EXHIBIT 10.2
AMENDMENT NO. 2 TO CREDIT AGREEMENT
THIS AMENDMENT NO. 2 TO CREDIT AGREEMENT (this "Amendment Agreement") is
made and entered into effective as of the 28th day of October, 1997, by and
between BERLITZ INTERNATIONAL, INC, a New York corporation (the "Borrower"),
EACH OF THE GUARANTORS SIGNATORY HERETO (the "Guarantors"), and NATIONSBANK,
NATIONAL ASSOCIATION, a national banking association organized and existing
under the laws of the United States ("NationsBank"), in its capacity as agent
for the Lenders ("Agent") under the Credit Agreement (as defined below). Unless
the context otherwise requires, all terms used herein without definition shall
have the definitions provided therefor in the Credit Agreement.
W I T N E S S E T H:
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WHEREAS, the Agent and the Borrower have entered into that certain Credit
Agreement dated as of August 28, 1997, as amended by that certain Amendment No.
1 to Credit Agreement and Amendment No. 1 to Pledge Agreement dated as of
September 12, 1997 (as hereby and from time to time amended, supplemented or
replaced, the "Credit Agreement"), pursuant to which the Lenders have agreed to
make certain revolving and term credit facilities available to the Borrower; and
WHEREAS, the parties hereto desire to amend the Credit Agreement in the
manner herein set forth effective as of the date hereof and prior to the
effectiveness of any Assignment and Acceptance by NationsBank in its capacity as
a Lender to any Person of its rights and obligations under the Credit Agreement
(collectively, "Assignments").
NOW, THEREFORE, the parties hereby agree as follows:
1. DEFINITIONS. The term "Credit Agreement" or "Agreement" (as the case may
be) as used herein and in the Loan Documents shall mean the Credit Agreement as
hereby amended and modified, and as further amended, modified or supplemented
from time to time as permitted thereby.
2. AMENDMENTS. Subject to the conditions hereof, the Credit Agreement is
hereby amended, effective as of the date hereof, as follows:
(a) The definition of "Eligible Assignee" is hereby deleted in its
entirety and the following is inserted in replacement thereof:
"Eligible Assignee" means (i) a Lender, (ii) an affiliate of a
Lender, and (iii) any other Person approved by the Agent and, unless
an Event of Default has occurred and is continuing at the time any
assignment is effected in accordance with SECTION 13.1, the Borrower,
such approval not to be unreasonably withheld or delayed by the Agent
or the Borrower, PROVIDED, HOWEVER, that neither the Borrower nor an
Affiliate shall qualify as an Eligible Assignee.
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(b) The definition of "Total Letter of Credit Commitment" is hereby
deleted in its entirety and the following is inserted in replacement
thereof:
"Total Letter of Credit Commitment" means an amount not to exceed
$3,000,000.
(c) The definition of "Total Revolving Credit Commitment" is hereby
deleted in its entirety and the following is inserted in replacement
thereof:
"Total Revolving Credit Commitment" means a principal amount
equal to $55,000,000, as reduced from time to time in accordance with
SECTION 3.7 hereof.
(d) Section 9.1(e) of the Credit Agreement is hereby deleted in its
entirety and the following is inserted in replacement thereof:
(e) not later than thirty days prior to the end of each Fiscal
Year of the Borrower, deliver to the Agent and each Lender (through
the Agent) a copy of the monthly operating budget and cash flow budget
of the Borrower and its Subsidiaries for the succeeding fiscal year,
such budgets to be accompanied by a certificate of the Borrower signed
by an Authorized Officer to the effect that such budgets have been
prepared in good faith on the basis of sound financial planning
practice and that such Authorized Officer has no reason to believe
they are incorrect or misleading in any material respect; and
(e) Section 9.7 of the Credit Agreement is hereby deleted in its
entirety and the following is inserted in replacement thereof:
9.7 RIGHT OF INSPECTION. Permit any Person designated by any
Lender or the Agent, at the expense of the Agent or such Lender, if
occurring more than once in any Fiscal Year to visit and inspect any
of the properties, corporate books and financial reports of the
Borrower or any Subsidiary and to discuss its affairs, finances and
accounts with its principal officers and independent certified public
accountants, all in their Permitted Discretion, at reasonable times,
at reasonable intervals and with reasonable prior notice; PROVIDED,
HOWEVER, that, notwithstanding the foregoing, after the occurrence and
during the continuance of an Event of Default, such visits and
inspections may be conducted at any reasonable interval and any
reasonable number of occasions and all reasonable and documented
out-of-pocket expenses incurred by the Agent or the Lenders in
conducting such visits and inspections shall be paid by the Borrower;
(f) Section 10.1(c) of the Credit Agreement is hereby deleted in its
entirety and the following is inserted in replacement thereof:
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(c) CONSOLIDATED NET WORTH. Permit at any time Consolidated Net
Worth to be less than $300,000,000, such amount to be increased as at
the first day of each fiscal quarter, beginning with the fiscal
quarter ending December 31, 1997, by an amount equal to (a) fifty
percent (50%) of Consolidated Net Income during the immediately
preceding fiscal quarter, plus (b) one hundred percent (100%) of the
Net Proceeds of any Equity Offering consummated during the immediately
preceding fiscal quarter; PROVIDED, HOWEVER, in no event shall the
Consolidated Net Worth requirement be decreased as a result of a net
loss of the Borrower and its Subsidiaries (i.e., negative Consolidated
Net Income) for any fiscal quarter. Any increase calculated pursuant
hereto shall be determined based upon financial statements delivered
in accordance with SECTION 9.1(A) and (B) hereof; PROVIDED, HOWEVER
such increase shall be deemed effective as of the first day of the
fiscal quarter in which such financial statements are delivered.
(g) Section 10.8 of the Credit Agreement is hereby deleted in its
entirety and the following is inserted in replacement thereof:
10.8 RESTRICTED PAYMENTS. Make any Restricted Payments or apply
or set apart any of their assets therefor or agree to do any of the
foregoing other than (a) conversion of any of the Borrower's
securities into Common Stock which are so convertible in accordance
with their terms, (b) dividends payable by any Subsidiary to a
Guarantor or to the Borrower, (c) payments of up to $3,000,000 made by
the Borrower during any Fiscal Year to (i) repurchase shares of
capital stock, or options to purchase shares of capital stock, of the
Borrower or any Subsidiary owned by any officer, director or employee
of the Borrower or any Subsidiary pursuant to (A) an employee or
management stock option plan or other compensation plan or (B) any
arrangement in connection with the death or termination of employment
of such officer, director or employee or (ii) repurchase shares of
capital stock of the Borrower at a price equal to or less than the
market price for such shares either (y) in order to enable the
Borrower to contribute such shares to an employee or management stock
option plan, which contribution shall occur prior to the end of the
next succeeding Fiscal Year, or (z) for any other corporate purpose of
the Borrower approved by the Board of Directors of the Borrower, the
Disinterested Directors Committee thereof, the Agent and the Required
Lenders, and (d) cash dividends payable by the Borrower in any fiscal
quarter following a period of two consecutive fiscal quarters for
which the Borrower shall have maintained a Consolidated Leverage Ratio
of less than 2.50 to 1.00 for each such fiscal quarter, in an amount
not in excess of 6.25% of Consolidated Net Income for the Four-Quarter
Period most recently ended, but in any case above, only if immediately
prior and immediately after giving effect thereto no Default or Event
of Default shall exist or occur and be continuing;
(h) Section 11.1(A) of the Credit Agreement is hereby deleted in its
entirety and the following is inserted in replacement thereof:
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(A) either or both of the following actions may be taken: (i) the
Agent, with the consent of the Required Lenders may, and at the
direction of the Required Lenders shall, declare any obligation of the
Lenders and the Issuing Bank to make further Revolving Loans or to
issue additional Letters of Credit terminated, whereupon the
obligation of each Lender to make further Revolving Loans and of the
Issuing Bank to issue additional Letters of Credit, hereunder shall
terminate immediately, and (ii) the Agent shall at the direction of
the Required Lenders, at their option, declare by notice to the
Borrower any or all of the Obligations to be immediately due and
payable, and the same, including all interest accrued thereon and all
other obligations of the Borrower to the Agent and the Lenders, shall
forthwith become immediately due and payable without presentment,
demand, protest, notice or other formality of any kind, all of which
are hereby expressly waived, anything contained herein or in any
instrument evidencing the Obligations to the contrary notwithstanding;
PROVIDED, HOWEVER, that notwithstanding the above, if there shall
occur an Event of Default under clause (g) or (h) above with respect
to the Borrower, then the obligation of the Lenders to make Revolving
Loans and of the Issuing Bank to issue Letters of Credit hereunder
shall automatically terminate and any and all of the Obligations shall
be immediately due and payable without the necessity of any action by
the Agent or the Required Lenders or notice to the Agent or the
Lenders;
(i) Section 13.9(b) of the Credit Agreement is hereby deleted in its
entirety and the following is inserted in replacement thereof:
(b) The Borrower agrees that no Indemnified Party shall have any
liability (whether direct or indirect, in contract or tort or
otherwise) to it, any of its Subsidiaries, any Guarantor, or any
security holders or creditors thereof arising out of, related to or in
connection with the transactions contemplated herein, except to the
extent that such liability is found in a final non-appealable judgment
by a court of competent jurisdiction to have directly resulted from
such Indemnified Party's gross negligence or willful misconduct;
provided, HOWEVER, in no event shall any Indemnified Party be liable
for punitive, consequential, indirect or special damages, as opposed
to direct damages.
(j) EXHIBIT A to the Credit Agreement is hereby amended and restated
in its entirety as set forth on EXHIBIT A attached hereto and incorporated
herein by reference.
3. GUARANTORS. Each Guarantor hereby (i) consents and agrees to the
amendments to the Credit Agreement set forth herein and (ii) confirms its joint
and several guarantee of payment of all the Obligations pursuant to the
Subsidiary Guaranty.
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4. REPRESENTATIONS AND WARRANTIES. The Borrower hereby certifies that:
(1) The representations and warranties made by the Borrower in Article
VIII of the Credit Agreement are true and correct in all material respects
on and as of the date hereof, with the same effect as though such
representations and warranties were made on the date hereof, except to the
extent that such representations and warranties expressly relate to an
earlier date.
(2) No event has occurred and no condition exists which, upon the
consummation of the transaction contemplated hereby, will constitute a
Default or an Event of Default on the part of the Borrower under the Credit
Agreement or any other Loan Document either immediately or with the lapse
of time or the giving of notice, or both.
5. ENTIRE AGREEMENT. This Amendment Agreement sets forth the entire
understanding and agreement of the parties hereto in relation to the subject
matter hereof and supersedes any prior negotiations and agreements among the
parties relative to such subject matter. No promise, condition, representation
or warranty, express or implied, not herein set forth shall bind any party
hereto, and not one of them has relied on any such promise, condition,
representation or warranty. Each of the parties hereto acknowledges that, except
as otherwise expressly stated herein, no representations, warranties or
commitments, express or implied, have been made by any party to the other. None
of the terms or conditions of this Amendment Agreement may be changed, modified,
waived or canceled orally or otherwise, except by writing, signed by all the
parties hereto, specifying such change, modification, waiver or cancellation of
such terms or conditions, or of any proceeding or succeeding breach thereof.
6. FULL FORCE AND EFFECT OF AGREEMENT. Except as hereby specifically
amended, modified or supplemented, the Credit Agreement and all of the other
Loan Documents are hereby confirmed and ratified in all respects and shall
remain in full force and effect according to their respective terms.
7. COUNTERPARTS. This Amendment Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
8. GOVERNING LAW. This Agreement shall in all respects be governed by, and
construed in accordance with, the laws of the state of New York.
9. ENFORCEABILITY. Should any one or more of the provisions of this
Amendment Agreement be determined to be illegal or unenforceable as to one or
more of the parties hereto, all other provisions nevertheless shall remain
effective and binding on the parties hereto.
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10. CREDIT AGREEMENT. All references in any of the Loan Documents to the
"Credit Agreement" shall mean the Credit Agreement as amended hereby and all
references to the amount of the Total Revolving Credit Commitment or the
principal amount of the Revolving Credit Facility in any of the Loan Documents
shall be to the amount of $55,000,000 as set forth herein.
11. SUCCESSORS AND ASSIGNS. This Amendment Agreement shall be binding upon
and inure to the benefit of each of the Borrower, the Lenders and the Agent and
their respective successors, assigns and legal representatives; PROVIDED,
however, that the Borrower, without the prior consent of the Agent, may not
assign any rights, powers, duties or obligations hereunder.
12. EXPENSES. Borrower agrees to pay to the Agent and the Lenders all
reasonable out-of-pocket expenses incurred or arising in connection with the
negotiation and preparation of this Amendment Agreement.
13. EFFECTIVENESS. The amendments of the Credit Agreement set forth in
Sections 2(a), (b) and (c) hereof shall be effective prior to any Assignments,
and the amendment of the Credit Agreement set forth in Section 2(d) hereof shall
be effective on the date hereof immediately following effectiveness of the
Assignments.
[Signature pages follow.]
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IN WITNESS WHEREOF, the parties hereto have caused this Amendment Agreement
to be duly executed by their duly authorized officers, all as of the day and
year first above written.
BERLITZ INTERNATIONAL, INC.
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
NATIONSBANK, NATIONAL ASSOCIATION,
as Agent for the Lenders and as Lender
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
GUARANTORS:
BERLITZ LANGUAGES, INC.
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
BERLITZ INVESTMENT CORPORATION
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
BERLITZ PUBLISHING COMPANY, INC.
By:
---------------------------------
Name:
-------------------------------
Title:
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BERLITZ DO BRASIL, INC.
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
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ELS EDUCATIONAL SERVICES, INC.
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
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EXHIBIT A
APPLICABLE COMMITMENT PERCENTAGES
LENDER TRANCHE A TRANCHE B REVOLVING APPLICABLE
TERM LOAN TERM LOAN CREDIT COMMITMENT
COMMITMENT COMMITMENT COMMITMENT PERCENTAGE
NationsBank, $2,607,142.83 $9,907,142.87 $5,735,714.30 10.428571429%
National
Association
Fleet Bank, N.A $2,321,428.57 $8,821,428.57 $5,107,142.86 9.285714286%
Summit Bank $2,321,428.57 $8,821,428.57 $5,107,142.86 9.285714286%
The Long-Term $2,321,428.57 $8,821,428.57 $5,107,142.86 9.285714286%
Credit Bank
of Japan, Ltd.
The Chugoku Bank, $1,714,285.72 $6,514,285.71 $3,771,428.57 6.857142857%
Limited
Corestates Bank, $1,714,285.72 $6,514,285.71 $3,771,428.57 6.857142857%
N.A
The Sumitomo $1,714,285.72 $6,514,285.71 $3,771,428.57 6.857142857%
Bank, Limited
PNC Bank, N.A $1,714,285.72 $6,514,285.71 $3,771,428.57 6.857142857%
The Bank of $1,428,571.43 $5,428,571.43 $3,142,857.14 5.714285714%
Nova Scotia
The Bank of $1,428,571.43 $5,428,571.43 $3,142,857.14 5.714285714%
Tokyo-Mitsubishi,
Ltd.
Banque Paribas $1,428,571.43 $5,428,571.43 $3,142,857.14 5.714285714%
Caisse Nationale de $1,428,571.43 $5,428,571.43 $3,142,857.14 5.714285714%
Credit Agricole
The Dai-Ichi $1,428,571.43 $5,428,571.43 $3,142,857.14 5.714285714%
Kangyo Bank,
Limited
The Sakura Bank, $1,428,571.43 $5,428,571.43 $3,142,857.14 5.714285714%
Limited
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