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Exhibit 10.21
REVOLVING
NOTE AGREEMENT
$7,500,000 Dated as of January 20, 1998
At Syracuse, New York
(1) Subject to the terms of this Revolving Note Agreement ("Note"),
commencing on January 20, 1998 and continuing through January 19, 2001, (the
"Advance Period"), FLEET NATIONAL BANK, its successors and assigns with banking
offices at Xxx Xxxxxxx Xxxxxx, Xxxxxxxx, Xxx Xxxx 00000 ("Bank") agrees to loan
to APPLIEDTHEORY COMMUNICATIONS, INC., a New York corporation with its offices
at 000 Xxxxxx Xxxxx Xxxx, Xxxxx Xxxxxxxx, Xxx Xxxx 00000 ("Borrower") on a
revolving credit basis an amount not to exceed Seven Million Five Hundred
Thousand Dollars ($7,500,000) (the "Loan") in the aggregate at any one time
outstanding. So long as no Event of Default has occurred and is then continuing,
the Borrower may obtain Loan advances(an "Advance" or the "Advances") from the
Bank during the Advance Period in accordance with the provisions of this Note.
Borrower unconditionally agrees that Loan amounts advanced by the Bank to the
Borrower hereunder shall be repaid by the Borrower as follows under the
provisions of this Note.
(2) Payment. Commencing on the first day of the first calendar month
following the date of the first Advance made by the Bank to the Borrower
hereunder and continuing on the first day of each succeeding calendar month
through and including January 1, 2001 (each a "Monthly Payment Date"), Borrower
shall pay to the order of the Bank interest on the then outstanding unpaid
balance of the amount of each Advance made under this Note at a rate of interest
equal to the "Applicable Interest Rate" (defined below), and on January 19, 2001
(the "Maturity Date"), Borrower shall pay to the Bank the then unpaid principal
balance of all amounts advanced under this Note plus all accrued and unpaid
interest.
(3) Advance Term and Interest Rates. At the time Borrower requests an
Advance, Borrower shall include in the Advance request the term of the requested
Advance and which of the following interest rate options Borrower elects with
respect to the Advance (the Applicable Interest Rate"). Under no circumstances
may the requested Advance term extend beyond the Maturity Date. If no term or
interest rate option is specified by the Borrower, or if the amount of the
requested Advance is less than $100,000, the Advance involved shall bear
interest at the Bank's Prime Rate of interest minus two hundred (200) basis
points.
(a) LIBOR Advance. The Borrower may obtain Advances by submitting
an Advance request, in the form attached hereto as Exhibit "A"
two (2) Business Days prior to date on which Advance is to be
made during the Advance Period at the "LIBOR Rate" (defined
below) for the "Applicable Interest Period" (defined below)
plus fifty (50) basis points. Each Advance requested under
this Section 3(a) shall be in the minimum amount of $100,000.
The term "LIBOR" or "LIBOR Rate" shall mean, as applicable to
any Advance under this Section 3(a) (a "LIBOR Advance"), the
rate per annum (rounded upward, if necessary,
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to the nearest 1/32 of one percent) as determined on the basis
of the offered rates for deposits in U.S. dollars, for an
Advance term as specified by Borrower of either thirty (30)
days, sixty (60) days, ninety (90) days, one hundred twenty
(120) days, one hundred eighty (180) days or three hundred
sixty (360) days (the "Applicable Interest Period") which
appears on the Telerate page 3750 as of 11:00 a.m. London time
on the day that is two London Banking Days preceding the first
day of such LIBOR Advance; provided, however, if the rate
described above does not appear on the Telerate System on the
interest determination date, the LIBOR Rate shall be the rate
(rounded upwards as described above, if necessary) for
deposits in dollars for a period substantially equal to the
Applicable Interest Period on the Reuters Page "LIBOR" (or
such other page as may replace the LIBOR Page on that service
for the purpose of displaying such rates), as of 11:00 a.m.
(London Time), on the day that is two (2) London Banking Days
prior to the beginning of such Interest Period. "Banking Day"
shall mean, in respect of any city, any date on which
commercial banks are open for business in that city.
If both the Telerate and Reuters system are unavailable, then
the rate for that date will be determined on the basis of the
offered rates for deposits in U.S. dollars for the number of
days in the Applicable Interest Period which are offered by
four major banks in the London interbank market at
approximately 11: 00 a.m. London time, on the date that is two
(2) London Banking Days preceding the first day of such LIBOR
Advance as selected by the Calculation Agent. The principal
London office of each of the four major London banks will be
requested to provide a quotation of its U.S. dollar deposit
offered rate. If at least two such quotations are provided,
the rate for that date will be the arithmetic mean of the
quotations. If fewer than two quotations are provided as
requested, the rate for that date will be determined on the
basis of the rates quoted for loans in U.S. dollars to leading
European banks for the number of days in the Applicable
Interest Period offered by major banks in New York City at
approximately 11:00 a.m. New York City time, on the date that
is two London Banking Days preceding the first day of such
LIBOR Advance. In the event that Bank is unable to obtain any
such quotation as provided above, it will be deemed that LIBOR
pursuant to a LIBOR Advance cannot be determined and the
Advance will be made at the rate provided for in Section 3(c)
below.
In the event that the Board of Governors of the Federal
Reserve System shall impose a Reserve Percentage with respect
to LIBOR deposits of Bank then for any period during which
such Reserve Percentage shall apply, LIBOR shall be equal to
the amount determined above divided by an amount equal to 1
minus the Reserve Percentage.
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(b) Cost of Funds Advance. If the term of a requested Advance is
to be for more than one (1) year, Borrower, by submitting an
Advance request two (2) Business Days prior to the date on
which the Advance is to be made, may obtain Advances during
Advance Period at a rate equal to the Bank's "Cost of Funds"
(defined below) for the term of the requested Advance, plus
fifty (50) basis points. Each Advance requested under this
Section 3(b) shall be in the minimum amount of $100,000.
For the purposes of this Note, the term "Cost of Funds" means
the per annum rate of interest which the Bank is required to
pay, or is offering to pay, for wholesale liabilities,
adjusted for reserve requirements and such other requirements
as may be imposed by federal, state or local government and
regulatory agencies, as determined by the Bank's treasury
funding group or treasury funding management.
(c) Prime Rate Advance. The Borrower, by submitting an Advance
request, may obtain Advances at any time during the Advance
Period at the Bank's "Prime Rate" of interest (defined below)
minus 200 basis points. Advances made by Bank to Borrower
under the Target Balance Service Agreement between Borrower
and Bank dated January 20, 1998 shall be deemed to be Advances
made under this Section 3(c). The term "Prime Rate" means the
variable rate per annum of interest so designated from time to
time by the Bank as its Prime Rate. The Prime Rate is a
reference rate and does not necessarily represent the lowest
or best rate being charged to any customer.
(d) With respect to any Advance made under Section 3(a) or 3(b)
above, Borrower must either repay such Advance at the end of
the Applicable Interest Period or Cost of Funds Period, as the
case may be or notify the Bank two banking days prior to the
expiration of the period involved that Borrower intends to
continue such borrowing in which event Borrower must at such
time notify the Bank as to whether the borrowing will be
continued as an Advance under Section 3(a) or 3(b) or 3(c) of
this Note. If at the end of an Applicable Interest Period or a
Cost of Funds Period, the Borrower has not given such two
banking day notice and does not repay the Advance in question,
then, so long as no Event of Default has occurred and is then
continuing, the Advance involved shall be repaid by making an
Advance under Section 3(c) for a period of 30 days.
(e) The term "Business Day" means a day on which commercial banks
are regularly open for business in the State of New York.
(4) Interest Computations. All computations of interest shall be made
by Bank on the basis of a 360-day year and the actual number of days elapsed.
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(5) Prepayment. In the event Borrower obtains an Advance under Section
3(a) or 3(b) above, the last day of the Advance term selected by the Borrower
shall be deemed to be and is referred to herein as the "Advance Maturity Date".
Borrower shall have the right at any time and from time to time to prepay in
whole or in part any Advance made under Section 3(c) above without penalty,
premium or yield maintenance fee. Borrower shall have the right at any time and
from time to time to prepay in whole or in part in advance made under Section
3(a) or 3(b) prior to the Advance Maturity Date with respect to the prepaid
Advance, and Borrower shall pay to the Bank a yield maintenance fee computed as
follows: The current rate for United States Treasury securities (bills on a
discounted basis shall be converted to a bond equivalent) with a maturity date
closest to the Advance Maturity Date for the Advance being prepaid following the
day the prepayment is made, shall be subtracted from the "Cost of Funds"
component of the rate in effect at the time of prepayment. If the result is a
positive number, then the resulting percentage shall be multiplied by the amount
of the principal balance being prepaid. The resulting amount shall be divided by
360 and multiplied by the number of days remaining until the Advance Maturity
Date for the Advance being prepaid. Said amount shall be reduced to present
value calculated by using the above-referenced United States Treasury security
rate and the number of days remaining until the Advance Maturity Date for the
Advance being prepaid. The resulting amount shall be the yield maintenance fee
due to Bank upon the prepayment.
If by reason of an event of default Bank elects to declare the Loan to
be immediately due and payable, then any yield maintenance fee with respect to
the loan shall become due and payable in the same manner as though Borrower had
exercised such right of prepayment with respect to all then unpaid Advances.
(6) U.S. Dollars. All payments shall be in lawful money of the United
States in immediately available funds.
(7) Participations. Bank shall have the unrestricted right at any time
and from time to time, and without the consent of or notice to Borrower, to
grant to one or more banks or other financial institutions (each, a
"Participant") participating interests in Bank's obligation to lend hereunder
and/or any or all of the Loan. In the event of any such grant by Bank of a
participating interest to a Participant, whether or not upon notice to Borrower,
Bank shall remain responsible for the performance of its obligations hereunder
and Borrower shall continue to deal solely and directly with Bank in connection
with Bank's rights and obligations hereunder.
Bank may furnish any information concerning Borrower in its possession
from time to time to prospective Participants, provided that Bank shall require
any such prospective Participant to agree in writing to maintain the
confidentiality of such information.
(8) Certain Bank Rights. To secure all amounts due under this Note,
Borrower hereby grants to Bank, a lien, security interest and right of setoff as
security for all liabilities and obligations to Bank when due, whether now
existing or hereafter arising, upon and against all deposits and credits now or
hereafter in the possession, custody, safekeeping or control of Bank or any
entity under the control of Bank, or in transit to any of them. At any
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time, without demand or notice, Bank may set off the same or any part thereof
and apply the same to any liability or obligation of Borrower to the Bank
regardless of the adequacy of any other collateral securing the Loan. ANY AND
ALL RIGHTS TO REQUIRE BANK TO EXERCISE ITS RIGHTS OR REMEDIES WITH RESPECT TO
ANY OTHER COLLATERAL WHICH SECURED THE LOAN, PRIOR TO EXERCISING ITS RIGHT OF
SETOFF WITH RESPECT TO SUCH DEPOSITS, CREDITS OR OTHER PROPERTY OF THE BORROWER
ARE HEREBY KNOWINGLY, VOLUNTARILY AND IRREVOCABLY WAIVED.
(9) Lost or Destroyed Documents. Upon receipt of an affidavit of an
officer of Bank as to the loss, theft, destruction or mutilation of the Note or
any other security or loan document which is not of public record, and, in the
case of any such loss, theft, destruction or mutilation, upon surrender and
cancellation of such Note or other security or loan document, Borrower will
issue, in lieu thereof, a replacement Note or other security or loan document in
the same principal amount thereof and otherwise of like tenor. The Bank agrees
to indemnify Borrower from liability in the event Borrower is required to make
any payment on account of any Note or other Loan Document replaced by the
Borrower at the Bank's request under this Section 9.
(10) Bank Pledge. Bank may at any time pledge all or any portion of its
rights under the loan documents including any portion of this Note to any of the
twelve (12) Federal Reserve Banks organized under Section 4 of the Federal
Reserve Act, 12 U.S.C. Section 341. No such pledge or enforcement thereof shall
release Bank from its obligations under any of the loan documents.
(11) Defaults. The occurrence of any of the following shall constitute
an "Event of Default" under this Note:
(a) Failure by Borrower to make any payment within ten (10) days
of the date when due under this Note;
(b) The occurrence and continuation beyond the applicable space
period, if any, of an event of default with respect to any
other indebtedness of Borrower to Bank;
(c) Any representation or warranty contained in this Note any
other loan document or in any certificate delivered to Bank by
Borrower shall have been incorrect or false in any material
respect as of the date as to which the facts set forth were
asserted;
(d) If Borrower or XXXXXXxx.xxx, Inc. ("NYSERNET") shall file a
voluntary petition in bankruptcy or a voluntary petition
seeking reorganization or to effect a plan, composition or
other arrangement with creditors under any federal or state
law relating to bankruptcy, insolvency. or relief of debtors;
(e) If Borrower or NYSERNet shall have filed against either of
them an involuntary petition in bankruptcy or an involuntary
petition seeking reorganization or to effect a plan,
composition or other arrangement with creditors under any
federal or state law relating to bankruptcy, insolvency or
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relief of debtors and such petition is not dismissed within
thirty (30) days of the date of filing;
(f) The entry of a judgment against Borrower not fully covered by
insurance less normal deductibles, and the failure to either
satisfy or stay the enforcement of such judgment, within
fifteen (15) days of the date of such entry;
(g) The acceleration before stated maturity of any indebtedness
for borrowed money owed by Borrower where the amount involved
exceeds $10,000;
(h) Failure by NYSERNet to maintain the "Required Value" of the
"Collateral" [as those quoted terms are defined in the Pledge
Security Agreement between NYSERNet and the Bank dated January
20, 1998] as required by the terms of such Pledge Security
Agreement;
(i) Failure by Borrower to perform any of Borrower's other
obligations under this Note or the documents securing amounts
due under this Note within fifteen (15) days after notice from
the Bank.
(12) Acceleration. Upon the occurrence of an Event of Default the then
unpaid amount of this Note, together with all accrued and unpaid interest, shall
be and become due and payable.
(13) Late Fee. Further, and not in lieu of any other remedy, Borrower
shall pay to Bank a late charge equal to five percent (5%) of the amount of any
payment due under this Note which is not made within ten (10) days of the date
when due.
(14) Default Rate. Upon default or after maturity or after judgment has
been rendered on this Note, or in the Event of Default as defined above, the
unpaid principal of all advances shall, at the option of the Bank, bear interest
at a rate which is four (4) percentage points per annum greater than the rate in
effect when the Banks exercise this option.
(15) Financial Statements. Borrower shall furnish to Bank within one
hundred fifty (150) days of Borrower's fiscal year end, annual audited year-end
financial statements of Borrower, prepared in accordance with generally accepted
accounting principles consistently applied and certified by an independent
certified public accounting firm acceptable to Bank.
(16) No Usury. All agreements between Borrower and Bank are hereby
expressly limited so that in no contingency or event whatsoever, whether by
reason of acceleration of maturity of the indebtedness evidenced hereby or
otherwise, shall the amount paid or agreed to be paid to Bank for the use or the
forbearance of the indebtedness evidenced hereby exceed the maximum permissible
under applicable law. As used herein, the term "applicable law" shall mean the
law in effect as of the date hereof provided, however, that in the event there
is a change in the law which results in a higher permissible rate of interest,
then this Note shall be governed by such new law as of its effective date. In
this regard, it is expressly agreed that it is the intent of Borrower and in the
execution, delivery and acceptance of this Note to contract in strict compliance
with the laws of the State of New York from time to time in effect. If, under or
from any circumstances whatsoever, fulfillment of any provision hereof or of any
of the loan documents at the time of
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performance of such provision shall be due, shall involve transcending the limit
of such validity prescribed by applicable law, then the obligation to be
fulfilled shall automatically be reduced to the limits of such validity, and if
under or from circumstances whatsoever Bank should ever receive as interest and
amount which would exceed the highest lawful rate, such amount which would be
excessive interest shall be applied to the reduction of the principal balance
evidenced hereby and not to the payment of interest. This provision shall
control every other provision of all agreements between Borrower and Bank.
(17) Certain Waivers. Borrower expressly waives any presentment,
demand, protest or notice in connection with this Note, now or hereafter
required by applicable law.
(18) Costs of Collection. Borrower promises and agrees to pay the costs
of collection and any reasonable attorneys fees incurred by Bank after the
occurrence of an Event of Default under this Note.
(19) New York Law. This Note shall be governed by and construed and
enforced in accordance with the laws of the State of New York, exclusive of New
York's conflicts of laws rules and public policies.
(20) Business Purpose. Borrower represents that the proceeds of this
Note will be used for business or commercial purposes.
(21) Merger Clause. This Note constitutes the complete understanding
between the parties and supersedes all prior or contemporaneous understandings,
agreements, commitment letters and negotiations, all of which are merged into
this Note. This Note may not be changed, altered or amended absent the execution
and delivery by Borrower and Bank of a writing intended for such purpose.
(22) Jury Waiver. BORROWER AND BANK MUTUALLY HEREBY KNOWINGLY,
VOLUNTARILY AND INTENTIONALLY WAIVE THE RIGHT TO A TRIAL BY JURY IN RESPECT OF
ANY CLAIM BASED HEREON, ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS NOTE OR
ANY OTHER LOAN DOCUMENTS CONTEMPLATED TO BE EXECUTED IN CONNECTION HEREWITH OR
ANY COURSE OF CONDUCT, COURSE OF DEALINGS, STATEMENTS
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(WHETHER VERBAL OR WRITTEN) OR ACTIONS OF ANY PARTY. THIS WAIVER CONSTITUTES A
MATERIAL INDUCEMENT FOR BANK TO ACCEPT THIS NOTE AND MAKE THE LOAN.
APPLIEDTHEORY COMMUNICATIONS, INC.
By: /s/ Xxxxx X. Xxxxxx
XXXXX X. XXXXXX
VP & Chief Financial Officer
FLEET NATIONAL BANK
By: /s/ Xxxxxxxxxxx X. Xxxxxxxxxxx, SVP
XXXXXXXXXXX X. XXXXXXXXXXX
Xx. Vice President
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