Exhibit 10.24
May 28, 1999
VIA OVERNIGHT COURIER
AppNet Systems, Inc.
0000 Xxxxxxxxx Xxxxxxxxx, Xxxxx 0000
Xxxxxxxx, Xxxxxxxx 00000
Attention: Xx. Xxxx Xxxxxxxxxx
RE: REPAYMENT OF LOANS AND PREFERRED STOCK
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 "Unguaranteed 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 Revolving
Credit Agreement, dated as of January 8, 1999 (as amended and in effect from
time to time, the "Guaranteed 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 "Guaranteed Banks"), BankBoston,
N.A. as agent for itself and the Guaranteed Banks (in such capacity, the
"Guaranteed Agent") and Antares Capital Corporation as co-agent for itself and
the Guaranteed Banks. Capitalized terms used herein and which are not otherwise
defined shall have the respective meanings ascribed thereto in the Unguaranteed
Credit Agreement.
The Borrower has advised the Agent, the Guaranteed Agent, the Banks and
the Guaranteed Banks that, in connection with the Borrower's IPO, the Borrower
is contemplating (a) repaying all outstanding Obligations (as such term is
defined in the Guaranteed Credit Agreement) under the Guaranteed Credit
Agreement and terminating the Commitment (as such term is defined in the
Guaranteed Credit Agreement) of each of the Guaranteed Banks under the
Guaranteed Credit Agreement in their entirety, but retaining in full force and
effect the Commitment under the Unguaranteed Credit Agreement, and retaining
such Commitment in effect without the limitations to borrowings based on the
Guaranteed Credit Agreement set forth in ss.2.1 and ss.3.2 of the Unguaranteed
Credit Agreement (such transaction being hereinafter referred to as the
"Termination of Guaranteed Facility"); (b) redeeming all or a portion of the
Borrower's Class A and Class B Preferred Stock (the "Stock Redemption") and
AppNet Systems, Inc.
May 28, 1999
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converting or exchanging any Class A and Class B Preferred Stock that is not
redeemed for the Borrower's common stock; and (c) prepaying all or a portion of
the Seller Subordinated Debt (the "Subordinated Debt Repayment"). The occurrence
of the Termination of Guaranteed Facility, the Stock Redemption and/or the
Subordinated Debt Repayment, or any one of or any combination of such events
shall hereinafter be referred to as the "IPO Transactions".
As you are aware, (a) ss.2.1 of the Unguaranteed Credit Agreement does
not permit the sum of the outstanding Revolving Credit Loans PLUS the Maximum
Drawing Amount and all Unpaid Reimbursement Obligations to exceed the Guaranteed
Credit Agreement Outstandings; (b) ss.2.3 of the Unguaranteed Credit Agreement
does not permit the Total Commitment under the Unguaranteed Credit Agreement to
exceed the amount of the Total Commitment under the Guaranteed Credit Agreement;
(c) ss.3.2 of the Unguaranteed Credit Agreement requires that, to the extent the
sum of the outstanding amount of the Revolving Credit Loans, the Maximum Drawing
Amount and all Unpaid Reimbursement Obligations exceeds the Guaranteed Credit
Agreement Outstandings, then the Borrower will repay such excess; (d) ss.9.4 of
the Unguaranteed Credit Agreement does not permit the Borrower to effect the
Stock Redemption (except with respect to the Class A Preferred Stock); (e)
ss.9.18 of the Unguaranteed Credit Agreement does not permit the Borrower to
prepay, redeem or repurchase any of the Seller Subordinated Debt; (f) Section
12.6 of the Unguaranteed Credit Agreement requires, as a condition to borrowing
thereunder, that the Borrower demonstrate that the Total Commitment in the
Guaranteed Credit Agreement is not less than the Total Commitment in the
Unguaranteed Credit Agreement and that the sum of the outstanding Revolving
Credit Loans plus the Maximum Drawing Amount and all Unpaid Reimbursement
Obligations under the Unguaranteed Credit Agreement does not exceed the
Guaranteed Credit Agreement Outstandings; (g) ss.2.3 of the Guaranteed Credit
Agreement does not permit the Borrower to reduce the Total Commitment under the
Guaranteed Credit Agreement to an amount which is less than the Total Commitment
under the Unguaranteed Credit Agreement; (h) ss.9.4 of the Guaranteed Credit
Agreement does not permit the Borrower to effect the Stock Redemption (except
with respect to the Class A Preferred Stock); and (i) ss.9.18 of the Guaranteed
Credit Agreement does not permit the Borrower to prepay, redeem or repurchase
any of the Seller Subordinated Debt. As such, the Borrower has asked the Agent,
the Guaranteed Agent and the Majority Banks (as such term is defined in each of
the Unguaranteed Credit Agreement and the Guaranteed Credit Agreement) to
consent to the IPO Transactions. The Agent, the Guaranteed Agent and the
Majority Banks hereby consents to the IPO Transactions on the conditions that:
(a) the net cash proceeds received by the Borrower in connection with
the IPO are an amount which is not less than the aggregate amount necessary to
repay all outstanding Revolving Credit Loans under each of the Guaranteed Credit
Agreement
AppNet Systems, Inc.
May 28, 1999
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and the Unguaranteed Credit Agreement, together with any and all
interest and fees accrued thereunder;
(b) the Borrower shall (i) use the net cash proceeds received in
connection with the IPO to repay all outstanding Revolving Credit Loans under
each of the Guaranteed Credit Agreement and the Unguaranteed Credit Agreement,
and any and all interest and fees accrued to date thereunder; (ii) permanently
reduce the Total Commitment under the Guaranteed Credit Agreement to zero; and
(iii) permanently reduce the Total Commitment under the Unguaranteed Credit
Agreement to $20,000,000;
(c) the Borrower shall have demonstrated to the satisfaction of the
Agent that the Borrower has not less than $10,000,000 of cash and "Cash
Equivalents" (defined as all investment in direct obligations of the United
States of America or any agency thereof with a maturity of not more than one
year, certificates of deposit with a maturity of less than ninety (90) days
issued by BKB or any other commercial bank organized under the laws of the
United States of America or any state thereof if such other bank has a
short-term debt rating in the highest rating category of either Xxxxx'x
Investors Services, Inc. or Standard & Poors Corporation, and commercial paper
with a maturity of less than ninety (90) days that is rated in the highest
rating category of either Xxxxx'x Investors Services, Inc. or Standard & Poors
Corporation) on its balance sheet and located at the Agent's Head Office, and,
in addition, the Borrower agreeing at all times from and after the date hereof
to maintain not less than $10,000,000 of cash and Cash Equivalents on its
balance sheet and located at the Agent's Head Office;
(d) the Borrower shall not make any Subordinated Debt Repayments until
such time as all of the Class A and Class B Preferred Stock has been redeemed or
otherwise converted or exchanged into the Borrower's common stock;
(e) until such time as the amount of cash and Cash Equivalents on the
balance sheet of the Borrower is equal to or greater than $15,000,000, the
Borrower shall not be permitted to use more than sixty percent (60%) of the
"Remaining IPO Proceeds" (defined as the net cash proceeds received by the
Borrower in connection with the IPO after giving effect to all required
repayments required to be made to the Agent and the Banks pursuant to paragraph
(b) above and after giving effect to the Borrower retaining any cash required to
cause the Borrower to comply with paragraph (c) above) to effect any Stock
Redemption or Subordinated Debt Repayment, and, at such time as the cash and
Cash Equivalents on the Borrower's balance sheet equal or exceed $15,000,000 the
Borrower shall be permitted to use 100% of any remaining Remaining IPO Proceeds
to effect the Stock Redemption and the Subordinated Debt Repayment so long as at
all times (both before and after giving effect to any Stock Redemption and
Subordinated
AppNet Systems, Inc.
May 28, 1999
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Debt Repayment) the amount of the cash and Cash Equivalents on the Borrower's
balance sheet is not less than $15,000,000;
(f) the Borrower will not use any Revolving Credit Loans under the
Unguaranteed Credit Agreement to fund any Stock Redemptions or to make any
Subordinated Debt Repayments, and such Stock Redemptions and Subordinated Debt
Repayments shall be made only with the Remaining IPO Proceeds;
(g) the Borrower agrees to cause Claymore Partners to deliver to the
Agent the results of its commercial finance examination by not later than
September 30, 1999, and the result shall be satisfactory to Claymore, the Agent
and the Majority Banks in their sole discretion (including the compliance by the
Borrower with all of the financial management requirements that Claymore or the
Agent may require);
(h) notwithstanding anything to the contrary contained in the
Unguaranteed Credit Agreement (including without limitation the covenant
contained in ss.10.1 thereof), the Borrower's Leverage Ratio at all times from
and after the date of the consummation of the IPO Transactions shall not exceed
2.50:1.00;
(i) all Stock Redemptions and Subordinated Debt Payments shall have
been consummated by not later than thirty (30) days after the consummation of
the IPO; and
(j) no Default or Event of Default (as such terms are defined in each
of the Guaranteed Credit Agreement and the Unguaranteed Credit Agreement) has
occurred and is continuing or would exist as a result of the IPO Transactions.
Subject to such conditions, the Majority Banks, the Guaranteed Agent
and the Agent hereby consent to the IPO Transactions pursuant to ss.26 of each
of the Guaranteed Credit Agreement and the Unguaranteed Credit Agreement. This
consent shall not be construed, however, as a waiver of any other provisions of
the Loan Documents (as such term is defined in each of the Guaranteed Credit
Agreement and the Unguaranteed Credit Agreement) or to permit the Borrower or
any Subsidiary to take any other action which is prohibited by the terms of the
Unguaranteed Credit Agreement, the Guaranteed Credit Agreement and the other
Loan Documents (as such term is defined in each of the Guaranteed Credit
Agreement and the Unguaranteed Credit Agreement).
The Borrower hereby acknowledges and agrees that (a) the execution and
delivery by the Borrower of this consent shall constitute the election by the
Borrower upon the consummation of the IPO Transactions to permanently reduce the
Total Commitment under the Unguaranteed Credit Agreement to $20,000,000 and the
notice required by ss.2.3 of the Unguaranteed Credit Agreement; (b) the Borrower
agrees that upon the consummation of the IPO Transactions it shall at all times
thereafter maintain
AppNet Systems, Inc.
May 28, 1999
Page -5-
cash and Cash Equivalents of not less than $10,000,000 on its balance sheet, and
(c) the Borrower agrees upon the consummation of the IPO Transactions to be
bound by the covenant contained in subparagraphs (b), (g) and (h) and by all the
requirements set forth in paragraphs (a) - (j) above, and any failure to so
comply with any covenant contained therein shall constitute an Event of Default
under the Unguaranteed Credit Agreement.
AppNet Systems, Inc.
May 28, 1999
Page -6-
Except as expressly stated herein, neither the execution of this
consent nor the failure of the Banks or the Guaranteed Banks to exercise any
right or remedy constitutes a waiver of any Default or Event of Default (as such
terms are defined in each of the Guaranteed Credit Agreement and the
Unguaranteed Credit Agreement) or of such right or remedy or any other right or
remedy under the Guaranteed Credit Agreement and the Unguaranteed Credit
Agreement.
Sincerely,
BANKBOSTON, N.A., individually and as
Agent and Guaranteed 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.
May 28, 1999
Page -7-
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.
May 28, 1999
Page -8-
XXXXXXXXX ACQUISITION CORP.
By: /s/
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Title:
GTCR FUND VI, L.P.
By: GTCR Partners VI, L.P.
Its: General Partner
By: GTCR Xxxxxx Xxxxxx, L.L.C.
Its: General Partner
By: /s/
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Xxxxxx X. Xxxxxxxx, Principal
