered SAP Confidential and/or
Proprietary Information as defined in the NLP Agreement.
4. Upon compliance with the terms of this Addendum, Partner shall be
authorized to represent itself as an authorized ASAP Partner and to display the
ASAP Partner logo. Partner's failure to
<PAGE>
comply with the terms of the Addendum shall result in termination of the
Addendum, unless such failure is cured to SAP's reasonable satisfaction within
thirty (30) days of written notice of such failure.
5. The term of this Addendum shall be coterminus with that of the NLP
Agreement, unless earlier terminated pursuant to the provisions of Section 4 of
this Addendum.
6. Except as specifically modified herein, all terms and conditions of the
NLP Agreement shall be applicable to this Appendix and the subject matter
hereof.
INTELLIGROUP, INC.
By: /s/ Sophia Zouras By: /s/ Cheryl Groom
------------------------------------------ ----------------
Title: Director, Marketing & Business Development Title: Director
------------------------------------------ ----------------
Date: July 24, 1997 Date: 7/30/97
------------------------------------------ ----------------
Implementation Partner Agreement
--------------------------------
This Agreement ("Agreement") is made as of July 15, 1997 the ("Effective Date")
by and between PeopleSoft, Inc. ("PeopleSoft"),, a Delaware corporation having
an office at 4305 Hacienda Drive, Pleasanton, California 94588 and Intelligroup,
Inc. ("Implementation Partner"), having an office at 517 Route One South,
Iselin, NJ 08830.
The PeopleSoft contact for this Agreement is: Jeff McClure
Telephone: (510) 468-2315
The Implementation Partner contact for this Sophia Zouras
Agreement is: Telephone: (908) 726-2133
The parties agree as follows:
1. DEFINITIONS
-----------
"End Users" means only those end user customers of PeopleSoft who have licensed
the Software directly from PeopleSoft for internal use in the Territory. End
Users do not include entities with reseller or distribution rights.
"Implementation Tools" shall consist only of software developed by
Implementation Partner, using the Software which Implementation Partner utilizes
solely in connection with the provision of Services to End Users. Implementation
Tools do not include any PeopleSoft Software.
"Services" means the services provided by Implementation Partner to assist End
Users with the planning for and implementation of the Software. Services consist
of assistance with system specifications and system design; project guidance;
training End Users in the design, implementation, documentation and operation of
the system, assistance with system modifications and enhancements; and technical
advice in the system implementation. Services may include a license grant from
Implementation Partner to the End User to use the Implementation Tools designed
specifically for the End User. Services may not include the presentation of
standard functional or technical PeopleSoft Education Services courses to End
Users, or re-distribution of PeopleSoft Education Services course materials in
any media format.
"Software" means any or all portions of the binary computer software programs
(including corresponding source code) and Documentation provided by PeopleSoft
or made by Implementation Partner with PeopleSoft's prior written consent,
whether in machine-readable or printed form only as listed in the applicable
Schedule and all corrections or updates thereto. Software includes the
third-party software only as specified in the Schedule. Software includes an
object code version of PeopleTools but does not include source code to
PeopleTools. Unless specifically stated otherwise, all Software is delivered to
Implementation Partner only if and when generally commercially available.
"Term" means the period commencing on the Effective Date and ending one (1) year
thereafter.
"Territory" means United States only.
2. LICENSE TO USE SOFTWARE
-----------------------
PeopleSoft agrees to grant Implementation Partner a non-exclusive,
non-transferable license to use the Software, pursuant to the terms of the
Implementation Partner Software License Agreement, attached as Exhibit A and
made a part hereof.
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Implementation Partner may:
- Use the Software to develop Implementation Tools solely in connection
with Implementation Partner's provision of Services to End Users
located in the Territory;
- Use the Software to develop training programs for consultants and/or
End Users so long as Implementation Partner does not market such
training or so long as such training does not compete with training
courses currently available to End Users through PeopleSoft;
- Use the Software to develop competency and solution centers to support
sales and service to End Users; and
- Acquire additional Software licenses for use in connection with this
Agreement.
Implementation Partner may not:
- Use the Software to provide training services to any End User as
specified above;
- Transfer a Software license to End User or any other third party;
- Distribute, market or resell a Software license;
- Provide Services to PeopleSoft distributors or resellers including,
but not limited to, ADP or Electronic Data Systems for further
distribution or marketing; or
- Take any action prohibited by the Implementation Partner Software
License Agreement attached as Exhibit A.
3. IMPLEMENTATION SERVICES TO BE PROVIDED
--------------------------------------
Implementation Partner's provision of Services shall be pursuant to a separate
contractual arrangement directly between Implementation Partner and the End
User. Implementation Partner is granted the license to use the Software
hereunder only for providing Services to End Users as a PeopleSoft
Implementation Partner.
4. RESPONSIBILITIES
----------------
4a. PEOPLESOFT'S RESPONSIBILITIES
-----------------------------
PeopleSoft shall:
1. Upon Implementation Partner's payment to PeopleSoft of the applicable fees
as specified in the Schedule attached as Exhibit B, provide Implementation
Partner with the Software listed therein and shall designate Implementation
Partner as a participant in PeopleSoft's Implementation Partner Program.
2. Designate an alliance manager who will function as the single point of
contact for all alliance management and administration related issues.
These issues include, but are not limited to, relationship management,
communication between the two organizations, software distribution,
contract management, accounting management and service support.
3. Once PeopleSoft receives Implementation Partner's detailed corporate
overview information, prepare a one-page company standard profile
containing Implementation Partner's marketing data. PeopleSoft shall
provide this standard profile upon request to PeopleSoft's End Users and
business prospects.
4. Permit Implementation Partner to attend PeopleSoft's annual users'
conference and participate in the product fair. Implementation Partner
shall be solely responsible for its own costs of attendance and
participation.
5. Provide Implementation Partner with access to PeopleSoft's Software Support
Services, upon Implementation Partner's payment of appropriate additional
fees.
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6. Provide Implementation Partner with access to training for the Software in
accordance with its Implementation Partner Program at then current rates
and policies, as specified in Exhibit E - Training Agreement.
7. Provide Implementation Partner with access to PeopleSoft's PeopleSoft Forum
program in connection with Implementation Partner's use of its
independently licensed copy of Lotus Notes.
8. Have the right to suspend all support and Services in the event
Implementation Partner is more than sixty days delinquent in payment to
PeopleSoft.
9. Preserve the confidentiality Implementation Partner confidential
information.
4b. IMPLEMENTATION PARTNER'S RESPONSIBILITIES
-----------------------------------------
Implementation Partner shall:
1. Designate an alliance manager who will function as the single point of
contact for all alliance management and administration related issues.
These include, but are not limited to, relationship management,
communication between the two organizations, software distribution,
contract management, accounting management and service support.
2. Preserve the confidentiality of the terms of this Agreement and any
PeopleSoft confidential information.
3. Take every reasonable measure to ensure that only the highest quality
consulting services are provided to End User. Implementation partner shall
utilize a quality survey or other methods to receive customer evaluations
on a regular basis, and provide copies to PeopleSoft on request.
4. Accurately represent itself to End Users and business prospects of
PeopleSoft when discussing the skills and know-how which it can provide.
5. As necessary, arrange with PeopleSoft Education Services the training
program for its consultants who will be working with PeopleSoft End Users.
Functional Consultants shall attend functional courses in the areas in
which they will be providing assistance to the End User, including advanced
functional courses and PeopleTools I where available. In addition, it is
recommended that Functional Consultants attend Query, Crystal, and
PS/nVision. Technical Consultants shall attend technical courses in the
areas in which they will be providing assistance to the End User, including
but not limited to PeopleTools I, PeopleTools II, PeopleCode, SQL/SQR,
Security Administration and Application Upgrader. Individual consultants
may "test out" of Level I courses if they can demonstrate that they have
had prior PeopleSoft experience.
6. Designate a Training Administrator contact for PeopleSoft to coordinate all
Education Services activities.
7. Remain current in payment of all fees due to PeopleSoft, including those
specified in the Schedule attached as Exhibit B, annual renewal, software
updates and any incurred training fees. Implementation Partner agrees to
bring current any outstanding balances due to PeopleSoft within thirty (30)
days of starting the Implementation Partnership program.
5. IMPLEMENTATION PARTNER'S USE OF PEOPLETOOLS
-------------------------------------------
At no additional fee to Implementation Partner, PeopleSoft shall provide one
PeopleTools license with the Software acquired by Implementation Partner solely
to enable Implementation Partner to develop Implementation Tools for use
pursuant to this Agreement. Implementation Partner or its consultants shall not
use PeopleTools software to develop application software other than for use by
its individual End Users for their internal business purposes. Implementation
Tools are not transferable by Implementation Partner from End User to End User
without PeopleSoft's prior written consent.
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6. REPRESENTATIONS AND DISCLAIMERS
-------------------------------
Both parties represent that they have the independent right and power to enter
into this Agreement. PEOPLESOFT DISCLAIMS ALL OTHER REPRESENTATIONS OR
WARRANTIES, INCLUDING IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A
PARTICULAR PURPOSE. IN NO EVENT SHALL PEOPLESOFT BE LIABLE FOR INDIRECT,
SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES OF ANY KIND, INCLUDING WITHOUT
LIMITATION, LOST PROFITS.
7. LIMITATION OF LIABILITY
-----------------------
PeopleSoft's maximum liability for any action, regardless of the form of action,
whether in tort or contract, arising under this Agreement shall be limited to
the amount of license fees paid by Implementation Partner hereunder.
8. INDEPENDENT CONTRACTOR STATUS
-----------------------------
Implementation Partner performs this Agreement as an independent contractor, not
as an employee of PeopleSoft. Nothing in this Agreement is intended to construe
the existence of a partnership, joint venture, or agency relationship between
Implementation Partner and PeopleSoft.
9. CONFIDENTIAL INFORMATION
------------------------
All information received by either party which concerns the parties nonpublic
business strategy, technical data, software designs, specifications, or
configurations shall be considered confidential, as will information which is
clearly marked "confidential." Both parties shall use reasonable commercial
efforts to refrain from disclosing such confidential information to anyone but
personnel working under this Agreement. Neither party shall have a nondisclosure
obligation with respect to information claimed to be confidential or proprietary
to the other in the event such information is disclosed or released to the
public through no fault of the other or which was rightfully known by the other
party prior to disclosure herein.
10. TERMINATION
-----------
At the end of the Term, PeopleSoft and Implementation Partner shall meet and
negotiate a possible extension of this Agreement pursuant to then mutually
agreeable terms and conditions and in accordance with PeopleSoft's then current
Implementation Partner Program. No extension is guaranteed by either party. In
the event of a termination for any reason, PeopleSoft shall have no obligation
to return any portion of license fees previously paid by Implementation Partner
and Implementation Partner will be required to either (1) return all licensed
Software and copies thereof to PeopleSoft to the address specified in this
Agreement; or (2) certify in writing to PeopleSoft that all copies of the
Software have been destroyed. Either party may terminate this Agreement upon ten
(10) days written notice in the event of a material breach.
11. NO ASSIGNMENT
-------------
Implementation Partner shall not assign this Agreement (by operation of law or
otherwise) or sublicense the Software without the prior written consent of
PeopleSoft, and any prohibited assignment or sublicense shall be null and void.
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12. GENERAL
-------
This Agreement shall be governed by the laws of the State of California,
excluding choice of law principles. All notices and demands shall be made in
writing and delivered to the other party at the respective address set forth
above or as modified from time to time in writing. If any provision of this
Agreement is held to be unenforceable, the other provisions shall nevertheless
remain in full force and effect. This Agreement is the entire understanding of
the parties with respect to the subject matter hereof and may only be amended or
modified by a writing signed by an authorized representative of each party. In
the event of conflict between the terms of this Agreement and License Agreement
in Exhibit A attached, this Agreement shall take precedence.
ACCEPTED BY: ACCEPTED BY:
INTELLIGROUP, INC. PEOPLESOFT, INC.
/s/ Sophia Zouras /s/ Jeff McClure
- ----------------- ----------------
Authorized Signature Authorized Signature
Sophia Zouras, Director Marketing &
Business Development Jeff McClure, Dir. Service Alliances
- ----------------------------------- ------------------------------------
Printed Name and Title Printed Name and Title
Approved As To
Legal Form
RDJ 7/25/97
----------------------
Initial Date
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Exhibit A
Implementation Partner Software License Agreement
-------------------------------------------------
This Agreement is made as of the Effective Date by and between PeopleSoft,
Inc. ("PeopleSoft"), a Delaware corporation having an office at 4305 Hacienda
Drive, Pleasanton, California 94588 and Intelligroup, Inc. ("Implementation
Partner").
TERMS AND CONDITIONS
--------------------
1. LICENSE
-------
1.1 PeopleSoft grants Implementation Partner a non-exclusive, non-transferable
license to use the licensed number of copies of Software during the term, solely
for Implementation Partner's internal training and demonstration purposes at the
Site(s) specified in the Exhibit B and solely pursuant to Implementation
Partner's duties under the Implementation Partner Agreement between the parties
executed herewith. This license is also subject to the restrictions of use set
forth in said Implementation Partner Agreement. Implementation Partner shall use
any third party software products or modules provided by PeopleSoft solely with
PeopleSoft Software.
1.2 Implementation Partner may:
a. use the Software temporarily on a back-up machine in the event that the
Server is inoperable, if applicable;
b. make a reasonable number of copies of the Software, solely for archive or
emergency back-up purposes and/or disaster recovery testing purposes; and
c. modify or merge the Software with other software, with the understanding
that any modifications, however extensive, shall not diminish PeopleSoft's
title or interest in the Software.
1.3 PeopleSoft shall provide Implementation Partner with the licensed number of
copies of the Software and Documentation only as specified in the applicable
Schedule. Implementation Partner may make a reasonable number of copies of
Documentation solely for Implementation Partner's internal use with the Software
provided all copyright notices are reproduced.
2. LICENSE EXCLUSIONS
------------------
2.1 Except as expressly authorized herein, Implementation Partner shall not:
a. Copy the Software;
b. Cause or permit reverse compilation or reverse assembly of all or any
portion of the Software;
c. Distribute, disclose, market, rent, lease or transfer to any third party
any portion of the Software (including PeopleTools) or the Documentation,
or use the Software or Documentation in any service bureau arrangement,
facility management, or third party training;
d. Disclose the results of Software performance benchmarks to any third party
without PeopleSoft's prior written consent;
e. Transfer the Software to a different database platform without the prior
written consent of PeopleSoft (such consent shall not be unreasonably
withheld) and payment of any additional fees that may be due;
f. Transfer the Software to a different location without providing prior
written notice to PeopleSoft;
g. Export the Software in violation of U.S. Department of Commerce export
administration regulations;
h Use PeopleTools or third party software, except solely in conjunction with
the licensed PeopleSoft applications;
i. Provide Training services to PeopleSoft End Users using the Software; and
j. Transfer the Software to End User or any other third party.
2.2 No license, right, or interest in any PeopleSoft trademark, trade name, or
service mark is granted hereunder.
3. FEES AND PAYMENT TERMS
----------------------
3.1 Implementation Partner shall pay PeopleSoft the fees as specified in each
applicable Schedule.
3.2 Unless Implementation Partner provides PeopleSoft with a valid tax
exemption or direct pay certificate, Implementation Partner is responsible for
all taxes, duties and customs fees concerning the Software and/or services,
excluding taxes based on PeopleSoft's income. Overdue payments shall bear
interest at the lesser of twelve percent (12%) per
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<PAGE>
annum or the maximum rate allowed under applicable law.
4. TITLE AND PROTECTION
--------------------
4.1 PeopleSoft (or its third-party providers) retains title to all portions of
the Software and any copies thereof. If Implementation Partner creates a
Software modification using PeopleTools, Implementation Partner shall only have
title in such modification that remains after PeopleTools has been separated
from the modification. Implementation Partner shall use modifications created by
Implementation Partner solely in accordance with this Agreement. In the event
Implementation Partner provides Software modifications to PeopleSoft, PeopleSoft
shall have a perpetual, royalty-free license from Implementation Partner to use,
enhance and incorporate such modifications into PeopleSoft's software products
for general use and distribution.
4.2 Title to the physical media for the Software vests in Implementation
Partner upon delivery. PeopleSoft represents that the Software contains valuable
proprietary information. Implementation Partner shall not disclose the Software
to anyone other than those of its employees or consultants under nondisclosure
obligation who have a need to access the Software for purposes consistent with
this Agreement. Implementation Partner shall affix, to each full or partial copy
of the Software made by Implementation Partner, all copyright and proprietary
information notices as affixed to the original. Paragraphs 4.1 - 4.3 shall
survive termination of this Agreement.
4.3 The Software may be transferred to the U.S. government only with the
separate prior written consent of PeopleSoft and solely with "Restricted Rights"
as that term is defined in FAR 52.227- l9(c)(2) (or DFAR 252.227-7013(c)(1) if
the transfer is to a defense-related agency) or subsequent citation.
5. PATENT AND COPYRIGHT INDEMNITY
------------------------------
PeopleSoft shall indemnify and defend Implementation Partner against any claims
that the Software infringes any United States or Canadian patent or copyright;
provided that PeopleSoft is given prompt notice of such claim and is given
information, reasonable assistance, and sole authority to defend or settle the
claim. In the defense or settlement of the claim, PeopleSoft shall, in its
reasonable judgment and at its option and expense: (i) obtain for Implementation
Partner the right to continue using the Software; (ii) replace or modify the
Software so
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that it becomes noninfringing while giving equivalent performance; or (iii) if
PeopleSoft cannot obtain the remedies in (i) or (ii) as its sole obligation,
terminate the license for the infringing Software and upon receipt of the
infringing Software, return only the license fees paid by Implementation Partner
for such Software, prorated over a five year term from the applicable Schedule
Effective Date. PeopleSoft shall have no liability to indemnify or defend
Implementation Partner to the extent the alleged infringement is based on: (i) a
modification of the Software by anyone other then PeopleSoft, or (ii) use of the
Software other than in accordance with the Documentation.
6. DEFAULT AND TERMINATION
-----------------------
6.1 An event of default is: (i) a failure by either party to comply with any
material obligation under this Agreement; and (ii) such non-compliance remains
uncured for more than thirty (30) days after receipt of written notice thereof.
6.2 If an event of default occurs, the nondefaulting party, in addition to any
other rights available to it under law or equity, may terminate this Agreement
and all licenses granted hereunder by written notice to the defaulting party.
Except as otherwise specifically stated herein, remedies shall be cumulative and
there shall be no obligation to exercise a particular remedy.
6.3 Within ten (10) days after termination of this Agreement, Implementation
Partner shall certify in writing to PeopleSoft that all copies of the Software
in any form, including partial copies within modified versions, have been
destroyed or returned to PeopleSoft.
7. LIMITED WARRANTY
----------------
7.1 PeopleSoft warrants that it has title to the Software and/or the authority
to grant licenses to use the third party software. PeopleSoft warrants that the
Software will perform substantially in accordance with the Documentation for a
period of one (1) year from the date of initial installation and that the
Software media is free from material defects. PeopleSoft does not warrant that
the Software is error-free. PeopleSoft's sole obligation is limited to repair or
replacement of the defective Software in a timely manner, provided
Implementation Partner notifies PeopleSoft of the deficiency within the one year
period and provided Implementation Partner has installed all Software updates
provided pursuant to PeopleSoft's Software Support Services. PEOPLESOFT
DISCLAIMS ALL OTHER
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WARRANTIES, EXPRESS OR IMPLIED, INCLUDING BUT NOT LIMITED TO THE WARRANTIES OF
MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE.
8. LIMITATION OF LIABILITY
-----------------------
EXCEPT FOR VIOLATIONS OF PEOPLESOFT'S INTELLECTUAL OR PROPRIETARY RIGHTS,
NEITHER PARTY WILL BE LIABLE FOR ANY INDIRECT, INCIDENTAL, SPECIAL, OR
CONSEQUENTIAL DAMAGES, INCLUDING BUT NOT LIMITED TO LOST DATA OR LOST PROFITS,
HOWEVER ARISING, EVEN IF IT HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.
EXCLUDING DAMAGES INCURRED BY IMPLEMENTATION PARTNER UNDER THE ARTICLE ENTITLED
"PATENT AND COPYRIGHT INDEMNITY," PEOPLESOFT'S LIABILITY FOR DAMAGES UNDER THIS
AGREEMENT (WHETHER IN CONTRACT OR TORT) SHALL IN NO EVENT EXCEED THE AMOUNT PAID
BY IMPLEMENTATION PARTNER TO PEOPLESOFT FOR THE SOFTWARE MODULE OR THE SERVICES
FROM WHICH THE CLAIM AROSE. THE PARTIES AGREE TO THE ALLOCATION OF LIABILITY
RISK SET FORTH IN THIS SECTION.
9. SOFTWARE SUPPORT SERVICES TERMS AND CONDITIONS
----------------------------------------------
Upon Implementation Partner's payment of the fees described in the Schedule
attached hereto as Exhibit B, PeopleSoft shall provide Implementation Partner
with the Software support services as described in PeopleSoft's standard
Software Support Services Terms and Conditions, attached hereto as Exhibit D.
10. NOTICES
-------
All notices shall be in writing and sent by registered mail, overnight mail,
courier, or transmitted by facsimile (if confirmed by such mailing), to the
addresses indicated on the first page of this Agreement, or such other address
as either party may indicate by at least ten (10) days prior written notice to
the other party. Notices to PeopleSoft shall be sent to the attention of
PeopleSoft Legal with a copy to Implementation Partner's assigned account
manager.
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11. ASSIGNMENT
----------
Implementation Partner may not assign this Agreement (by operation of law or
otherwise) or sublicense the Software without the prior written consent of
PeopleSoft, and any prohibited assignment or sublicense shall be null and void.
12. NONDISCLOSURE OBLIGATION
------------------------
12.1 The terms, conditions, pricing and any other information clearly marked
"confidential" under this Agreement are confidential and shall not be disclosed,
orally or in writing by Implementation Partner to any third party without the
prior written consent of PeopleSoft.
12.2 Implementation Partner shall protect the Software with at least the same
degree of care and confidentiality, but not less than a reasonable standard of
care, which Implementation Partner utilizes for Implementation Partner
information that it does not wish disclosed to the public. Implementation
Partner may provide access to and use of the Software only to those third
parties that: (i) provide services to Implementation Partner concerning
Implementation Partner's use of the Software; (ii) have a need to use and access
the Software; and (iii) have agreed to substantially similar non-disclosure
obligations imposed by Implementation Partner as those contained herein.
13. GENERAL
-------
This Agreement is made in and shall be governed by the laws of the State of
California, excluding choice of law principles. Venue shall be in San Francisco,
California. The section headings herein are provided for convenience only and
have no substantive effect on the construction of this Agreement. No purchase
order or other ordering document that purports to modify or supplement the
printed text of this Agreement or any Schedule shall add to or vary the terms of
this Agreement. All such proposed variations or additions (whether submitted by
PeopleSoft or Implementation Partner) are objected to and deemed material unless
agreed to in writing. Except for Implementation Partner's obligation to pay
PeopleSoft, neither party shall be liable for any failure to perform due to
causes beyond its reasonable control. If any provision of this Agreement is held
to be unenforceable, this Agreement shall be construed without such provision.
The failure by a party to exercise any right hereunder shall not operate as a
waiver of such party's right to exercise such right or any other right in the
future. Except for actions for non-payment or
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breach of PeopleSoft's proprietary rights in the Software, no action, regardless
of form, arising out of this Agreement may be brought by either party more than
one year after the cause of action has accrued. This Agreement may be amended
only by a written document executed by a duly authorized representative of each
of the parties. This Agreement may be executed in counterparts. To expedite
order processing, Transmitted Copies are considered documents equivalent to
original documents, however Implementation Partner agrees to provide PeopleSoft
with one fully executed original Agreement and applicable Schedule(s).
This Agreement and the Schedule(s) ("Agreement") constitute the entire agreement
between the parties concerning Implementation Partner's acquisition and use of
the Software. This Agreement replaces and supersedes any prior verbal or written
understandings, communications, and representations between the parties. This
Agreement may be executed in counterparts, which taken together shall be
considered original.
14. DEFINITIONS
-----------
"Documentation" means only technical publications relating to the use of the
Software, such as reference, user, installation, systems administrator and
technical guides, delivered by PeopleSoft to Implementation Partner.
"PeopleTools" means the underlying architecture from which the Software is
designed, and includes software application programming tools and code.
"Schedule(s)" means the independent Software product schedule(s) executed by the
parties and Support Services schedule(s) referencing this Agreement. Each
Schedule is a separate and independent contractual obligation from any other
Schedule. Agreement Effective Date and Schedule Effective Date(s) may differ.
"Server" means a single database or file server that may be accessed by a
network of personal computers as set forth in the applicable Schedule.
"Site" means a specific, physical location of Implementation Partner's Server as
set forth in the applicable Schedule.
"Software" means any or all portions of the binary computer software programs
(including corresponding source code) and Documentation provided by PeopleSoft
or made by Implementation Partner with PeopleSoft's prior written consent,
whether in machine-readable or printed form only as listed in the applicable
Schedule and all corrections
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or updates thereto. Software includes the third-party software only as specified
in the Schedule. Software includes an object code version of PeopleTools but
does not include source code to PeopleTools. Unless specifically stated
otherwise, all Software is delivered to Implementation Partner only if and when
generally commercially available.
"Term" means from the period commencing Effective Date until one year
thereafter.
"Transmitted Copies" means this Agreement, Schedules and other ordering
documents that are (i) copied or reproduced and transmitted via photocopy,
facsimile or process that accurately transmits the original documents; and (ii)
accepted by PeopleSoft.
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Exhibit B
Implementation Partner Fees/Schedule
------------------------------------
This Schedule to the Implementation Partner Agreement is between PeopleSoft,
Inc. and Intelligroup, Inc. ("Implementation Partner"). Handwritten or
typewritten text (other than information which is specifically called for in the
spaces provided) which purports to modify or supplement the printed text of this
Schedule shall have no effect and shall not add to or vary the terms of the
Agreement. All such variations or additions are objected to and considered
material.
- --------------------------------------------------------------------------------
PRIMARY CONTACT BILLING INFORMATION SHIPPING/SITE INFORMATION
- --------------------------------------------------------------------------------
Contact: Sophia Zouras Contact: Same Contact: Same
- --------------------------------------------------------------------------------
Address: 517 Route One South Address: Same Address: Same
Iselin, NJ 08830
- --------------------------------------------------------------------------------
Phone: (908)726-2133 Phone: Phone:
- --------------------------------------------------------------------------------
Fax: (908)750-1880 Fax: Fax:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Software/Service (indicate Database Platform Per Copy # Total
specific Software modules or License Fee Copies License
"full suite")** Fee
- --------------------------------------------------------------------------------
HRMS 6 suite Oracle (LAN)* $5,000.00 1 $5,000.00
- --------------------------------------------------------------------------------
Financials 6 suite Oracle (LAN)* $5,000.00 1 $5,000.00
- --------------------------------------------------------------------------------
Distribution 6 suite Oracle (LAN)* $5,000.00 1 $5,000.00
- --------------------------------------------------------------------------------
Manufacturing 6 suite Oracle (LAN)* $5,000.00 1 $5,000.00
- --------------------------------------------------------------------------------
TOTAL SOFTWARE LICENSE: $20,000.00
- --------------------------------------------------------------------------------
ALLIANCE PROGRAM MEMBERSHIP FEE: $50,000.00
- --------------------------------------------------------------------------------
TOTAL FIRST YEAR IMPLEMENTATION PARTNER FEES: $70,000.00
- --------------------------------------------------------------------------------
** Please refer to Exhibit C, Software Product Descriptions, for details about
software modules contained in each product description.
* LAN versions are Unlimited Users.
1. ANNUAL RENEWAL FEE
------------------
After the first year of the Term and for each year thereafter that the Agreement
remains in effect, Implementation Partner shall pay PeopleSoft, in advance, an
annual renewal fee. The annual renewal fee is 50% (fifty percent) of the total
software license fee for all software licenses acquired under this Agreement. If
Implementation Partner is extending licenses of previously acquired software in
this Agreement, the total annual software support services fees for said
software will be included in the annual renewal fee. IMPLEMENTATION PARTNERS
THAT ARE ALSO EXISTING PEOPLESOFT CUSTOMERS WILL RECEIVE AN ADDITIONAL 25%
(TWENTY-FIVE PERCENT) PRICE REDUCTION OFF OF EACH YEAR'S NET RENEWAL FEE.
[Example assuming only new Software licensed: Total license fee is $100,000;
Annual Renewal fee is $50,000. Existing customer/Implementation Partner annual
renewal fee is: $37,500.]
2. PAYMENT TERMS
-------------
Within thirty (30) days from the Schedule Effective Date, Implementation Partner
will be invoiced for and agrees to pay the "Total first year fees" specified
above. Payment is due thirty (30) days after the invoice date.
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Unless Implementation Partner provides PeopleSoft with a valid tax exemption or
direct pay certificate, Implementation Partner is responsible for all taxes,
duties and customs fees concerning the Software and/or services, excluding taxes
based on PeopleSoft's income. Overdue payments shall bear interest at the lesser
of twelve percent (12%) per annum or the maximum rate allowed under applicable
law.
ACCEPTED BY: ACCEPTED BY:
INTELLIGROUP, INC. PEOPLESOFT, INC.
/s/ Sophia Zouras /s/ Jeff McClure
- ----------------- ----------------
Authorized Signature Authorized Signature
Sophia Zouras, Director Marketing &
Business Development Jeff McClure, Dir. Service Alliances
- ----------------------------------- ------------------------------------
Printed Name and Title Printed Name and Title
Approved As To
Legal Form
RDJ 7/25/97
----------------------
Initial Date
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Exhibit C
Software Product Descriptions
-----------------------------
PeopleSoft 6 HRMS consists of:
------------------------------
Human Resources
Benefits Administration
Payroll
Payroll Interface
Flexible Spending Accounts
Pension Administration
Time and Labor
PeopleSoft 6 Financials consists of:
------------------------------------
General Ledger
Receivables
Payables
Asset Management
Projects
Budgets
PeopleSoft 6 Distribution consists of:
--------------------------------------
Purchasing
Inventory
Billing
Order Management
Enterprise Planning
PeopleSoft 6 Manufacturing consists of:
---------------------------------------
Manufacturing
Bills and Routing
Cost Management
Production Planning
Production Management
PeopleTools 6
-------------
(restricted development only)
SQLBase single-user database is included with Single User Version
Workstation Access includes: base application access, Workstation SQR,
Crystal, QueryLink, PS/nVision
Unless specifically stated otherwise, all Software is delivered to
Licensee only if and when generally commercially available.
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Exhibit D
Software Support Services Terms and Conditions
----------------------------------------------
Software Support Services Terms and Conditions ("Support Services") are
referenced in and incorporated into the License Agreement between PeopleSoft and
Implementation Partner. Upon reasonable notice, PeopleSoft reserves the right to
modify the terms and conditions of Support Services on an annual basis to
reflect then - current market conditions.
1. COVERAGE
--------
PeopleSoft provides Implementation Partner with Support Services for the
Software in consideration of Implementation Partner's payment of the applicable
fees to PeopleSoft.
2. SOFTWARE MAINTENANCE
--------------------
The following technical and functional improvements will be issued periodically
by PeopleSoft to improve Software operations:
a. Fixes to Errors;
b. Updates; and
c. Enhancements contained within new releases.
3. PRIORlTY LEVEL OF ERRORS
------------------------
PeopleSoft shall reasonably determine the priority level of Error in accordance
with the following protocols:
Priority A:
PeopleSoft promptly initiates the following procedures: (1) assign
PeopleSoft specialist(s) to correct the Error; (2) provide ongoing
communication on the status of the correction(s); and (3) immediately
begin to provide a Workaround or a Fix.
Priority B:
(1) PeopleSoft assigns a PeopleSoft specialist to commence correction of
Error(s) and (2) Provide escalation procedures as reasonably determined by
PeopleSoft support staff. PeopleSoft exercises all commercially reasonable
efforts to include the Fix for the Error in the next Software maintenance
release.
Priority C:
PeopleSoft may include the Fix for the Error in the next major Software
release.
4. TELEPHONE SUPPORT
-----------------
PeopleSoft provides telephone support concerning installation and use of the
Software. Except for designated holidays, standard telephone support hours are
Monday through Friday, 4:00 a.m. to 6:30 p.m., Pacific Standard Time. Telephone
Support is also available 24-hours a day, 7-days a week for in-production
customers who need to resolve critical production problems apart from normal
support hours.
5. CUSTOMER CONNECTION
-------------------
a. The PeopleSoft Customer Connection system is an on-line, self-service
system which features postings by PeopleSoft and PeopleSoft Software
users regarding technical and non-technical topics of interest.
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Implementation Partner may access PeopleSoft Customer Connection via
the Internet. At Implementation Partner's expense, Implementation
Partner is responsible for independently acquiring appropriate
Internet access.
b. All Software maintenance releases and Fixes to the Software may be
delivered to Implementation Partner through PeopleSoft Customer
Connection, or by mail from PeopleSoft upon written request by
Implementation Partner. All information specified in Customer
Connection by PeopleSoft is confidential and proprietary to PeopleSoft
and shall only be used in connection with Implementation Partner's use
of the Software and informational communications with other PeopleSoft
Customer Connection participants. PeopleSoft reserves the right to
modify information posted to PeopleSoft Customer Connection.
PeopleSoft shall have the right to publish and distribute only through
PeopleSoft Customer Connection in all languages and in association
with Implementation Partner's name any material or software programs
provided by Implementation Partner to Customer Connection.
Implementation Partner shall not use PeopleSoft Customer Connection
for advertising or public relations purposes and shall only submit
information to PeopleSoft Customer Connection which is owned by
Implementation Partner or which Implementation Partner has third party
permission to submit to PeopleSoft Customer Connection for use by all
other PeopleSoft Customer Connection users.
c. In the interest of diminishing exposure to software viruses,
PeopleSoft tests and scans for software viruses all information
entered by PeopleSoft prior to submission of information to PeopleSoft
Customer Connection. Implementation Partner shall also use a reliable
virus detection system on any software or information posted to
PeopleSoft Customer Connection, utilize back-up procedures, monitor
access to PeopleSoft Customer Connection, promptly notify PeopleSoft
of any virus detected within Implementation Partner's systems
associated with PeopleSoft Customer Connection and generally exercise
a reasonable degree of caution when utilizing information from
PeopleSoft Customer Connection. PeopleSoft does not warrant that
Customer Connection will operate without interruption or without
errors. PeopleSoft reserves the right to modify or suspend PeopleSoft
Customer Connection service in connection with PeopleSoft's provision
for Support Services.
6. FEES
----
Implementation Partner shall pay PeopleSoft the annual Support Services fee as
set forth in Implementation Partner's license agreement with PeopleSoft. Support
Services are billed on an annual basis, payable in advance. Implementation
Partner shall be responsible for all taxes associated with Support Services,
exclusive of taxes based on PeopleSoft's income. Implementation Partner's
payment shall be due within thirty (30) days of receipt of the PeopleSoft
invoice. Should Implementation Partner elect not to renew Support Services and
subsequently request Support Services, PeopleSoft shall reinstate Support
Services only after Implementation Partner pays PeopleSoft the annual then
current fee plus all cumulative fees that would have been payable had
Implementation Partner not suspended Support Services.
7. TERM AND TERMINATION
--------------------
Support Services shall be provided for one (1) year from the date of the initial
license of the Software. Commencing on the anniversary of the date of the
initial license of the Software, continued Support Services shall be provided
contingent upon Implementation Partner's payment of the annual Software Support
Services Fee. In the event Implementation Partner fails to make payment pursuant
to the section titled "Fees", or in the event Implementation Partner breaches
the Support Services provisions and such breach has not been cured within thirty
(30) days of written receipt of notice of breach, PeopleSoft may suspend or
cancel Support Services.
8. EXCLUSIONS
----------
PeopleSoft shall have no obligation to support:
a. Altered, damaged or substantially modified Software;
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b. Software that is not a current release, or a Previous Sequential
Release;
c. Errors caused by Implementation Partner's negligence, hardware
malfunction, or other causes beyond the reasonable control of
PeopleSoft;
d. Software installed in a hardware or operating environment not
supported by PeopleSoft; and
e. Third party software not licensed through PeopleSoft.
9. GENERAL
-------
All Updates provided to Implementation Partner are subject to the terms and
conditions of the Agreement.
PeopleSoft shall not be liable for any failure or delay in performance of the
Support Services due to causes beyond its reasonable control. Any illegal or
unenforceable provision shall be severed from these Terms and Conditions.
Implementation Partner agrees that any information received pursuant to these
Terms and Conditions shall be deemed subject to the non-disclosure obligations
set forth in the Agreement. The Support Services Terms and Conditions states the
entire agreement of PeopleSoft's provision of Support Services to Implementation
Partner and may only be amended by a written amendment executed by both parties.
10. DEFINITIONS
-----------
Unless otherwise defined herein, capitalized terms used herein shall have the
same meaning as set forth in the Agreement and applicable Schedule.
"Enhancement" means technical or functional additions to the Software to improve
software functionality and/or operations. Enhancements are delivered with new
releases of the Software.
"Error" means a malfunction in the Software which degrades the use of the
Software.
"Fix" means the repair or replacement of source or object or executable code
versions of the Software to remedy an Error.
"Previous Sequential Release" means a release of Software for use in a
particular operating environment which has been replaced by a subsequent release
of the Software in the same operating environment. A Previous Sequential Release
will be supported by PeopleSoft for a period of eighteen (18) months after
release of the subsequent release. Multiple Previous Sequential Releases may be
supported at any given time.
"Priority A" means an Error that: (1) renders the Software inoperative; or (2)
causes the Software to fail catastrophically.
"Priority B" means an Error that affects performance of the Software, but does
not prohibit Implementation Partner's use of the Software.
"Priority C" means an Error that causes only a minor impact of the use of the
Software.
"Update" means all published revisions to the printed documentation and one (1)
copy of the new release of the Software which are not designated by PeopleSoft
as new products for which it charges separately.
"Workaround" means a change in the procedures followed or data supplied to avoid
an Error without significantly impairing performance of the Software.
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Exhibit E
TRAINING AGREEMENT
------------------
This Training Agreement ("Agreement") is made as of July 15, 1997 (the
"Effective Date") between PeopleSoft, Inc. ("PeopleSoft"), a Delaware
corporation having an office at 4305 Hacienda Drive, Pleasanton, California
94588 and Intelligroup, Inc. ("Trainee") having a office at 517 Route One South,
Iselin, NJ 08830.
The Term of this Agreement commences on the Effective Date and ends upon either
party providing thirty (30) days prior written notice of termination.
The PeopleSoft contact for this Agreement is: Jeff McClure
Telephone: (510) 468-2315
The Trainee contact for this Agreement is: Sophia Zouras
Telephone: (908) 726-2133
TERMS AND CONDITIONS
--------------------
1. TRAINING
--------
1.1 Under the terms of this Agreement, Trainee shall be entitled to enroll
participants in PeopleSoft training classes. Training classes include PeopleSoft
University (PSU) classes offered at PeopleSoft's corporate headquarters and
customer classes offered in PeopleSoft regional training centers.
1.2 Trainee shall designate a training administrator ("Administrator") as a
single point of contact for all training related issues. The Administrator is
responsible for obtaining training identification numbers, enrolling students in
classes, class cancellation, schedule changes, obtaining training summaries, and
facilitating Trainee's payment to PeopleSoft.
1.3 The Administrator for Trainee is:
Name: Samar Mishra
Address: Intelligroup, Inc.
517 Route One South
Iselin, NJ 08830
Telephone Number: (908) 726-2146
Fax Number: (908) 750- 1880
E-MAIL Address: [email protected]
1.4. Each PeopleSoft training class is assigned a unit value equal to the number
of class days. One training unit equals one day of training for one participant.
Trainee can purchase additional training units for the following standard fees
by issuing a purchase order or other ordering document to PeopleSoft:
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1-99 units $450 per unit
100-299 units $400 per unit
300+ or more units $350 per unit
Except as specifically provided herein, training units are non-refundable and
non-cancelable and expire one year after the date of purchase. Prospective
training unit pricing may be changed upon thirty (30) days prior written notice
to Trainee.
2. FEES AND PAYMENT TERMS
----------------------
2.1 Trainee will be invoiced for the training units which are purchased through
the Administrator or other pertinent Trainee personnel. Payment for invoices is
due with in thirty (30) days following the date of the invoice.
2.2 Unless Trainee provides PeopleSoft with a valid tax exemption or direct pay
certificate, Trainee is responsible for all taxes, excluding taxes based on
PeopleSoft's income. Overdue payments shall bear interest at the lesser of
twelve percent (12%) per annum or the maximum rate allowed under applicable law.
3. CANCELLATION
------------
3.1 In the event that the PeopleSoft training class is canceled by PeopleSoft,
Trainee shall have ten (10) days to select only one of the two options:
a) Attend the same training class at a later date as agreed to in writing
by Trainee and PeopleSoft, pursuant to the terms of this Agreement; or
b) Receive a refund of all fees paid for the training class.
3.2 In the event that the Trainee cancels enrollment at least ten (10) business
days prior to the scheduled start date of the PeopleSoft training class, Trainee
shall only have the option of either:
a) Attending the same training class at a later date as agreed to in
writing by Trainee and PeopleSoft, under the terms of this Agreement; or
b) Receiving a refund of all fees pre-paid for the training class.
3.3 In the event that the Trainee cancels enrollment in less then ten (10)
business days prior to the scheduled start date of the PeopleSoft training
class, Trainee will be responsible for payment for the training class.
4. NOTICES
-------
All contractual notices shall be in writing and sent by registered mail,
overnight mail, courier, or transmitted by facsimile (if confirmed by such
mailing), to the addresses indicated on the first page of this Agreement, or
such other address as either party may indicate by at least ten (10) days prior
written notice to the other party. Notices to PeopleSoft shall be sent to the
attention of PeopleSoft Legal with a copy to Trainee's assigned alliance
manager.
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5. NONDISCLOSURE OBLIGATION
------------------------
The terms, conditions, pricing and all other information under this Agreement is
confidential and shall not be disclosed, orally or in writing by Trainee to any
third party without the prior written consent of PeopleSoft. The information
presented in relation to the training classes, including, but not limited to
training data, class schedules, class handouts, sample reports, and screen
prints is proprietary and shall not be disclosed, orally or in writing by
Trainee to any third party.
6. REPRESENTATIONS AND DISCLAIMERS
-------------------------------
Both parties represent that they have the right to enter into this Agreement. No
warranty, express or implied, is provided to Trainee concerning the training
contemplated by this Agreement. PEOPLESOFT DISCLAIMS ALL OTHER WARRANTIES,
EXPRESS OR IMPLIED, INCLUDING BUT NOT LIMITED TO THE WARRANTIES OF
MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE. EXCEPT FOR TRAINEE'S
VIOLATIONS OF PEOPLESOFT'S INTELLECTUAL PROPERTY RIGHTS, NEITHER PARTY WILL BE
LIABLE FOR ANY INDIRECT, INCIDENTAL, SPECIAL, OR CONSEQUENTIAL DAMAGES,
INCLUDING BUT NOT LIMITED TO LOST DATA OR LOST PROFITS, HOWEVER ARISING, EVEN IF
IT HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES. PEOPLESOFT'S LIABILITY
FOR DAMAGES UNDER THIS AGREEMENT (WHETHER IN CONTRACT OR TORT) SHALL IN NO EVENT
EXCEED THE AMOUNT PAID BY IMPLEMENTATION PARTNER TO PEOPLESOFT FOR THE SERVICES
FROM WHICH THE CLAIM AROSE. THE PARTIES AGREE TO THE ALLOCATION OF LIABILITY
RISK SET FORTH IN THIS SECTION.
7. GENERAL
-------
This Agreement is made in and shall be governed by the laws of the State of
California, excluding choice of law principles. Venue shall be in San Francisco,
California. The section headings herein are provided for convenience only and
have no substantive effect on the construction of this Agreement. No purchase
order or other ordering document that purports to modify or supplement the
printed text of this Agreement or any Schedule shall add to or vary the terms of
this Agreement. All such proposed variations or additions (whether submitted by
PeopleSoft or Trainee) are objected to and deemed material unless agreed to in
writing. Except for Trainee's obligation to pay PeopleSoft, neither party shall
be liable for any failure to perform due to causes beyond its reasonable
control. If any provision of this Agreement is held to be unenforceable, this
Agreement shall be construed without such provision. The failure by a party to
exercise any right hereunder shall not operate as a waiver of such party's right
to exercise such right or any other right in the future. This Agreement may be
amended only by a written document executed by a duly authorized representative
of each of the parties. This Agreement may be executed in counterparts. To
expedite order processing, fax transmitted copies are considered documents
equivalent to original documents, however Trainee agrees to provide PeopleSoft
with one fully executed original Agreement and applicable Schedule(s). Sections
1.4, 2, 4, 5, 6, and 7 shall survive the termination of this agreement.
This Agreement constitutes the entire agreement between the parties concerning
PeopleSoft's training class(es).
ACCEPTED BY: ACCEPTED BY:
INTELLIGROUP, INC. PEOPLESOFT, INC.
/s/ Sophia Zouras /s/ Jeff McClure
- ----------------- ----------------
Authorized Signature Authorized Signature
Sophia Zouras, Director Marketing &
Business Development Jeff McClure, Dir. Service Alliances
- ----------------------------------- ------------------------------------
Printed Name and Title Printed Name and Title
Approved As To
Legal Form
RDJ 7/25/97
----------------------
Initial Date
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CONSULTING ALLIANCE AGREEMENT
-----------------------------
THE UNDERSIGNED PARTIES:
- ------------------------
1. Intelligroup, Inc. with a place of business at 517 Route One South, Iselin,
NJ, 08830, USA, hereinafter referred to as "Company,"
and
2. Baan International B.V., with a place of business at Baron van Nagellstraat
89, P.O. Box 143, 3770 AC Barneveld, The Netherlands, hereinafter referred
to as "Baan."
HEREBY AGREE FOLLOWS:
- ---------------------
1. Execution and duration
----------------------
1.1 Company and Baan agree to enter into and to execute this Consulting
Alliance Agreement, hereinafter referred to as this "Agreement."
1.2 This Agreement is in effect as of the latter of the dates it is signed by
both parties and shall remain in force for a period of one ( 1) year,
unless terminated pursuant to Section 8 of the General Terms and
Conditions attached hereto as Schedule A and, after the expiration of the
initial term, will be automatically renewed for subsequent periods of one
year. Neither party shall be under any obligation to extend or renew the
duration of the Agreement upon expiration of the initial term, or the
renewal term, and each party may elect or refrain from any extension or
renewal for any reason whatsoever. In addition, either party may terminate
this Agreement without cause, provided it supplies the other party with
ninety (90) days' prior written notice of such termination.
1.3 Company shall operate as an International Consulting Alliance Program
Member ("Member") to Baan pursuant to this Agreement.
2. Baan Consulting Alliance Program Requirements
---------------------------------------------
By entering into this Agreement, Company is participating in the Baan
Consulting Alliance Program. In order to protect the standards of quality
for services provided under Baan's trademarks and in order for Baan to
monitor the quality of services provided under Baan's trademarks, Company
hereby agrees to fulfill the Baan Consulting Alliance Program (the
"Program") requirements set forth below.
2.1 Advanced Trained Consultants
----------------------------
Within twenty-four (24) months of signing this Agreement, Company shall
have at least that number of consultants dedicated to Baan as is
reasonably necessary to meet its obligations hereunder. All such
consultants shall have been Basic Trained and Advanced Trained in at least
one Baan Software package. If Company is unable to satisfy this
requirement within the specified time period, Company shall notify Baan in
writing of the inability to comply and the reasons thereof. Baan may, in
its sole discretion, allow Company to retain Membership in the Program
hereof despite this inability to comply. Consultants shall update their
training by passing a "differences course" within 6 months of the general
release of each major version of the Baan Software. If training is not
available in a certain region or area, Company must obtain a waiver from
Baan postponing this requirement until training does become available.
Company shall also provide Baan practice-level skills profile information
to Baan. Company shall update this information at least quarterly.
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2.3 Non-solicitation
----------------
During the term of this Agreement and for one (1) year after its
expiration or termination, neither party shall without the prior written
consent of the other party, solicit for employment as an employee,
independent contractor, or consultant, any employee, independent
contractor or consultant of the other party or (in the case of Baan) of
Baan Company N.V., or a Baan Company N.V. subsidiary who performs or
participates in the delivery of Consulting Services or other related
services. In addition, neither party shall procure any third party to do
any of the aforementioned acts.
2.4 Vertical Market Focus
---------------------
Company shall build industry expertise in the requisite number of Baan's
vertical industry markets as set forth in the definition of International
Member on Schedule A and shall be able to provide added value to customers
in those markets. Baan's vertical industry markets currently include,
without limitation, Automotive, Hi-Tech Electronics, Project Industries,
Aerospace & Defense and Process.
2.5 Orgware and Baan Methodology Compliance
---------------------------------------
In order to protect the value of Baan's trademarks, during an
implementation, Company shall use Baan's Orgware tools and Baan
Methodology or Company's proprietary methodology that has been previously
approved by Baan. In order for Company's proprietary methodology to be
approved by Baan, the following deliverables must be satisfied:
1) Methodology mapped to the Baan Methodology.
2) Consulting services presentation jointly developed.
3) Format of Project proposal - approved by Baan.
4) Format of Project budget - approved by Baan.
2.6 Quality
-------
Company shall deliver the Consulting Services in a professional and
workmanlike manner.
3. Baan Consulting Alliance Program Member Privileges
--------------------------------------------------
3.1 As a Member of the Consulting Alliance Program, Company is entitled to,
among other privileges, the following privileges for as long as Company
maintains its status as a Member:
3.2 Use of Baan Authorized Consulting Alliance Member Logo
-------------------------------------------------------------
Company is authorized to use the Baan Authorized Consulting Alliance
Member logo on business cards, letterhead, marketing materials,
advertisements, in sales presentations, and to link to Baan's web site
(http://www.Baan.com) on the World Wide Web; provided, however, that
Company shall not use such logo or any other mark as part of its company
or business name.
3.3 Internal Copies
---------------
Upon paying the appropriate annual support fee to Baan for Maintenance and
Support under Schedule B of this Agreement, Company will receive a
non-exclusive, non-transferable license to use the Internal Copies for the
sole purpose of enabling Company to become more familiar with the Software
and provide Consulting Services, it being understood that Company has no
rights to:
(i) sell, lease, license, or sublicense the Software;
(ii) decompile, disassemble, or reverse engineer the Software, in whole
or in part; or
(iii) write or develop any derivative software or any other software
program based upon the Software or any confidential information of
Baan.
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3.4 Maintenance and Support.
------------------------
Upon payment by Company of the appropriate annual fee, Baan will provide
Maintenance and Support to Company with respect to the Internal Copies
according to the terms of Schedule B hereof.
3.5 Access to Baan E-Mail and Databases
-----------------------------------
Company shall receive access to Baan's e-mail and supporting alliance
databases for the purpose of assisting Company professionals.
3.6 Discount on Baan Education Courses
----------------------------------
Company shall receive a standard discount of 20% off Baan's standard
charges on all courses offered at Baan's education centers.
3.7 Baan Institute
--------------
Company shall be invited to enroll consultants in courses at the Baan
Institute, subject to space availability and payment of the requisite fee.
3.8 Trainer Accreditation
---------------------
Company shall be invited to participate in Baan's accreditation program
for trainers, subject to space availability and payment of the requisite
fee. The accreditation program provides instructors with knowledge and
skills to transfer Baan product knowledge and teaches trainers to provide
Standard and Configured Training, to protect the value of Baan's
trademarks.
3.9 Sales and Marketing Events
--------------------------
Company shall receive invitations to attend Baan's major global and
regional sales and marketing events, both as a participant and, where
applicable, as a speaker. Such sales and marketing events may include,
Baan world users conferences, sales kickoff meetings, vertical industry
executive summits, product announcements, and press and analysts tours.
Baan will also accept invitations to and, at Baan's reasonable discretion,
attend and support Company's own sales and marketing events.
3.10 Joint Marketing Programs
------------------------
Company shall be offered the opportunity to arrange joint marketing
programs, events, and press releases with Baan's marketing department.
3.11 Company Name Listed on Baan Web Site
------------------------------------
Company shall have the option to list their company name on Baan's web
site (http://www.Baan.com/) on the World Wide Web. Company shall also have
the option to link from the Baan web site to Company's web site, and vice
versa.
3.12 Company Name Listed in the Baan Consulting Alliance Program Members Guide
------------------------------------------ ------------------------------
Company shall have the option to be listed in the Baan Consulting Alliance
Program Members Guide, which is a listing of Baan's Consulting Alliance
Program Members. The Consulting Alliance Program Members Guide is
distributed in print format and on Baan's web site.
3.13 Fee
---
To the extent a fee is not already referenced herein, Baan hereby reserves
the right to, at Baan's sole discretion, charge a fee for any of the
privileges set forth in Sections 3.1 through 3.12 above by giving Company
ninety (90) days' prior written notice. Baan may only change its fee
policy twice during any twelve-month period and only as long as Baan
imposes such fee equally on all of its Consulting Alliance Program
Members. Company shall have the right to decline receiving any of the
privileges listed above and thereby eliminate the obligation to pay any
such fee applicable to such declined privileges.
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4. Company-Sole Control.
---------------------
Company shall have sole and exclusive control over all aspects of the
business not expressly covered under this Agreement, including, without
limitations, (i) sales policies, (ii) credit practices, (iii) hiring and
supervision of personnel, (iv) marketing, advertising, and promotion, (v)
contracting, (vi) billing and collection; and (vii) pricing.
5. No Limitation.
--------------
Nothing in this Agreement shall be construed to restrict Company from
conducting any other business, including, without limitation, consulting
services relating to any third party's computer software products.
6. Price
-----
Except as set forth in Section 5.2 of Schedule A, Company shall
unilaterally determine the price for Consulting Services offered by
Company hereunder. No employee or representative of Baan or anyone else
shall have any authority whatsoever to set Company's price of such
Consulting Services or to inhibit in any way Company's pricing discretion
with respect to such Consulting Services.
7. Notices
-------
Any notice required or permitted under the terms of this Agreement or
required by law shall (unless otherwise provided) be in writing and shall
be delivered in person, sent by registered mail, by express mail with
package tracking capability or air mail as appropriate, properly posted
and fully prepaid in an envelope properly addressed, or shall be sent by
fax to the respective parties as follows:
(i) Baan - Address: 4600 Bohannon Drive, Suite 105
Menlo Park, CA 94025, USA
Attn: Legal Counsel
- Phone number: 1.415.462.4949
- Fax number: 1.415.462.4960
(ii) Company - Address: 517 Route One South,
Iselin, NJ, 08830, USA
Attn: Sophia Zouras,
VP Marketing & Business Development
with a copy to: Intelligroup, Inc., Legal Department
(same address, phone, and fax)
- Phone number: 1.908.750.1600
- Fax number: 1.908.750.1880
or to such other address or fax number as either party may be notified of
by the other party. Any such notice shall be in the English language,
unless otherwise specified in this Agreement, and shall be considered to
have been given at the time of actual delivery in person or, if sent by
fax, at the time mentioned on the transmission result report, or in any
other event within fourteen days after it was mailed in the manner
specified above.
8. Entire Agreement
----------------
This Agreement (including the Schedules and any addenda hereto signed by
both parties) contains the entire agreement of the parties with respect to
the subject matter of this Agreement and supersedes all previous
communications, representations, understandings and agreements, either
oral or written, between the parties with respect to said subject matter.
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<PAGE>
DRAWN UP IN DUPLICATE AND SIGNED:
in [Reston, VA, USA] in [Iselin, NJ, USA]
on [26 SEPT], 1997 on [29 SEPT], 1997
Baan: Company:
BAAN INTERNATIONAL B.V. INTELLIGROUP, INC.
By: /s/ Christine B. Pittman By: /s/ Sophia M. Zouras
------------------------ --------------------
Name: Christine B. Pittman Name: Sophia M. Zouras
Title: Vice President, BAAN Title: Vice President, Marketing & Business
Consulting Development
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<PAGE>
SCHEDULE A
GENERAL TERMS AND CONDITIONS
1. Definitions
-----------
1.1 "Advanced Trained" means having successfully passed both the Baan basic
training exam and the Baan advanced training exam for one package of the
Software.
1.2 "Baan Consulting Alliance Program" means Baan's program for establishing
Alliance relationships with entities that provide Consulting Services and
for describing the nature of the relationships.
1.3 "Basic Trained" means having successfully passed the Baan basic training
exam.
1.4 "Configured Training" means a Baan education course that is taught by a
Baan accredited trainer using a subset of the standard Baan curriculum and
a subset of the standard Baan materials. All configured training courses
are scheduled through the Baan education center in the region where the
course is taught.
1.5 "Consultant" means an employee of Company who is providing Consulting
Services.
1.6 "Consulting Services" means the activities of Company by means of which it
supports Customers with the use of the Software.
1.7 "Customer" means an individual end-user of the Software, who has licensed
the Software either directly from Baan, from a Distributor of Baan, or
from both.
1.8 "DEM Consulting" means implementation consulting relating to Dynamic
Enterprise Modeling and the Line of Business Reference Models.
1.9 "Distributor" means a company authorized by Baan to market and license
Software to Customers.
1.10 "Documentation" means any on-line system help files or written instruction
manuals regarding the use of the Software.
1.11 "General Terms and Conditions" means the terms and conditions contained in
this Schedule A.
1.12 "Global Consulting Alliance Program Member" means a company who has (i) at
least five hundred (500) Advanced Trained Certified Consultants; (ii)
consultants available in all of Baan's Targeted Countries in the
geographic region(s) where the relationship is active; (iii) deep industry
expertise in at least two of Baan's industry vertical markets.
1.13 "International Consulting Alliance Program Member" means a company who has
(i) at least seventy-five (75) Advanced Trained Consultants; (ii)
consultants available in all of Baan's Targeted Countries in the
geographic region(s) where the relationship is active; (iii) deep industry
expertise in at least one of Baan's industry vertical markets.
1.14 "Local Consulting Alliance Program Member" means a Company who has at
least twenty-five (25) Advanced Trained consultants in one country or
geographic area.
1.15 "Product Consulting" means implementation consulting relating to the
Software.
1.16 "Release" means a set of the Software in which in addition to possible
corrections of detected shortcomings, (small) functional enhancements have
been included. New Releases are registered by means of a change of the
number to the right of the decimal point, e.g. BAAN IV.0 >> BAAN IV. I.
1.17 "Software" means the suite of Baan applications software (including Baan
Tools and Baan Orgware) in object code form.
1.18 "Standard Training" means a Baan education course that is taught by a Baan
accredited trainer using the standard Baan curriculum and the standard
Baan materials. All standard training courses are scheduled through the
Baan education center in the region where the course is taught.
1.19 "Targeted Countries" means the countries set forth on Schedule C attached
hereto.
1.20 "Update" means a set of the Software in which detected shortcomings are
being remedied. Updates are registered by means of a letter indication
after the version number of the Software, e.g. BAAN IV.0 >> BAAN IV.0A.
1.21 "Version" means a set of the Software in which substantial new
functionalities or other substantial changes are introduced. Versions are
registered by means of a change of the number to the left of the decimal
point, e.g. BAAN IV.0 >> BAAN V.0.
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<PAGE>
2. Interpretation
--------------
Section, Clause and Schedule headings are for convenience of reference
only and shall not affect the meaning or construction of any provision of
this Agreement.
3. Enhancements, modifications, translations
-----------------------------------------
3.1 Company shall not have the right to decompile, modify or alter the
Software in any manner that would in any way jeopardize the property
rights of Baan, or would provide Company access to source code or other
code that is not generally available to other Baan Alliance Program
Members or Customers; nor shall Company have the right to cause others to
make any copy of any part of the Software unless otherwise agreed to in
this Agreement. In the normal course of providing Consulting Services to
is Customers, Company shall have the right to make modifications and
enhancements to the Software where those modifications and enhancements
are accomplished solely through the use of Baan Tools, where they are for
the express and limited use of the Customer, and where they are
accomplished using practices generally accepted by Baan. Notwithstanding
the foregoing, ownership of computer software developed by Company shall
be as follows:
(a) "Source Code Modifications" means any computer software that consists
of modifications to the Source Code. Baan shall own any Source Code
Modifications. Company hereby assigns to Baan, and Baan hereby
accepts, all right, title and interest, including all intellectual
property rights, in and to such Source Code Modifications. Company
agrees to execute such applications, assignments and other instruments
as Baan may deem necessary or desirable to effect and perfect such
assignment. Company shall retain a non-exclusive, non-transferable and
non-assignable license to use such Source code Modifications under the
terms of this Agreement.
(b) "Integration Software" means any computer software that integrates the
Software to other computer software used by Company's Customers and
does not contain any modifications to the Source Code. Company shall
own any Integration Software.
(c) "Application Software" means any computer software that is created
using the Baan Tools and does not contain any modification to the
Source Code. Company shall own any Application Software.
Once per year, Company shall deliver tapes to Baan containing the Source
Code Modifications which have been developed by Company after the previous
delivery of such tapes .
3.2 Company shall not modify, translate, reproduce, edit, or resell Baan's
promotional literature, training materials, Documentation, advertising
artwork, the names and/or package design of the Software, or any other
materials that are copyrighted by Baan without Baan's prior written
consent. All modifications, translations, reproductions, and/or edited
versions of those items described in Sections 3.1 (a) and 3.2 will become
the exclusive property of Baan.
3.3 Baan shall notify Company of any new Updates, Releases or Versions of the
Software.
4. Payment
-------
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<PAGE>
4.1 Copies of brochures, other marketing collateral and literature are to be
obtained at Baan's then-current rates, which rates are not to exceed (a)
Baan's then current published rates, or (b) the current rates charged to
other participants in the Baan Consulting Alliance Program.
4.2 All payments to Baan are due within thirty days after the invoice date,
unless specified otherwise in this Agreement, or within a subsequent
subcontractor agreement where Baan subcontracts to Company, or unless such
amounts are in dispute as specified in Section 5.3 herein. Payments are to
be paid to the invoice address.
4.3 If Company disagrees with an invoice, it shall contact Baan in writing
within fourteen (14) days from the invoice date, in the absence of which
the invoice shall be deemed to have been fully accepted by Company.
4.4 In the event, of overdue payment (excepting those payments that are in
dispute) Baan reserves the right to charge interest at one percent (1%)
per month, until the date payment in full is received by Baan.
5. Subcontracting
--------------
5.1 Company shall not, without Baan's prior written consent, subcontract the
delivery of Consulting Services to non-Advanced Trained consultants or
non-Advanced Trained independent contractors for Product Consulting or DEM
Consulting.
5.2 In the event the delivery of Consulting Services by Company is
subcontracted by Baan, Company will provide consultants to Baan at a rate
not to exceed 80 percent of the published Baan rates for comparable
consultants. The current published Baan rates are attached hereto as
Schedule D.
5.3 In the event the delivery of Consulting Services by Company is
subcontracted by Baan, Baan will pay Company for Consulting Services
performed within 14 days after payment is received by Baan from the
Customer, or within sixty (60) days whichever is sooner. Baan agrees to
use is best efforts, including, but not limited to, bringing collections
actions, to obtain payment from such Customer.
6. Intellectual Property Rights
----------------------------
6.1 Baan hereby represents that it owns or has the right to license the
Software and that, to the best of Baan's knowledge as of the date of this
Agreement after the exercise of due diligence, there is no pending
litigation involving Baan's Software which would affect Company's use of
the Software.
6.2 Company acknowledges that any and all of the trade marks, copyrights,
patents and other intellectual property rights, owned exclusively by Baan,
used or embodied in or in connection with the Software shall be and remain
the exclusive property of Baan.
6.3 Company shall ensure that the appropriate designation for the Software,
either (C) (copyright) or (R) (registered) or "TM" (trade mark) or "SM"
(service mark), as applicable and as provided by Baan, for all copyrights
and trademarks, shall be depicted in all Company's advertisements,
publications, public presentations, packages and external correspondence.
6.4 In the event of a pending seizure of the Software by a creditor of
Company, Company shall immediately inform Baan of this fact and take all
reasonable measures to ensure that the valid, existing intellectual
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<PAGE>
property rights of Baan are recognized. All reasonable expenses incurred
by Baan in recovering seized Software from Company's creditors shall be at
Company's expense and shall be paid by Company.
6.5 Baan shall, at its expense, defend or settle any claim, action or
allegation brought against Company that the Software infringes any patent,
copyright, trade secret or other proprietary right of any third party and
shall pay any final judgments awarded or settlements entered into;
provided that Company gives prompt written notice to Baan of any such
claim, action or allegation of infringement and gives Baan the authority
to proceed as contemplated herein. Baan will have the exclusive right to
defend any such claim, action or allegation and make settlements thereof
at is own discretion, and Company may not settle or compromise such claim,
action or allegation, except with prior written consent of Baan. Company
shall give such assistance and information as Baan may reasonably require
to settle or oppose such claims.
7. Liability
---------
7.1 If one of the parties does not properly observe one or more of his
obligation(s) under the Agreement, the other party will grant him by means
of a written declaration of material breach, thirty (30) days to cure this
breach. If the party in breach fails to cure this breach, then such party,
will be liable for the compensation of the damage suffered by the other
party, subject to the terms and conditions of this Agreement.
7.2 Except as set forth, Baan makes no warranties, whether express, implied,
or statutory, regarding or relating to the Software or the Documentation,
or any materials or services furnished or provided to Company under this
Agreement. Baan specifically disclaims all implied warranties of
merchantability and fitness for a particular purpose with respect to the
Software, Documentation and said other materials and services, and with
respect to the use of any of the foregoing.
7.3 Neither Party shall be liable for any loss of profits, loss of use,
business interruption, loss of data, cost of cover or indirect, special,
incidental and/or consequential damages of any kind in connection with or
arising out of the furnishing, performance or use of the Software or
services performed hereunder, whether alleged as a breach of contract or
tortious conduct, including negligence, even if that Party has been
advised of the possibility of such damages. In addition, neither Party
will be liable for any damages caused by delay in delivery, or furnishing
the Software or said services. Baan's liability under this Agreement for
direct, indirect, special, incidental and/or consequential damages of any
kind, including, without limitation, restitution, will not, in any event,
exceed the amount paid to Baan by Company under this Agreement.
7.4 Notwithstanding anything to the contrary, contained herein, Baan's
liability under Section 6.5 shall not be subject to any of the limitation
of liability contained in this Section 7.
8. Termination or expiry
---------------------
8.1 Notwithstanding any provisions contained herein, this Agreement may be
terminated with immediate effect by either party upon written notification
by the party not at fault to the other party if any of the following
events takes place: (i) if the other party, at any time is in material
breach of any term, condition or provision of this Agreement, and such
breach, if capable of being cured, is not cured within thirty (30) days,
upon receipt of a written notification from the party not at fault
specifying such breach; or (ii) if either party becomes insolvent, admits
in writing is inability to pay is debts as they mature, makes an
assignment for the benefit of its creditors, files or has filed against it
by a third party any petition under any Bankruptcy Act, or an application
for a receiver of either party is made by anyone and such petition or
application is not resolved in favor of such party within sixty (60) days
after such event taking place. If
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<PAGE>
any of these evens occur, termination shall become effective forthwith or
on the date set forth in the written notice of termination.
8.2 Upon expiry, or termination (for whatever reason) of this Agreement,
Company shall return or destroy (as Baan shall instruct) within a
reasonable period of time thereafter any Documentation, technical
information and any other data in respect of the Software supplied by Baan
to Company during the term of this Agreement and all and any copies made
in whole or in part of the same, and if requested, Company shall furnish
Baan with a written statement certifying that the same has been done,
except for (a) such supporting software, information and data which
Company will require to support the Software beyond the date of expiry or
termination provided Baan permits Company to do so, or (b) copies of
information which Company may be required to keep under the rules or
regulations governing professional consultants and/or accountants. If
Company has paid for any items which are required to be returned to Baan,
then, upon the return of such items from Company to Baan, Baan shall
reimburse Company for such items.
8.3 Termination of this Agreement shall not affect the provisions regarding
the Parties' treatment of Confidential Information, provisions relating to
the payment of amounts due, or provisions limiting or disclaiming Baan's
liability, which provisions will survive termination of this Agreement.
8.4 Sections 6.5, 14 and 17 herein shall survive termination of this
--------------------------
Agreement.
9. Force Majeure
-------------
Neither party will incur any liability to the other party on account of
any loss or damage resulting from any delay or failure to perform all or
any part of this Agreement if such delay or failure is caused, in whole or
in part, by events, occurrences, or causes beyond the control and without
negligence of the parties. Such evens, occurrences, or causes will
include, without limitation, acts of God, strikes, lockouts, riots, acts
of war, earthquakes, fire and explosions, but the inability to meet
financial obligations is expressly excluded.
10. Waiver
------
Any waiver of the provisions of this Agreement or of a party's rights or
remedies under this Agreement must be in writing to be effective. Failure,
neglect, or delay by a party to enforce the provisions of this Agreement
or its rights or remedies at any time, will not be construed and will not
be deemed to be a waiver of such party's rights under this Agreement and
will not in any way affect the validity of the whole or any part of this
Agreement or prejudice such party's right to take subsequent action.
Except as expressly stated in this Agreement, no exercise or enforcement
by either party of any right or remedy under this Agreement will preclude
the enforcement by such party of any other right or remedy under this
Agreement or that such party is entitled by law to enforce.
11. Severability
------------
If any term, condition, or provision in this Agreement is found to be
invalid, unlawful or unenforceable to any extent, the parties shall
endeavor in good faith to agree to such amendments that will preserve, as
far as possible, the intentions expressed in this Agreement. If the
parties fail to agree on such an amendment, such invalid term, condition
or provision will be severed from the remaining terms, conditions and
provisions, which will continue to be valid and enforceable to the fullest
extent permitted by law.
12. Assignment
----------
Neither this Agreement nor any rights under this Agreement may be assigned
or otherwise transferred by Company, in whole or in part, whether
voluntary or by operation of law, including by way of sale of
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<PAGE>
assets, merger or consolidation, without the prior written consent of
Baan, which consent will not be unreasonably withheld. Subject to the
foregoing, this Agreement will be binding upon and will inure to the
benefit of the parties and their respective successors and assigns.
13. Independent Parties
-------------------
The parties shall at all times be independent Parties and shall present
themselves to all other parties as such. Nothing in this Agreement will be
construed to make either Party, and each party agrees that it is not, an
agent, employee, franchisee, joint venturer or legal representative of the
other Party. Except as otherwise provided in this Agreement, neither Party
will either have nor represent itself to have any authority to bind the
other Party or act on is behalf.
14. Confidential information
------------------------
Company and Baan shall treat all proprietary, and/or confidential
information of each other as strictly confidential. The parties hereby
agree that all terms and conditions of this Agreement and Schedules
thereto shall be treated as confidential and shall not be disclosed
without the other party's prior written consent. This confidentiality
undertaking shall not apply to any part of the proprietary, and/or
confidential information of which the recipient party can prove that: (i)
it was known to it prior to being furnished to the recipient party
hereunder (as evidenced by written record predating such disclosure); (ii)
it is, or becomes public knowledge through no fault or breach of the terms
of this Agreement by the recipient party; (iii) is received by the
recipient party from a third party in good faith and not in breach of any
agreement; or (iv) is independently acquired by the recipient party as a
result of work carried out by an employee of the recipient party to whom
no disclosure of this proprietary, and/or confidential information has
been made. If a Baan-dedicated consultant is moved from the Baan practice
to a Company practice of a direct competitor of Baan, Company shall ensure
that all that consultant's access to Baan confidential information sources
(e.g., access to Baan alliance databases) and to Baan confidential
information is terminated immediately.
15. Amendments to this Agreement.
----------------------------
This Agreement may not be amended, except by a writing signed by both
parties.
16. Counterparts.
-------------
This Agreement may be executed in counterparts, each of which so executed
will be deemed to be an original and such counterparts together will
constitute one and the same agreement.
17. Applicable law and arbitration
------------------------------
This Agreement will be interpreted and construed in accordance with the
laws of the State of California and the United States of America, without
regard to conflict of law principles.
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<PAGE>
SCHEDULE B
CONSULTING ALLIANCE MAINTENANCE
AND SUPPORT AGREEMENT
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<PAGE>
SCHEDULE C
BAAN'S TARGETED COUNTRIES
1997 1998
---- ----
AMERICAS U.S.A. U.S.A.
Canada Canada
Brazil Brazil
Mexico
EUROPE/MIDDLE EAST/AFRICA The Netherlands The Netherlands
Germany Germany
Italy Italy
United Kingdom United Kingdom
France France
Nordic
ASIA PACIFIC Japan Japan
India India
Korea Korea
Australia
Chinas
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SCHEDULE D
BAAN'S CURRENT PUBLISHED RATES
PROFESSIONAL SERVICES TO BE PROVIDED
BAAN FIELD CONSULTING RESOURCE HOURLY RATE *
- ------------------------------ ---------------
Sr. Implementation Specialist, Program Manager $ 375 ($3000)
Implementation Specialist/Project Manager $ 250 ($2000)
Implementation Support Mgr./Implementation Auditor $ 250 ($2000)
Product Specialist $ 225 ($1800)
Technical Specialist $ 200 ($1600)
Programmer Analyst $ 150 ($1200)
CENTER OF EXPERTISE RESOURCES HOURLY RATE *
- ----------------------------- ---------------
Sr. Implementation Consultant/Sr. Program Manager $ 425 ($3400)
Sr. Product Consultant $ 375 ($3000)
Product Consultant $ 250 ($2000)
NOTES:
- ------
It is Baan's practice to charge by the hour, for convenience we indicate in
parenthesis what the charge would be for an eight hour day. All quotes should be
done using the hourly rate.
Minimum time: In general, we do not accept work of less than one day duration.
- ------------
If requested by the customer, and agreed upon by Baan, this work will be a
custom quote.
Custom Modification: Charges above do not apply for developing interface
- --------------------
programs to software or hardware not directly provided by BAAN, this work will
be a custom quote.
Travel & Living Costs: In addition to above rates, there are charges for travel
- ---------------------
and living expenses as incurred (hotel, meals, travel costs, etc.) Travel time
is considered billable time, from consultant's home to customer site billed at
50% of hourly rate. Customer may request a per diem charge. Baan is willing to
negotiate a per diem for long term assignments. Baan's policy for per diem rates
is to follow IRS guidelines.
Remote Support: All support provided remotely from consultant home office or
- ---------------
Baan office will be surcharged by $60/hour to account for long distance/fax
charges. This charge is in addition to the hourly consulting fee and is a
blended rate to cover cell phone charges, long distance direct dial charges, fax
charges, and home office secretarial support.
Discounting of Services: It is Baan's policy to NOT discount Consulting
- -------------------------
Services and Training fees, except for the following situations;
- - Consulting Package is paid up front in increments of $250K, and charges
deducted from prepaid account When balance is used, rates go back to list
price or account must be replenished. 10% discount available for prepayment.
- - Resource utilization of 5 billable days per week guaranteed for a period of
six months for one resource. If resource is used after that period with no
additional lock-in, rate reverts to list price. Discount only applies to each
consulting level guaranteed, at 10% off list.
Rate Increases: Baan reserves the right to modify consulting and training rates
- --------------
with 90 days notice. We will not agree to cap rates for the duration of a
contract or to a minimum level per year. Any forced negotiation of this type
will have a direct impact on the quality of resource Baan is able to provide on
the implementation team. It is Baan's general policy to modify rates on an
annual basis.
- --------------------------------------------------------------------------------
SOH142r4.doc
2/10/97
14
<PAGE>
ADDENDUM NUMBER ONE TO CONSULTING ALLIANCE AGREEMENT
----------------------------------------------------
This is Addendum Number One (the "Addendum") to that certain Consulting Alliance
Agreement dated , 1997 (the "Agreement"), by and between Intelligroup,
------
Inc. ("Company") and Baan International B.V. ("Baan").
In consideration of the mutual covenants set forth herein and in the Agreement,
Company and Baan agree as follows:
Priority. The parties agree that the Agreement is hereby amended as set forth in
- --------
this Addendum. Any inconsistency between this Addendum and the Agreement shall
be resolved in favor of the intent of the parties as expressed by this Addendum.
Terms used herein with the initial letter capitalized which are not otherwise
defined herein, shall have the meaning given said terms in the Agreement. The
Agreement as amended by this Addendum Number One shall remain in full force and
effect.
2.5 Orgware and Baan Methodology Compliance. The following sentence is hereby
-----------------------------------------
added to the end of Section 2.5: "Baan shall treat all proprietary and/or
confidential information regarding Company's methodology, format of Project
proposal, and format of Project budget, as strictly confidential and shall not
disclose such information without Company's prior written consent."
3.4 Maintenance and Support. The words "Schedule B hereof" in Section 3.4 are
-------------------------
hereby deleted and replaced with the words "the Maintenance and Support
Agreement entered into by the parties dated 28 February 1997".
3.13 Fee. The following is hereby added to the end of Section 3. 13: "For
----
calendar year 1997, Baan shall charge no additional fees to Company for any of
the privileges set forth in Sections 3.1 through 3. 12. For calendar year 1998,
the fee that Baan shall charge Company for the privileges set forth in Section
3.1 through 3.12 shall be US$50,000, which shall include single-site Maintenance
and Support for USA and single-site Maintenance and Support for India."
4. (Schedule A) Payment. The following sentence is hereby added to the end of
--------
Section 4.1 of Schedule A: "A Baan Literature and Distribution Center Order
Form, which lists the prices for Baan literature, is attached hereto as Schedule
B."
12. (Schedule A) Assignment. The following text is inserted at the end of the
-----------
first sentence of Section 12 of Schedule A, before the period:
"or delayed, provided that Company may, without the prior written
consent of Baan, assign this Agreement in whole to a successor to all or
substantially all of its assets by sale, merger or acquisition which has assumed
in writing or by operation of law Company's obligations under this Agreement and
which does not make software which is in competition with the Software. Company
may, if it believes that software made available by a prospective assignee is
not in competition with the Software but wishes to obtain an acknowledgment from
Baan that Baan agrees with that belief, request such an acknowledgment from
Baan, and Baan will not unreasonably withhold or delay that acknowledgment. In
the event that Company assigns this Agreement to a successor which does make
software which is in competition with the Software, this Agreement shall
terminate effective immediately."
<PAGE>
Addendum Number One To
Consulting Alliance Agreement
Intelligroup, Inc.
================================================================================
14. (Schedule A) Confidential information. The following is hereby added to the
-------------------------
end of the third sentence of Section 14 of Schedule A, before the period:
"; (v) is required to be disclosed by the receiving party by order of a court of
competent jurisdiction, administrative agency or governmental body, or by any
law, rule or regulation, or by subpoena, or any other administrative or legal
process, or by applicable regulatory or professional standards."
The last sentence of Section 14 of Schedule A is hereby deleted.
Schedule B The words "CONSULTING ALLIANCE MAINTENANCE AND SUPPORT AGREEMENT" in
- ----------
Schedule B are hereby deleted and replaced with the following:
"BAAN LITERATURE DISTRIBUTION CENTER ORDER FORM"
- --------------------------------------------------------------------------------
Baan Literature
Distribution center
Order Form
- --------------------------------------------------------------------------------
Part Number Description Number Unit Quantity Cost
of Cost ordered
pieces
per
unit
- --------------------------------------------------------------------------------
Baan Audio/Video
- --------------------------------------------------------------------------------
19004 US CD ROM Baan World '96 1 $4.00 $-
- --------------------------------------------------------------------------------
19005 US Baan IV Opening Video 1 $5.30 $-
- --------------------------------------------------------------------------------
19012 US Jan Baan Video 1 $5.30 $-
- --------------------------------------------------------------------------------
19013 US Andries Bottema 1 $5.30 $-
- --------------------------------------------------------------------------------
33206A Baan/Microsoft Video Announcement 1 $5.30 $-
- --------------------------------------------------------------------------------
19102 Baan IV BackOffice Video - VHS Tape 1 $2.50 $-
- --------------------------------------------------------------------------------
19103 Baan IV BackOffice Video - PAL Tape 1 $2.50 $-
- --------------------------------------------------------------------------------
19104 Bunting Windows Video - VHS Tape 1 $2.50 $-
- --------------------------------------------------------------------------------
19105 Bunting Windows Video - PAL Tape 1 $2.50 $-
- --------------------------------------------------------------------------------
19106 Baan for the Microsoft Market - 1 $2.50 $-
VHS Tape
- --------------------------------------------------------------------------------
19107 Baan for the Microsoft Market - 1 $2.50 $-
PAL Tape
- --------------------------------------------------------------------------------
Baan Reprints
- --------------------------------------------------------------------------------
19001 US CompWorld-The Don of Baan 50 $175.00 $-
- --------------------------------------------------------------------------------
1902 US Wall Street Reprint--Out of Nowhere 50 $21.00 $-
- --------------------------------------------------------------------------------
19003 US Baan Storm Reprint 50 $100.00 $-
- --------------------------------------------------------------------------------
19007 US Computer World--High Flying Baan 50 $7.00 $-
- --------------------------------------------------------------------------------
19008 US CIME Reprint: Revving Up Production 50 $9.50 $-
- --------------------------------------------------------------------------------
19015 US Fortune Reprint: Hip, Hot, 'N' 50 $48.00 $-
Happening
- --------------------------------------------------------------------------------
19018 US Computer World--Baan IV 50 $16.50 $-
Implementation
- --------------------------------------------------------------------------------
19026 US Computing Canada--Faster 50 $10.50 $-
Implementation
- --------------------------------------------------------------------------------
19028 ATP--Giving SAP a Run for its Money 50 $37.50 $-
- --------------------------------------------------------------------------------
2
Int.AdC.doc
97/09/26
<PAGE>
Addendum Number One To
Consulting Alliance Agreement
Intelligroup, Inc.
================================================================================
- --------------------------------------------------------------------------------
19029 Software--Jan Baan: This Avis is... 50 $17.50 $-
- --------------------------------------------------------------------------------
19030 Microsoft/Baan Reprint in 50 $50.00 $-
Computerworld
- --------------------------------------------------------------------------------
19031 Aberdeen Report Profile 50 $18.00 $-
- --------------------------------------------------------------------------------
13029 Heavy Equipment Industry 25 $30.00 $-
- --------------------------------------------------------------------------------
19032 Information Week - Baan Aims for 50 $ 15.00 $-
New Base
- --------------------------------------------------------------------------------
19033 Investors Business Daily - 50 $15.00 $-
February 19, 1997
- --------------------------------------------------------------------------------
19034 Communications Week 50 $15.00 $-
- --------------------------------------------------------------------------------
19036 Industry Week 25 $15.00 $-
- --------------------------------------------------------------------------------
19037 Gartner Group Report 10 $35.00 $-
- --------------------------------------------------------------------------------
19040 AMR Alert on Manufacturing - Aurum 25 $25.00 $-
Acquisition
- --------------------------------------------------------------------------------
Baan and Microsoft
- --------------------------------------------------------------------------------
098-66141 UPDATED Microsoft Solution Product 25 $50.00 $-
Guide
- --------------------------------------------------------------------------------
19017 US Baan/Microsoft White Polo Shirt 1 $22.00 $-
w/logo
- --------------------------------------------------------------------------------
9622 US Baan/Microsoft brochure: Enable 25 $43.75 $-
Dynamic
- --------------------------------------------------------------------------------
9622A US Box: Enterprise Computing 1 $8.00 $-
RFP Standards Material
- --------------------------------------------------------------------------------
19019 US Cover/Spine Slip 5 $12.50 $-
- --------------------------------------------------------------------------------
19021 US Tabs 5 $26.00 $-
- --------------------------------------------------------------------------------
19022 US Binder--2 inch 5 $27.00 $-
- --------------------------------------------------------------------------------
19023 US Title Page 5 $3.25 $-
- --------------------------------------------------------------------------------
Baan Success Stories
- --------------------------------------------------------------------------------
15001 -796 US Global Industrial Technologies 25 $18.75 $-
- --------------------------------------------------------------------------------
15002-696 US Parr Instruments 25 $13.50 $-
- --------------------------------------------------------------------------------
15003-696 US Teledyne 25 $13.5 $-
- --------------------------------------------------------------------------------
15004-696 US Teknion 25 $13.50 $-
- --------------------------------------------------------------------------------
9626 US Bull Electronics 25 $30.00 $-
- --------------------------------------------------------------------------------
9634 US Transfield Defense Systems 25 $30.00 $-
- --------------------------------------------------------------------------------
9635 US Hitachi 25 $30.00 $-
- --------------------------------------------------------------------------------
9636 US Kee Hin industries 25 $30.00 $-
- --------------------------------------------------------------------------------
9637 US Kvaerner Singapore 25 $30.00 $-
- --------------------------------------------------------------------------------
9638 US Mercedes-Benz 25 $30.00 $-
- --------------------------------------------------------------------------------
9639 US Messer Griesheim 25 $30.00 $-
- --------------------------------------------------------------------------------
9640 US Palmco Oil 25 $30.00 $-
- --------------------------------------------------------------------------------
Baan IV Brochures
- --------------------------------------------------------------------------------
9602 US Product Overview 25 $43.75 $-
- --------------------------------------------------------------------------------
9603 US Corporate Overview 25 $43.75 $-
- --------------------------------------------------------------------------------
9608 US Orgware 25 $43.75 $-
- --------------------------------------------------------------------------------
9609 US Manufacturing 25 $43.75 $-
- --------------------------------------------------------------------------------
9610 US Distribution & Transportation 25 $43.75 $-
- --------------------------------------------------------------------------------
9611 US Finance 25 $43.75 $-
- --------------------------------------------------------------------------------
9612 US Project 25 $43.75 $-
- --------------------------------------------------------------------------------
3
Int.AdC.doc
97/09/26
<PAGE>
Addendum Number One To
Consulting Alliance Agreement
Intelligroup, Inc.
================================================================================
- --------------------------------------------------------------------------------
9613 US Service 25 $43.75 $-
- --------------------------------------------------------------------------------
9614 US Tools 25 $43.75 $-
- --------------------------------------------------------------------------------
Baan Vertical Market information
- --------------------------------------------------------------------------------
9604 US Automotive Brochure 25 $43.75 $-
- --------------------------------------------------------------------------------
9605 US Electronics Brochure 25 $43.75 $-
- --------------------------------------------------------------------------------
9606 US Project Industries Brochure 25 $43.75 $-
- --------------------------------------------------------------------------------
9607 US Process Industries Brochure 25 $43.75 $-
- --------------------------------------------------------------------------------
9641 US Aerospace & Defense Brochure 25 $43.75 $-
- --------------------------------------------------------------------------------
19014 Transmission--Automotive Journal #1 1 $4.30 $-
- --------------------------------------------------------------------------------
13021 Transmission--Automotive Journal #2 1 $4.50 $-
- --------------------------------------------------------------------------------
10001 US Baan Electronics Overview 25 $33.50 $-
- --------------------------------------------------------------------------------
Baan Training and Support
- --------------------------------------------------------------------------------
9642 US Global Support Brochure 1 $4.30 $-
- --------------------------------------------------------------------------------
9643 US Global Support Brochure and CD ROM 1 $24.20 $-
- --------------------------------------------------------------------------------
Baan Products--Other
- --------------------------------------------------------------------------------
11000 US 1995 Annual Report 5 $37.50 $-
- --------------------------------------------------------------------------------
11096 1996 Annual Report 5 $37.50 $-
- --------------------------------------------------------------------------------
19025 US Baan/HP T-shirt 1 $4.00 $-
- --------------------------------------------------------------------------------
19006 US The Baan Book--Ongoing Innovation 1 $13.00 $-
- --------------------------------------------------------------------------------
19101 DEM Book 1 $50.00 $-
- --------------------------------------------------------------------------------
9616 US Baan Presentation Folder 1 $1.30 $-
- --------------------------------------------------------------------------------
19500 Baan Merchandise 4-color catalog 1 $3.00 $-
- --------------------------------------------------------------------------------
19501 CONTINUE Brochure 1 $1.50 $-
- --------------------------------------------------------------------------------
2100US Baan Capital Brochure (leasing 10 $9.00 $-
program)
- --------------------------------------------------------------------------------
250010-597 Baan Technology for the Enterprise 10 $32.00 $-
- White paper
- --------------------------------------------------------------------------------
00BAG Trade Show Bag 1 $1.00 $-
- --------------------------------------------------------------------------------
Baan Partners
- --------------------------------------------------------------------------------
12001 Solution Partner Program 25 $25.00 $-
Brochure-VAR
- --------------------------------------------------------------------------------
12012 Baan Consulting Brochure 25 $42.50 $-
- --------------------------------------------------------------------------------
12002 Baan and Sterling Commerce Solution 1 Free! 0
- --------------------------------------------------------------------------------
19502 Baan World Users Brochure 1 $2.50 $-
- --------------------------------------------------------------------------------
19011-596US E&Y Baan Service Timely Solution 10 Free! 0
- --------------------------------------------------------------------------------
12005 Baan/DB2 Brochure 25 $12.50 $-
- --------------------------------------------------------------------------------
12009 Baan/Compaq Brochure 25 S25.00 $-
- --------------------------------------------------------------------------------
12010 Managing Automation 25 $25.00 $-
- --------------------------------------------------------------------------------
12011 Deloitte&Touche Fast Track Brochure 10 $ 10.00 $-
- --------------------------------------------------------------------------------
12015 Deloitte&Touche Process Brochure 10 $ 10.00 $-
- --------------------------------------------------------------------------------
12013 Deloitte&Touche Automotive Brochure 10 $ 10.00 $-
- --------------------------------------------------------------------------------
12014 Deloitte&Touche A&D Brochure 10 $ 10.00 $-
- --------------------------------------------------------------------------------
12020-597 Solution Partners Guide 1 $6.75 $-
- --------------------------------------------------------------------------------
12000-796 Baan Service Partner Guide 1 $8.33 $-
- --------------------------------------------------------------------------------
4
Int.AdC.doc
97/09/26
<PAGE>
Addendum Number One To
Consulting Alliance Agreement
Intelligroup, Inc.
================================================================================
$-
LDC
Order
Total:
======================================
IN WITNESS WHEREOF, the parties have executed this Addendum as of the date first
written above.
Baan: Company:
BAAN INTERNATIONAL B.V. INTELLIGROUP, INC.
By: /s/ Christine B. Pittman By: /s/ Sophia M. Zouras
------------------------ --------------------
Name: Christine B. Pittman Name: Sophia M. Zouras
Title: Vice President, BAAN Title: Vice President, Marketing & Business
Consulting Development
Date: 26 September 1997 Date: 29 September 1997
5
Int.AdC.doc
97/09/26
AMENDMENT TO
LOAN AND SECURITY AGREEMENT
---------------------------
THIS AMENDMENT TO LOAN AND SECURITY AGREEMENT (this "Amendment") is made as
of August 18, 1997 between PNC BANK, NATIONAL ASSOCIATION ("Lender"), having an
office at Two Tower Center Boulevard, East Brunswick, New Jersey 08816, and
INTELLIGROUP, INC., a New Jersey corporation ("Borrower"), having an office at
517 Route One South, Iselin, New Jersey 08830.
WITNESSETH:
-----------
A. Lender and Borrower entered into a Loan and Security Agreement dated as
of January 22, 1997 (as amended hereby and as further amended, supplemented or
otherwise modified from time to time, the "Agreement"), pursuant to which, among
other things, Lender (i) agreed to make revolving loans to Borrower in the
maximum aggregate principal amount outstanding at any time of $7,500,000, and
(ii) at its option, may make equipment loans to Borrower in the aggregate
principal amount not to exceed $350,000, all upon the terms and subject to the
conditions set forth therein.
B. Borrower and Lender desire to amend the Agreement as set forth herein.
NOW, THEREFORE, in consideration of the premises and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Borrower and Lender agree as follows:
1. Capitalized terms used in this Amendment shall have the same meanings
given them in the Agreement, unless otherwise defined herein.
2. The definitions of Borrowing Base, Borrowing Base Certificates and
Qualified Account set forth in Section 1.1 of the Agreement are hereby deleted.
3. The definition of "Revolving Credit Limit" set forth in Section 1.1 of
the Agreement is hereby amended to delete "the lesser of $7,500,000 or the
Borrowing Base" and substitute "$7,500,000" therefor.
4. The following definitions shall be added to Section 1.1 of the Agreement
as follows:
(a) A definition of "EBIT" is hereby added to read in its entirety as
follows:
"'EBIT' - for any period, the consolidated net income (or loss) of
Borrower and its consolidated subsidiaries for such period, before
deduction for taxes and interest expense and without giving effect to any
extraordinary gains or losses for such period, determined in accordance
with GAAP."
(b) A definition of "Eligible Equipment Collateral" is hereby added to
read in its entirety as follows:
"'Eligible Equipment Collateral' - (a) all Eligible Equipment
purchased with the proceeds of Equipment Loans, (b) all documents of title,
policies or certificates of insurance, insurance proceeds, chattel paper
and other documents and instruments
<PAGE>
evidencing or pertaining to any such Eligible Equipment, (c) all claims of
Borrower against third parties for loss of or damage to, or otherwise
relating to, any such Eligible Equipment, (d) all books and records owned
by Borrower or in which Borrower has an interest, which contain information
identifying any of such Eligible Equipment or which would or may otherwise
be necessary or helpful in the actual and/or potential realization on any
of such Eligible Equipment, and (e) all accessions and additions to,
replacements and substitutions for, and proceeds and products of any of the
foregoing."
(c) A definition of "Euro-Rate" is hereby added to read in its
entirety as follows:
"'Euro-Rate' - with respect to any Revolving Loan bearing interest at
the Euro-Rate for any Euro-Rate Interest Period, the interest rate per
annum determined by Lender by dividing (the resulting quotient rounded
upwards, if necessary, to the nearest 1/16th of 1% per annum) (a) the rate
of interest determined by Lender in accordance with its usual procedures
(which determination shall be conclusive absent manifest error) to be the
eurodollar rate two (2) Banking Days prior to the first day of such
Euro-Rate Interest Period for an amount comparable to such Revolving Loan
and having a borrowing date and a maturity comparable to such Euro-Rate
Interest Period by (b) a number equal to 1.00 minus the Euro-Rate Reserve
Percentage."
(d) A definition of "Euro-Rate Interest Period" is hereby added to
read in its entirety as follows:
''Euro-Rate Interest Period' - the period of one, two or three months
selected by Borrower commencing on the date of disbursement of a Revolving
Loan bearing interest at the Euro-Rate and each successive period selected
by Borrower thereafter, provided, that if a Euro-Rate Interest Period would
end on a day which is not a Banking Day, it shall end on the next
succeeding Banking Day, unless such day falls in the succeeding calendar
month in which case the Euro-Rate Interest Period shall end on the next
preceding Banking Day. In no event shall any Euro-Rate Interest Period end
on a day after the Revolving Credit Termination Date."
(e) A definition of "Euro-Rate Loans" is hereby added to read in its
entirety as follows:
"'Euro-Rate Loans' - Revolving Loans bearing interest at a rate based
upon the Euro-Rate."
(f) A definition of "Euro-Rate Reserve Percentage" is hereby added to
read in its entirety as follows:
"'Euro-Rate Reserve Percentage' - on any day, the maximum effective
percentage in effect on such day as prescribed by the Board of Governors of
the Federal Reserve System (or any successor) for determining the reserve
requirements (including, without limitation, supplemental, marginal and
emergency reserve requirements) with respect to eurocurrency funding
(currently referred to as "Eurocurrency liabilities")."
- 2 -
<PAGE>
(g) A definition of "Interest Coverage Ratio" is hereby added to read
in its entirety as follows:
"'Interest Coverage Ratio' - for any period, the ratio of (a) EBIT for
such period, to (b) Interest Expense for such period."
(h) A definition of "Interest Expense" is hereby added to read in its
entirety as follows:
"'Interest Expense' - for any period, the consolidated interest
expense of Borrower and its consolidated subsidiaries for such period,
determined in accordance with GAAP."
(i) A definition of "Leverage Ratio" is hereby added to read in its
entirety as follows:
"'Leverage Ratio' - at any particular date of determination, the ratio
of (a) Total Liabilities on such date, to (b) Tangible Net Worth on such
date."
(j) A definition of "Operating Income" is hereby added to read in its
entirety as follows:
"'Operating Income' - for any period, the amount which, in conformity
with GAAP, would be set forth opposite the caption "operating income" or
any like caption of Borrower's consolidated income statement."
(k) A definition of "Prime Rate Loans" is hereby added to read in its
entirety as follows:
"'Prime Rate Loans' - Revolving Loans bearing interest at a rate based
upon the Prime Rate."
(l) A definition of "Total Liabilities" is hereby added to read in its
entirety as follows:
"'Total Liabilities' - at any particular date of determination, the
consolidated total liabilities of Borrower and its consolidated
subsidiaries on such date, determined in accordance with GAAP."
5. Section 2.3 of the Agreement is hereby amended to read in its entirety
as follows:
"2.3 Procedure for Revolving Loan Borrowings. Borrower may request to
borrow under the Revolving Line of Credit on any Banking Day prior to the
Revolving Credit Termination Date by giving Lender irrevocable notice prior
to 12:30 p.m. (eastern standard time) (a) on the Banking Day of the
proposed borrowing date, in the case of Prime Rate Loans, or (b) three (3)
Banking Days prior to the proposed borrowing date, in the case of Euro-Rate
Loans, specifying (i) the amount to be borrowed, (ii) the requested
borrowing date (which must be a Banking Day), (iii) whether the Revolving
Loans to be borrowed will be Euro-Rate Loans and/or Prime Rate Loans, and
(iv) in the case of Euro-Rate Loans, the relevant Euro-Rate Interest
Period. Borrower may select different interest rate options to
- 3 -
<PAGE>
apply simultaneously to different Revolving Loans and may select up to
three (3) different interest periods to apply simultaneously to different
Euro-Rate Loans. Subject to the terms of this Agreement, not later than
3:00 p.m. (eastern standard time) on the borrowing date specified in such
notice, subject to the terms and conditions hereof, Lender shall make the
amount of such Revolving Loan available to Borrower by depositing such
amount in immediately available funds in the account of Borrower with
Lender. Each borrowing of Euro-Rate Loans under the Revolving Line of
Credit shall be in a minimum amount of $500,000 and each borrowing of
Prime Rate Loans under the Revolving Line of Credit shall be in a minimum
amount of $250,000. Subject to the terms of this Agreement, at the end of
any Euro-Rate Interest Period applicable to a Euro-Rate Loan, Borrower may
renew such Loan as a Euro-Rate Loan or convert such Loan to a Prime Rate
Loan. If no notice of conversion or renewal is received by Lender prior to
three (3) Banking Days before the end of such Euro-Rate Interest Period,
Borrower shall be deemed to have converted such Loan to a Prime Rate Loan.
All notices given by Borrower to Lender pursuant to this Section 2.3 may
be by telephone (confirmed immediately in writing). Lender shall give
Borrower prompt notice of the Euro-Rate determined in accordance with this
Agreement, and any such determination shall be conclusive absent manifest
error.
6. Subsection 4.1(a)(i) of the Agreement is hereby amended to read in its
entirety as follows:
"(i) Each Revolving Loan shall bear interest, at the selection of
Borrower, at (A) a fluctuating rate per annum equal to the Prime Rate in
effect from time to time, each change in such fluctuating rate to take
effect simultaneously with the corresponding change in the Prime Rate,
without notice to Borrower, or (B) subject to Section 4.9 hereof, at a rate
per annum equal to two percent (2%) per annum above the Euro-Rate for the
Euro-Rate Interest Period in an amount equal to such Revolving Loan and
having a comparable maturity as determined at or about 11 a.m. (eastern
time) two Banking Days prior to the commencement of the Euro-Rate Interest
Period, each change in the Euro-Rate as the result of any change in the
Euro-Rate Reserve Percentage to take effect simultaneously with the
effective date of such change in the Euro-Rate Reserve Percentage."
7. Subsection 4.1(a)(ii) of the Agreement is hereby amended to read in its
entirety as follows:
"(ii) Each Equipment Loan shall bear interest at a fluctuating rate
per annum equal to one-quarter of one percent (1/4 of 1%) per annum above
the Prime Rate in effect from time to time, each change in such fluctuating
rate to take effect simultaneously with the corresponding change in the
Prime Rate, without notice to Borrower."
8. A new Section 4.9 is added to the Agreement and shall read in its
entirety as follows:
"4.9 Unavailability of Euro-Rate Loans; Funding Loss Indemnification.
(a) If Lender determines (which determination shall be final and
conclusive) that, by reason of circumstances affecting the interbank
eurodollar market generally, deposits in dollars (in the applicable
amounts) are not being offered to banks in the interbank eurodollar market
for the selected term, or adequate means do not exist for ascertaining the
Euro-Rate, then Lender shall give notice thereof to Borrower. Thereafter,
until Lender notifies Borrower that the circumstances giving rise to such
determination no longer exist, (i) the availability of Euro-Rate Loans
shall be suspended, and (ii) all Euro-Rate
- 4 -
<PAGE>
Loans shall be converted at the expiration of the then current Euro-Rate
Interest Period(s) to Prime Rate Loans.
(b) If Lender shall determine (which determination shall be final and
conclusive) that any enactment, promulgation or adoption of or any change
in any applicable law, rule or regulation, or any change in the
interpretation or administration thereof by a governmental authority,
central bank or comparable agency charged with the interpretation or
administration thereof, or compliance by Lender with any guideline, request
or directive (whether or not having the force of law) of any such
authority, central bank or comparable agency shall make it unlawful or
impossible for Lender to make or maintain Euro-Rate Loans, Lender shall
notify Borrower. Upon receipt of such notice, until Lender notifies
Borrower that the circumstances giving rise to such determination no longer
apply, (i) the availability of Euro-Rate Loans shall be suspended, and (ii)
all current Euro-Rate Loans shall be converted to the Prime Rate Loans
either (A) on the last day of the then current Euro-Rate Interest Period(s)
if Lender may lawfully continue to maintain Euro-Rate Loans to such day, or
(ii) immediately if Lender may not lawfully continue to maintain Euro-Rate
Loans.
(c) If Lender shall determine (which determination shall be final and
conclusive) that any enactment, promulgation or adoption of or any change
in any applicable law, rule or regulation, or any change in the
interpretation or administration thereof by a governmental authority,
central bank or comparable agency charged with the interpretation or
administration thereof, or compliance by Lender with any guideline, request
or directive (whether or not having the force of law) of any such
authority, central bank or comparable agency shall have the effect of
requiring an increase in the amount of capital required or expected to be
maintained by Lender or any corporation controlling Lender, and Lender
determines that such increase is based upon its obligations hereunder, and
other similar obligations, Lender shall notify Borrower of the amount
allocable to Lender's obligations to Borrower hereunder. Borrower shall pay
such amount to Lender within ten (10) days after such notice is given. Any
such determination by Lender shall be conclusive absent manifest error.
(d) Borrower shall indemnify Lender against all liabilities, losses
and expenses (including, without limitation, any loss of margin, any loss
or expense incurred in liquidating or employing deposits from third parties
and any loss or expense incurred in connection with funds acquired by
Lender to fund or maintain Euro-Rate Loans) which Lender incurs or sustains
as a consequence of (i) any prepayment by Borrower of any Euro-Rate Loan
(other than on the last day of the Euro-Rate Interest Period relating
thereto) or (ii) any attempt by Borrower to revoke (expressly, by later
inconsistent notice, or otherwise) in whole or in part any notice given to
Lender to request, renew or repay any Euro-Rate Loan or to convert any
Prime Rate Loan into a Euro-Rate Loan. If Lender incurs or sustains any
such liability, loss or expense, it shall notify Borrower of the amount
determined by Lender to be necessary to indemnify Lender for such
liability, loss or expense (which determination may include such
assumptions, allocations of costs and expenses and averaging or attribution
methods as Lender deems reasonable). Borrower shall pay such amount to
Lender within ten (10) days after such notice is given. Any such
determination by Lender shall be conclusive absent manifest error.
- 5 -
<PAGE>
9. A new Section 6.5 is hereby added to the Agreement to read in its
entirety as follows:
"6.5 Release of Collateral.
(a) Concurrently with the delivery of the financial statements
referred to in Subsections 8.5(a) and 8.5(b) hereof with respect to the
fiscal year and fiscal quarter, respectively, of Borrower ending on
December 31, 1997, upon Borrower's request Lender shall release its lien on
and security interest in the Collateral (other than Eligible Equipment
Collateral), provided that the conditions to release described in
Subsection 6.5(b) hereof have been satisfied, in the sole discretion of
Lender. Any such request by Borrower shall be made in writing and
accompanied by a certificate of the chief financial officer of Borrower
stating that the conditions to release described in Subsection 6.5(b)
hereof have been satisfied.
(b) Lender shall not be required to release its lien on and security
interest in the Collateral (other than Eligible Equipment Collateral)
unless all of the following conditions have been satisfied, in the sole
discretion of Lender:
(i) the Operating Income for the fiscal year of Borrower ending
on December 31, 1997 shall have been equal to or greater than eighty
percent (80%) of the Operating Income for the fiscal year of Borrower
ending on December 31, 1996;
(ii) the Operating Income for the three-month period ending on
December 31, 1997 shall have been equal to or greater than eighty-five
percent (85%) of the Operating Income for the three-month period
ending on September 30, 1997;
(iii) the Operating Income for the six-month period ending on
December 31, 1997 shall have been equal to or greater than ninety
percent (90%) of the Operating Income for the six-month period ending
on June 30, 1997;
(iv) Borrower shall have at all times been in compliance with the
financial covenants contained in Sections 9.18, 9.19, 9.22 and 9.23
hereof;
(v) Borrower shall have provided Lender evidence that is
reasonably satisfactory to Lender that the SAP National Logo Partner
Agreement dated April 29, 1997, between Borrower and SAP America, Inc.
(the "SAP Agreement") is in full force and effect and that the term of
the SAP Agreement has been renewed or extended for at least one year
beyond its current termination date;
(vi) there shall have been no material adverse change in
Borrower's condition (financial or otherwise), results of operations,
assets or operations since December 31, 1997; and
(vii) no Event of Default, or any event which, with the giving of
notice, the lapse of time, or both, or the occurrence of any other
condition, would constitute an Event of Default, shall have occurred
and be continuing.
10. Subsection 7.10 of the Agreement is hereby amended to delete the last
sentence thereof.
- 6 -
<PAGE>
11. Subsection 8.5(b) of the Agreement is hereby amended (a) to add "and by
March 31, 1998 with respect to the fourth fiscal quarter of 1997" after "fiscal
year of Borrower" in the third line thereof, and (b) to delete "to the extent
that they relate to dates or periods on or before June, 1998, reviewed by an
independent certified public accountant reasonably satisfactory to Lender and"
after "as applicable)," in the tenth line thereof.
12. Subsection 8.5(d) of the Agreement is hereby amended to read in its
entirety as follows:
"(d) Intentionally Omitted."
13. Subsection 8.5(e)(ii) of the Agreement is hereby amended to add ", 9.22
and 9.23" after "9.19" in the second to last line thereof.
14. A new Subsection 8.5(e)(iii) is hereby added to the Agreement to read
in its entirety as follows:
"(iii) Concurrently with the delivery of the financial statements
referred to in Subsection 8.5(a), a certificate of the independent
certified public accountant that audited such financial statements, and
concurrently with the delivery of the financial statements referred to
in (b) hereof, a certificate of the chief financial officer of Borrower, in
each case indicating the Interest Expense for all periods necessary to
determine Borrower's compliance with Section 9.22 hereof."
15. A new Subsection 8.5(i) is hereby added to the Agreement to read in its
entirety as follows:
"(i) Accountant's Reports. Promptly upon receipt thereof, true and
complete copies of all reports submitted to Borrower by an independent
certified public accountant in connection with each annual, interim or
special audit of the books of Borrower or its subsidiaries made by such
accountant, including, without limitation, any management letter commenting
on the internal controls of Borrower or its subsidiaries."
16. Section 9.5 of the Agreement is hereby amended to delete "$250,000" in
the fourth line thereof and to substitute "$750,000" therefor.
17. Section 9.20 of the Agreement is hereby amended to delete "$750,000" in
the third line thereof and to substitute "$1,500,000" therefor.
18. A new Section 9.22 is hereby added to the Agreement to read in its
entirety as follows:
"9.22 Interest Coverage Ratio. Cause or permit Borrower's Interest
Coverage Ratio for any period of four consecutive calendar quarters to be
less than 3.00 to 1.00, as determined at the end of each fiscal quarter of
Borrower."
19. A new Section 9.23 is hereby added to the Agreement to read in its
entirety as follows:
"9.23 Leverage Ratio. Cause or permit Borrower's Leverage Ratio at any
time to be more than 1.00 to 1.00, as determined at the end of each fiscal
quarter of Borrower.
- 7 -
<PAGE>
20. In order to induce Lender to enter into this Amendment, Borrower hereby
represents and warrants to Lender that:
(a) no Event of Default, or any event which, with the giving of
notice, the lapse of time, or both, or the occurrence of any other
condition, would constitute an Event of Default, has occurred and is
continuing;
(b) the Agreement, the Notes and each of the other Loan Documents,
after giving effect to this Amendment and the transactions contemplated
hereby, continue to be in full force and effect and to constitute the
legal, valid and binding obligations of Borrower, enforceable against
Borrower in accordance with their respective terms;
(c), the representations and warranties made by Borrower in or
pursuant to the Agreement or any Loan Document, or which are contained in
any certificate, document or financial or other statement furnished at any
time under or in connection herewith or therewith, are each true and
correct in all material respects on and as of the date hereof, as though
made on and as of such date;
(d) Borrower has not amended its Certificate of Incorporation or
Bylaws subsequent to January 22,1997; and
(e) Borrower has delivered to Lender a true, complete and correct copy
of the SAP Agreement (including all amendments thereto).
21. This Amendment shall become effective upon the satisfaction of the
following conditions:
(a) Lender shall have received such executed and delivered documents
and instruments from Borrower and others as it may request in connection
with the transactions contemplated hereby (including, without limitation, a
good standing certificate and UCC-1, judgment, federal tax lien and other
searches with respect to Borrower).
(b) Borrower shall have paid all expenses of Lender, including,
without limitation, reasonable counsel fees, in connection with the
preparation, execution and delivery of this Amendment and any other
documents and instruments to be executed and delivered pursuant hereto or
in connection herewith, and the transactions contemplated hereby.
22. This Amendment may be executed in several counterparts, each of which,
when executed and delivered, shall be deemed an original, and all of which
together shall constitute one agreement.
23. This Amendment shall be governed by and construed and interpreted in
accordance with the laws of the State of New Jersey, without giving effect to
principles of conflicts law.
24. From and after the effectiveness hereof, all references to the
Agreement in the other Loan Documents shall mean the Agreement as amended and
modified by this Amendment.
25. Borrower expressly ratifies and confirms the waiver of jury trial and
other provisions of Section 15.9 of the Agreement.
- 8 -
<PAGE>
26. Except as amended and otherwise modified by this Amendment, the
Agreement and the other Loan Documents shall remain in full force and effect in
accordance with their respective terms.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed and delivered by their proper and duly authorized officers as of
the day and year first above written.
ATTEST: INTELLIGROUP, INC.
By: /s/ Robert M. Olanoff By: /s/ Ashok Pandey
----------------------- ---------------------------
Robert M. Olanoff, Ashok Pandey, President and
Secretary Chief Executive Officer
PNC BANK, NATIONAL ASSOCIATION
By: /s/ Edward D. Harrington
--------------------------
EDWARD D. HARRINGTON,
Vice President
EXHIBIT 11
<TABLE>
INTELLIGROUP, INC. AND SUBSIDIARIES
<CAPTION>
Three Months Ended September 30, Nine Months Ended September 30,
-------------------------------- -------------------------------
1997 1996 1997 1996
------------- -------------- ------------- --------------
<S> <C> <C> <C> <C>
Net income (loss) $ 1,581,000 $ (600,000) $ 3,587,000 $ (105,000)
============ ============ ============ ============
Weighted average shares outstanding 11,925,000 7,322,000 11,153,000 9,331,000
Incremental shares
considered outstanding (1) (2) 402,000 1,555,000 402,000 1,494,000
------------ ------------ ------------ ------------
Shares used in per share calculation 12,327,000 8,877,000 11,555,000 10,825,000
============ ============ ============ ============
Net income (loss) per share $ 0.13 $ (0.07) $ 0.31 $ (0.01)
============ ============ ============ ============
(1) Pursuant to the requirements of the Securities and Exchange Commission, stock options and warrants
issued by the Company during the twelve months immediately preceding the initial public offering have been
included in computing net income per share as if they were outstanding for all periods using the treasury
stock method.
(2) Includes dilutive stock options, using the treasury method.
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS INCLUDED IN THE
REGISTRANT'S FORM 10-QSB FOR THE PERIOD ENDED SEPTEMBER 30, 1997 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FORM 10-QSB.
</LEGEND>
<CIK> 0001016439
<NAME> Intelligroup, Inc.
<MULTIPLIER> 1
<CURRENCY> U.S. Dollars
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> Dec-31-1997
<PERIOD-START> Jan-01-1997
<PERIOD-END> Sep-30-1997
<EXCHANGE-RATE> 1
<CASH> 11,176,000
<SECURITIES> 0
<RECEIVABLES> 22,213,000
<ALLOWANCES> 886,000
<INVENTORY> 0
<CURRENT-ASSETS> 34,311,000
<PP&E> 3,592,000
<DEPRECIATION> 530,000
<TOTAL-ASSETS> 37,666,000
<CURRENT-LIABILITIES> 6,245,000
<BONDS> 0
0
0
<COMMON> 120,000
<OTHER-SE> 31,250,000
<TOTAL-LIABILITY-AND-EQUITY> 37,666,000
<SALES> 56,797,000
<TOTAL-REVENUES> 56,797,000
<CGS> 38,631,000
<TOTAL-COSTS> 38,631,000
<OTHER-EXPENSES> 12,670,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (266,000)
<INCOME-PRETAX> 5,762,000
<INCOME-TAX> 2,175,000
<INCOME-CONTINUING> 3,587,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,587,000
<EPS-PRIMARY> 0.31
<EPS-DILUTED> 0.31
</TABLE>
