THIRD AMENDMENT TO AND REAFFIRMATION OF LOAN DOCUMENTS
THIRD AMENDMENT TO AND REAFFIRMATION OF LOAN DOCUMENTS (this "Third
Amendment") made as of the 1st day of January, 2000 by and among ALPHANET
SOLUTIONS, INC., a New Jersey corporation (the "Company"), THE LEARNINGNET, INC.
f/k/a NETTEMPS, INC., a New Jersey corporation (the "Guarantor") and FIRST UNION
NATIONAL BANK, a national banking institution (the "Bank").
W I T N E S S E T H:
WHEREAS, the Bank has agreed to make credit available to the Company
on a revolving basis in the principal amount of up to $15,000,000 (the "Loan"),
pursuant to the terms and conditions of a certain Loan and Security Agreement,
dated June 30, 1997, as amended (as so amended and as amended and reaffirmed by
this Third Amendment, the "Loan Agreement"; all capitalized terms used herein
and not defined shall have the meanings ascribed to them therein); and
WHEREAS, the Loan is evidenced by a certain revolving note of the
Company dated September 28, 1999 (the "Existing Revolving Note"); and
WHEREAS, as collateral security for its obligations under the Loan
Agreement and the Existing Revolving Note, the Company granted to the Bank liens
and security interests in the Collateral described in the Loan Agreement; and
WHEREAS, the repayment and performance obligations of the Company
under the Loan Agreement and the Existing Revolving Note were guaranteed by the
Guarantor under the Guaranty; and
WHEREAS, as collateral security for its obligations under the Loan
Agreement and the Guaranty, the Guarantor granted to the Bank liens and security
interests in the Collateral described in the Loan Agreement; and
WHEREAS, the Bank, the Company and the Guarantor have agreed that (a)
the Loan Agreement should be amended, among other things, to: (i) extend the
Maturity Date to December 31, 2000; (ii) modify the existing $15,000,000 secured
revolving credit facility to provide for an unsecured revolving credit facility
in the amount of $2,000,000 and a secured revolving credit facility in the
amount of $13,000,000, (iii) modify the interest rates applicable to the Loan,
(iv) modify the Commitment Fee, (v) modify certain financial covenants, and (vi)
amend certain of the definitions set forth therein; and (b) the other Loan
Documents shall be reaffirmed and amended to include the amendments set forth in
the Loan Agreement;
NOW, THEREFORE, in consideration of the mutual covenants and premises
contained herein, the Bank, the Company and the Guarantor, do hereby agree as
follows:
1. By executing this Third Amendment, each of the Company and the
Guarantor confirms and acknowledges that it has no defenses, offsets or
counterclaims against any of its obligations to the Bank under the Loan
Documents and that all amounts outstanding, if any, under the Existing Revolving
Note and the other Loan Documents are owing to the Bank without defense, off-set
or counterclaim.
2. The following new or revised definitions are hereby added to
Article I of the Loan Agreement:
1.15 "Borrowing Base" means the lesser of (A) Thirteen
Million and 00/100 Dollars ($13,000,000.00), or (B) the Eligible
Loan Value of Eligible Accounts.
1.30 "Eligible Loan Value of Eligible Accounts" means up
to eighty percent (80%) of the face amount of Eligible Accounts,
less returns and discounts, offsets, contra balances, credits or
allowances of any nature, at any time issued, owing, granted or
outstanding.
1.35C "Third Amendment" means the Third Amendment to and
Reaffirmation of Loan Documents, dated as of January 1, 2000, by
and among the Company, the Guarantor and the Bank.
1.55 "Loan" means either or both of Loan A and Loan B.
1.55A "Loan A" means the revolving loan in the maximum
principal amount of up to TWO MILLION DOLLARS ($2,000,000.00) made
available by Bank pursuant to Section 2.1(A) hereof.
1.55B "Loan B" means the revolving loan and Letters of
Credit in the maximum principal amount of up to THIRTEEN MILLION
DOLLARS ($13,000,000.00) made available by Bank pursuant to
Section 2.1(B) hereof.
1.56 "Loan Documents" means this Agreement, the
Revolving Notes, the Guaranty, the Intercreditor Agreements, any
Letter of Credit Agreement, all notes or other documents executed
and delivered by Borrower or any other Obligor hereunder, and any
amendments, renewals, modifications or supplements thereto, or
substitutions therefor.
1.60 "Maturity Date" means December 31, 2000.
1.72 "Revolving Notes" means (a) that certain Revolving
Note dated as of January 1, 2000 issued by Borrower evidencing the
Loan A and any revolving note replacing such note ("Revolving Note
A") and (b) that certain Revolving Note dated as of January 1,
2000 issued by Borrower evidencing Loan B and any revolving note
replacing such note ("Revolving Note B")."
3. Section 2.1 of the Loan Agreement is hereby amended to read as
follows:
"2.1 LOAN AND LETTERS OF CREDIT
(A) Loan A. Subject to the terms and conditions
hereinafter set forth, and provided that no Default or Event of
Default shall have occurred and be continuing or would result from
the making of any Advance, from time to time hereafter, through
the Maturity Date, Bank shall extend credit under Loan A to
Borrower by making Advances (excluding Acquisition Advances);
provided, however that at no time shall the total principal amount
of Advances then outstanding under Loan A exceed $2,000,000.
Borrower shall have the right, upon thirty (30) days prior written
notice to Bank, to terminate all or part of the unused portion of
the Loan A, without premium or penalty. The first two million
dollars ($2,000,000) of Advances (excluding Acquisition Advances)
then outstanding from time to time shall be deemed to be Advances
under Loan A.
(B) Loan B and Letters of Credit. Within the collateral
limits of the Borrowing Base, subject to the terms and conditions
hereinafter set forth, and provided that no Default or Event of
Default shall have occurred and be continuing or would result from
the making of any Advance or issuance of any Letter of Credit,
from time to time hereafter, through the Maturity Date, Bank shall
extend credit under Loan B to Borrower by (i) making Advances and
(ii) the issuance of Letters of Credit; provided, however that at
no time shall (x) the total amount of Letter of Credit Obligations
exceed Two Million Five Hundred Thousand Dollars ($2,500,000), (y)
the total principal amount of Acquisition Advances exceed Five
Million Dollars ($5,000,000) and (z) the total amount of Letter of
Credit Obligations plus the total principal amount of Advances
then outstanding under Loan B exceed the Borrowing Base. Borrower
shall have the right, upon thirty (30) days prior written notice
to Bank, to terminate all or part of the unused portion of the
Loan B, without premium or penalty."
4. The first sentence of Section 2.2(A) of the Loan Agreement is
hereby amended to read as follows:
"(A) On all Base Rate Advances, Borrower shall pay to
Bank monthly interest on the first day of each month until all
such Advances are paid in full, and on all Adjusted LIBO Rate
Advances, Borrower shall pay to Bank interest on the last day of
the Interest Period but in no event less often than quarterly (in
which case such payments shall be made on the last Working Day of
such calendar quarter), until all such Advances are paid in full,
which interest shall be computed on the basis of a 360 day year,
for the actual number of days elapsed, on the daily unpaid balance
of such Advances, at the rate selected by Borrower by written
notice to Bank equal to the following: (x) one-half of one percent
(1/2%) per annum below the Base Rate or (y) the Adjusted LIBO Rate
for such Interest Period plus one and one-half percent (1 1/2%)."
5. Section 2.2(B) of the Loan Agreement is hereby amended to read
as follows:
"(B) Subject to Section 2.5, if, at any time, the outstanding
Advances under Loan B exceed the Borrowing Base, Borrower shall pay to Bank
monthly interest computed on the basis of a 360 day year for the actual number
of days elapsed, on that portion of the daily unpaid balance of such Advances
under Loan B which is in excess of the Borrowing Base, at the default rate set
forth in Section 9.7."
6. Section 2.4(A) of the Loan Agreement is hereby amended to read
as follows:
"(A) Borrower agrees to pay to Bank on a quarterly basis the
Commitment Fee on the average daily unused portion of the Commitment from the
Closing Date until the Maturity Date, at a rate equal to one-quarter percent
(1/4%) per annum, such payments commencing on January 1, 2000, and continuing
quarterly thereafter on the last day of March, June, September and December,
with such payments terminating on the Maturity Date."
7. Section 2.5 of the Loan Agreement is hereby amended to read as
follows:
"2.5 Prepayment (A) If on any day the sum of the
aggregate outstanding principal balance of the Advances under
Section 2.1(A) hereof shall exceed the limitations set forth in
Section 2.1(A), Borrower shall, on such day, prepay such Advances
by an amount equal to such excess together with the Repayment
Indemnity, if any. The failure to make any such payment shall be
an Event of Default. (B) If on any day the sum of the aggregate
outstanding principal balance of the Advances under Section 2.1(B)
plus the Letter of Credit Obligations hereof shall exceed the then
Borrowing Base on such day or the other limitations set forth in
Section 2.1(B), Borrower shall, on such day, prepay such Advances
by an amount equal to such excess together with the Repayment
Indemnity, if any. The failure to make any such payment shall be
an Event of Default."
8. The second sentence of Section 2.6 of the Loan Agreement is
hereby amended to read as follows:
"The notice to Bank requesting an Advance under Loan B shall
also include evidence that based upon the most recent Borrowing Base
Certificate, there exists sufficient availability of funds for such Advance.
9. Section 3.1 of the Loan Agreement is hereby amended to read as
follows:
"3.1 Cross Collateral All of the Collateral heretofore,
herein or hereafter given or assigned to Bank
hereunder or in any other Loan Document shall secure payment of
(A) all Obligations of Borrower and Guarantor to Bank and (B) all
Indebtedness and any Snd all other obligations of any of the other
Obligors to Bank; excluding, however, the principal amount
outstanding under Loan A."
10. The last sentence of Section 2.14 of the Loan Agreement is
hereby amended to read as follows:
"Nothing herein shall prohibit Bank from pledging or
assigning the Revolving Notes to any Federal Reserve Bank in accordance with
applicable law."
11. Section 6.1(D) of the Loan Agreement is hereby amended to read
as follows:
"(D) In the event any Advances or Letters of Credit in excess
of $100,000 in the aggregate are outstanding at a month's end, not later than
the 15th day after the end of such month, an accounts receivable aging and
corresponding Borrowing Base Certificate;".
12. Section 7.2 of the Loan Agreement is hereby amended to read as
follows:
"(A) Total Liabilities/Tangible Net Worth. The Obligors will
not, on a consolidated basis, allow its ratio of Total Liabilities to Tangible
Net Worth to exceed 1.00:1.00.
(B) Fixed Charge Coverage Ratio. The Obligors will not allow
its Fixed Charge Coverage Ratio, on a consolidated basis, to be less than (x)
2.50:1.00 for the quarters ended December 31, 1999 and March 31, 2000 and (y)
3.00:1.00 thereafter.
The foregoing financial covenants shall be calculated and measured
on a rolling, trailing four quarter basis."
13. The Company shall execute new Revolving Notes dated the date
hereof which shall supersede and replace (but not represent a repayment or
novation of) the Existing Revolving Note. The Revolving Notes dated the date
hereof shall be the "Revolving Notes" for all purposes of the Loan Agreement and
the other Loan Documents.
14. By executing this Third Amendment, the Company and the
Guarantor confirm and acknowledge that (i) the representations and warranties
contained in Article V of the Loan Agreement (pertaining to each of them) are
correct as of the date hereof, (ii) the Company and the Guarantor are in
compliance with all covenants contained in the Loan Agreement (except as
otherwise agreed to by the Bank in writing) and all other Loan Documents, and
(iii) no Event of Default, or an event which with the giving of notice or
passage of time or both would constitute an Event of Default, has occurred and
is continuing.
15. All references to the "Agreement" or "this Agreement" in the
Loan Agreement shall mean the Loan Agreement, as amended and reaffirmed by this
Third Amendment; all references to the "Guaranty" in the Loan Agreement shall be
deemed to mean the Guaranty, as amended and reaffirmed by this Third Amendment;
and all references to the "Loan Documents" shall mean and include the Loan
Documents, as amended and reaffirmed by this Third Amendment, as well as the
Revolving Notes (as defined in the Loan Agreement, as amended by this Third
Amendment). All references to the "Obligations" in the Loan Agreement shall mean
and include the obligations of the Company and the Guarantor to the Bank
pursuant to the Loan Documents, as amended and reaffirmed pursuant to this Third
Amendment, including, but not limited to the Revolving Notes (as defined in the
Loan Agreement, as amended by this Third Amendment).
16. By executing this Third Amendment, the parties hereto confirm
the continued accuracy of all Schedules and Exhibits attached to and made a part
of the Loan Agreement and the other Loan Documents. If any such Schedule or
Exhibit is no longer fully accurate or needs updating, such revised or updated
Schedule or Exhibit shall be delivered to the Bank as a condition precedent to
the effectiveness of this Third Amendment and shall be deemed to replace the
prior Schedule or Exhibit for all purposes of the Loan Agreement or such other
Loan Document.
17. The Guaranty, effective the date hereof, is hereby amended to
provide that the term "Obligations" therein shall mean and include the
obligations of the Company to the Bank under the Loan Agreement and the other
Loan Documents, as each is amended and reaffirmed by this Third Amendment, and
all references to the "Loan Agreement" and the "Loan Documents" in the Guaranty
shall mean and include such agreements, as amended and reaffirmed by, or
delivered pursuant to, this Third Amendment. By executing this Third Amendment,
the Guarantor reaffirms and acknowledges the validity of the Guaranty as of the
date hereof and confirms that it guarantees unconditionally the repayment and
other obligations of the Company under the Revolving Notes (as defined in the
Loan Agreement, as amended and reaffirmed by this Third Amendment) and the other
Loan Documents, as amended and reaffirmed by this Third Amendment.
18. By executing this Third Amendment, each of the Company and the
Guarantor confirms the security interests previously granted to the Bank in and
to the Collateral described in the Loan Agreement as security for their
obligations under the Loan Documents (as defined in the Loan Agreement as
amended by this Third Amendment), and each of the Company and the Guarantor
hereby grants to the Bank a security interest in the Collateral described in the
Loan Agreement to secure the repayment of their Obligations under Revolving Note
B (as defined in the Loan Agreement as amended by this Third Amendment) and
Guaranty (as defined in the Loan Agreement as amended by this Third Amendment),
as applicable, and the other Loan Documents, as amended and reaffirmed by this
Third Amendment.
19. As conditions precedent to the effectiveness of this Third
Amendment, the following shall be delivered to the Bank by the Company and/or
the Guarantor:
(a) This Third Amendment, duly executed by all parties hereto;
(b) The Revolving Notes, duly executed by the Company;
(c) The Certification (as to jurisdiction of execution);
(d) A corporate resolution, incumbency certificate, and such other
documents as the Bank may reasonably request reflecting the corporate
authorization and approval of the transactions contemplated hereunder by the
Company and the Guarantor; and
(e) Such other documents as the Bank may reasonably request.
20. This Third Amendment is incorporated by reference into the
Loan Agreement and the other Loan Documents. Except as otherwise provided
herein, all other provisions of the Loan Agreement and the other Loan Documents
are hereby confirmed and ratified and shall remain in full force and effect as
of the date of this Third Amendment.
21. This Third Amendment may be executed in any number of
counterparts, each of which shall be an original and all of which shall
constitute one and the same instrument.
22. This Third Amendment shall be binding upon the parties hereto
and their heirs, executors, administrators, successors and/or assigns.
23. This Third Amendment shall be governed by, and construed in
accordance with, the laws of the State of New Jersey.
24. In the event any provision of this Third Amendment or any
other Loan Document executed and delivered in connection herewith shall be held
invalid or unenforceable by a court of competent jurisdiction, such holdings
shall not invalidate or render unenforceable any other provision hereof or
thereof.
IN WITNESS WHEREOF, the parties hereto have executed this Third
Amendment as of the date first above written.
FIRST UNION NATIONAL BANK
By: Nancy Angell
-----------------------------------
Name: Angell
Title: AVP
ATTEST: ALPHANET SOLUTIONS, INC.
By: Jack P. Adler By: David M. Gordon
----------------------------- ----------------------
Name: Jack P. Adler Name: David M. Gordon
Title: Secretary Title: Vice President, Treasurer & CFO
ATTEST: THE LEARNINGNET, INC. f/k/a
NETTEMPS, INC.
By: Jack P. Adler By: Stan Gang
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Name: Jack P. Adler Name: Stan Gang
Title: Secretary Title: Chairman of the Board