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EXHIBIT 10.5.3
THIRD AMENDMENT TO CREDIT AGREEMENT
THIS THIRD AMENDMENT TO CREDIT AGREEMENT (this "Amendment") is made
and entered into as of the 27th day of August, 1999, by and between EDUTREK
INTERNATIONAL, INC., a Georgia corporation ("Borrower"), the undersigned
Guarantors party hereto (the "Guarantors") and FIRST UNION NATIONAL BANK
("Lender").
W I T N E S S E T H:
WHEREAS, Borrower and Lender are a party to that certain Credit
Agreement, dated as of March 25, 1999, as amended by a First Amendment to
Credit Agreement dated May 27, 1999, as further amended by a Second Amendment
to Credit Agreement and Waiver dated August 16, 1999 (as amended, the "Credit
Agreement") pursuant to which Lender made available to Borrower a $10,000,000
revolving line of credit pursuant to the Facility A Commitment and a line of
credit providing a maximum availability of $3,300,000 pursuant to the Facility
B Commitment; and
WHEREAS, Borrower and Lender desire to further amend the Credit
Agreement as set forth herein;
NOW, THEREFORE, for and in consideration of the foregoing premises,
the mutual promises, covenants and agreements contained herein, and other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto hereby agree as follows:
1. Definitions. All capitalized terms used herein and not
expressly defined herein shall have the same respective meanings given to such
terms in the Credit Agreement.
2. Amendments. Subject to the conditions contained herein, the
Credit Agreement is hereby amended as follows:
2.1. New Definitions. Section 1.1 of the Credit Agreement
is hereby amended by adding thereto in appropriate alphabetical order
the following new definitions:
"Xxxxxx Note" shall mean that certain Promissory
Note dated as of August 27, 1999 made by the Borrower payable
to the order of R. Xxxxxxx Xxxxxx or any successor holder
thereof as "Payee" in the original principal amount of
$1,000,000.
"Cash Infusion Event" shall have the meaning given
to such term in Section 8.15 of this Agreement.
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"Net Cash Proceeds" shall mean the aggregate cash
payments received, net of all legal, accounting, brokerage
and all other types of fees and expenses, including any
commissions, incurred in connection with such cash payments.
"Proceeding" means any (a) insolvency, bankruptcy,
receivership, liquidation, reorganization, readjustment,
composition or other similar proceeding of Borrower, (b)
proceeding for any liquidation, dissolution or other
winding-up of Borrower, voluntary or involuntary, whether or
not involving an insolvency or bankruptcy proceeding, (c)
assignment for the benefit of creditors of Borrower, (d) sale
of all or any substantial part of the assets of Borrower, or
(e) any marshaling of the assets or liabilities of Borrower.
"Third Amendment" shall mean that certain Third
Amendment to Credit Agreement, dated as of August 27, 1999,
between Borrower and Lender.
"Third Amendment Effective Date" shall mean that
date on which all of the conditions precedent set forth in
Section 3 of the Third Amendment have been satisfied and the
Third Amendment has become effective.
2.2. Existing Definitions. Section 1.1 of the Credit
Agreement is hereby further amended by deleting the definitions of
"Facility B Commitment" and "Facility B Termination Date" and
substituting in lieu thereof the following new definitions of such
terms:
"Facility B Commitment" means the obligation of the
Lender to make Loans to the Borrower pursuant to Section
2.1(b) hereof in an aggregate principal amount at any time
outstanding not to exceed during the applicable periods set
forth below, the amount set forth below in respect of each
such period:
Period: Facility Amount
First Amendment Effective $ 650,000
Date - 05/31/99
06/01/99 - 06/30/99 $2,800,000
07/01/99 - 08/31/99 $3,300,000
09/01/99 - 09/30/99 $2,800,000
10/01/99 - 10/31/99 $2,300,000
11/01/99 - 12/30/99 $1,300,000
Thereafter $ 0
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as the same may be reduced or modified at any time or from
time to time pursuant to the terms hereof; provided, however,
if the Cash Infusion Event occurs by August 31, 1999, then
the periods and the facility amounts applicable the Facility
B Commitment shall be as follows:
Period: Facility Amount
First Amendment Effective $ 650,000
Date - 05/31/99
06/01/99 - 06/30/99 $2,800,000
07/01/99 - 09/30/99 $3,300,000
10/01/99 - 10/31/99 $2,800,000
11/01/99 - 11/30/99 $2,300,000
12/01/99 - 12/31/99 $1,800,000
01/01/00 - 01/31/00 $1,300,000
02/01/00 - 02/29/00 $ 800,000
Thereafter $ 0
"Facility B Termination Date" means the earliest of
(a) December 31, 1999, (b) the date of termination by the
Borrower pursuant to Section 2.5(a), (c) the Termination
Date; and (d) the date of termination by the Lender pursuant
to Section 11.2(a); provided, however, if the Cash Infusion
Event occurs by August 31, 1999, the date "December 31, 1999"
in part (a) of this paragraph shall be replaced with the date
March 1, 2000.
2.3. Cash Infusion Covenant. Article 8 of the Credit
Agreement is hereby amended by adding in the appropriate numerical
order the following new Section 8.15, to read as follows:
SECTION 8.15 Cash Infusion Event. Cause, on or prior
to August 31, 1999, Borrower to receive Net Cash Proceeds in
an amount not less than $1,000,000 from the incurrence of
debt or the issuance of equity, in either case on terms and
evidenced by documentation in form and substance satisfactory
to the Lender in its sole discretion, which consent shall be
evidenced by a writing delivered to Borrower by Lender (the
"Cash Infusion Event"). In connection with such Cash Infusion
Event, the Borrower may grant to the source of such debt or
equity infusion a security interest in any tax refund claim
of Borrower arising in connection with Borrower's federal or
state income taxes for its tax year ending September 30, 1999
(not to exceed the amount of Net Cash Proceeds from any such
infusion made by such third party), subject to the security
interest of Lender and on such terms and conditions as are
acceptable to the Lender in its sole discretion, which shall
include without limitation that the sole source of repayment
from the Borrower shall be any such tax refund claim
described in this Section and that such third party shall
enter
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into an intercreditor agreement with Lender on term and
conditions acceptable to Lender.
2.4. Indebtedness. Section 10.1 of the Credit Agreement is
hereby amended by deleting such Section in its entirety, and
substituting in lieu thereof a new Section 10.1 to read as follows:
SECTION 10.1 Limitations on Debt. Create, incur,
assume or suffer to exist any Debt or Contingent Obligations
except:
(a) the Obligations;
(b) Debt incurred in connection with a Hedging
Agreement with a counterparty and upon terms and conditions
reasonably satisfactory to the Lender;
(c) Debt (i) existing on the Closing Date and
not otherwise permitted under this Section 10.1, as set forth
on Schedule 6.1(u) and the renewal and refinancing (but not
the increase) thereof plus (ii) additional purchase money
Debt of the Borrower and its Subsidiaries or Debt incurred in
connection with Capital Lease in an aggregate outstanding
amount not to exceed, in the case of this clause (ii),
$4,000,000, during the Fiscal Year of Borrower ending
December 31, 1999, and $8,000,000 in the aggregate during the
term of this Agreement;
(d) intercompany Debt between the Borrower and
any Guarantor or between Guarantors; and
(e) Debt incurred pursuant to Section 8.15 of
this Agreement and evidenced by the Xxxxxx Note;
provided, that none of the Debt permitted to be incurred by
this Section shall restrict, limit or otherwise encumber (by
covenant or otherwise) the ability of any Subsidiary of the
Borrower to make any payment to the Borrower or any of its
Subsidiaries (in the form of dividends, intercompany advances
or otherwise) for the purpose of enabling the Borrower to pay
the Obligations.
2.5. Liens. Section 10.2 of the Credit Agreement is hereby
amended by deleting such Section in its entirety, and substituting in
lieu thereof a new Section 10.2 to read as follows:
SECTION 10.2 Limitations on Liens. Create, incur,
assume or suffer to exist, any Lien on or with respect to any
of its assets or properties (including without limitation
shares of Capital Stock), real or personal, whether now owned
or hereafter acquired, except:
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(a) Liens for taxes, assessments and other
governmental charges or levies (excluding any Lien imposed
pursuant to any of the provisions of ERISA or Environmental
Laws) not yet due or as to which the period of grace (not to
exceed thirty (30) days), if any, related thereto has not
expired;
(b) the claims of materialmen, mechanics,
carriers, warehousemen, processors or landlords for labor,
materials, supplies or rentals or similar Liens imposed by
law incurred in the ordinary course of business (i) which are
not overdue for a period of more than thirty (30) days or
(ii) which are being contested in good faith and by
appropriate proceedings;
(c) Liens consisting of deposits or pledges made
in the ordinary course of business in connection with, or to
secure payment of, obligations under workers' compensation,
unemployment insurance or similar legislation or obligations
and deposits made in the ordinary course of business in
connection with, or to secure payment of, obligations under
insurance policies;
(d) Liens of the Lender;
(e) Liens not otherwise permitted by this
Section 10.2 and in existence on the Closing Date and
described on Schedule 10.2;
(f) Liens securing Debt permitted under Section
10.1(c)(ii); provided that (i) such Liens shall be created
substantially simultaneously with the acquisition of the
related asset, (ii) such Liens do not at any time encumber
any property other than the property financed by such Debt,
(iii) the amount of Debt secured thereby is not increased and
(iv) the principal amount of Debt secured by any such Lien
shall at no time exceed ninety percent (90%) of the original
purchase price of such property at the time it was acquired;
and
(g) Liens on the Borrower's right to any tax
refund claim of Borrower arising in connection with
Borrower's federal or state income taxes for its tax year
ending September 30, 1999 to the extent permitted by Section
8.15 and subject to the Liens of the Lender, granted to
secure Borrower's obligations under the Xxxxxx Note.
2.6. Restrictive Payments. Article 10 of the Credit
Agreement is hereby amended by adding, in appropriate numerical order,
the following new Section 10.12 to read as follows
SECTION 10.12 Restrictive Payments. Make any payment
or distribution of cash or property or both, directly or
indirectly, in respect of (a) the principal balance of the
Xxxxxx Note except from proceeds of any tax refund claim of
Borrower arising in connection with Borrower's federal or
state income taxes for its tax year ending September 30,
1999, or (b) interest or any other amount due
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under the Xxxxxx Note (other than principal) or under the
security agreement executed in connection therewith if (y)
any Proceeding shall have occurred or (z) Borrower shall have
failed to pay any amounts then due and owing to First Union
in respect of the Obligations.
2.7. Events of Default. Section 11.1(d) of the Credit
Agreement is hereby amended by deleting such Section in its entirety,
and substituting in lieu thereof a new Section 11.1(d) to read as
follows:
(d) Default in Performance of Covenants and
Conditions. The Borrower or any Subsidiary thereof shall
default in the performance or observance of (i) any term,
covenant, condition or agreement contained in Article 7 or 8
hereof (excluding Sections 7.5 and 8.15 hereof) and such
default shall continue unremedied for thirty (30) days or
(ii) any other term, covenant, condition or agreement
contained in this Agreement (other than as specifically
provided for otherwise in this Section 11.1) or any other
Loan Document.
3. Conditions Precedent. The amendments and consents contained
herein shall not become effective unless and until the Lender shall have
received each of the following instruments, documents and agreements:
(a) this Amendment, duly executed and delivered by the
Borrower and each Guarantor;
(b) a certificate from the chief executive officer or
chief financial officer of the Borrower, in form and substance
satisfactory to the Lender, to the effect that all representations and
warranties of the Borrower contained in the Credit Agreement, this
Amendment and the other Loan Documents are true, correct and complete;
that giving effect to this Amendment the Borrower is not in violation
of any of the covenants contained in the Credit Agreement and the other
Loan Documents; and that, after giving effect to this Amendment, no
Default or Event of Default has occurred and is continuing;
(c) a certificate of the secretary or assistant secretary
of each Credit Party certifying that (i) the certificate or articles of
incorporation and by-laws of such Credit Party, or the comparable
organizational documents of such Credit Party, have not been amended,
modified or supplemented since the Closing Date and (ii) attached
thereto is a true and complete copy of resolutions duly adopted by the
Board of Directors of the Borrower authorizing the execution, delivery
and performance of this Amendment and the other Amendment Documents to
which it is a party, and ratifying the execution and delivery of the
Second Amendment; and as to the incumbency and genuineness of the
signature of each officer of such Credit Party executing the Amendment
Documents to which it is a party;
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(d) a consent and acknowledgment to an intercreditor
agreement to be entered into between the Lender and R. Xxxxxxx Xxxxxx
in connection with the execution and delivery by the Borrower of the
Xxxxxx Note; and
(e) such other instruments, documents and agreements as
the Lender may reasonably request.
4. References. All references in the Credit Agreement and the
Loan Documents to the Credit Agreement shall hereafter be deemed to be
references to the Credit Agreement as amended hereby and as the same may
hereafter be amended from time to time.
5. Limitation of Agreement. Except as especially set forth
herein, this Amendment shall not be deemed to waive, amend or modify any term
or condition of the Credit Agreement, each of which is hereby ratified and
reaffirmed and which shall remain in full force and effect, nor to serve as a
consent to any matter prohibited by the terms and conditions thereof.
6. Counterparts. This Amendment may be executed in any number of
counterparts, and any party hereto may execute any counterpart, each of which,
when executed and delivered, will be deemed to be an original and all of which,
taken together will be deemed to be but one and the same agreement.
7. Further Assurances. Borrower agrees to take such further
action as the Lender shall reasonably request in connection herewith to
evidence the amendments herein contained to the Credit Agreement.
8. Successors and Assigns. This Agreement shall be binding upon
and inure to the benefit of the successors and permitted assigns of the parties
hereto.
9. Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Georgia, without regard
to principles of conflicts of law.
10. No Claim. Each Credit Party hereby represents, warrants,
acknowledges and agrees to and with the Lender that as of the date hereof (a)
such Credit Party neither holds nor claims any right of action, claim, cause of
action or damages, either at law or in equity, against the Lender, its
officers, directors, agents, employees or Affiliates, or any of them, which
arises from, may arise from, allegedly arise from, are based upon or are
related in any manner whatsoever to the Credit Agreement and the Loan Documents
or which are based upon acts or omissions of the Lender, any such officer,
director, agent, employee or Affiliate of Lender, or any of them, in connection
therewith and (b) the Obligations are absolutely owed to the Lender, without
offset, deduction or counterclaim.
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IN WITNESS WHEREOF, the parties hereto have executed this Amendment
under seal as of the date first written above.
CREDIT PARTIES:
BORROWER:
EDUTREK INTERNATIONAL, INC.
By:
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R. Xxxxxx Xxxxxx
Chairman of the Board and
Chief Executive Officer
Attest:
By:
---------------------------------
Name:
Title:
[CORPORATE SEAL]
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GUARANTORS:
[CORPORATE SEAL] EDUTREK SYSTEMS, INC.
By:
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R. Xxxxxx Xxxxxx
Chief Executive Officer
[CORPORATE SEAL] AMERICAN INTERCONTINENTIAL
UNIVERSITY, INC.
By:
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R. Xxxxxx Xxxxxx
Chief Executive Officer
[CORPORATE SEAL] AMERICAN COLLEGE IN LONDON, LTD, U.S.
By:
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R. Xxxxxx Xxxxxx
Chief Executive Officer
[CORPORATE SEAL] AMERICAN EUROPEAN MIDDLE EAST CORPORATION, LLC
By: American College in London, Ltd., U.S.
By:
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R. Xxxxxx Xxxxxx
Chief Executive Officer
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LENDER:
FIRST UNION NATIONAL BANK
By:
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Xxxxxxxxxxx X. Xxxxxx
Vice President
