Exhibit 10.3
August 16, 1999
VIA OVERNIGHT COURIER
AppNet Systems, Inc.
0000 Xxxxxxxxx Xxxxxxxxx, Xxxxx 0000
Xxxxxxxx, Xxxxxxxx 00000
Attention: Xx. Xxxx Xxxxxxxxxx
RE: LIMITED CONSENT
Ladies and Gentlemen:
Reference is hereby made to each of (a) that certain Revolving Credit
Agreement, dated as of January 8, 1999 (as amended and in effect from time to
time, the "Credit Agreement"), by and among AppNet Systems, Inc. (the
"Borrower"), BankBoston, N.A. and the other lending institutions set forth on
SCHEDULE 1 thereto (collectively, the "Banks"), BankBoston, N.A. as agent for
itself and the Banks (in such capacity, the "Agent") and Antares Capital
Corporation as co-agent for itself and the Banks; and (b) that certain letter
agreement dated as of May 28, 1999 (the "IPO Consent Letter") by and among the
Borrower, the Banks, the Agent, each Subsidiary (as such term is defined in the
Credit Agreement) of the Borrower and GTCR Fund VI, L.P. Capitalized terms used
herein and which are not otherwise defined shall have the respective meanings
ascribed thereto in the Credit Agreement.
Pursuant to the terms of the IPO Consent Letter, the Borrower has
agreed, among other things, (a) to at all times maintain not less than
$10,000,000 of cash and Cash Equivalents (as defined in the IPO Consent Letter)
on its balance sheet and located at the Agent's Head Office (the "Minimum Cash
Requirement"); and (b) cause Claymore Partners to deliver to the Agent the
results of its commercial finance examination by not later than September 30,
1999, with the results of such examination being satisfactory to Claymore
Partners, the Agent and the Majority Banks in their sole discretion.
The Borrower has advised the Agent and the Banks that the results of
the Claymore Partners commercial finance examination were delivered on August
12, 1999 and have requested that the Agent and the Majority Banks acknowledge
that the results thereof are satisfactory to the Agent and the Majority Banks.
In addition, the Borrower has asked the Agent and the Majority Banks consent to
a modification of the IPO Consent Letter so as to not require the Borrower to at
all times maintain a minimum of $10,000,000 of cash and Cash Equivalents on its
balance sheet. By its signature below, each of the Agent and each Bank hereby
acknowledges that the results of the Claymore Partners examination are
satisfactory to
AppNet Systems, Inc.
August 16, 1999
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each such Person. In addition, the Agent and the Banks hereby agree to waive the
Minimum Cash Requirement contained in the IPO Consent Letter on the conditions
that:
(a) no Default or Event of Default (as such terms are defined in the
Credit Agreement) has occurred and is continuing;
(b) the Borrower agrees that notwithstanding anything to the contrary
contained in the Credit Agreement (including without limitation the covenant
contained ss.10.5 thereof), the Borrower's Quick Ratio at all times from and
after the date hereof shall not be less than 1.25:1.00, and, in addition, the
definition of "Consolidated Current Liabilities" used to calculate such Quick
Ratio shall, from and after the date hereof, be amended to include in such
calculation all outstanding Revolving Credit Loans, with such definition to be
amended and restated as follows: "CONSOLIDATED CURRENT LIABILITIES. All
liabilities of the Borrower and its Subsidiaries on a consolidated basis
maturing on demand or within one (1) year from the date on which Consolidated
Current Liabilities are to be determined, and all Revolving Credit Loans
outstanding on such date, and such other liabilities as may properly be
classified as current liabilities in accordance with generally accepted
accounting principles; PROVIDED, HOWEVER, any nonrecurring one-time liabilities
relating to any acquisitions permitted hereunder which are required to be
capitalized shall not be included as a Consolidated Current Liability and the
outstanding amount of all Seller Subordinated Debt shall not be included as a
Consolidated Current Liability";
(c) the Borrower agrees that it shall maintain a monthly "Maximum DSO
Requirement" (as hereinafter defined) of not greater than (i) 86 for the months
ended July 31, 1999 and August 31, 1999; (ii) 84 for the months ended September
30, 1999 through November 30, 1999; and (iii) 82 for each month ending
thereafter, which Maximum DSO Requirement shall be tested at the end of each
calendar month, at which time the Borrower shall provide all calculations
requested by the Agent and the Banks to demonstrate such compliance. "Maximum
DSO Requirement" shall mean the billed and unbilled Accounts Receivable of the
Borrower and its Subsidiaries (net of credits, rebates, offsets, holdbacks or
other adjustments or commissions payable to third parties that are adjustments
to such Accounts Receivable) as of the last day of the most recent calendar
month end (the "Test Date") divided by the revenue of the Borrower and its
Subsidiaries for the three consecutive months ending on the Test Date, with the
result thereof being multiplied by 90.
(d) the Borrower agrees to otherwise comply with all the conditions
contained in the IPO Consent Letter and the Loan Documents.
Subject to such conditions, the Majority Banks and the Agent hereby
consent to waive the Minimum Cash Requirement pursuant to ss.26 of the Credit
Agreement. This consent shall not be construed, however, as a waiver of any
other provisions of the IPO Consent Letter or any
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August 16, 1999
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of the Loan Documents or to permit the Borrower or any Subsidiary to take any
other action which is prohibited by the terms of the IPO Consent Letter or any
of the Loan Documents.
The Borrower hereby acknowledges and agrees that the Borrower agrees,
upon the execution and delivery of this consent, to be bound by the covenants
contained in paragraphs (b) and (c), and any failure to so comply with any such
covenant contained therein shall constitute an Event of Default under the Credit
Agreement.
AppNet Systems, Inc.
August 16, 1999
Page-4-
Except as expressly stated herein, neither the execution of this
consent nor the failure of the Banks to exercise any right or remedy constitutes
a waiver of any Default or Event of Default or of such right or remedy or any
other right or remedy under the Credit Agreement.
Sincerely,
BANKBOSTON, N.A., individually and
as Agent
By: /s/
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Title:
ANTARES CAPITAL CORPORATION
By: /s/
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Title:
ACNOWLEDGED AND AGREED:
APPNET SYSTEMS, INC.
By: /s/
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Title:
APPNET OF MICHIGAN, INC.
By: /s/
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Title:
APPNET OF MARYLAND, INC.
By: /s/
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Title:
AppNet Systems, Inc.
August 16, 1999
Page-5-
SOFTWARE SERVICES CORPORATION
By: /s/
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Title:
NEW MEDIA PUBLISHING, INC.
By: /s/
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Title:
RESEARCH & PLANNING, INC.
By: /s/
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Title:
CENTURY COMPUTING, INCORPORATED
By: /s/
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Title:
THE KODIAK GROUP, INC.
By: /s/
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Title:
I33 COMMUNICATION CORP.
By: /s/
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Title:
SIGMA6, INC.
By: /s/
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Title:
AppNet Systems, Inc.
August 16, 1999
Page-2-
XXXXXXXXX ACQUISITION CORP.
By: /s/
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Title:
