**Exhibit 10.21**

 

ECOLLEGE.COM

4900 S. Monaco Street

Denver, Colorado 80237

 

 

Dated as of May 30, 2004

 

 

Capital Resource PartnersIV, L.P.

85 Merrimac Street

Suite 200

Boston,Massachusetts  02114

 

Re:                               AmendmentNo. 1 to Senior Subordinated Secured Note and Warrant Purchase Agreement

 

Ladies and Gentlemen:

 

ThisAmendment No. 1 to Senior Subordinated Secured Note and Warrant PurchaseAgreement (this “Amendment”) is made as of the date written above by and amongeCollege.com (the “Company”), a Delaware corporation, eCollege International,Inc. (the “eCollege Sub”), a Colorado corporation,****andCapital Resource Partners IV, L.P. (“CRP”), a Delaware limitedpartnership.  Reference is made to thatcertain Senior Subordinated Secured Note and Warrant Purchase Agreement datedas of October 31, 2003 (the “Purchase Agreement”).

 

WHEREAS,the Company, eCollege Sub and CRP desire to amend the Purchase Agreement tochange certain definitions and covenants contained therein.

 

NOW,THEREFORE, in consideration of the mutual covenants contained herein, and forother good and valuable consideration, the receipt and sufficiency of which arehereby acknowledged, the parties hereby agree to amend the Purchase Agreementas follows:

 

1.             Amendmentto Purchase Agreement.

 

1.01.        Section 1.01of the Purchase Agreement entitled “Definitions” is hereby amended by addingthe following definition therein to read as follows:

 

“Advance” shall have the meaning ascribed tothat term in the Loan Agreement.

 

“Quarter-End Advance” is an Advance made on thelast Business Day of a fiscal quarter, which Advance remains outstanding nolonger than 3 Business Days following the date such Advance is made, and theproceeds of which remain on deposit at the Bank during the period such Advanceis outstanding.

 

1.02.        Section 1.01of the Purchase Agreement entitled “Definitions” is hereby amended by changingthe definitions of “Deferred Revenue” and “Tangible Net Worth” in theirentirety to read as follows:

 

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“Deferred Revenue” is all amounts received inadvance of performance under a maintenance contract and not yet recognized asrevenue, and other amounts received from or billed to customers in excess ofrevenue that has been earned, including customer advances or deposits thatcustomers are required to pay for services, where such payments received arerecorded as customer advances (liability) until the revenue is recognized asearned.

 

“Tangible Net Worth” means, on any date, theConsolidated total assets (excluding proceeds of any Quarter-End Advance) ofthe Company and its Subsidiaries minus (i) any amounts attributable to (a)goodwill, (b) intangible items such as unamortized debt discount and expense,Patents, trade and service marks and names, Copyrights and research anddevelopment expenses except prepaid expenses, and (c) reserves not alreadydeducted from assets, and (ii) Total Liabilities excluding any Quarter-EndAdvance.

 

1.03.        Section 7.01(m)(ii)of the Purchase Agreement is hereby amended and restated in its entirety toread as follows:

 

 (ii)          Minimum Adjusted Quick Ratio. Commencing on the Closing Date and continuing through the fiscal quarterending March 31, 2004, the Company will maintain, on a Consolidated basis,measured at the end of each fiscal quarter, a ratio of Quick Assets to CurrentLiabilities minus Deferred Revenue and any Quarter-End Advance of at least 1.30to 1.00; provided, however that so long as the Bank is lending or remainsobligated to lend Senior Debt to the Company, such ratio shall be not less than1.17 to 1.00.  Commencing on April 1,2004 and including each fiscal quarter ended June 30, September 30, December 31and March 31 thereafter the Company will maintain, on a Consolidatedbasis, measured at the end of each fiscal quarter, a ratio of Quick Assets toCurrent Liabilities minus Deferred Revenue and any Quarter-End Advance of atleast 1.50 to 1.00; provided, however that so long as the Bank is lending orremain obligated to lend Senior Debt to the Company, such ratio shall be notless than 1.35 to 1.00.

 

1.04.        Section 6.01(m)(iii) of the PurchaseAgreement is hereby amended and restated in its entirety to read as follows:

 

(iii)          Minimum Debt Service Coverage.  TheCompany will maintain, on a Consolidated basis, measured at the end of eachfiscal quarter, a ratio of (a) earnings after taxes paid, less CapitalizedProduct Development Costs, plus interest expense, depreciation, amortization ofintangible assets and other non-cash charges made to the Company’s income forthe preceding quarter on an annualized basis, to (b) current maturities of alllong term debt and capitalized leases plus annualized interest expense of notless than 2.00 to 1.00 provided, however, that so long as the Bank is lendingor remains obligated to lend Senior Debt to Company, such ratio shall be notless than 1.80 to 1.00.  For purposeshereof, “interest expense” shall exclude non-current, non-cash andnon-recurring interest expense items and shall include only actual cash paidinterest expense items.

 

2.             Miscellaneous.

 

2.01.        NoWaiver.  This Amendment is effectiveonly in the specific instance and for the specific purpose for which it isexecuted and, except as specifically set forth herein, shall not be 

 

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considered a waiver oragreement to amend as to any provision of the Purchase Agreement (as amended)in the future.

 

2.02.        Costs,Expenses and Taxes. The Company agrees to pay on demand all reasonablecosts and expenses of CRP (including all reasonable fees and expenses ofTH&T, counsel to CRP) in connection with the preparation, execution and deliveryof this Amendment, and in connection with the consummation of the transactionscontemplated hereby and thereby and with any amendment, waiver (whether or notsuch amendment or waiver becomes effective) or enforcement of this Amendment.

 

2.03.        PriorAgreements.  This Amendment, thePurchase Agreement, including the exhibits, schedules and other agreementsdelivered pursuant to the Purchase Agreement contain all of the terms andconditions agreed upon by the parties relating to the subject matter of thisAmendment and supersede all prior agreements, negotiations, correspondence,undertakings and communications of the parties, whether oral or writtenrespecting that subject matter.

 

2.04.        GoverningLaw.  This Amendment shall begoverned by, and construed in accordance with, the internal laws of theCommonwealth of Massachusetts.

 

2.05.        SealedInstrument.  This Amendment isexecuted as an instrument under seal.

 

2.06.        Effect.   Except as expressly set forth in thisAmendment, the Purchase Agreement shall remain in full force and effect andshall not be altered, amended or modified.

 

2.07.        DefinedTerms.  All capitalized terms used bynot specifically defined herein shall have the same meanings given such termsin the Purchase Agreement unless the context clearly indicates or dictates acontrary meaning.

 

2.08.        Counterparts.  This Amendment may be executed in any numberof counterparts, including counterparts transmitted by facsimile, all of whichtaken together shall constitute one and the same instrument, and each of theparties hereto may execute this Amendment by signing any such counterpart.

 

2.09.        FurtherAssurances.  From and after the dateof this Amendment, upon the request of CRP, the Company and the Subsidiariesshall execute and deliver such instruments, documents and other writings as maybe reasonably necessary to confirm and carry out and to effectuate fully theprovisions of this Amendment.

 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK.]

 

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INWITNESS WHEREOF, the parties hereto have executed this Amendment No. 1 toSenior Subordinated Secured Note and Warrant Purchase Agreement as of the datefirst above written.

 
|   | **COMPANY**:                        |
|--------|-------------------------------------|
|   |                                |
|   | ECOLLEGE.COM                        |
|   |                                |
|   |                                |
|   | By:                                 | /s/ Reid E.  Simpson |   |
|   |                                | Name:  Reid E. Simpson |
|   |                                | Title:  Chief Financial Officer |
|   |                                |
|   |                                |
|   | **SUBSIDIARY**:                     |
|   |                                |
|   | ECOLLEGE  INTERNATIONAL, INC.       |
|   |                                |
|   | By:                                 | /s/ Reid E.  Simpson |   |
|   |                                | Name:  Reid E. Simpson |
|   |                                | Title:  Chief Financial Officer |
|   |                                |
|   |                                |
|   | **CRP**:                            |
|   |                                |
|   | CAPITAL RESOURCE  PARTNERS IV, L.P. |
|   |                                |
|   | BY:                                 | CRP PARTNERS IV,  L.L.C., |
|   |                                | Its General  Partner |
|   |                                |
|   | By:                                 | /s/ |   |
|   |                                | Name: | Authorized  signer |
|   |                                | Title: |   |
|        |                                     |  |  |  |  |  |  |

 

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