CREDIT AGREEMENT
THIS
CREDIT AGREEMENT (this
"Agreement") is entered into as of May 30, 2008, by and between AMBASSADORS
GROUP, INC., a Delaware corporation ("Borrower"), and XXXXX FARGO BANK, NATIONAL
ASSOCIATION ("Bank").
RECITALS
Borrower
has requested that Bank
extend or continue credit to Borrower as described below, and Bank has agreed
to
provide such credit to Borrower on the terms and conditions contained
herein.
NOW,
THEREFORE, for valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
Bank and Borrower hereby agree as follows:
ARTICLE
I
CREDIT
TERMS
SECTION
1.1.
LINE OF CREDIT.
(a)
Line of
Credit. Subject to the terms and conditions of this Agreement,
Bank hereby agrees to make advances to Borrower from time to time up to and
including May 31, 2011, not to exceed at any time the aggregate principal amount
of Twenty Million Dollars ($20,000,000.00) ("Line of Credit"), the proceeds
of
which shall be used for Borrower’s general corporate
purposes. Borrower's obligation to repay advances under the Line of
Credit shall be evidenced by a promissory note dated as of May 30, 2008 ("Line
of Credit Note"), all terms of which are incorporated herein by this
reference.
(b)
Letter of Credit
Subfeature. As a subfeature under the Line of Credit, Bank
agrees from time to time during the term thereof to issue or cause an affiliate
to issue standby letters of credit for the account of Borrower to finance
Borrower’s working capital requirements (each, a "Letter of Credit" and
collectively, "Letters of Credit"); provided, however,
that the
aggregate undrawn amount of all outstanding Letters of Credit shall not at
any
time exceed Two Million Five Hundred Thousand Dollars
($2,500,000.00). The form and substance of each Letter of Credit
shall be subject to approval by Bank, in its sole discretion. No
Letter of Credit shall have an expiration date subsequent to the maturity date
of the Line of Credit. The undrawn amount of all Letters of Credit
shall be reserved under the Line of Credit and shall not be available for
borrowings thereunder. Each Letter of Credit shall be subject to the
additional terms and conditions of the Letter of Credit agreements (each, a
"Letter of Credit Agreement" and collectively, "Letter of Credit Agreements"),
applications and any related documents required by Bank in connection with
the
issuance thereof. Each drawing paid under a Letter of Credit shall be
deemed an advance under the Line of Credit and shall be repaid by Borrower
in
accordance with the terms and conditions of this Agreement applicable to such
advances; provided however, that if advances under the Line of Credit are not
available, for any reason, at the time any drawing is paid, then Borrower shall
immediately pay to Bank the full amount drawn, together with interest thereon
from the date such drawing is paid to the date such amount is fully repaid
by
Borrower, at the rate of interest applicable to advances under the Line of
Credit. In such event Borrower agrees that Bank, in its sole
discretion, may debit any account maintained by Borrower with Bank for the
amount of any such drawing.
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(c)
Borrowing and
Repayment. Borrower may from time to time during the term of
the Line of Credit borrow, partially or wholly repay its outstanding borrowings,
and reborrow, subject to all of the limitations, terms and conditions contained
herein or in the Line of Credit Note; provided, however,
that the
total outstanding borrowings under the Line of Credit shall not at any time
exceed the maximum principal amount available thereunder, as set forth
above.
SECTION
1.2.
INTEREST/FEES.
(a)
Interest. The
outstanding principal balance of each credit subject hereto shall bear interest
at the rate of interest set forth in each promissory note or other instrument
or
document executed in connection therewith.
(b)
Computation and
Payment. Interest with respect to all interest rates other
than the Prime Rate shall be computed on the basis of a 360-day year, actual
days elapsed. Interest based on the Prime Rate shall be computed on
the basis of the actual days in a year of 365 (or in a leap year,
366). Interest shall be payable at the times and place set forth in
each promissory note or other instrument or document required
hereby.
(c)
Commitment
Fee. Borrower shall pay to Bank a non-refundable commitment
fee for the Line of Credit equal to Ten Thousand Dollars ($10,000.00), which
fee
shall be due and payable in full on the date of this Agreement.
(d)
Letter of Credit
Fees. Borrower shall pay to Bank (i) for each Letter of
Credit, fees equal to sixty hundredths percent (0.60%) per annum (computed
on
the basis of a 360-day year, actual days elapsed) of the face amount thereof,
which shall be due and payable upon: (A) the issuance of such Letter of Credit
and (B) each annual renewal date of such Letter of Credit thereafter, and
(ii) fees upon the payment or negotiation of each drawing under any Letter
of Credit and fees upon the occurrence of any other activity with respect to
any
Letter of Credit (including without limitation, the transfer, amendment or
cancellation of any Letter of Credit) determined in accordance with Bank's
standard fees and charges then in effect for such activity.
(e)
Facility
Fee. Borrower shall pay to Bank a non-refundable facility fee
for the Line of Credit equal to Twenty Thousand Dollars ($20,000.00), which
fee
shall be due and payable in full as of each May 1.
SECTION
1.3.
COLLECTION OF PAYMENTS. Borrower authorizes Bank to collect all interest and
fees due under the Line of Credit by charging Borrower's deposit account number
00-000-00000 with Bank, or any other deposit account maintained by Borrower
with
Bank, for the full amount thereof when due. Should there be insufficient funds
in any such deposit account to pay all such sums when due, the full amount
of
such deficiency shall be immediately due and payable by Borrower.
ARTICLE
II
REPRESENTATIONS
AND
WARRANTIES
Borrower
makes the following
representations and warranties to Bank, which representations and warranties
shall survive the execution of this Agreement and shall continue in full force
and effect until the full and final payment, and satisfaction and discharge,
of
all obligations of Borrower to Bank subject to this Agreement.
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SECTION
2.1.
LEGAL STATUS. Borrower is a corporation, duly organized and existing and in
good
standing under the laws of the state of Delaware, and is qualified or licensed
to do business (and is in good standing as a foreign corporation, if applicable)
in all jurisdictions in which such qualification or licensing is required or
in
which the failure to so qualify or to be so licensed could have a material
adverse effect on Borrower.
SECTION
2.2.
AUTHORIZATION AND VALIDITY. This Agreement, the Line of Credit Note, the Letters
of Credit, the Letter of Credit Agreement and any other instrument or document
required hereby or at any time hereafter delivered to Bank in connection
herewith (collectively, the "Loan Documents") have been duly authorized, and
upon their execution and delivery in accordance with the provisions hereof
will
constitute legal, valid and binding agreements and obligations of Borrower
or
the party which executes the same, enforceable in accordance with their
respective terms.
SECTION
2.3.
NO VIOLATION. The execution, delivery and performance by Borrower of each of
the
Loan Documents do not violate any provision of any law or regulation, or
contravene any provision of the Articles of Incorporation or By-Laws of
Borrower, and to the best of Borrower’s knowledge, result in any
breach of or default under any contract, obligation, indenture or other
instrument to which Borrower is a party or by which Borrower may be
bound.
SECTION
2.4.
LITIGATION. There are no pending, or to the best of Borrower's knowledge
threatened, actions, claims, investigations, suits or proceedings by or before
any governmental authority, arbitrator, court or administrative agency involving
a claim in excess of $500,000.00 (each, a "Litigation Matter") other than those
identified on Schedule 2.4 hereto and incorporated herein by this
reference.
SECTION
2.5.
CORRECTNESS OF FINANCIAL STATEMENT. The consolidated annual financial statement
of Borrower dated December 31, 2007, and all interim financial statements
delivered to Bank since said date, true copies of which have been delivered
by
Borrower to Bank prior to the date hereof, (a) are complete and correct and
present fairly the financial condition of the Ambassador Entities, (b) disclose
all liabilities of Borrower that are required to be reflected or reserved
against under generally accepted accounting principles, whether liquidated
or
unliquidated, fixed or contingent, and (c) have been prepared in accordance
with
generally accepted accounting principles consistently applied. To the best
of
Borrower's knowledge, since the dates of such financial statements there has
been no material adverse change in the financial condition of Borrower, nor
has
Borrower mortgaged, pledged, granted a security interest in or otherwise
encumbered any of its assets or properties except in favor of Bank or as
otherwise permitted by Bank in writing.
SECTION
2.6.
INCOME TAX RETURNS. To the best of Borrower's knowledge, there are no pending
assessments or adjustments of its income tax payable with respect to any
year.
SECTION
2.7.
NO SUBORDINATION. There is no agreement, indenture, contract or instrument
to
which Borrower is a party or by which Borrower may be bound that requires the
subordination in right of payment of any of Borrower's obligations subject
to
this Agreement to any other obligation of Borrower.
SECTION
2.8.
PERMITS, FRANCHISES. Borrower possesses, and will hereafter possess, all
permits, consents, approvals, franchises and licenses required and rights to
all
trademarks, trade names, patents, and fictitious names, if any, necessary to
enable it to conduct the business in which it is now engaged in material
compliance with applicable law.
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SECTION
2.9.
ERISA. To the best of Borrower's knowledge, Borrower is in compliance in all
material respects with all applicable provisions of the Employee Retirement
Income Security Act of 1974, as amended or recodified from time to time
("ERISA"); Borrower has not violated any provision of any defined employee
pension benefit plan (as defined in ERISA) maintained or contributed to by
Borrower (each, a "Plan"); no Reportable Event as defined in ERISA has occurred
and is continuing with respect to any Plan initiated by Borrower; Borrower
has
met its minimum funding requirements under ERISA with respect to each Plan;
and
each Plan will be able to fulfill its benefit obligations as they come due
in
accordance with the Plan documents and under generally accepted accounting
principles.
SECTION
2.10.
OTHER OBLIGATIONS. To the best of Borrower's knowledge, Borrower is not in
default on any obligation for borrowed money, any purchase money obligation
or
any other material lease, commitment, contract, instrument or
obligation.
SECTION
2.11.
ENVIRONMENTAL MATTERS. Except as disclosed by Borrower to Bank in writing prior
to the date hereof, and to the best of Borrower's knowledge, Borrower is in
compliance in all material respects with all applicable federal or state
environmental, hazardous waste, health and safety statutes, and any rules or
regulations adopted pursuant thereto, which govern or affect any of Borrower's
operations and/or properties, including without limitation, the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, the Superfund
Amendments and Reauthorization Act of 1986, the Federal Resource Conservation
and Recovery Act of 1976, and the Federal Toxic Substances Control Act, as
any
of the same may be amended, modified or supplemented from time to time. None
of
the operations of Borrower is the subject of any federal or state investigation
evaluating whether any remedial action involving a material expenditure is
needed to respond to a release of any toxic or hazardous waste or substance
into
the environment. Borrower has no material contingent liability in connection
with any release of any toxic or hazardous waste or substance into the
environment.
ARTICLE
III
CONDITIONS
SECTION
3.1.
CONDITIONS OF INITIAL EXTENSION OF CREDIT. The obligation of Bank to extend
any
credit contemplated by this Agreement is subject to the fulfillment to Bank's
satisfaction of all of the following conditions:
(a)
Approval of Bank
Counsel. All legal matters incidental to the extension of
credit by Bank shall be satisfactory to Bank's counsel.
(b)
Documentation. Bank
shall have received, in form and substance satisfactory to Bank, each of the
following, duly executed:
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(i)
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This
Agreement and each promissory note or other instrument or document
required hereby.
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(ii)
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Corporate
Resolution: Borrowing.
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(iii)
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Certificate
of Incumbency.
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(iv)
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Such
other documents as Bank may require under any other Section of this
Agreement.
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(c)
Financial
Condition. There shall have been no material adverse change,
as determined by Bank, in the financial condition or business of Borrower,
nor
any material decline, as determined by Bank, in a substantial or material
portion of the assets of Borrower since December 31, 2007.
(d)
Insurance. Borrower
shall have delivered to Bank evidence of insurance coverage on all Borrower's
property, in form, substance, amounts, covering risks and issued by companies
satisfactory to Bank.
SECTION
3.2.
CONDITIONS OF EACH EXTENSION OF CREDIT. The obligation of Bank to make each
extension of credit requested by Borrower hereunder shall be subject to the
fulfillment to Bank's satisfaction of each of the following
conditions:
(a)
Compliance. The
representations and warranties contained herein and in each of the other Loan
Documents shall be true on and as of the date of the signing of this Agreement
and on the date of each extension of credit by Bank pursuant hereto, with the
same effect as though such representations and warranties had been made on
and
as of each such date, and on each such date (unless by their terms, such
representations and warranties were made as of a specific date), no Event of
Default as defined herein, and no condition, event or act which with the giving
of notice or the passage of time or both would constitute such an Event of
Default, shall have occurred and be continuing or shall exist.
(b)
Documentation. Bank
shall have received all additional documents which may be required in connection
with such extension of credit.
(c)
Additional Letter
of
Credit Documentation. Prior to the issuance of each Letter of
Credit, Bank shall have received a Letter of Credit Agreement properly completed
and duly executed by Borrower.
ARTICLE
IV
AFFIRMATIVE
COVENANTS
Borrower
covenants that so long as
Bank remains committed to extend credit to Borrower pursuant hereto, or any
liabilities (whether direct or contingent, liquidated or unliquidated) of
Borrower to Bank under any of the Loan Documents remain outstanding and until
payment in full of all obligations of Borrower subject hereto, Borrower shall,
unless Bank otherwise consents in writing:
SECTION
4.1.
PUNCTUAL PAYMENTS. Punctually pay all principal, interest, fees or other
liabilities due under any of the Loan Documents at the times and place and
in
the manner specified therein.
SECTION
4.2.
ACCOUNTING RECORDS. Maintain adequate books and records in accordance with
generally accepted accounting principles consistently applied, and permit any
representative of Bank, at any reasonable time, to inspect, audit and examine
such books and records, to make copies of the same, and to inspect the
properties of Borrower; provided, however,
that so long
as no Event of Default exists and is continuing hereunder as of the date of
such
inspection, Bank shall provide Borrower with at least two (2) days' prior notice
thereof.
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SECTION
4.3.
FINANCIAL STATEMENTS. Provide to Bank all of the following, in form and detail
satisfactory to Bank:
(a)
not later than 90 days after and as of the end of each fiscal year, a
consolidated financial statement of Borrower, together with a copy of the 10K
report filed by Borrower with the Securities Exchange Commission, audited by
a
certified public accountant reasonably acceptable to Bank, to include a balance
sheet, an income statement and a statement of cash flows;
(b)
not later than 45 days after and as of the end of each fiscal quarter, a
consolidated financial statement of Borrower, together with a copy of the 10Q
report filed by Borrower with the Securities Exchange Commission, to include
a
balance sheet, an income statement and a statement of cash flows;
(c)
not later than 60 days prior to the last day of each fiscal year, Borrower’s
projections of consolidated financial statements for the immediately following
year, by fiscal quarter;
(d)
a Compliance Certificate: (i) contemporaneously with any request for an advance
under the Line of Credit when the outstanding principal balance of the Line
of
Credit at the time of such request is zero, and (ii) so long as there are
outstanding borrowings under the Line of Credit (excluding amounts reserved
under Section 1.1 (b)), contemporaneously with each annual and quarterly
financial statement of Borrower required hereby. As used herein, “Compliance
Certificate” shall mean a financial covenant compliance certificate (in form and
substance acceptable to Bank) of Borrower, together with a certificate of the
president or chief financial officer of Borrower that said financial statements
are accurate and that there exists no Event of Default nor any condition, act
or
event with which the giving of notice or the passage of time or both would
constitute an Event of Default;
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(e)
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from
time to time such other information as Bank may reasonably
request.
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SECTION
4.4.
COMPLIANCE. Preserve and maintain all licenses, permits, governmental approvals,
rights, privileges and franchises necessary for the conduct of its business;
and
comply with the provisions of all documents pursuant to which Borrower is
organized and/or which govern Borrower's continued existence and with the
requirements of all laws, rules, regulations and orders of any governmental
authority applicable to Borrower and/or its business.
SECTION
4.5.
INSURANCE. Maintain and keep in force, for each business in which Borrower
is
engaged, insurance of the types and in amounts customarily carried in similar
lines of business, including but not limited to fire, extended coverage, public
liability, flood, property damage and workers' compensation, with all such
insurance carried with companies and in amounts satisfactory to Bank, and
deliver to Bank from time to time at Bank's request schedules setting forth
all
insurance then in effect.
SECTION
4.6.
FACILITIES. Keep all properties useful or necessary to Borrower's business
in
good repair and condition, and from time to time make necessary repairs,
renewals and replacements thereto so that such properties shall be fully and
efficiently preserved and maintained.
SECTION
4.7.
TAXES AND OTHER LIABILITIES. Pay and discharge when due any and all
indebtedness, obligations, assessments and taxes, both real or personal,
including
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without
limitation federal and state income taxes and state and local property taxes
and
assessments, except (a) such as Borrower may in good faith contest or as to
which a bona fide dispute may arise, and (b) for which Borrower has made
provision, to Bank's satisfaction, for eventual payment thereof in the event
Borrower is obligated to make such payment.
SECTION
4.8.
LITIGATION. Promptly give notice in writing to Bank of any Litigation Matter
pending or threatened against Borrower that is not disclosed on Schedule 2.4
appended hereto.
SECTION
4.9.
FINANCIAL CONDITION. Maintain Borrower's financial condition as follows using
generally accepted accounting principles consistently applied and used
consistently with prior practices (except to the extent modified by the
definitions herein):
(a)
Current Ratio not less than 1.10 to 1.0 for each fiscal quarter ending June
30
and not less than 1.50 to 1.0 for each fiscal quarter ending September 30,
with
“Current Ratio” defined as the sum of cash and cash equivalents, marketable
securities, prepaid program costs, and expenses divided by
the sum of
accounts payable, accrued expenses and other short-term liabilities (excluding
deferred taxes), participant deposits, the outstanding principal balance of
the
Line of Credit (including the reserve for outstanding Letters of Credit) and
the
current portion of capitalized lease payments and long-term debt.
(b)
Deployable Cash not less than zero at any time, with “Deployable Cash” defined
as cash and cash equivalents, available for sale securities, prepaid program
costs and expenses minus participant
deposits, accounts payable, accrued expenses, and other short-term liabilities
(excluding deferred taxes) and the current portion of long-term capitalized
lease payments.
(c)
Tangible Net Worth not less than $40,000,000.00 at any time, with "Tangible
Net
Worth" defined as the aggregate of total stockholders' equity less any
intangible assets.
(d)
Net income after taxes not less than $4,000,000.00 on a trailing 4-quarter
basis, determined as of each fiscal quarter end.
SECTION
4.10.
NOTICE TO BANK. Promptly (but in no event more than ten (10) days after the
occurrence of each such event or matter) give written notice to Bank in
reasonable detail of: (a) the occurrence of any Event of Default, or any
condition, event or act which with the giving of notice or the passage of time
or both would constitute an Event of Default; (b) any change in the name or
the organizational structure of Borrower; (c) the occurrence and nature of
any Reportable Event or Prohibited Transaction, each as defined in ERISA, or
any
funding deficiency with respect to any Plan; or (d) any termination or
cancellation of any insurance policy which Borrower is required to maintain,
or
any uninsured or partially uninsured loss through liability or property damage,
or through fire, theft or any other cause affecting Borrower's.
ARTICLE
V
NEGATIVE
COVENANTS
Borrower
further covenants that so
long as Bank remains committed to extend credit to Borrower pursuant hereto,
or
any liabilities (whether direct or contingent, liquidated or unliquidated)
of
Borrower to Bank under any of the Loan Documents remain outstanding, and
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until
payment in full of all obligations of Borrower subject hereto, Borrower will
not
without Bank's prior written consent:
SECTION
5.1.
USE OF FUNDS. Use any of the proceeds of any credit extended hereunder except
for the purposes stated in Article I hereof.
SECTION
5.2.
OTHER INDEBTEDNESS. Create, incur, assume or permit to exist any indebtedness
or
liabilities resulting from borrowings, loans or advances, whether secured or
unsecured, matured or unmatured, liquidated or unliquidated, joint or several,
except (a) the liabilities of Borrower to Bank, (b) liabilities not to exceed
an
aggregate of $2,500,000.00 outstanding at any time, (c) any other
liabilities of Borrower existing as of, and disclosed to Bank prior to, the
date
hereof, (d) indebtedness of Borrower contractually subordinated to Borrower's
obligations to Bank on terms and conditions acceptable to Bank, and (e)
participant deposits.
SECTION
5.3.
MERGER, CONSOLIDATION, TRANSFER OF ASSETS. Except as identified on Schedule
5.3
hereto, incorporated herein by this reference, and Except in connection with
a
Permitted Acquisition, merge into or consolidate with any other entity; make
any
substantial change in the nature of Borrower's business as conducted as of
the
date hereof; acquire all or substantially all of the assets of any other entity
except in connection with a Permitted Acquisition; nor sell, lease, transfer
or
otherwise dispose of all or a substantial or material portion of Borrower's
assets except in the ordinary course of its business.
As
used herein, “Permitted
Acquisition” means the purchase by Borrower of all or substantially all of the
assets, business, stock, partnership interests or membership interests of any
person or entity, or the acquisition by Borrower of any corporation, partnership
or limited liability company through a merger or consolidation in which the
surviving entity is Borrower, and which satisfies the following conditions,
as
determined by Bank in its sole discretion: (a) the purpose of the acquisition
shall be to acquire a business in a similar or related line of business to
that
of Borrower; (b) Bank shall have received from Borrower such information
regarding the terms and conditions of the acquisition as it shall reasonably
require; (c) no later than thirty (30) days prior to the anticipated closing
of
such acquisition, Borrower shall deliver consolidated pro forma financial
statements to Bank, in form and substance satisfactory to Bank and certified
by
the president or chief financial officer of Borrower, evidencing that after
giving effect to the acquisition, no financial covenant of this Agreement shall
be violated; (d) at the time of such acquisition, no Event of Default (as
defined in Section 6.1 hereof), and no condition or event or act which with
the
giving of notice or the passage of time or both would constitute an Event of
Default, shall exist or shall have occurred and be continuing hereunder or
under
any of the other Loan Documents; and (e) the acquisition shall comply with
all
applicable laws.
SECTION
5.4.
GUARANTIES. Guarantee or become liable in any way as surety, endorser (other
than as endorser of negotiable instruments for deposit or collection in the
ordinary course of business), accommodation endorser or otherwise for, nor
pledge or hypothecate any assets of Borrower as security for, any liabilities
or
obligations of any other person or entity, except any of the foregoing in favor
of Bank.
SECTION
5.5.
LOANS, ADVANCES, INVESTMENTS. Make any loans or advances to or investments
in
any person or entity, except (a) any of the foregoing existing as of, and
disclosed to Bank prior to, the date hereof, and (b) intercompany loans and
investments in other entities related to Permitted Acquisitions in an amount
not
to exceed an aggregate of $2,500,000.00 outstanding at any time.
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SECTION
5.6.
PLEDGE OF ASSETS. Except as identified on Schedule 5.6 hereto, incorporated
herein by this reference, mortgage, pledge, grant or permit to exist a security
interest in, or lien upon, all or any portion of Borrower's assets now owned
or
hereafter acquired, except (a) purchase money security interests granted to
secure debt permitted under Section 5.2 (b) hereof; and (b) any of the foregoing
in favor of Bank.
ARTICLE
VI
EVENTS
OF
DEFAULT
SECTION
6.1.
The occurrence of any of the following shall constitute an "Event of Default"
under this Agreement:
(a)
Borrower shall fail to pay within five (5) Business Days of the date when due
any principal, interest, fees or other amounts payable under any of the Loan
Documents.
(b)
Any financial statement or certificate furnished to Bank in connection with,
or
any representation or warranty made by Borrower or any other party under this
Agreement or any other Loan Document shall prove to be incorrect, false or
misleading in any material respect when furnished or made.
(c)
Any default in the performance of or compliance with any obligation, agreement
or other provision contained herein or in any other Loan Document (other than
those referred to in subsections (a) and (b) above), and with respect to any
such default which by its nature can be cured, such default shall continue
for a
period of twenty (20) days from its occurrence.
(d)
Any default in the payment or performance of any obligation, or any defined
event of default, under the terms of any contract or instrument (other than
any
of the Loan Documents) pursuant to which Borrower, any guarantor hereunder
or
any general partner or joint venturer in Borrower if a partnership or joint
venture (with each such guarantor, general partner and/or joint venturer
referred to herein as a "Third Party Obligor") has incurred any debt or other
liability to any person or entity, including Bank.
(e)
Attachments, levies or other like process in excess of $1,000,000.00 in the
aggregate are made upon Borrower's or any Third Party Obligor's assets or a
judgment is rendered against the property of Borrower or any Third Party Obligor
involving a liability of more than $1,000,000.00 which shall not have been
vacated, discharged, stayed or bonded to Bank's satisfaction within thirty
(30)
days from the entity thereof.
(f)
Borrower or any Third Party Obligor shall become insolvent, or shall suffer
or
consent to or apply for the appointment of a receiver, trustee, custodian or
liquidator of itself or any of its property, or shall generally fail to pay
its
debts as they become due, or shall make a general assignment for the benefit
of
creditors; Borrower or any Third Party Obligor shall file a voluntary petition
in bankruptcy, or seeking reorganization, in order to effect a plan or other
arrangement with creditors or any other relief under the Bankruptcy Reform
Act,
Title 11 of the United States Code, as amended or recodified from time to time
("Bankruptcy Code"), or under any state or federal law granting relief to
debtors, whether now or hereafter in effect; or any involuntary petition or
proceeding pursuant to the Bankruptcy Code or any other applicable state or
federal law relating to bankruptcy, reorganization or other relief for debtors
is filed or commenced against Borrower or any Third Party Obligor which is
not
dismissed within sixty (60) days of the filing of such petition, or Borrower
or
any Third Party Obligor shall file an answer
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admitting
the jurisdiction of the court and the material allegations of any involuntary
petition; or Borrower or any Third Party Obligor shall be adjudicated a
bankrupt, or an order for relief shall be entered against Borrower or any Third
Party Obligor by any court of competent jurisdiction under the Bankruptcy Code
or any other applicable state or federal law relating to bankruptcy,
reorganization or other relief for debtors.
(g)
There shall exist or occur any event or condition which Bank in good faith
believes impairs, or is substantially likely to impair, the prospect of payment
or performance by Borrower of its obligations under any of the Loan
Documents.
(h)
The dissolution or liquidation of Borrower or any Third Party Obligor if a
corporation, partnership, joint venture or other type of entity; or Borrower
or
any such Third Party Obligor, or any of its directors, stockholders or members,
shall take action seeking to effect the dissolution or liquidation of Borrower
or such Third Party Obligor.
SECTION
6.2.
REMEDIES. Upon the occurrence of any Event of Default: (a) all indebtedness
of Borrower under each of the Loan Documents, any term thereof to the contrary
notwithstanding, shall at Bank's option and without notice become immediately
due and payable without presentment, demand, protest or notice of dishonor,
all
of which are hereby expressly waived by Borrower; (b) the obligation, if
any, of Bank to extend any further credit under any of the Loan Documents shall
immediately cease and terminate; and (c) Bank shall have all rights, powers
and remedies available under each of the Loan Documents, or accorded by law,
including without limitation the right to resort to any or all security for
any
credit subject hereto and to exercise any or all of the rights of a beneficiary
or secured party pursuant to applicable law. All rights, powers and
remedies of Bank may be exercised at any time by Bank and from time to time
after the occurrence of an Event of Default, are cumulative and not exclusive,
and shall be in addition to any other rights, powers or remedies provided by
law
or equity.
ARTICLE
VII
MISCELLANEOUS
SECTION
7.1.
NO WAIVER. No delay, failure or discontinuance of Bank in exercising any right,
power or remedy under any of the Loan Documents shall affect or operate as
a
waiver of such right, power or remedy; nor shall any single or partial exercise
of any such right, power or remedy preclude, waive or otherwise affect any
other
or further exercise thereof or the exercise of any other right, power or remedy.
Any waiver, permit, consent or approval of any kind by Bank of any breach of
or
default under any of the Loan Documents must be in writing and shall be
effective only to the extent set forth in such writing.
SECTION
7.2.
NOTICES. All notices, requests and demands which any party is required or may
desire to give to any other party under any provision of this Agreement must
be
in writing delivered to each party at the following address:
BORROWER: AMBASSADORS
GROUP, INC.
0000
Xxxxxxxxxx Xxx
Xxxxxxx,
Xxxxxxxxxx
00000-0000
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BANK: XXXXX
FARGO BANK, NATIONAL ASSOCIATION
000
Xxxx 0xx
Xxxxxx,
0xx
Xxxxx
Xxxxxxx,
Xxxxxxxxxx 00000
or
to
such other address as any party may designate by written notice to all other
parties. Each such notice, request and demand shall be deemed given
or made as follows: (a) if sent by hand delivery, upon delivery;
(b) if sent by mail, upon the earlier of the date of receipt or three (3)
days after deposit in the U.S. mail, first class and postage prepaid; and
(c) if sent by telecopy, upon receipt.
SECTION
7.3.
COSTS, EXPENSES AND ATTORNEYS' FEES. Borrower shall pay to Bank immediately
upon
demand the full amount of all payments, advances, charges, costs and expenses,
including reasonable attorneys' fees (to include outside counsel fees and all
allocated costs of Bank's in-house counsel), expended or incurred by Bank in
connection with (a) Bank's continued administration of this Agreement and the
other Loan Documents, and the preparation of any amendments and waivers hereto
and thereto, (b) the enforcement of Bank's rights and/or the collection of
any amounts which become due to Bank under any of the Loan Documents, and
(c) the prosecution or defense of any action in any way related to any of
the Loan Documents, including without limitation, any action for declaratory
relief, whether incurred at the trial or appellate level, in an arbitration
proceeding or otherwise, and including any of the foregoing incurred in
connection with any bankruptcy proceeding (including without limitation, any
adversary proceeding, contested matter or motion brought by Bank or any other
person) relating to Borrower or any other person or entity.
SECTION
7.4.
SUCCESSORS, ASSIGNMENT. This Agreement shall be binding upon and inure to the
benefit of the heirs, executors, administrators, legal representatives,
successors and assigns of the parties; provided, however,
that
Borrower may not assign or transfer its interests or rights hereunder without
Bank's prior written consent. Bank reserves the right to sell,
assign, transfer, negotiate or grant participations in all or any part of,
or
any interest in, Bank's rights and benefits under each of the Loan
Documents. In connection therewith, Bank may disclose all documents
and information which Bank now has or may hereafter acquire relating to any
credit subject hereto, Borrower or its business, or any collateral required
hereunder.
SECTION
7.5.
ENTIRE AGREEMENT; AMENDMENT. This Agreement and the other Loan Documents
constitute the entire agreement between Borrower and Bank with respect to each
credit subject hereto and supersede all prior negotiations, communications,
discussions and correspondence concerning the subject matter hereof. This
Agreement may be amended or modified only in writing signed by each party
hereto.
SECTION
7.6.
NO THIRD PARTY BENEFICIARIES. This Agreement is made and entered into for the
sole protection and benefit of the parties hereto and their respective permitted
successors and assigns, and no other person or entity shall be a third party
beneficiary of, or have any direct or indirect cause of action or claim in
connection with, this Agreement or any other of the Loan Documents to which
it
is not a party.
SECTION
7.7.
TIME. Time is of the essence of each and every provision of this Agreement
and
each other of the Loan Documents.
SECTION
7.8.
SEVERABILITY OF PROVISIONS. If any provision of this Agreement shall be
prohibited by or invalid under applicable law, such provision shall be
ineffective only to
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the
extent of such prohibition or invalidity without invalidating the remainder
of
such provision or any remaining provisions of this Agreement.
SECTION
7.9.
COUNTERPARTS. This Agreement may be executed in any number of counterparts,
each
of which when executed and delivered shall be deemed to be an original, and
all
of which when taken together shall constitute one and the same
Agreement.
SECTION
7.10.
GOVERNING LAW. This Agreement shall be governed by and construed in accordance
with the laws of the State of Washington.
SECTION
7.11.
ARBITRATION.
(a)
Arbitration. The
parties hereto agree, upon demand by any party, to submit to binding arbitration
all claims, disputes and controversies between or among them (and their
respective employees, officers, directors, attorneys, and other agents), whether
in tort, contract or otherwise in any way arising out of or relating to (i)
any
credit subject hereto, or any of the Loan Documents, and their negotiation,
execution, collateralization, administration, repayment, modification,
extension, substitution, formation, inducement, enforcement, default or
termination; or (ii) requests for additional credit.
(b)
Governing
Rules. Any arbitration proceeding will (i) proceed in a
location in Washington selected by the American Arbitration Association (“AAA”);
(ii) be governed by the Federal Arbitration Act (Title 9 of the United States
Code), notwithstanding any conflicting choice of law provision in any of the
documents between the parties; and (iii) be conducted by the AAA, or such other
administrator as the parties shall mutually agree upon, in accordance with
the
AAA’s commercial dispute resolution procedures, unless the claim or counterclaim
is at least $1,000,000.00 exclusive of claimed interest, arbitration fees and
costs in which case the arbitration shall be conducted in accordance with the
AAA’s optional procedures for large, complex commercial disputes (the commercial
dispute resolution procedures or the optional procedures for large, complex
commercial disputes to be referred to herein as applicable, as the
“Rules”). If there is any inconsistency between the terms hereof and
the Rules, the terms and procedures set forth herein shall
control. Any party who fails or refuses to submit to arbitration
following a demand by any other party shall bear all costs and expenses incurred
by such other party in compelling arbitration of any dispute. Nothing
contained herein shall be deemed to be a waiver by any party that is a bank
of
the protections afforded to it under 12 U.S.C. §91 or any similar applicable
state law.
(c)
No Waiver of
Provisional Remedies, Self-Help and Foreclosure. The
arbitration requirement does not limit the right of any party to (i) foreclose
against real or personal property collateral; (ii) exercise self-help remedies
relating to collateral or proceeds of collateral such as setoff or repossession;
or (iii) obtain provisional or ancillary remedies such as replevin, injunctive
relief, attachment or the appointment of a receiver, before during or after
the
pendency of any arbitration proceeding. This exclusion does not
constitute a waiver of the right or obligation of any party to submit any
dispute to arbitration or reference hereunder, including those arising from
the
exercise of the actions detailed in sections (i), (ii) and (iii) of this
paragraph.
(d)
Arbitrator
Qualifications and Powers. Any arbitration proceeding in which
the amount in controversy is $5,000,000.00 or less will be decided by a single
arbitrator selected according to the Rules, and who shall not render an award
of
greater than $5,000,000.00. Any dispute in which the amount in
controversy exceeds $5,000,000.00 shall be decided by majority
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vote
of a
panel of three arbitrators; provided, however,
that all
three arbitrators must actively participate in all hearings and
deliberations. The arbitrator will be a neutral attorney licensed in
the State of Washington or a neutral retired judge of the state or federal
judiciary of Washington, in either case with a minimum of ten years experience
in the substantive law applicable to the subject matter of the dispute to be
arbitrated. The arbitrator will determine whether or not an issue is
arbitratable and will give effect to the statutes of limitation in determining
any claim. In any arbitration proceeding the arbitrator will decide
(by documents only or with a hearing at the arbitrator's discretion) any
pre-hearing motions which are similar to motions to dismiss for failure to
state
a claim or motions for summary adjudication. The arbitrator shall
resolve all disputes in accordance with the substantive law of Washington and
may grant any remedy or relief that a court of such state could order or grant
within the scope hereof and such ancillary relief as is necessary to make
effective any award. The arbitrator shall also have the power to
award recovery of all costs and fees, to impose sanctions and to take such
other
action as the arbitrator deems necessary to the same extent a judge could
pursuant to the Federal Rules of Civil Procedure, the Washington Rules of Civil
Procedure or other applicable law. Judgment upon the award rendered
by the arbitrator may be entered in any court having
jurisdiction. The institution and maintenance of an action for
judicial relief or pursuit of a provisional or ancillary remedy shall not
constitute a waiver of the right of any party, including the plaintiff, to
submit the controversy or claim to arbitration if any other party contests
such
action for judicial relief.
(e)
Discovery. In
any arbitration proceeding, discovery will be permitted in accordance with
the
Rules. All discovery shall be expressly limited to matters directly
relevant to the dispute being arbitrated and must be completed no later than
20
days before the hearing date. Any requests for an extension of the
discovery periods, or any discovery disputes, will be subject to final
determination by the arbitrator upon a showing that the request for discovery
is
essential for the party's presentation and that no alternative means for
obtaining information is available.
(f)
Class Proceedings
and
Consolidations. No party hereto shall be entitled to join or
consolidate disputes by or against others in any arbitration, except parties
who
have executed any Loan Document, or to include in any arbitration any dispute
as
a representative or member of a class, or to act in any arbitration in the
interest of the general public or in a private attorney general
capacity.
(g)
Payment Of Arbitration
Costs And Fees. The arbitrator shall award all costs and
expenses of the arbitration proceeding.
(h)
Miscellaneous. To
the maximum extent
practicable, the AAA, the arbitrators and the parties shall take all action
required to conclude any arbitration proceeding within 180 days of the filing
of
the dispute with the AAA. No arbitrator or other party to an
arbitration proceeding may disclose the existence, content or results thereof,
except for disclosures of information by a party required in the ordinary course
of its business or by applicable law or regulation. If more than one
agreement for arbitration by or between the parties potentially applies to
a
dispute, the arbitration provision most directly related to the Loan Documents
or the subject matter of the dispute shall control. This arbitration
provision shall survive termination, amendment or expiration of any of the
Loan
Documents or any relationshipbetween the
parties.
ORAL
AGREEMENTS OR ORAL COMMITMENTS TO LOAN MONEY, EXTEND CREDIT OR TO FORBEAR
ENFORCING REPAYMENT OF A DEBT ARE NOT ENFORCEABLE UNDER
WASHINGTON LAW.
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IN
WITNESS WHEREOF, the parties
hereto have caused this Agreement to be executed as of the day and year first
written above.
XXXXX FARGO BANK,
AMBASSADORS
GROUP,
INC.
NATIONAL ASSOCIATION
By:
________________________________
By: ____________________________
Xxxxxxxx
X. Xxxx, Chief Financial
Officer
Xxxxxx Xxxx, Relationship Manager
By:
________________________________
Xxxxxxx X. Xxxxxx, Chief Executive Officer and President
Xxxxxxx X. Xxxxxx, Chief Executive Officer and President
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