ex10-1.htm


    
      

    

    Exhibit 10.1

     

    AMENDMENT
NO. 2 TO CREDIT AGREEMENT

     

    This AMENDMENT NO. 2 TO CREDIT
AGREEMENT (this "Amendment") is made
and entered into as of this 30th day of September, 2008, by and among INTERNAP NETWORK SERVICES
CORPORATION, a Delaware corporation (“Borrower”), each of
the Loan Parties (as defined in the Credit Agreement (defined below)) party
hereto, the Lenders (as defined in the Credit Agreement (defined below))
signatory hereto and BANK OF
AMERICA, N.A., as administrative agent for itself and on behalf of the
Lenders (in such capacity, the "Administrative
Agent"), L/C Issuer and Swing Line Lender (each as defined in the Credit
Agreement (as defined below)).

     

    W I T N E S S E T
H:

     

    WHEREAS, Borrower, the Loan
Parties, the Lenders, the Administrative Agent, the L/C Issuer and the Swing
Line Lender are parties to that certain Credit Agreement, dated as of September
14, 2007 (as hereafter amended, restated, supplemented or otherwise modified
from time to time, the "Credit Agreement"),
pursuant to which the Lenders extended certain financial accommodations to the
Borrower under the terms and conditions stated therein; and

     

    WHEREAS, the Borrower and the
other Loan Parties have informed the Administrative Agent and the Lenders that
they desire to amend the Credit Agreement as further set forth
herein;

     

    NOW, THEREFORE, for and in
consideration of the mutual covenants and agreements contained herein, and for
other good and valuable consideration, the receipt and sufficiency of which is
acknowledged, the parties hereto agree that all capitalized terms used herein
which are not otherwise defined herein shall have the meanings ascribed thereto
in the Credit Agreement, and further agree as follows:

     

    
      	
               1. 

            	 	 Amendments.
	 	 	 


    

     (a)   
Section 1.01 of the Credit Agreement, Defined Terms, is hereby amended by adding
the following new definitions in the appropriate alphabetical
order:

     

    “Amendment No. 2”
shall mean that certain Amendment No. 2 to Credit Agreement, dated as of
September 30, 2008, by and among Borrower, the Loan Parties signatory thereto,
the Lenders signatory thereto, Administrative Agent, L/C Issuer and Swing Line
Lender.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    “Amendment No. 2 Effective
Date” shall mean the “Effective Date” under and as defined in Amendment
No. 2.

     

    “Consolidated Debt Service
Coverage Ratio” means, at any date of determination, for the most
recently completed Measurement Period, the ratio of (a) Consolidated EBITDA to
(b) the sum of (i) Consolidated Interest Charges for such Measurement Period and
(ii) the aggregate principal amount of all regularly scheduled principal
payments or redemptions or similar acquisitions for value of outstanding debt
for borrowed money, but excluding any such payments to the extent refinanced
through the incurrence of additional Indebtedness otherwise expressly permitted
under Section 7.02, for such Measurement Period.

     

    “Lease Financing
Agreement” has the meaning set forth in Section 2.16.

     

    “Lease Financing
Obligations” has the meaning set forth in Section 2.16.

     

    (b)   
Section 1.01 of the Credit Agreement, Defined Terms, is hereby further amended
by deleting the defined term “Consolidated Fixed Charge
Coverage Ratio”.

     

    (c)   
Section 1.01 of the
Credit Agreement, Defined Terms, is hereby further amended by deleting the
definitions of the terms “Consolidated Leverage
Ratio”, “Loan
Documents”, “Obligations”, “Outstanding Amount”
and “Total Revolving
Credit Outstandings” in their entirety and by inserting, in lieu thereof,
the following new definitions:

     

    “Consolidated Leverage
Ratio” means, as of any date of determination, the ratio of (a)
Consolidated Funded Indebtedness as of such date to (b) Consolidated EBITDA of
the Borrower and its Subsidiaries on a consolidated basis for the most recently
completed Measurement Period.

     

    “Loan Documents”
means, collectively, (a) this Agreement, (b) the Notes, (c) the Guaranty, (d)
the Collateral Documents, (e) the Fee Letter, (f) each Issuer Document, (g) each
Secured Hedge Agreement, (h) each Secured Cash Management Agreement and (i) the
Lease Financing Agreement; provided that for purposes of the definition of
“Material Adverse Effect” and Articles IV through IX, “Loan Documents” shall not
include Secured Hedge Agreements or Secured Cash Management
Agreements.

     

    “Obligations” means
all advances to, and debts, liabilities, obligations, covenants and duties of,
any Loan Party arising under any Loan Document or otherwise with respect to any
Loan or Letter of Credit, and all Lease Financing Obligations, whether direct or
indirect (including those acquired by assumption), absolute or contingent, due
or to become due, now existing or hereafter arising and including interest and
fees that accrue after the commencement by or against any Loan Party or any
Affiliate thereof of any proceeding under any Debtor Relief Laws naming such
Person as the debtor in such proceeding, regardless of whether such interest and
fees are allowed claims in such proceeding.

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

    
      
      

    

    
      	 	
               “Outstanding
      Amount” means (a) with respect to Term Loan, Revolving Credit
      Loans, Swing Line Loans or any Lease Financing Obligations on any date,
      the aggregate outstanding principal amount thereof after giving effect to
      any borrowings and prepayments or repayments of the Term Loan, Revolving
      Credit Loans, Swing Line Loans and Lease Financing Obligations, as the
      case may be, occurring on such date; and (b) with respect to any L/C
      Obligations on any date, the amount of such L/C Obligations on such date
      after giving effect to any L/C Credit Extension occurring on such date and
      any other changes in the aggregate amount of the L/C Obligations as of
      such date, including as a result of any reimbursements by the Borrower of
      Unreimbursed Amounts.

            
	 	 	 
	 	
              “Total Revolving Credit
      Outstandings” means the aggregate Outstanding Amount of all
      Revolving Credit Loans, Swing Line Loans, L/C Obligations and Lease
      Financing Obligations.

            
	 	 	 


    

     

    (d)   
Section 1.01 of the Credit Agreement, Defined Terms, is hereby further amended
by deleting the final proviso in the definition of “Applicable Rate” and
by inserting, in lieu thereof, the following new final
proviso:

    
      
        	 	 	 
	 	“; and provided, further that in
      the event that Borrower does not maintain all or substantially all of its
      deposit accounts and securities accounts (as such terms are defined in the
      UCC) with Bank of America, N.A. or one of its Affiliates at any time
      following May 30, 2009, the Applicable Rate for Eurodollar Rate Loans
      shall automatically increase by 0.15%, which increase shall be effective
      from and after the first date after May 30, 2009 on which Borrower does
      not maintain all or substantially all of its deposit accounts and
      securities accounts with Bank of America, N.A.”
	 	 	 


      
(e)   
Section 1.01 of the Credit Agreement, Defined Terms, is hereby further amended
by amending the definition of “Letter of Credit Sublimit” by deleting the
reference to “$5,000,000” therein and replacing it with
“$7,000,000”.

     

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

       

      (f)   
Section 1.01 of the Credit Agreement, Defined Terms, is hereby further amended
by amending the definitions of “Revolving Credit
Borrowing” and “Revolving Credit
Commitment” by deleting the references to “Section 2.01(b)” therein and
replacing them with “Section 2.01(c)”. 

       

      (g)  
Section
2.01 of the Credit Agreement, The Loans, is hereby amended by adding the
following new clause (d) immediately after existing clause (c)
thereof:

       

      
        “(d)   
Conversion of Term Loans
into Revolving Loans on the Amendment No. 2 Effective
Date.  Notwithstanding any provision of this Agreement to the
contrary (including without limitation the provisions of Section 2.01(a)), on
the Amendment No. 2 Effective Date (i) the entire outstanding principal amount
of the Term Loans hereunder (which principal amount is $20,000,000 as of the
Amendment No. 2 Effective Date) shall be converted into a Revolving Credit Loan
outstanding on such date, (ii) the Term Loan Commitment of each Term Loan Lender
shall be reduced to $0 in accordance with the new Schedule 2.01 adopted as of
the Amendment No. 2 Effective Date, (iii) the Revolving Credit Commitment of
each Revolving Credit Lender shall be increased as set forth on the new Schedule
2.01 adopted as of the Amendment No. 2 Effective Date, and (iv) the Term Loan
Lenders shall have no further obligation to make Term Loans
hereunder.  Notwithstanding the immediately preceding sentence, the
$20,000,000 portion of the Revolving Loan representing the converted Term Loan
on the Amendment No. 2 Effective Date shall continue to accrue interest at the
interest rate that was applicable thereto on the Amendment No. 2 Effective Date
until October 15, 2008; provided that after
October 15, 2008, all of the Revolving Loans (including the $20,000,000 portion
thereof converted from the Term Loan on the Amendment No. 2 Effective Date)
shall accrue interest as set forth herein.  The conversion of the Term
Loans into a portion of the Revolving Loans on the Amendment No. 2 Effective
Date is not intended by the parties to constitute, and shall not constitute, a
novation or an accord and satisfaction of any of the indebtedness and other
obligations owing by the Borrower to any Lender under this
Agreement.”

      

    

     

    (h)  
Article II of the Credit Agreement, The Commitments and Credit Extensions, is
hereby amended by adding a new Section 2.16 immediately following Section 2.15
as follows:

     

    
    

    “2.16   
Lease Financing
Agreement.  The Borrower and Bank of America may, after the
Amendment No. 2 Effective Date, enter into a lease financing agreement in an
aggregate funded amount not to exceed $10,000,000 at any time on terms and
conditions satisfactory to Bank of America in its sole discretion (such
financing agreement, if executed, and as amended, modified, restated or replaced
from time to time, the “Lease Financing
Agreement”), it being understood that Bank of America has no obligation
to enter into the Lease Financing Agreement or any other financing arrangement
with Borrower.  In the event that a Lease Financing Agreement is
executed between Borrower and Bank of America, (i) all indebtedness and other
obligations owing from time to time by Borrower to Bank of America under such
Lease Financing Agreement (the “Lease Financing
Obligations”) shall constitute Obligations hereunder, (ii) the Lease
Financing Obligations shall be secured by the Collateral hereunder under the
other Loan Documents and (iii) the outstanding balance of all Lease Financing
Obligations outstanding from time to time shall constitute a portion of the
Total Revolving Credit Outstandings.”

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

    (i)    
Article VII of the Credit Agreement, Negative Covenants, is hereby amended by
deleting Section 7.11, Financial Covenants, in its entirety and replacing it
with the following new Section 7.11 as follows:

     

    “7.11   
Financial
Covenants.

     

    (a)   
Consolidated
Leverage Ratio.  Permit the Consolidated Leverage Ratio as of
the end of any fiscal quarter of the Borrower to be greater than 2.00 to
1.00.

     

    (b)   
Consolidated
Debt Service Coverage Ratio.  Permit the Consolidated Debt
Service Coverage Ratio as of the end of any fiscal quarter of the Borrower to be
less than 3.00 to 1.00.

     

    (c)   
Minimum Liquidity.  At any
time upon the request of Administrative Agent in its sole discretion, permit the
balance of unrestricted cash or cash equivalents in any deposit account or
securities account maintained by Borrower to be less than
$10,000,000.”

     

    (j)   
Article
VII of the Credit Agreement, Negative Covenants, is hereby further amended by
deleting Section 7.12, Capital Expenditures, in its entirety and replacing it
with the following new Section 7.12 as follows:

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

    
    

     

    
      	 	 “7.12	
               Capital Expenditures.
      

            
	 	 	
               

              Make or become
      legally obligated to make any Capital Expenditure, except for Capital
      Expenditures in the ordinary course of business not exceeding, in the
      aggregate for the Borrower and it Subsidiaries (i) $55,000,000 during the
      fiscal year ended December 31, 2008 and (ii) for each fiscal year
      thereafter, either (A) $25,000,000 or (B) an amount to be mutually agreed
      upon between Borrower and Administrative Agent in writing pursuant to a
      letter agreement in the form attached to Amendment No. 2 as Exhibit A;
      provided,
      that so long as no Default has occurred and is continuing or would result
      from such expenditure, any portion of any Capital Expenditure set forth
      above, if not expended in the fiscal year for which it is permitted above,
      may be carried over for expenditure in the next following fiscal year and
      if any such amount is so carried over, it will be deemed used first in the
      applicable subsequent fiscal year before the amount agreed upon above for
      such fiscal year.”

            


    

     

    
      	
            	 “(a)	Non-Payment.  The
      Borrower or any other Loan Party fails to (i) pay when and as required to
      be paid herein, any amount of principal of any Loan, any Lease Financing
      Obligation or any L/C Obligation or deposit any funds as Cash Collateral
      in respect of L/C Obligations, or (ii) pay within three days after the
      same becomes due, any interest on any Loan, any Lease Financing Obligation
      or any L/C Obligation, or any fee due hereunder, or (iii) pay within five
      days after the same becomes due, any other amount payable hereunder or
      under any other Loan Document;
or”


    

     

    (k)     
Article
VIII of the Credit Agreement, Events of Default and Remedies, is hereby further
amended by deleting clause (a) of Section 8.01 and by inserting, in lieu
thereof, the following new clause (a) of Section
8.01:

     

    
      	 	 “(a)	Non-Payment.  The
      Borrower or any other Loan Party fails to (i) pay when and as required to
      be paid herein, any amount of principal of any Loan, any Lease Financing
      Obligation or any L/C Obligation or deposit any funds as Cash Collateral
      in respect of L/C Obligations, or (ii) pay within three days after the
      same becomes due, any interest on any Loan, any Lease Financing Obligation
      or any L/C Obligation, or any fee due hereunder, or (iii) pay within five
      days after the same becomes due, any other amount payable hereunder or
      under any other Loan Document;
or”


    

     

    (l)    The
Credit Agreement is further amended by deleting Schedule 2.01 thereof and
replacing it with Schedule 2.01 attached to this Amendment.

     

    2.  Strict
Compliance.  Except for the amendments set forth above, the
text of the Credit Agreement shall remain unchanged and in full force and
effect.  The amendments agreed to herein shall not constitute a
modification of the Credit Agreement or a course of dealing with the
Administrative Agent and the Lenders, or any of them, at variance with the
Credit Agreement such as to require further notice by the Administrative Agent,
the Lenders, the Swing Line Lender, the Required Lenders, the L/C Issuer, or any
of them, to require strict compliance with the terms of the Credit Agreement, as
amended by this Amendment, in the future.

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

     

    3.    Representations
and Warranties.  Borrower and each other Loan Party hereby
represents and warrants to and in favor of the Administrative Agent, the L/C
Issuer, the Swing Line Lender and the Lenders as follows:

     

    (a)   
Each
representation and warranty set forth in Article 5 of the Credit Agreement, as
amended hereby, is hereby restated and affirmed as true and correct in all
material respects as of the date hereof, except to the extent (i) relating
specifically to the Agreement Date, in which case such representation or
warranty is true and correct in all material respects as of such date and (ii)
such representation or warranty already contains a materiality qualifier, in
which case such representation or warranty shall be true and correct in all
respects;

     

    (b)   
Borrower
and each other Loan Party has the corporate power and authority (i) to enter
into this Amendment and (ii) to do all acts and things as are required or
contemplated hereunder to be done, observed and performed by
it;

     

    (c)   
This
Amendment has been duly authorized, validly executed and delivered by one or
more authorized signatories of the Borrower and each Loan Party, and each of
this Amendment and the Credit Agreement as amended hereby constitutes the legal,
valid and binding obligations of the Borrower and each Loan Party, enforceable
against each of them in accordance with its terms;
and

     

    (d)   
The
execution and delivery of this Amendment and performance by each Loan Party
under the Credit Agreement, as amended hereby, does not and will not require the
consent or approval of any Governmental Authority or any other Person having
jurisdiction over any Loan Party, nor be in contravention of or in conflict with
the Organizational Documents of any Loan Party, or any provision of any statute,
judgment, order, indenture, instrument, agreement, or undertaking, to which any
Loan Party is party or by which any Loan Party’s assets or properties are
bound.

     

    4.    
Conditions
Precedent to Effectiveness of this Amendment.  This Amendment,
shall be effective as of the date on which each of the conditions precedent set
forth below are satisfied (such date, the “Effective Date”):

     

    (a)    all
of the representations and warranties of the Borrowers under Section 3 hereof
which are made as of the date hereof are true and correct in all respects;
and

     

    (b)   
receipt by the Administrative Agent of executed signature pages to this
Amendment from the Borrower, the Guarantors and the Lenders.

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

    
    

     

    5.    Guarantor
Acknowledgment.

     

    (a)   
Each
Guarantor hereby acknowledges that it has reviewed the terms and provisions of
the Credit Agreement and this Amendment.  Each Guarantor hereby
confirms that the Guaranty to which it is a party or otherwise bound will
continue to guarantee, as the case may be, to the fullest extent possible in
accordance with such Guaranty the payment and performance of all "Obligations"
under each of the Guaranties, as the case may be (in each case as such terms are
defined in the applicable Guaranty), including without limitation the payment
and performance of all such "Obligations" under each of the Guaranties, as the
case may be, in respect of the Obligations of the Borrowers now or hereafter
existing under or in respect of the Credit Agreement and the Notes defined
therein.

     

    (b)   
Each Guarantor
acknowledges and agrees that any of the Guaranties to which it is a party or
otherwise bound shall continue in full force and effect and that all of its
obligations thereunder shall be valid and enforceable and shall not be impaired
or limited by the execution or effectiveness of this Amendment.  Each
Guarantor represents and warrants that all representations and warranties
contained in the Credit Agreement, this Amendment and the Guaranty to which it
is a party or otherwise bound are true, correct and complete in all material
respects on and as of the date hereof to the same extent as though made on and
as of that date, except to the extent such representations and warranties
specifically relate to an earlier date, in which case they were true, correct
and complete in all material respects on and as of such earlier
date.

     

    (c)   
Each
Guarantor acknowledges and agrees that (i) notwithstanding the conditions to
effectiveness set forth in this Amendment, such Guarantor is not required by the
terms of the Credit Agreement or any other Loan Document to consent to the
amendments of the Credit Agreement effected pursuant to this Amendment and (ii)
nothing in the Credit Agreement, this Amendment or any other Loan Document shall
be deemed to require the consent of such Guarantor to any future amendments to
the Credit Agreement.

     

    6. Counterparts.  This
Amendment may be executed in multiple counterparts, each of which shall be
deemed to be an original and all of which when taken together shall constitute
one and the same agreement.

     

    7. Law
of Contract.  This Amendment shall be deemed to be made
pursuant to the laws of the State of Georgia and shall be construed,
interpreted, performed and enforced in accordance therewith.

     

    8. Loan
Document.  This Amendment shall constitute a Loan
Document.

     

    9. Amendment
to Loan Documents.  All of the Loan Documents are hereby
amended to the extent necessary to give full force and effect to the amendment
contained in this Amendment.

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

     

    10. Severability.  Any
provision of this Amendment which is prohibited or unenforceable shall be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof in that jurisdiction or affecting
the validity or enforceability of such provision in any other
jurisdiction.

     

    [Remainder of page intentionally left
blank]

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

     

     

    IN WITNESS WHEREOF, the
parties hereto have executed this Amendment under seal as of the day and year
first above written.

     

    
    

    
      	 	BORROWER
      AND GUARANTORS:


    

     

    
      
        	 	INTERNAP
      NETWORK SERVICES CORPORATION
	 	 	 	 
	
                 

              	
                By:
      

              	/s/
      George E. Kilguss, III	 
	 	Name:  George
      E. Kilguss, III	 
	 	Title:
      CFO  	 
	 	 	 	 


      

    

     

    
      	
            	VITALSTREAM
      HOLDINGS, INC.
	 	 	 	 
	
               

            	
              By:
      

            	/s/
      George E. Kilguss, III	 
	 	Name:  George
      E. Kilguss, III	 
	 	Title:
      CFO  	 
	 	 	 	 


    

     

    
      	
            	VITALSTREAM,
      INC.
	 	 	 	 
	
               

            	
              By:
      

            	/s/
      George E. Kilguss, III	 
	 	Name:  George
      E. Kilguss, III	 
	 	Title:
      CFO  	 


    

     

    
      	
            	PLAYSTREAM,
      INC.
	 	 	 	 
	
               

            	
              By:
      

            	/s/
      George E. Kilguss, III	 
	 	Name:  George
      E. Kilguss, III	 
	 	Title:
      CFO  	 



      	
            	VITALSTREAM
      ADVERTISING SERVICES, INC.
	 	 	 	 
	
               

            	
              By:
      

            	/s/
      George E. Kilguss, III	 
	 	Name:  George
      E. Kilguss, III	 
	 	Title:
      CFO  	 


    

     

    
      	
            	ADMINISTRATIVE AGENT, L/C
      ISSUER, SWING LINE LENDER AND SOLE LENDER:
	 	 
	 	 BANK
      OF AMERICA, N.A.
	 	 	 	 
	
               

            	
              By:
      

            	/s/
      Van Brandenberg 	 
	 	Name:  Van
      Brandenberg  	 
	 	Title:  Vice
      President 	 


    

                                                                                         

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

                          

    Schedule
2.01

     

    Commitments
and Applicable Percentages

     

    


     

    Term
Loan Facility

     

    


     

    
      	
               

              Term Loan Lender

            	
               

              Term Loan Commitment

            	
              Applicable Percentage of

              Term Loan Facility

            
	
              Bank
      of America, N.A.

            	
              $0

            	
              100.000000000%

            
	
              Totals:

            	
              $0

            	
              100.000000000%

            


    

    


     

    Revolving
Credit Facility

     

     

    
      	
               

              Revolving Credit Lender

            	
               

              Revolving Credit Commitment

            	
              Applicable Percentage of Revolving 
Credit
      Facility

            
	
              Bank
      of America, N.A.

            	
              $35,000,000.00

            	
              100.000000000%

            
	
              Totals:

            	
              $35,000,000.00

            	
              100.000000000%

            


    

     

    
      
        
        

      

      
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    Exhibit
A

    to

    Amendment
No. 2

    Form of Letter Agreement for
Capital Expenditures

     

    _________,
200__

     

    Internap
Network Services Corporation

    250
Williams Street

    Atlanta,
Georgia 30303

    Attn:
Richard Dobb, Esq.

    rdobb@internap.com

    Telephone:
404-302-9700

    Telecopier:
404-302-9984

     

    


     

    
      	
               
      RE:

            	
              Credit
      Agreement, dated as of September 14, 2007, by and among INTERNAP NETWORK SERVICES
      CORPORATION, a Delaware corporation (“Borrower”),
      each of the Loan Parties party hereto, the Lenders signatory thereto and
      BANK OF AMERICA,
      N.A., as administrative agent for itself and on behalf of the
      Lenders (in such capacity, the "Administrative
      Agent"), L/C Issuer and Swing Line Lender (as hereafter amended,
      restated, supplemented or otherwise modified from time to time, the "Credit
      Agreement").

            


    

     

    Dear
____________:

     

    Pursuant to clause (ii)(B) of Section
7.12 of the Credit Agreement, Administrative Agent hereby agrees that Borrower
shall be permitted to make Capital Expenditures in the ordinary course of
business not to exceed $______________ for the fiscal year ended December 31,
20____.

     

    Except for the modification expressly
set forth herein, the Credit Agreement shall remain unchanged and in full force
and effect.  This letter agreement shall not become effective until
signed by the Administrative Agent and accepted and agreed to in writing by
Borrower.

     

    
      	 	BANK OF AMERICA,
      N.A.
	 	 	 	 
	 	By:	 	 
	 	Name:	 	 
	 	Title: 	 	 


    

                                                                             

    ACCEPTED
AND AGREED TO:

     

    INTERNAP
NETWORK SERVICES

     

    CORPORATION

    
    

     

    
      	By: 	 	 
	Name: 	 	 
	Title:	 	 


    

     

    


    12