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EXHIBIT 10.7
THIS NOTE HAS BEEN ISSUED AND SOLD WITHOUT REGISTRATION UNDER THE FEDERAL
SECURITIES ACT OF 1933 (THE "FEDERAL ACT") OR THE SECURITIES LAWS OF ANY STATE,
IN RELIANCE UPON CERTAIN EXEMPTIVE PROVISIONS OF SAID ACTS, INCLUDING PARAGRAPH
(13) OF THE CODE SECTION 10-5-9 OF THE GEORGIA SECURITIES ACT OF 1973 (THE
"GEORGIA ACT"). THIS NOTE CANNOT BE SOLD OR TRANSFERRED EXCEPT IF, IN THE
OPINION OF COUNSEL TO THE ISSUER, SUCH SALE OR TRANSFER WOULD BE: (1) PURSUANT
TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE FEDERAL ACT OR PURSUANT TO AN
EXEMPTION FROM SUCH REGISTRATION; AND (2) IN A TRANSACTION WHICH IS EXEMPT UNDER
APPLICABLE STATE SECURITIES LAWS, INCLUDING THE GEORGIA ACT, OR PURSUANT TO
EFFECTIVE REGISTRATION STATEMENTS UNDER SUCH LAWS, OR IN A TRANSACTION WHICH IS
OTHERWISE IN COMPLIANCE WITH SUCH LAWS.
PROMISSORY NOTE
$5,000,000.00 May 30, 2000
Atlanta, Georgia
FOR VALUE RECEIVED, the undersigned, EDUTREK INTERNATIONAL, INC., a
corporation organized and existing under the laws of the State of Georgia (the
"Company"), hereby promises to pay to the order of SYLVAN LEARNING SYSTEMS,
INC., a corporation organized and existing under the laws of the State of
Maryland (the "Holder"), at the Holder's address at 0000 Xxxxxxxxx Xxxxxx,
Xxxxxxxxx, Xxxxxxxx, 00000, or at such other place as the Holder may designate,
a principal sum equal to FIVE MILLION AND NO/100 Dollars ($5,000,000.00),
together with interest at the rate set forth below and calculated and paid as
described below on the unpaid balance of such principal amount from the date
hereof until the unpaid principal balance shall have been paid in full.
1. Payment Provisions
1.1 Interest and Maturity. This Note shall bear simple
interest on the outstanding principal amount at a rate per annum equal to the
then current prime rate of interest, which rate, as of the date hereof, is nine
and one-half percent (9 1/2%), as published from time to time in the "Money
Rates" section of The Wall Street Journal (or, if the prime rate of interest is
no longer published in such publication, the Holder may, in its reasonable
discretion, designate an alternative reference rate for calculation of interest
under this Note, which rate shall be the substantial equivalent of the prime
rate), computed on the basis of a year of 365 days against actual days elapsed.
All accrued but unpaid interest at the aforesaid rate shall be due and payable
quarterly, commencing on July 3, 2000 and continuing on the first Business Day
(as hereinafter defined) of each and every calendar quarter thereafter, until
the entire principal balance hereof, together with all accrued but unpaid
interest thereon, has been paid in full. The entire principal amount of this
Note, together with any accrued but unpaid interest thereon, shall be due and
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payable on the earlier to occur of (a) November 30, 2000, or (b) the Business
Day upon which the Holder shall have acquired all of the issued and outstanding
common shares or other equity securities or ownership interests of ACIL (as
hereinafter defined) owned by the Company or its subsidiaries or affiliates, or
(c) the date upon which the entire indebtedness of the Company under the Credit
Agreement (as hereinafter defined) becomes due and payable (the "Maturity
Date").
1.2 Payments. All payments under this Note shall be made
in lawful money of the United States of America. Payments shall be credited,
first, to unpaid interest accrued through the date of such payment and, then, to
principal.
1.3 Limitation on Interest Rate and Payments.
Notwithstanding any other provision of this Note or of any other agreement or
instrument to which the Company and the Holder are parties, nothing herein
contained or therein contained shall require the payment of any interest,
expense or other charge by the Company which, when aggregated with all other
interest, expenses and charges directly or indirectly paid by the Company or
imposed by the Holder as a condition to extension of this credit, shall exceed
the highest lawful rate permissible under any law applicable thereto. If, but
for this provision, this Note or any other such agreement or instrument would
require any such payment in excess of any such highest lawful rate, this Note
and such other agreement or instrument shall automatically be deemed amended so
that all interest, charges, expenses and other payments required hereunder or
thereunder or so imposed, individually and in the aggregate, shall be equal to,
but no greater than, the highest lawful rate therefor. If from any circumstances
the Holder should ever receive an amount which, but for this provision, would
constitute an unlawful payment hereunder or thereunder, then, ipso facto, such
amount shall be applied to the reduction of the outstanding principal balance of
this Note and not to the payment of interest, expenses and charges.
1.4 Prepayment. The Company may, at any time prior to the
Maturity Date, prepay all or any part of the outstanding principal balance of
this Note.
2. Certain Definitions. As used herein, the following terms shall
have the respective meanings set forth below:
2.1 "ACIL" shall mean American College in London, Ltd., a
United Kingdom company and a wholly-owned subsidiary of the Company.
2.2 "ACIL-US" shall mean American College in London,
Ltd., U.S., a District of Columbia corporation and a wholly-owned subsidiary of
the Company.
2.3 "AEMEC" shall mean American European Middle East
Corporation, LLC, a Georgia limited liability company.
2.4 "AIU" shall mean American Intercontinental
University, a Georgia corporation and a wholly-owned subsidiary of the Company.
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2.5 "Business Day" shall mean any day that is not a
Saturday, a Sunday or a day on which banks are required or permitted to be
closed in the State of Georgia.
2.6 "Credit Agreement" shall mean that certain Credit
Agreement, dated March 25, 1999, as amended through the date hereof, between the
Company, as Borrower, and First Union National Bank, as Lender.
2.7 "Edutrek Systems" shall mean Edutrek Systems, Inc., a
Georgia corporation and a wholly-owned subsidiary of the Company.
2.8 "Guaranty" shall mean that certain Guaranty, dated of
even date herewith, executed by ACIL-US, AEMEC, AIU and Edutrek Systems in favor
of the Holder.
2.9 "Letter of Intent" shall mean that certain letter
agreement, dated May ___, 2000, between the Holder and the Company.
2.10 "Person" or "person" shall mean an individual,
partnership, corporation, trust, unincorporated organization, joint venture,
government or agency, political subdivision thereof, or any other entity of any
kind.
2.11 "Pledge Agreement" shall mean that certain Pledge
Agreement, dated of even date herewith, executed by the Company, ACIL-US, AEMEC
and AIU in favor of the Holder.
2.12 "Security Agreement" shall mean that certain Security
Agreement, dated of even date herewith, executed by the Company, ACIL-US, AEMEC,
AIU and Edutrek Systems in favor of the Holder.
3. Security. This Note is secured by the terms of each of the
Guaranty, the Pledge Agreement and the Security Agreement (collectively, the
"Security Documents").
4. Use of Proceeds. Monies loaned by the Holder to the Company
pursuant to this Note may be used for the purposes of financing the working
capital needs of the Company and its subsidiaries and for general corporate
purposes, but not for the purposes of repaying or prepaying principal amounts
owed pursuant to the Credit Agreement or prepaying principal amounts owed to any
other debtor of the Company or its subsidiaries.
5. Default. A default shall occur under this Note upon (a) the
failure of the Company to (i) pay any monetary obligations when due under this
Note, or (ii) perform any of its binding obligations under the Letter of Intent,
or (iii) adhere to the restrictions set forth in paragraph 4 of this Note; or
(b) the failure of the Company, ACIL-US, AEMEC, AIU, Edutrek Systems or any
other subsidiary of the Company that becomes a party to any such agreement after
the date hereof to (i) perform any of their respective obligations under any of
the Security Documents or to (ii) perform any of their respective obligations
under the Credit Agreement or any other agreement executed by the Company,
ACIL-US, AEMEC, AIU, Edutrek Systems or any other subsidiary of the Company in
favor of FUNB in connection therewith (a "Default").
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Upon the occurrence of a Default, the Holder shall be entitled to, at its sole
option, declare the entire unpaid principal and interest amounts under this Note
as immediately due and payable regardless of the stipulated date of maturity,
and the Holder may proceed to collect such obligations forthwith, and enforce
its remedies under the Security Documents, plus all out-of-pocket costs of
collection, including reasonable attorneys' fees actually incurred if collected
by and through an attorney. The failure of the Holder to exercise this option or
indulgence granted from time to time shall in no event be considered a waiver of
such option or estop the Holder from exercising such option.
6. Notices. All notices and other communications hereunder shall
be in writing and shall be deemed to have been given only (i) when personally
delivered, or (ii) three (3) business days after mailing, postage prepaid, by
certified mail, or (iii) when delivered (and receipted for) by an overnight
delivery service, or (iv) when first sent by telex, telecopier or other means of
instantaneous communication, provided such communication is promptly confirmed
by personal delivery, mail or an overnight delivery service as provided above,
addressed in each case as follows:
If to the Company, to:
Edutrek International, Inc.
0000 Xxxxxxxxx-Xxxxxxxx Xxxx
000 Xxxxxxx Xxx
Xxxxxxx, Xxxxxxx 00000
Telecopier: (000) 000-0000
Attention: Xxxxx X. Xxxx, Chief Financial Officer
with a copy in like manner to:
Xxxxx Xxxxxxxx & Xxxxxxx, LLP
0000 Xxxxxxxxx Xxxx, X. X.
Promenade XX, Xxxxx 0000
Xxxxxxx, Xxxxxxx 00000-0000
Telecopier: (000) 000-0000
Attention: X. Xxx Xxxxxxxx, Esq.
If to the Holder, to:
Sylvan Learning Systems, Inc.
0000 Xxxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxx 00000
Telecopier: 000-000-0000
Attention: Xxxx Xxxxxxx, Chief Executive Officer
and President of Sylvan University Division
with a copy in like manner to:
Xxxx, Xxxxxxxx, Xxxxxxxx & Xxxxxx
000 Xxxxxxxxx Xxxxxx
5
Suite 2400
Atlanta, Georgia 30308
Telecopier: (000) 000-0000
Attention: Xxxxxxx Xxxxxx, Esq.
Each party may change its address for the giving of notices and communications
to it, and/or copies thereof, by written notice to the other parties in
conformity with the foregoing.
7. Negotiability; Assignment. This Note may be assigned, conveyed
or otherwise transferred at any time without the consent of the Company;
provided, however, that this Note may not be assigned to any person or entity
engaged in the business of providing post-secondary education services similar
to or competitive with those services provided by the Company without the
express written consent of the Company.
8. Binding Effect. This Note shall be binding upon the Company
and its successors and permitted assigns and shall inure to the benefit of the
Holder and its successors and permitted assigns.
9. Headings. The paragraph headings contained in this Note are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Note.
10. Time of the Essence. Time is of the essence under this Note.
11. Waiver of Presentment. EXCEPT AS OTHERWISE PROVIDED IN THIS
NOTE, THE COMPANY, ITS SUCCESSORS OR ASSIGNS, AND ALL OTHER PERSONS LIABLE FOR
THE PAYMENT OF THIS NOTE, WAIVE PRESENTMENT FOR PAYMENT, DEMAND, PROTEST, AND
NOTICE OF DEMAND, DISHONOR, PROTEST, AND NONPAYMENT, AND CONSENT TO ANY AND ALL
RENEWALS, EXTENSIONS OR MODIFICATIONS THAT MIGHT BE MADE BY THE HOLDER AS TO THE
TIME OF PAYMENT OF THIS NOTE FROM TIME TO TIME.
12. Governing Law. This Note has been delivered in Atlanta,
Georgia and shall be governed by and construed in accordance with the internal
laws of the State of Georgia without regard to its conflicts of laws principles.
IN WITNESS WHEREOF, the Company has caused this Note to be duly
executed under seal as of the day and year above first written.
"COMPANY"
EDUTREK INTERNATIONAL, INC.
By:
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Name:
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[CORPORATE SEAL] Title:
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