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EXHIBIT 10.5.2
SECOND AMENDMENT TO CREDIT AGREEMENT
AND WAIVER
THIS SECOND AMENDMENT TO CREDIT AGREEMENT AND WAIVER (this
"Amendment") is made and entered into as of the 16th 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 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 has requested that Lender modify the financial
covenants and other provisions set forth in the Agreement and grant certain
waivers with respect thereto and Lender, subject to the terms and conditions
hereof, has agreed to such requests;
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:
"Second Amendment" shall mean that certain Second
Amendment to Credit Agreement and Waiver, dated as of August
16, 1999, between Borrower and Lender.
"Second Amendment Effective Date" shall mean that
date on which all of the conditions precedent set forth in
Section 4 of the Second
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Amendment have been satisfied and the Second Amendment has
become effective.
2.2. Net Worth Covenant. Section 9.1 of the Credit
Agreement is hereby amended by deleting such Section in its entirety,
and substituting in lieu thereof a new Section 9.1 to read as follows:
SECTION 9.1 Net Worth. Permit at any time its Net
Worth to be less than an amount equal to (a) in the case of
the fiscal quarters of Borrower ending September 30 and
December 31, 1999, $32,000,000; or (b) for any subsequent
fiscal quarter, an amount equal to the sum of (i) the Net
Worth required pursuant to this Section 9.1 as of the last
day of the immediately preceding fiscal quarter of Borrower
plus (ii) 50% of the Borrower's Net Income (if positive) for
such fiscal quarter plus (iii) 75% of the net proceeds
received by Borrower from the issuance of its Capital Stock
during such fiscal quarter, calculated in each case on a
consolidated basis for Borrower and its consolidated
Subsidiaries in accordance with GAAP.
3. Waivers. Effective on the Second Amendment Effective Date,
Lender hereby waives Borrower's compliance with the following financial
covenants set forth in Article 9 of the Agreement for the respective periods
set forth below:
(a) Ratio of Actual to Budgeted Revenues. Borrower's
compliance with the Ratio of Actual to Budgeted Revenues covenant for
the months of July, August, September, October, November and December
1999.
(b) Accounts Payable. Borrower's compliance with the
Accounts Payable covenant for the months of July, August and September
1999.
(c) Quarterly Rent Expense Ratio. Borrower's compliance
with the Quarterly Rent Expense Ratio covenant for the fiscal quarter
ended September 30, 1999.
4. 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; and
(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
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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.
5. Contingent Arrangement Fee. In consideration of Lender
entering into this Amendment, Borrower hereby agrees to pay the following
contingent arrangement fee to Lender in lieu of the contingent arrangement fee
set forth in Section 4.2 of the First Amendment:
5.1. Contingent Arrangement Fee. Borrower agrees to pay a
contingent arrangement fee equal to the lesser of (a) $250,000 and (b)
0.50% of the increase in the Market Capitalization (as such term is
hereinafter defined) of Borrower between the date hereof and the
earlier of (i) April 30, 2000 and (ii) the date the Credit Agreement
is terminated and the Obligations are repaid in full, payable on the
earlier of May 1, 2000 and the date of such termination and repayment.
As used herein, "Market Capitalization" as of any date shall be an
amount equal to the number of issued and outstanding shares of capital
stock of Borrower multiplied by the average closing price of
Borrower's Class A Common Stock for the 20 consecutive date period
ending on the day immediately preceding such date.
6. Representations and Warranties; No Default. The Borrower and
each of the Guarantors (individually a "Credit Party" and collectively, the
"Credit Parties") hereby jointly and severally represent and warrant to the
Lender that (a) all of Credit Parties' representations and warranties contained
in the Credit Agreement, the other Loan Documents and this Amendment are true
and correct on and as of the date of this Amendment (or, if any such
representation or warranty is expressly stated to have been made as of a
specific date, as of such specific date); (b) no Default or Event of Default
(other than those being waived under Section 3 of this Amendment) has occurred
and is continuing as of such date under any Loan Document; (c) each Credit
Party has the power and authority to enter into this Amendment and the
instruments, documents and agreements executed and delivered pursuant hereto or
in connection herewith (the "Amendment Documents") and to perform all of its
obligations hereunder and thereunder; (d) the execution, delivery and
performance of this Amendment and the Amendment Documents have been duly
authorized by all necessary corporate or partnership action on the part of each
Credit Party; (e) this Amendment and the Amendment Documents are the legal,
valid and binding obligations of the Credit Parties, enforceable in accordance
with their respective terms, except as such enforcement may be limited by
bankruptcy, insolvency, reorganization, moratorium or similar state or federal
debtor relief laws from time to time in effect which affect the enforcement of
creditors' rights in general and the availability of equitable remedies; and
(f) the execution and delivery of this Amendment and the Amendment Documents
and performance thereof by the Credit Parties do not and will not violate the
Certificate or Articles of Incorporation, By-laws or other organizational
documents of any Credit Party and do not and will not violate or conflict with
any law, order, writ, injunction, or decree of any court, administrative agency
or other governmental authority applicable to any Credit Party or its
properties.
7. Reaffirmation of Loan Documents. Each of the Credit Parties
hereby reaffirms its obligations under the Loan Documents, and acknowledges and
agrees that each of the Loan
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Documents to which such Credit Party is a party, and the obligations of such
Credit Party thereunder, remain in full force and effect, without release,
diminution or impairment, notwithstanding the execution and delivery of this
Amendment or any other agreement, document or instrument in connection
therewith.
8. Expenses. The Credit Parties, jointly and severally, agree to
pay, immediately upon demand by the Lender, all costs, expenses, reasonable
attorneys' fees and other charges and expenses actually incurred by the Lender
in connection with the negotiation, preparation, execution and delivery of this
Agreement and any other instrument, document, agreement or amendment executed
in connection with this Agreement.
9. Defaults Hereunder. The breach of any representation, warranty
or covenant contained herein or in any document executed in connection
herewith, or the failure to serve or comply with any term or agreement
contained herein shall constitute an Event of Default under the Credit
Agreement and the Lender shall be entitled to exercise all rights and remedies
it may have under the Credit Agreement, any other documents executed in
connection therewith and applicable law.
10. 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.
11. 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.
12. 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.
13. 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.
14. Successors and Assigns. This Agreement shall be binding upon
and inure to the benefit of the successors and permitted assigns of the parties
hereto.
15. 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.
16. 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
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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:
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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
