form8k.htm

AM AMBASSADORS GROUP, INC.

Date July 3, 2013

/s/Anthony F. Dombrowik

Anthony F. Dombrowik,

Interim Chief Executive Officer, Chief Financial Officer

(Principal Executive Officer, Principal Financial Officer and Principal Accounting Officer)

0001162315-13-000066.txt : 20130703 0001162315-13-000066.hdr.sgml : 20130703 20130703164528 ACCESSION NUMBER: 0001162315-13-000066 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20130630 ITEM INFORMATION: Entry into a Material Definitive Agreement ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20130703 DATE AS OF CHANGE: 20130703 FILER: COMPANY DATA: COMPANY CONFORMED NAME: AMBASSADORS GROUP INC CENTRAL INDEX KEY: 0001162315 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-EDUCATIONAL SERVICES [8200] IRS NUMBER: 911957010 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-33347 FILM NUMBER: 13953611 BUSINESS ADDRESS: STREET 1: 2001 SOUTH FLINT CITY: SPOKANE STATE: WA ZIP: 99224 BUSINESS PHONE: 5095687000 MAIL ADDRESS: STREET 1: 2001 SOUTH FLINT CITY: SPOKANE STATE: WA ZIP: 99224 8-K 1 form8k.htm FORM 8-K 7-3-13 form8k.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of

The Securities Exchange Act of 1934

Date of Report (Date of earliest event reported)

June 30, 2013

AMBASSADORS GROUP, INC.

Delaware		No. 0-33347		91-1957010
(State or Other Jurisdiction of Incorporation)		(Commission File Number)		(IRS Employer Identification No.)

Dwight D. Eisenhower Building, 2001 S Flint Road, Spokane, WA 99224

(Address of principal executive offices) (Zip Code)

Registrant’s telephone number, including area code

(509) 568-7800

Not Applicable

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

¨	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 1.01. Entry into a Material Definitive Agreement.

Effective June 30, 2013, Ambassadors Group, Inc. (the "Registrant") entered into an amendment to its Credit Agreement (the "Third Amendment to Credit Agreement") with Wells Fargo Bank, National Association (the "Bank") whereby the aggregate principal amount available to the Resgistrant under the Credit Agreement was reduced and certain covenants under the Credit Agreement were modified, including, without limitation, by limiting borrowings under the Credit Agreement to 50% of Deployable Cash (as defined in the Third Amendment to Credit Agreement) and deleting the net income financial covenant. Under the terms of the Third Amendment to Credit Agreement, the Registrant may continue to access up to an aggregate principal amount of $12.5 million, through June 1, 2014. The Registrant’s obligation to repay advances under the line of credit is evidenced by a Revolving Line of Credit Note dated May 31, 2011 as amended by the First Modification to Promissory Note effective March 31, 2012 and by the Second Modification to Promissory Note effective June 30, 2013. The credit facility contains a subfeature for the issuance of standby letters of credit not to exceed $2.5 million in the aggregate.

The following is a summary of certain of the modifications to the Credit Agreement effected by the Third Amendment to Credit Agreement:

	Existing Agreement	Third Amendment

Aggregate Principal Amount	$20.0 MM	$12.5 MM

Limitation on Borrowings		Outstanding borrowings (including issued and undrawn letters of credit and unreimbursed draws under any letters of credit), to a maximum of the principal amount, shall not exceed 50% of Deployable Cash.

Net Income	> $2.0 MM
	> $4.0 MM September 30, 2013 and after
	Calculation excludes any potential loss of sale of headquarters building

Under the current terms of the Credit Agreement, borrowings bear interest at LIBOR + 1.75% or at Bank’s Prime Rate, at the Registrant’s option. Fees for unused borrowings is at 0.25% per annum. There are no other material modifications to the existing terms.

The foregoing summary of the Third Amendment to Credit Agreement and the Second Modification to Promissory Note does not purport to be complete and is qualified in its entirety by reference to the full text of the agreements attached hereto as Exhibits 10.1 and 10.2 and incorporated herein by reference.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits

Exhibit 10.1: Third Amendment to Credit Agreement, effective June 30, 2013

Exhibit 10.2: Second Modification to Promissory Note, effective June 30, 2013

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

EXHIBIT INDEX

Exhibit
Number		Description

10.1		Third Amendment to Credit Agreement, effective June 30, 2013
10.2		Second Modification to Promissory Note, effective June 30, 2013

EX-10.1 2 ex10_1.htm EXHIBIT 10.1 ex10_1.htm

EXHIBIT 10.1

THIRD AMENDMENT TO CREDIT AGREEMENT

THIS AMENDMENT TO CREDIT AGREEMENT (this "Amendment") is entered into as of June 30, 2013, by and between AMBASSADORS GROUP, INC., a Delaware corporation ("Borrower"), and WELLS FARGO BANK, NATIONAL ASSOCIATION ("Bank").

RECITALS

WHEREAS, Borrower is currently indebted to Bank pursuant to the terms and conditions of that certain Credit Agreement between Borrower and Bank dated as of May 30, 2008, as amended from time to time ("Credit Agreement").

WHEREAS, Bank and Borrower have agreed to certain changes in the terms and conditions set forth in the Credit Agreement and have agreed to amend the Credit Agreement to reflect said changes.

NOW, THEREFORE, for valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree that the Credit Agreement shall be amended as follows:

1. Section 1.1 (a) is hereby amended by deleting “Twenty Million Dollars ($20,000,000.00)" as the maximum principal amount available under the Line of Credit, and by substituting for said amount “Twelve Million Five Hundred Thousand Dollars ($12,500,000.00)."

2. Section 1.1 (c) is hereby renumbered as Section 1.1 (d).

3. The following is hereby added to the Credit Agreement as the new Section 1.1 (c):

“(c) Limitation on Borrowings. Outstanding borrowings under the Line of Credit (including the face amount of any issued and undrawn Letters of Credit and unreimbursed draws under any Letters of Credit), to a maximum of the principal amount set forth above, shall not at any time exceed an aggregate of fifty percent (50%) of Deployable Cash, with “Deployable Cash” as defined in Section 4.9 (b) hereof.”

4. Section 4.1 is hereby deleted in its entirety, and the following substituted therefor:

“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, and immediately upon demand by Bank, the amount by which the outstanding principal balance of any credit subject hereto at any time exceeds any limitation on borrowings applicable thereto.”

5. Section 4.9 is hereby deleted in its entirety, and the following substituted therefor:

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“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) 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.

(b) Deployable Cash not less than $0.00 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.”

6. Section 5.2 and 5.3 are hereby deleted in their entirety, and the following substituted therefor:

“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) any other liabilities of Borrower existing as of, and disclosed to Bank prior to, the date hereof, (c) indebtedness of Borrower contractually subordinated to Borrower's obligations to Bank on terms and conditions acceptable to Bank, and (d) 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 (a) sales, leases, transfers or other dispositions in the ordinary course of its business, (b) the sale of Borrower’s real estate located at 1956 Ambassador Way, Spokane, WA 99224 and (c) the sale of Borrower’s Bookrags business unit.

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.”

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7. In consideration of the changes set forth herein and as a condition to the effectiveness hereof, immediately upon signing this Amendment Borrower shall pay to Bank a non-refundable fee of $3,500.00.

8. Except as specifically provided herein, all terms and conditions of the Credit Agreement remain in full force and effect, without waiver or modification. All terms defined in the Credit Agreement shall have the same meaning when used in this Amendment. This Amendment and the Credit Agreement shall be read together, as one document.

9. Borrower hereby remakes all representations and warranties contained in the Credit Agreement and reaffirms all covenants set forth therein. Borrower further certifies that as of the date of this Amendment there exists no Event of Default as defined in the Credit Agreement, nor any condition, act or event which with the giving of notice or the passage of time or both would constitute any such Event of Default.

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 Amendment to be executed as of the day and year first written above.

WELLS FARGO BANK,

AMBASSADORS GROUP, INC. NATIONAL ASSOCIATION

By: /s/Anthony F. Dombrowik By: /s/ Thomas Thoen

Anthony F. Dombrowik, Thomas Thoen,

Chief Financial Officer Relationship Manager

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EX-10.2 3 ex10_2.htm EXHIBIT 10.2 ex10_2.htm

EXHIBIT 10.2

SECOND MODIFICATION TO PROMISSORY NOTE

THIS MODIFICATION TO PROMISSORY NOTE (this “Modification”) is entered into as of June 30, 2013, by and between AMBASSADORS GROUP, INC. (“Borrower”), and WELLS FARGO BANK, NATIONAL ASSOCIATION (“Bank”).

RECITALS

WHEREAS, Borrower is currently indebted to Bank pursuant to the terms and conditions of that certain Revolving Line of Credit Note in the maximum principal amount of $20,000,000.00, executed by Borrower and payable to the order of Bank, dated as of May 31, 2011 (the "Note"), which Note is subject to the terms and conditions of a loan agreement between Borrower and Bank dated as of May 30, 2008, as amended from time to time (the "Loan Agreement").

WHEREAS, Bank and Borrower have agreed to certain changes in the terms and conditions set forth in the Note, and have agreed to modify the Note to reflect said changes.

NOW, THEREFORE, for valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree that the Note shall be modified as follows:

1. The maximum principal amount available under the Note is hereby modified to be Twelve Million Five Hundred Thousand Dollars ($12,500,000.00).

2. The effective date of the changes set forth herein shall be June 30, 2013. In consideration of said changes and as a condition to their effectiveness, immediately upon signing this Modification Borrower shall pay to Bank a non-refundable fee of $3,500.00.

3. Except as expressly set forth herein, all terms and conditions of the Note remain in full force and effect, without waiver or modification. All terms defined in the Note or the Loan Agreement shall have the same meaning when used in this Modification. This Modification and the Note shall be read together, as one document.

4. Borrower certifies that as of the date of this Modification there exists no Event of Default under the Note, nor any condition, act or event which with the giving of notice or the passage of time or both would constitute any such Event of Default.