ex10_2.htm


    REVOLVING
      LINE OF CREDIT NOTE

    


    $20,000,000.00


     Spokane,
      Washington

    May
      30,
      2008

    


    FOR
      VALUE RECEIVED, the undersigned
      AMBASSADORS GROUP, INC. ("Borrower") promises to pay to the order of WELLS
      FARGO
      BANK, NATIONAL ASSOCIATION ("Bank") at its office at Inland RCBO, 601 West
      1st
      Avenue, 9th
      Floor,
      Spokane, Washington 99201, or at such other place as the holder hereof may
      designate, in lawful money of the United States of America and in immediately
      available funds, the principal sum of Twenty Million Dollars ($20,000,000.00),
      or so much thereof as may be advanced and be outstanding, with interest thereon,
      to be computed on each advance from the date of its disbursement as set forth
      herein.

    


    DEFINITIONS:

    


    As
      used herein, the following terms
      shall have the meanings set forth after each, and any other term defined in
      this
      Note shall have the meaning set forth at the place defined:

    


    (a)           
      "Business Day" means any day except a Saturday, Sunday or any other day on
      which
      commercial banks in Washington are authorized or required by law to
      close.

    


    (b)           
      "Fixed Rate Term" means a period commencing on a Business Day and continuing
      for
      1, 2, 3 or 6 months, as designated by Borrower, during which all or a portion
      of
      the outstanding principal balance of this Note bears interest determined in
      relation to LIBOR; provided however, that no Fixed Rate Term may be selected
      for
      a principal amount less than One Million Dollars ($1,000,000.00); and provided
      further, that no Fixed Rate Term shall extend beyond the scheduled maturity
      date
      hereof. If any Fixed Rate Term would end on a day which is not a Business Day,
      then such Fixed Rate Term shall be extended to the next succeeding Business
      Day.

    


    (c)           
      "LIBOR" means the rate per annum (rounded upward, if necessary, to the nearest
      whole 1/16 of 1%) and determined pursuant to the following formula:

    


    
      	
              LIBOR
                =

            	
              Base
                LIBOR

            	 
	 	
              100%
                - LIBOR Reserve Percentage

            	 


    

    


                   (i)
      "Base LIBOR" means the
      rate per
      annum for United States dollar deposits quoted by Bank as the Inter-Bank Market
      Offered Rate, with the understanding that such rate is quoted by Bank for the
      purpose of calculating effective rates of interest for loans making reference
      thereto, on the first day of a Fixed Rate Term for delivery of funds on said
      date for a period of time approximately equal to the number of days in such
      Fixed Rate Term and in an amount approximately equal to the principal amount
      to
      which such Fixed Rate Term applies.  Borrower understands and agrees
      that Bank may base its quotation of the Inter-Bank Market Offered Rate upon
      such
      offers or other market indicators of the Inter-Bank Market as Bank in its
      discretion deems appropriate including, but not limited to, the rate offered
      for
      U.S. dollar deposits on the London Inter-Bank Market.

    


                   (ii)
      "LIBOR Reserve Percentage"
      means the reserve percentage prescribed by the Board of Governors of the Federal
      Reserve System (or any successor) for "Eurocurrency 

     

     

    
      
        
        

      

      
        -1-

        
          

        

      

      
        
        

      

    

    Liabilities"
      (as defined in Regulation D of the Federal Reserve Board, as amended), adjusted
      by Bank for expected changes in such reserve percentage during the applicable
      Fixed Rate Term.

    


                   (d)
      "Prime Rate" means at any
      time
      the rate of interest most recently announced within Bank at its principal office
      as its Prime Rate, with the understanding that the Prime Rate is one of Bank's
      base rates and serves as the basis upon which effective rates of interest are
      calculated for those loans making reference thereto, and is evidenced by the
      recording thereof after its announcement in such internal publication or
      publications as Bank may designate.

    


    INTEREST:

    


    (a)           
      Interest.  The
      outstanding principal balance of this Note shall bear interest either (i) at
      a
      fluctuating rate per annum equal to Prime Rate in effect from time to time,
      or
      (ii) at a fixed rate per annum determined by Bank to be eight hundred
      seventy-five thousandths percent (0.875%) above LIBOR in effect on the first
      day
      of the applicable Fixed Rate Term.  Interest determined in relation to
      the Prime Rate shall be computed on the basis of a 365/366-day year, actual
      days
      elapsed, and interest determined in relation to the LIBOR rate shall be computed
      on the basis of a 360-day year, actual days elapsed.  When interest is
      determined in relation to the Prime Rate, each change in the rate of interest
      hereunder shall become effective on the date each Prime Rate change is announced
      within Bank.  With respect to each LIBOR selection hereunder, Bank is
      hereby authorized to note the date, principal amount, interest rate and Fixed
      Rate Term applicable thereto and any payments made thereon on Bank's books
      and
      records (either manually or by electronic entry) and/or on any schedule attached
      to this Note, which notations shall be prima facie evidence of the accuracy
      of
      the information noted.

    


    (b)           
      Selection of Interest
      Rate Options.  At any time any portion of this Note bears
      interest determined in relation to LIBOR, it may be continued by Borrower at
      the
      end of the Fixed Rate Term applicable thereto so that all or a portion thereof
      bears interest determined in relation to the Prime Rate or to LIBOR for a new
      Fixed Rate Term designated by Borrower.  At any time any portion of
      this Note bears interest determined in relation to the Prime Rate, Borrower
      may
      convert all or a portion thereof so that it bears interest determined in
      relation to LIBOR for a Fixed Rate Term designated by Borrower.  At
      such time as Borrower requests an advance hereunder or wishes to select a LIBOR
      option for all or a portion of the outstanding principal balance hereof, and
      at
      the end of each Fixed Rate Term, Borrower shall give Bank notice specifying:
      (i)
      the interest rate option selected by Borrower; (ii) the principal amount
      subject thereto; and (iii) for each LIBOR selection, the length of the
      applicable Fixed Rate Term. Any such notice may be given by telephone (or such
      other electronic method as Bank may permit) so long as, with respect to each
      LIBOR selection, (A) if requested by Bank, Borrower provides to Bank written
      confirmation thereof not later than three (3) Business Days after such notice
      is
      given, and (B) such notice is given to Bank prior to 10:00 a.m. on the first
      day
      of the Fixed Rate Term, or at a later time during any Business Day if Bank,
      at
      its sole option but without obligation to do so, accepts Borrower's notice
      and
      quotes a fixed rate to Borrower.  If Borrower does not immediately
      accept a fixed rate when quoted by Bank, the quoted rate shall expire and any
      subsequent LIBOR request from Borrower shall be subject to a redetermination
      by
      Bank of the applicable fixed rate.  If no specific designation of
      interest is made at the time any advance is requested hereunder or at the end
      of
      any Fixed Rate Term, Borrower shall be deemed to have made a Prime Rate interest
      selection for such advance or the principal amount to which such Fixed Rate
      Term
      applied.

    


    (c)           
      Taxes
      and Regulatory Costs.  Borrower shall pay to
      Bank
      immediately upon demand, in addition to any other amounts due or to become
      due
      hereunder, any and all (i) 

     

    
      
        
        

      

      
        -2-

        
          

        

      

      
        
        

      

    

    withholdings,
      interest equalization
      taxes, stamp taxes or other taxes (except income and franchise taxes) imposed
      by
      any domestic or foreign governmental authority and related in any manner to
      LIBOR, and (ii) future, supplemental, emergency or other changes in the LIBOR
      Reserve Percentage, assessment rates imposed by the Federal Deposit Insurance
      Corporation, or similar requirements or costs imposed by any domestic or foreign
      governmental authority or resulting from compliance by Bank with any request
      or
      directive (whether or not having the force of law) from any central bank or
      other governmental authority and related in any manner to LIBOR to the extent
      they are not included in the calculation of LIBOR.  In determining
      which of the foregoing are attributable to any LIBOR option available to
      Borrower hereunder, any reasonable allocation made by Bank among its operations
      shall be conclusive and binding upon Borrower.

    


    (d)           
      Payment of
      Interest.  Interest accrued on this Note shall be payable on
      the last day of each month, commencing June 30, 2008.

    


    (e)           
      Default
      Interest.  From and after the maturity date of this Note, or
      such earlier date as all principal owing hereunder becomes due and payable
      by
      acceleration or otherwise, the outstanding principal balance of this Note shall
      bear interest until paid in full at an increased rate per annum (computed on
      the
      basis of a 360-day year, actual days elapsed) equal to two percent (2%) above
      the rate of interest from time to time applicable to this Note.

    


    BORROWING
      AND REPAYMENT:

    


    (a)           
      Borrowing and
      Repayment.  Borrower may from time to time during the term of
      this Note borrow, partially or wholly repay its outstanding borrowings, and
      reborrow, subject to all of the limitations, terms and conditions of this Note
      and of any document executed in connection with or governing this Note; provided
      however, that the total outstanding borrowings under this Note shall not at
      any
      time exceed the principal amount stated above.  The unpaid principal
      balance of this obligation at any time shall be the total amounts advanced
      hereunder by the holder hereof less the amount of principal payments made hereon
      by or for Borrower, which balance may be endorsed hereon from time to time
      by
      the holder.  The outstanding principal balance of this Note shall be
      due and payable in full on May 31, 2011.

    


    (b)           
      Advances.  Advances
      hereunder, to the total amount of the principal sum stated above, may be made
      by
      the holder at the oral or written request of (i) Chadwick J. Byrd or Margaret
      M.
      Thomas, any one acting alone, who are authorized to request advances and direct
      the disposition of any advances until written notice of the revocation of such
      authority is received by the holder at the office designated above, or (ii)
      any
      person, with respect to advances deposited to the credit of any deposit account
      of Borrower, which advances, when so deposited, shall be conclusively presumed
      to have been made to or for the benefit of Borrower regardless of the fact
      that
      persons other than those authorized to request advances may have authority
      to
      draw against such account.  The holder shall have no obligation to
      determine whether any person requesting an advance is or has been authorized
      by
      Borrower.

    


    (c)           
      Application of
      Payments.  Each payment made on this Note shall be credited
      first, to any interest then due and second, to the outstanding principal balance
      hereof.  All payments credited to principal shall be applied first, to
      the outstanding principal balance of this Note which bears interest determined
      in relation to the Prime Rate, if any, and second, to the outstanding principal
      balance of this Note which bears interest determined in relation to LIBOR,
      with
      such payments applied to the oldest Fixed Rate Term first.

    


    
      
        
        

      

      
        -3-

        
          

        

      

      
        
        

      

    

    PREPAYMENT:

    


    (a)           
      Prime
      Rate.  Borrower may prepay principal on any portion of this
      Note which bears interest determined in relation to the Prime Rate at any time,
      in any amount and without penalty.

    


    (b)           
      LIBOR.  Borrower
      may prepay principal on any portion of this Note which bears interest determined
      in relation to LIBOR at any time and in the minimum amount of One Hundred
      Thousand Dollars ($100,000.00); provided however, that if the outstanding
      principal balance of such portion of this Note is less than said amount, the
      minimum prepayment amount shall be the entire outstanding principal balance
      thereof.  In consideration of Bank providing this prepayment option to
      Borrower, or if any such portion of this Note shall become due and payable
      at
      any time prior to the last day of the Fixed Rate Term applicable thereto by
      acceleration or otherwise, Borrower shall pay to Bank immediately upon demand
      a
      fee which is the sum of the discounted monthly differences for each month from
      the month of prepayment through the month in which such Fixed Rate Term matures,
      calculated as follows for each such month:

    


    
      	
               

            	
              (i)

            	
            	
              Determine
                the
                amount of interest which would have accrued each month on the amount
                prepaid at the interest rate applicable to such amount had it remained
                outstanding until the last day of the Fixed Rate Term applicable
                thereto.
                

            


    

    


    
      	
               

            	
              (ii)

            	
            	
              Subtract
                from
                the amount determined in (i) above the amount of interest which would
                have
                accrued for the same month on the amount prepaid for the remaining
                term of
                such Fixed Rate Term at LIBOR in effect on the date of prepayment
                for new
                loans made for such term and in a principal amount equal to the amount
                prepaid. 

            


    

    


    
      	
               

            	
              (iii)

            	
            	
              If
                the result obtained in (ii) for any month is greater than zero, discount
                that difference by LIBOR used in (ii) above.


            


    

    


    Borrower
      acknowledges that prepayment of such amount may result in Bank incurring
      additional costs, expenses and/or liabilities, and that it is difficult to
      ascertain the full extent of such costs, expenses and/or
      liabilities.  Borrower, therefore, agrees to pay the above-described
      prepayment fee and agrees that said amount represents a reasonable estimate
      of
      the prepayment costs, expenses and/or liabilities of Bank.  If
      Borrower fails to pay any prepayment fee when due, the amount of such prepayment
      fee shall thereafter bear interest until paid at a rate per annum two percent
      (2%) above the Prime Rate in effect from time to time (computed on the basis
      of
      a 360-day year, actual days elapsed).

    


    EVENTS
      OF
      DEFAULT:

    


    This
      Note is made pursuant to and is
      subject to the terms and conditions of that certain Credit Agreement between
      Borrower and Bank dated as of May 1, 2008, as amended from time to time (the
      "Credit Agreement").  Any default in the payment or performance of any
      obligation under this Note which continues unremedied for five (5) Business
      Days, or any defined event of default under the Credit Agreement, shall
      constitute an "Event of Default" under this Note.

    


    
      
        
        

      

      
        -4-

        
          

        

      

      
        
        

      

    

    MISCELLANEOUS:

    


    (a)           
      Remedies.  Upon
      the occurrence of any Event of Default, the holder of this Note, at the holder's
      option, may declare all sums of principal and interest outstanding hereunder
      to
      be immediately due and payable without presentment, demand, notice of
      nonperformance, notice of protest, protest or notice of dishonor, all of which
      are expressly waived by Borrower, and the obligation, if any, of the holder
      to
      extend any further credit hereunder shall immediately cease and
      terminate.  Borrower shall pay to the holder 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 the holder's in-house counsel), expended or incurred by
      the
      holder in connection with the enforcement of the holder's rights and/or the
      collection of any amounts which become due to the holder under this Note, and
      the prosecution or defense of any action in any way related to this Note,
      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.

    


    (b)           
      Obligations Joint
      and
      Several.  Should more than one person or entity sign this Note
      as a Borrower, the obligations of each such Borrower shall be joint and
      several.

    


    (c)           
      Governing
      Law.  This Note shall be governed by and construed in
      accordance with the laws of the State of Washington.

    


    ORAL
      AGREEMENTS OR ORAL COMMITMENTS TO LOAN MONEY, EXTEND CREDIT OR TO FORBEAR
      ENFORCING REPAYMENT OF A DEBT ARE NOT ENFORCEABLE UNDER WASHINGTON
      LAW.

    


    IN
      WITNESS WHEREOF, the undersigned has
      executed this Note as of the date first written above.

    


    AMBASSADORS
      GROUP, INC.

    


    By:
      _________________________________

          Chadwick
      J. Byrd, Chief Financial Officer

    


    By:
      ____________________________

          Jeffery
      D. Thomas, Chief Executive Officer


    
      
        
          
            	 	
                    -5-