EXHIBIT 10.62
FIRST AMENDMENT TO $3 MILLION CREDIT AGREEMENT
THIS FIRST AMENDMENT TO $3 MILLION CREDIT AGREEMENT, dated as of November
, 2004 (the "FIRST AMENDMENT"), is entered into by and between AMERICAN
--- --------------
LEISURE HOLDINGS, INC., a Nevada corporation ("ALHI"), AMERICAN LEISURE
----
MARKETING & TECHNOLOGY, INC., a Florida corporation, ORLANDO HOLIDAYS, INC., a
Florida corporation, AMERICAN LEISURE, INC., a Florida corporation, WELCOME TO
ORLANDO, INC., a Florida corporation, AMERICAN TRAVEL & MARKETING GROUP, INC., a
Florida corporation, HICKORY TRAVEL SYSTEMS, INC., a Delaware corporation
("HICKORY")(collectively, "BORROWERS") and STANFORD VENTURE CAPITAL HOLDINGS,
------- ---------
INC. and its successors and assigns (the "LENDER"). All other capitalized terms
------
used in this Amendment and not otherwise defined have the meanings set forth in
that certain Credit Agreement dated as of June 17, 2004 (the "AGREEMENT").
---------
RECITALS
--------
WHEREAS, Assignor has executed and entered into that certain Purchase
Agreement with GDC Acquisition Corp. dated March 22, 2004, as amended on March
29, 2004 relating to that certain Assignment Agreement by and between GDC
Acquisition Corp. and CNG Hotels, Ltd. dated February 23, 2004 (the "GALILEO
-------
ASSIGNMENT") whereby CNG Hotels, Ltd. transferred all right, title and interest
-------
in the approximately $23,000,000 of indebtedness owed by Around the World
Travel, Inc., a corporation ("ATWT"), and originally payable to Galileo
------- ----
International LLC (the "GALILEO DEBT") and the related liens on all of the
-------------
assets of AWT (the "GALILEO SECURITY") (the Galileo Debt and the Galileo
-----------------
Security are collectively referred to herein as the "GALILEO DEBT"); and
------------
WHEREAS, the Borrowers and Lender entered into the Agreement pursuant to
which the Lender committed to make credit loans to the Borrowers not to exceed
$3,000,000; and
WHEREAS, the Borrowers executed a Promissory Note in the principal amount
of $3,000,000 dated the initial Borrowing Date and payable to the order of the
Lender (the "NOTE"); and
----
WHEREAS, the Borrowers have drawn the full $3,000,000 available under the
Agreement; and
WHEREAS, ALHI executed and entered into that certain Loan and Security
Agreement with Hickory dated October 1, 2004 pursuant to which Hickory granted a
security interest in all of Hickory's present and future accounts receivable
(the "ACCOUNTS") to ALHI; and
--------
WHEREAS, the Borrowers wish to increase the amount that they may borrow
from Lender by $1,250,000; and
WHEREAS, ALHI has agreed to loan $1,250,000 to ATWT; and
WHEREAS, in order to utilize the financial powers of Borrowers in the most
efficient and economical manner, and in order to facilitate the financing of
Borrowers' working capital needs, Lender will, at the request of Borrowers,
extend financial accommodations to Borrowers based on the combined borrowing
base of Borrowers in accordance with the provisions set forth in this Agreement;
and
WHEREAS, the Borrowers and Lender (collectively the "PARTIES") wish to
-------
amend the Agreement as provided below.
NOW, THEREFORE, in consideration of the premises and the mutual covenants
and agreements set forth herein, and other good and valuable consideration
exchanged between the parties, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
AMENDMENT
---------
1. MODIFICATION OF MAXIMUM LOAN COMMITMENT. The Maximum Loan
-------------------------------------------
Commitment as defined in Section 1.1.37 of the Agreement shall be increased to
the aggregate principal amount of up to $4,250,000.00. All references in the
Agreement to the Maximum Loan Commitment shall be revised to $4,250,000.00.
2. ADDITIONAL AVAILABILITY.
------------------------
(a) The following aggregate amounts (including all advances
previously made under the Agreement) shall be added to Section 1.1.7 of the
Agreement, but never in excess of the Borrowing Base (as hereinafter defined)
(the "Additional Amounts"):
Closing of this Amendment $ 450,000 (the "FIRST DISBURSEMENT")
------------------
November 16, 2004 $ 125,000
November 22, 2004 $ 150,000
November 30, 2004 $ 62,500
December 6, 2004 $ 200,000
December 16, 2004 $ 62,500
December 20, 2004 $ 200,000
TOTAL $1,250,000
(b) The Initial Transaction Costs up to and including $25,000 and
the Placement Fee shall be deducted from the First Disbursement.
(c) The First Disbursement shall not be disbursed until after the
payment of the Placement Fee and the initial Transaction Costs (in accordance
with Section 2(b)), and unless and until Borrowers deliver to Lender the
following documents set forth on SCHEDULE 2(C) hereto.
3. ADDITIONAL NOTE. Simultaneously with the execution of this
----------------
Amendment, the Borrowers have executed an Additional Note (the "ADDITIONAL
----------
NOTE," a copy of which is attached hereto as Exhibit A) which is made in
addition to the Note. Upon the execution of this Amendment and the Additional
Note, all references to the Note as defined in Section 1.1.38 of the Credit
Agreement shall be amended to include the "Additional Note" in addition to the
Note. The Additional Note, as defined herein, shall be added as a Defined Term
to Article I of the Credit Agreement.
4. PLACEMENT FEE. Upon execution of this Amendment, in consideration
--------------
of Lender's structuring, approving and committing to this Amendment, but without
affecting Borrowers' obligation to reimburse Lender for costs associated with
this Amendment and the transactions contemplated hereby as provided elsewhere in
this Amendment, Borrowers agree to pay Stanford International Bank (Panama) a
Placement Fee to equal to $25,000 (the "Placement Fee"), which amounts shall be
-------------
deducted from the first disbursement by Lender under the Note. The Placement
Fee constitutes compensation to Lender for services rendered and is not interest
or a charge for the use of money. Each installment of such Fee shall be fully
earned when due and payable and shall not be subject to refund or rebate.
5. DEFINITIONS. For purposes of this Amendment:
-----------
"Additional Loan Documents" means, collectively, this Amendment and any
---------------------------
other agreements, instruments, certificates or other documents entered into in
connection with this Amendment, including collateral documents, letter of credit
agreements, security agreements, pledges, guaranties, mortgages, deeds of trust,
assignments and subordination agreements, and any other agreement executed by
any Borrower, any guarantor or any Affiliate of any Borrower or any guarantor
pursuant hereto or in connection herewith.
"Borrowing Base" means, at any time, an amount equal to:
---------------
(a) the lesser of:
(i) $1,250,000, and
(ii) 50% of the dollar amount of Eligible Accounts.
minus
-----
(b) such reserves as Lender may establish from time to time
in its discretion.
"Borrowing Base Certificate" means the certificate, substantially in form
----------------------------
of EXHIBITB, with appropriate insertions, to be submitted to Lender by Hickory
--------
or ATWT pursuant to this Amendment and certified as true and correct by the
Chief Executive Officer or the Chief Financial Officer of ALHI.
"Eligible Accounts" means those Accounts arising from the sale of Inventory
-----------------
or performance of services in the ordinary course of Hickory or ATWT's business;
provided, however, that Eligible Accounts shall not include the following:
-------- ------- ---------
(a) any Account with respect to which more than 90 days have elapsed
since the date of the original invoice therefore or which is more than 60 days
past due shall not constitute an Eligible Account.
(b) Accounts with respect to which any customer of any Borrower or ATWT
("CUSTOMER") is an Affiliate of any Borrower or ATWT;
--------
(c) Accounts with respect to which services or goods are placed on
consignment, guaranteed sale, or other terms by reason of which the payment by
the Customer may be conditional;
(d) Accounts with respect to which the Customer (i) does not maintain
its chief executive office in the United States, or (ii) is not organized under
the laws of the United States of America or any state thereof; or (iii) is the
government of any foreign country or of any state, province, municipality, or
other political subdivision thereof; except to the extent that such Account is
secured or payable by a letter of credit satisfactory to Lender in its
discretion; provided, however, that Accounts in an aggregate outstanding amount
--------
not to exceed $50,000 owing by Customers with their chief executive office in
Canada or which are organized under the laws of Canada or any province thereof
shall not be ineligible under this paragraph;
(e) any and all Accounts as to which the perfection, enforceability, or
validity of Lender's security interest in such Account, or Lender's right or
ability to obtain direct payment to Lender of the proceeds of such Account, is
governed by any federal or state statutory requirements other than those of the
Uniform Commercial Code, including any Account subject to the Federal Assignment
of Claims Act of 1940; provided, however, that an Account shall not be deemed
-------- -------
ineligible by reason of this clause (e) if Hickory and ATWT have completed all
of the steps necessary, in the discretion of Lender, to comply with the Federal
Assignment of Claims Act of 1940 with respect to such Account;
(f) Accounts with respect to which the Customer is any state of the
United States or any city, town, municipality, county or division thereof;
(g) Accounts which may be subject to offset or recoupment by the
Customer, whether as the result of goods sold or services rendered by the
Customer to Hickory and/or ATWT, any contractual arrangement between the
Customer and Hickory or ATWT (including any lease) or otherwise;
(h) those Accounts where Lender, in Lender's discretion, has notified
Hickory or ATWT that the Account or Customer is not acceptable to Lender;
(i) all of the Accounts owed by a Customer if the aggregate outstanding
dollar amount of such Accounts not considered as Eligible Accounts under clause
(a) above is equal to or greater than a Cross Aging Percentage of 50%.
(j) Accounts for which services have not yet been rendered to the
Customer or the goods sold have not yet been delivered to the Customer (commonly
referred to as "pre-billed accounts");
(k) Accounts owed by a Customer not previously approved in writing by
Lender where the dollar value for the aggregate amount of Accounts owed by such
Customer is greater than 15% of the Eligible Accounts of either Hickory or ATWT,
but only to the extent of such excess;
(l) any Account with respect to all or part of which a check,
promissory note, draft, trade acceptance, or other instrument for the payment of
money has been received, presented for payment, and returned uncollected for any
reason;
(m) any Account with respect to which Hickory or ATWT has extended the
time for payment without the consent of Lender;
(n) any Account with respect to which any one or more of the following
events has occurred to the Customer on such Account: death or judicial
declaration of incompetency of a Customer who is an individual; the filing by or
against the Customer of a request or petition for liquidation, reorganization,
arrangement, adjustment of debts, adjudication as a bankrupt, winding-up, or
other relief under the bankruptcy, insolvency, or similar laws of the United
States, any state or territory thereof, or any foreign jurisdiction, now or
hereafter in effect; the making of any general assignment by the Customer for
the benefit of creditors; the appointment of a receiver or trustee for the
Customer or for any of the assets of the Customer, including, without
limitation, the appointment of or taking possession by a "custodian," as defined
in the Bankruptcy Code; the institution by or against the Customer of any other
type of insolvency proceeding (under the bankruptcy laws of the United States or
otherwise) or of any formal or informal proceeding for the dissolution or
liquidation of, settlement of claims against, or winding up of affairs of, the
Customer; the sale, assignment, or transfer of all or any material part of the
assets of the Customer; the nonpayment generally by the Customer of its debts as
they become due; or the cessation of the business of the Customer as a going
concern;
(o) any Account which arises out of finance or similar charges;
(p) any Account in which Lender does not have a duly perfected,
first-priority security interest, subject to no other Lien; or
(q) any Account which arises under a contract or arrangement covered by
A performance or surety bond on behalf of either Hickory or ATWT, unless the
Person providing such performance or surety bond has delivered an acceptable
Lien waiver to Lender.
7. BORROWING.
---------
(a) STANDARDS. Lender will determine eligibility and the loan value
---------
of the Accounts, in its sole discretion, consistent with Lender's experience,
prudent business judgment and standards of commercial reasonableness applicable
to asset-based credits and in good faith. Any loans requested by any Borrower
and made by Lender or at any time outstanding in excess of the Borrowing Base or
any other limitation set forth in this Amendment will, nevertheless, be subject
to the terms of this Amendment and constitute Obligations for all purposes, and
Lender will be entitled to the benefits of the Accounts.
(b) CONDITIONS TO OBLIGATION TO MAKE DISBURSEMENTS. Borrowers acknowledge
-----------------------------------------------
that Lender's obligation to make disbursements to Borrowers under this Amendment
is subject to the conditions that, as of the date of any such loan or other
accommodation, no Default will have occurred and be continuing hereunder, there
will have occurred no material adverse change in the financial condition or
operations of any Borrower or ATWT, or in any business prospects of any Borrower
or ATWT as compared to the state of facts existing on the Agreement Date, and
Borrowers' representations and warranties set forth in this Amendment (including
any amendment, modification, supplement or extension hereof) will be true and
correct as if made on and as of the date of each subsequent credit request. Each
request for a borrowing or other financial accommodation by any Borrower will be
deemed to be a reaffirmation of all of Borrowers' warranties and representations
hereunder.
(c) REPAYMENT OF LOANS. If at any time for any reason, the aggregate
--------------------
outstanding principal amount of all loans exceeds the Borrowing Base or any
other limitation on the amount available to be borrowed hereunder, Borrowers
will immediately, without notice or demand, repay the outstanding principal
amount of the loans, together with accrued and unpaid interest on the amount
repaid, in an amount equal to such excess. Borrowers shall make each payment
required hereunder or under any other Loan Document without setoff, deduction or
counterclaim.
8. USE OF PROCEEDS. The proceeds of the Borrowing Base shall be used
-----------------
by the Borrowers exclusively as working capital for ATWT and Hickory.
9. FINANCIAL COVENANTS. Borrowers, on a consolidated basis, shall
--------------------
comply with each of the following financial covenants:
(a) ALHI shall prepare and furnish every 30 days a cash flow forecast
for its Travel Division (including, but not limited to, Hickory and ATWT) for
each subsequent 90-day period.
(b) ALHI shall certify every 30 days that ATWT has receivables in good
standing equal to at least 200% of the then outstanding loan amount.
11. COLLATERAL COVENANTS.
---------------------
(a) ACCOUNTS. Borrowers will notify Lender, or cause ATWT to notify
--------
Lender, promptly of and settle all Customer disputes. However, if Lender so
elects, Lender will have the right at all times to settle, compromise, adjust,
or litigate all Customer disputes directly with the Customer or other
complainant upon such terms and conditions as Lender deems advisable without
incurring liability to any Borrower for Lender's performance of such acts. All
of each Borrower's books and records concerning Accounts and a copy of each
Borrower's general ledger will be maintained at the address of Borrowers' chief
executive office set forth in the Credit Agreement. All Accounts included on
any Borrowing Base Certificate will be, except as indicated on such Borrowing
Base Certificate or subsequently in writing to Lender, bona fide and existing
obligations of Customers arising out of the sale of goods and/or the rendering
of services by Borrowers in the ordinary course of Borrowers' business, owned by
and owing to the applicable Borrower without defense, setoff or counterclaim,
and will be subject to a perfected, first-priority security interest in Lender's
favor and will be free and clear of all other Liens.
(b) DEFENSE OF TITLE. All Accounts will at all times be owned by Hickory,
-----------------
subject to this Amendment, and Hickory will defend their title to the Accounts
against the claims of third parties. Hickory and ATWT will at all times keep
accurate and complete records of the Accounts.
12. REPORTING AND INFORMATION.
---------------------------
(a) FINANCIAL STATEMENTS. Borrowers will submit to Lender as soon as
---------------------
available, and in any case not later than 30 days after the end of each month, a
balance sheet and a detailed statement of profit and loss, prepared in
accordance with GAAP on a consolidated and consolidating basis, certified by the
chief financial or accounting officer of ALHI and ATWT as presenting fairly, in
accordance with GAAP, ALHI's consolidated financial condition and ATWT financial
condition, respectively, as of the last day of such month and Borrowers' results
of operations for such month and for the portion of Borrowers' fiscal year
ending with such month. Borrowers will also submit to Lender annual financial
statements within 90 days after the end of each fiscal year, including a balance
sheet and the related statement of profit and loss and stockholders' equity, to
be audited and certified without qualification by an independent practicing
certified public accountant acceptable to Lender on a consolidated and
consolidating basis. Borrowers will also submit to Lender annually at least 60
days prior to Borrowers' fiscal year end forecasted financial statements for the
upcoming fiscal year, containing a projected balance sheet and profit and loss
statement on a consolidated and consolidating basis. Together with each monthly
and annual financial statement, Borrowers will deliver to Lender the
certification of the chief financial or accounting officer of ALHI and ATWT in
the form of EXHIBIT C attached hereto to the effect that Borrowers are in
---------
compliance with the terms and conditions of this Amendment, and setting forth in
detail the calculation of all financial covenants, or, if Borrowers are not in
compliance, describing the nature of any noncompliance and the steps Borrowers
are taking or propose to take to remedy the same.
(b) COLLATERAL REPORTS. Concurrent with the execution of this
-------------------
Amendment and thereafter by 11:00 a.m. of each Business Day, prepared as of the
end of the immediately preceding day, each of Hickory and ATWT shall deliver to
Lender a fully completed Borrowing Base Certificate certified by the Chief
Executive Officer or Chief Financial Officer of Hickory and ATWT, respectfully,
as being true and correct. Concurrent with the delivery of each such Borrowing
Base Certificate, each of Hickory and ATWT shall provide a written report to
Lender of all materially significant returns, disputes and claims, together with
sales and other reports relating to the Accounts as required by Lender. Hickory
and ATWT shall deliver to Lender within ten (10) days after the end of each
month a report, reflecting the status as of the end of each month and certified
by the Chief Executive Officer or Chief Financial Officer of Hickory and ATWT,
respectfully, as being true and correct, containing (i) a current detailed
aging, by total and by Customer, of each of Hickory's and ATWT's Accounts, and
(ii) a current detailed aging, by total and by vendor, of each of Hickory's and
ATWT's accounts payable, all of which shall be set forth in a form and shall
contain such information as is acceptable to Lender.
(c) OTHER INFORMATION. Borrowers will notify Lender as promptly as
------------------
possible of any Default, any receipt by any Borrower of notice from any
governmental authority that any Borrower has or may have violated any law, rule
or regulation applicable to any Borrower or the terms or conditions of any
permit or license any Borrower holds or is required to hold in connection with
the conduct of such Borrower's business, any amendment to any Borrower's
constituent documents and any change in any Borrower's management or ownership,
and the commencement of any material litigation, claim or action against any
Borrower.
13. REMEDIES. If a Default under the Credit Agreement, this Amendment,
--------
or any other Loan Document occurs and is continuing, in addition to any other
available remedy, Lender may decrease the advance rates set forth in the
definition of "Borrowing Base" in Lender's discretion.
14. MISCELLANEOUS.
-------------
(a) The Agreement is reaffirmed and ratified in all respects,
except as expressly provided herein.
(b) In the event of any conflict between the terms or provisions
of (i) this Amendment and the Agreement or (ii) the Amendment and any other
agreement between the parties that is in any way related to the transaction
contemplated by the Agreement, then this Amendment shall prevail in all
respects. Otherwise, the provisions of the Agreement shall remain in full force
and effect.
(c) Capitalized terms used in this Amendment and not otherwise
defined in this Amendment have the meanings assigned to them in the Agreement.
(d) The parties shall execute and deliver any other
instruments or documents and take any further actions after the execution of
this Amendment, which may be reasonably required for the implementation of this
Amendment and the transactions contemplated hereby.
(e) This Amendment may be executed in multiple counterparts,
each of which shall be deemed an original, but all of which, taken together,
shall constitute one and the same instrument. For purposes of authenticating
this Amendment, facsimile signatures shall be deemed original.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
effective on the date first written above.
BORROWERS:
Signed, sealed and delivered ORLANDO HOLIDAYS, INC.,
a Florida corporation
/s/ Xxxxxx Xxxxxxx
--------------------
(Signature of Witness)
Xxxxxx Xxxxxxx By: /s/ Xxxxxxx X. Xxxxxx
--------------- ------------------------
(Printed Name of Witness) Name:Xxxxxxx X. Xxxxxx
-------------------
Title: President
---------
Signed, sealed and delivered AMERICAN LEISURE MARKETING &
TECHNOLOGY, INC.,
a Florida corporation
/s/ Xxxxxx Xxxxxxx
--------------------
(Signature of Witness)
Xxxxxx Xxxxxxx By:/s/ Xxxxxxx X. Xxxxxx
--------------- ------------------------
(Printed Name of Witness) Name:Xxxxxxx X. Xxxxxx
-------------------
Title:President
---------
Signed, sealed and delivered AMERICAN LEISURE HOLDINGS, INC., a Nevada
corporation
/s/ Xxxxxx Xxxxxxx
--------------------
(Signature of Witness)
Xxxxxx Xxxxxxx By:/s/ Xxxxxxx X. Xxxxxx
--------------- ------------------------
(Printed Name of Witness) Name:Xxxxxxx X. Xxxxxx
-------------------
Title:President
---------
Signed, sealed and delivered AMERICAN LEISURE, INC.,
a Florida corporation
/s/ Xxxxxx Xxxxxxx
--------------------
(Signature of Witness)
Xxxxxx Xxxxxxx By:/s/ Xxxxxxx X. Xxxxxx
--------------- ------------------------
(Printed Name of Witness) Name:Xxxxxxx X. Xxxxxx
-------------------
Title:President
---------
Signed, sealed and delivered WELCOME TO ORLANDO, INC.,
a Florida corporation
/s/ Xxxxxx Xxxxxxx
--------------------
(Signature of Witness)
Xxxxxx Xxxxxxx By:/s/ Xxxxxxx X. Xxxxxx
--------------- ------------------------
(Printed Name of Witness) Name:Xxxxxxx X. Xxxxxx
-------------------
Title:President
---------
Signed, sealed and delivered AMERICAN TRAVEL & MARKETING GROUP, INC., a
Florida corporation
/s/ Xxxxxx Xxxxxxx
--------------------
(Signature of Witness)
Xxxxxx Xxxxxxx By:/s/ Xxxxxxx X. Xxxxxx
--------------- ------------------------
(Printed Name of Witness) Name:Xxxxxxx X. Xxxxxx
-------------------
Title:President
---------
Signed, sealed and delivered HICKORY TRAVEL SYSTEMS, INC.,
a Delaware corporation
/s/ Xxxxxx Xxxxxxx
--------------------
(Signature of Witness)
Xxxxxx Xxxxxxx By:/s/ Xxxxxxx X. Xxxxxx
--------------- ------------------------
(Printed Name of Witness) Name:Xxxxxxx X. Xxxxxx
-------------------
Title:President
---------
LENDER:
Signed, sealed and delivered STANFORD VENTURE CAPITAL
HOLDINGS, INC., a Delaware corporation
---------------------------
(Signature of Witness)
By: /s/ Xxxxx X. Xxxxx
--------------------------- ---------------------
(Printed Name of Witness) Name: Xxxxx X. Xxxxx
----------------
Title:President
---------
