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EXHIBIT 10.3
AMENDED AND RESTATED CREDIT AGREEMENT
AMONG
FLEET NATIONAL BANK, as Agent
XXXXXXX XXXXX CREDIT PARTNERS L.P., as Syndication Agent
THE LENDERS NAMED HEREIN
TLC MULTIMEDIA INC.
LEARNING COMPANY PROPERTIES INC.
TEC DIRECT, INC.
LEARNING SERVICES INC.
SKILLS BANK CORPORATION
MICROSYSTEMS SOFTWARE, INC.
AND
MINDSCAPE, INC.
Dated:
as of May 6, 1998
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TABLE OF CONTENTS
SECTION I. DEFINITIONS...........................................1
1.1 Definitions...........................................1
1.2 Rules of Interpretation..............................13
SECTION II. DESCRIPTION OF CREDIT................................14
2.1 Loans................................................14
2.2 The Revolving Credit Notes. ........................16
2.3 Notice and Manner of Borrowing or Conversion
of Loans.............................................16
2.4 Funding of Loans.....................................17
2.5 Interest Rates and Payments of Interest..............18
2.6 Fees.................................................19
2.7 Payments and Prepayments of the Loans................20
2.8 Method and Allocation of Payments....................20
2.9 Eurodollar Indemnity. ...............................22
2.10 Computation of Interest and Fees.....................22
2.11 Changed Circumstances; Illegality....................23
2.12 Increased Costs. ...................................24
2.13 Capital Requirements.................................24
2.14 Removal of Lender....................................25
SECTION IIA LETTERS OF CREDIT....................................26
2A.1 Issuance.............................................26
2A.2 Reimbursement Obligation of the Borrowers............27
2A.3 Letter of Credit Payments............................27
2A.4 Obligations Absolute.................................28
2A.5 Reliance by the Issuing Bank and the Agent...........29
SECTION III CONDITIONS OF LOANS AND LETTERS OF CREDIT............29
3.1 Conditions Precedent to Initial Revolving
Credit Loans. .......................................29
3.2 Conditions Precedent to all Loans and Letters
of Credit............................................31
SECTION IV REPRESENTATIONS AND WARRANTIES.......................32
4.1 Organization; Qualification; Business................32
4.2 Corporate Authority..................................32
4.3 Valid Obligations....................................33
4.4 Consents or Approvals................................33
4.5 Title to Properties; Absence of Encumbrances.........33
4.6 Financial Statements.................................33
4.7 Changes..............................................34
4.8 Solvency.............................................34
4.9 Defaults.............................................34
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4.10 Taxes................................................34
4.11 Litigation...........................................34
4.12 Subsidiaries.........................................35
4.13 Investment Company Act...............................35
4.14 Compliance...........................................35
4.15 ERISA................................................35
4.16 Environmental Matters................................36
4.17 Restrictions on the Borrowers........................37
4.18 Labor Relations......................................38
4.19 Margin Rules.........................................38
4.20 Disclosure...........................................38
4.21 Intellectual Property. .............................38
4.22 Fiscal Year..........................................39
SECTION V AFFIRMATIVE COVENANTS................................39
5.1 Financial Statements. ..............................39
5.2 Conduct of Business..................................40
5.3 Maintenance and Insurance............................40
5.4 Taxes................................................41
5.5 Inspection...........................................41
5.6 Maintenance of Books and Records.....................42
5.7 Use of Proceeds......................................42
5.8 Further Assurances...................................42
5.9 Notification Requirements............................42
5.10 ERISA Reports........................................43
5.11 Environmental Compliance. ..........................43
5.12 Subsidiaries.........................................44
5.13 Intellectual Property Updates and
Hypothecation....................................................45
SECTION VI FINANCIAL COVENANTS..................................46
6.1 Leverage Ratio. ....................................46
6.2 Interest Coverage Ratio..............................47
6.3 Minimum EBITDA.......................................47
6.4 Quick Ratio..........................................47
6.5 Capital Expenditures.................................47
SECTION VI NEGATIVE COVENANTS...................................47
7.1 Indebtedness. ......................................47
7.2 Contingent Liabilities. ............................48
7.3 Encumbrances. .......................................48
7.4 Consolidation, Merger or Acquisition.................50
7.5 Disposition of Assets................................50
7.6 Subsidiary Stock. ..................................51
7.7 Restricted Payments. ...............................51
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7.8 Investments; Purchases of Assets.....................52
7.9 ERISA Compliance.....................................53
7.10 Transactions with Affiliates.........................54
7.11 Fiscal Year. .......................................54
7.12 Additional Negative Pledges..........................54
SECTION VIII DEFAULTS............................................55
8.1 Events of Default....................................55
8.2 Remedies.............................................57
SECTION IX ASSIGNMENT AND PARTICIPATION.........................58
9.1 Assignment...........................................58
9.2 Participations. ....................................59
SECTION X THE AGENT............................................60
10.1 Appointment of Agent; Powers and Immunities..........60
10.2 Actions by Agent.....................................61
10.3 Indemnification. ...................................61
10.4 Reimbursement. .....................................62
10.5 Non-Reliance on Agent and Other Lenders. ............62
10.6 Resignation of Agent. ...............................63
SECTION XI MISCELLANEOUS........................................63
11.1 Notices..............................................63
11.2 Expenses.............................................64
11.3 Indemnification......................................65
11.4 Survival of Covenants, Etc...........................66
11.5 Set-Off..............................................66
11.6 No Waivers...........................................66
11.7 Amendments, Waivers, etc.............................67
11.8 Binding Effect of Agreement..........................67
11.9 Captions; Counterparts...............................68
11.10 Entire Agreement; Conflicts..........................68
11.11 Waiver of Jury Trial.................................68
11.12 Governing Law........................................69
11.13 Severability.........................................69
11.14 Joint and Several Obligations........................69
11.15 TLC as Agent for the Borrowers. ....................70
11.16 Release of MECC from its Obligations.................70
11.17 Confidentiality......................................70
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SCHEDULES
SCHEDULE 1 - Commitments of the Lenders
SCHEDULE 2 - Significant Subsidiaries
SCHEDULE 3 - Disclosure Schedule
EXHIBITS
EXHIBIT A - Form of Revolving Credit Note
EXHIBIT B - Form of Notice of Borrowing or Conversion
EXHIBIT C - Form of Report of Chief Financial Officer
EXHIBIT D - Form of Assignment and Joinder Agreement
EXHIBIT E - Parent Guaranty
EXHIBIT F - MECC Release
EXHIBIT G - Instrument of Joinder
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AMENDED AND RESTATED CREDIT AGREEMENT
THIS AMENDED AND RESTATED CREDIT AGREEMENT is made as of May 6, 1998 by and
among TLC MULTIMEDIA INC., a Minnesota corporation ("TLC"), LEARNING COMPANY
PROPERTIES INC., a Delaware corporation ("Properties"), TEC DIRECT, INC., a
Colorado corporation ("Direct"), LEARNING SERVICES INC., an Oregon corporation
("Services"), SKILLS BANK CORPORATION, a Maryland corporation ("Skills Bank"),
MICROSYSTEMS SOFTWARE, INC., a Massachusetts corporation ("Microsystems"),
MINDSCAPE, INC., a Delaware corporation ("Mindscape", together with TLC,
Properties, Direct, Services, Skills Bank, Microsystems and Mindscape, each a
"Borrower", and collectively, the "Borrowers"), each with its chief executive
office located at Xxx Xxxxxxxxx Xxxxxx, Xxxxxxxxx, Xxxxxxxxxxxxx 00000; FLEET
NATIONAL BANK, a national banking association, with an xxxxxx xx Xxx Xxxxxxx
Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000-0000 (together with its successors,
"Fleet"); XXXXXXX XXXXX CREDIT PARTNERS L.P. ("Xxxxxxx Sachs"), the other
financial institutions listed on SCHEDULE 1 attached hereto (together with Fleet
and Xxxxxxx Xxxxx, each a "Lender", collectively, the "Lenders"); and Fleet, as
agent for the Lenders (in such capacity, the "Agent").
WHEREAS, Fleet, TLC (f/k/a SoftKey Inc.), Minnesota Educational Computing
Corporation (MECC) ("MECC") and Properties (successor to TLC Properties Inc.
(f/k/a SoftKey Multimedia Inc.)) are parties to a certain Credit Agreement,
dated as of September 30, 1994, as amended (the "Original Credit Agreement");
WHEREAS, Fleet and the Borrowers wish to amend and restate in its entirety
the Original Credit Agreement by the execution and delivery of this Agreement;
WHEREAS, the Borrowers have requested the Lenders to extend credit in the
form of loans and letters of credit, and the Lenders are willing to make loans
to the Borrowers and the Issuing Bank is willing to issue Letters of Credit, in
each case on the terms and subject to the conditions set forth herein.
NOW, THEREFORE, in consideration of the premises and for other good and
valuable consideration, the receipt and adequacy of which are hereby
acknowledged, the parties hereto agree as follows:
SECTION I.
DEFINITIONS
-----------
1.1 DEFINITIONS.
All capitalized terms used in this Agreement or in the Revolving Credit
Notes or in any agreement, certificate, report or other document made or
delivered pursuant to this
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Agreement (unless otherwise defined therein) shall have the meanings assigned to
them below:
ACCOUNTS RECEIVABLE FINANCING FACILITY. With respect to any Person (the
"first Person"), the facility or facilities, as amended, extended, supplemented,
modified or renewed from time to time, providing for the sale, encumbrance or
other disposition to a Person or Persons other than such first Person and its
Subsidiaries, at any time or from time to time, of all or a portion of the
accounts receivable of such first Person and/or its Subsidiaries, whether now
existing or hereafter created.
AFFECTED LOANS. See Section 2.11(a).
AFFILIATE. With reference to any Person, (i) any director, officer or
employee of that Person, (ii) any other Person controlling, controlled by or
under direct or indirect common control of that Person, (iii) any other Person
directly or indirectly holding 5% or more of any class of the capital stock or
other equity interests (including options, warrants, convertible securities and
similar rights) of that Person and (iv) any other Person 5% or more of any class
of whose capital stock or other equity interests (including options, warrants,
convertible securities and similar rights) is held directly or indirectly by
that Person. For purposes of Sections 4.15, 5.10 and 7.9 hereof, "Affiliate"
shall mean, within the meaning of Section 414(b), (c), (m) or (o) of the Code,
(i) any member of a controlled group of corporations which includes any of the
Borrowers or any Subsidiary of a Borrower, (ii) any trade or business, whether
or not incorporated, under common control with any of the Borrowers or any
Subsidiary of a Borrower, (iii) any member of an affiliated service group which
includes any of the Borrowers or any Subsidiary of a Borrower, and (iv) any
member of a group treated as a single employer by regulation.
AGREEMENT. This Amended and Restated Credit Agreement, including the
Exhibits and Schedules hereto, as the same may be supplemented or amended from
time to time.
APPLICABLE MARGIN. As of any date, with respect to Revolving Credit Loans
which are Base Rate Loans or Eurodollar Loans, the applicable percentage set
forth below opposite the applicable Leverage Ratio in effect at such date,
PROVIDED however that during the period from the Closing Date through and
including the date on which quarterly financial statements are delivered for the
fiscal quarter ending March 31, 1998, the Applicable Margin for Eurodollar Loans
and Base Rate Loans shall be 1.25% and 0%, respectively.
LEVERAGE RATIO EURODOLLAR LOANS BASE RATE LOANS
-------------- ---------------- ---------------
greater than 1.50% 0%
or equal to 3.00:1.00
less than 3.00:1.00 1.25% 0%
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and greater than or
equal to 2.50:1.00
less than 2.50:1.00 1.00% 0%
and greater than or
equal to 2.00:1.00
less than 2.00:1.00 0.75% 0%
ASSIGNEE. See Section 9.1.
ATTORNEYS' FEES. See Section 11.2.
BASE RATE. The rate of interest announced from time to time by the Agent at
its head office as its "Base Rate".
BASE RATE LOAN. Any Revolving Credit Loan bearing interest determined with
reference to the Base Rate.
BORROWER AND BORROWERS. See Preamble.
BORROWERS' ACCOUNTANTS. Coopers & Xxxxxxx L.L.P. or such other independent
certified public accountants as are selected by the Borrowers and reasonably
acceptable to the Agent.
BUSINESS DAY. (i) For all purposes other than as covered by clause (ii)
below, any day other than a Saturday, Sunday or legal holiday on which banks in
Boston, Massachusetts are open for the conduct of a substantial part of their
commercial banking business; and (ii) with respect to all notices and
determinations in connection with, and payments of principal and interest on,
Eurodollar Loans, any day that is a Business Day described in clause (i) and
that is also a day for trading by and between banks in U.S. Dollar deposits in
the interbank Eurodollar market.
CAPITAL EXPENDITURES. Without duplication, any expenditure for fixed or
capital assets, leasehold improvements, capital leases, installment purchases of
machinery and equipment, acquisitions of real estate and other similar
expenditures including (i) in the case of a purchase, the entire purchase price,
whether or not paid during the fiscal period in question, (ii) in the case of a
capital lease, the discounted present value of the future rental payment
obligation as determined under GAAP, but excluding, in the case of a
sale/leaseback transaction, the portion of the construction costs to be
reimbursed to the seller/lessee upon completion of construction, and (iii)
expenditures in any construction in progress account of any of the Parent, the
Borrowers or any of their Subsidiaries.
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CLOSING DATE. The first date on which the conditions set forth in Sections
3.1 and 3.2 have been satisfied and any Revolving Credit Loans are to be made
hereunder.
CODE. The Internal Revenue Code of 1986 and the rules and regulations
thereunder, collectively, as the same may from time to time be supplemented or
amended and remain in effect.
COLLATERAL. The real and personal property, rights and interests of the
Borrowers of every kind and description, tangible and intangible, whether now
owned or existing or hereafter arising or acquired, as specifically provided
herein and in the Security Documents; and all of the currently issued and
outstanding and hereafter issued and outstanding capital stock of TLC,
Properties and the Significant Subsidiaries, as specifically provided herein and
in the Security Documents.
COMMITMENT. With respect to any Lender, the maximum dollar amount which
such Lender has agreed to loan to the Borrowers as Revolving Credit Loans or to
make available to the Borrowers pursuant to Letter of Credit Participations upon
the terms and subject to the conditions of this Agreement, initially as set
forth on SCHEDULE 1 attached hereto and as such Lender's Commitment may be
modified pursuant hereto from time to time.
COMMITMENT FEE. See Section 2.6.
COMMITMENT FEE PERCENTAGE. As of any date, the applicable percentage set
forth below opposite the applicable Leverage Ratio in effect at such date,
PROVIDED however that during the period from the Closing Date through and
including the date on which quarterly financial statements are delivered for the
fiscal quarter ending March 31, 1998, the Commitment Fee Percentage shall be
0.300%.
LEVERAGE RATIO COMMITMENT FEE PERCENTAGE
-------------- -------------------------
greater than 0.375%
or equal to 3.00:1.00
less than 3.00:1.00 0.300%
and greater than or
equal to 2.50:1.00
less than 2.50:1.00 0.250%
and greater than or
equal to 2.00:1.00
less than 2.00:1.00 0.200%
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COMMITMENT PERCENTAGE. In relation to any particular Lender, the percentage
which such Lender's Commitment represents of the aggregate Commitments of all
the Lenders, initially as set forth on SCHEDULE 1 attached hereto, as such
Lender's Commitment Percentage may be modified pursuant hereto and in effect
from time to time. SCHEDULE 1 shall be amended from time to time to reflect any
changes in the Commitment Percentages of the Lenders.
CONSOLIDATED NET INCOME. For any fiscal period, the consolidated net income
(or net loss) after taxes for such period of the Parent and its Subsidiaries
(including the Borrowers and any entity acquired by any of the Borrowers in a
Permitted Acquisition during such period, whose net income shall be calculated
on a pro-forma basis for such fiscal period), determined in accordance with
GAAP.
DEEMED PRINCIPAL AMOUNT. At any time, with respect to any Accounts
Receivable Financing Facility of any Person (the "first Person"), the aggregate
outstanding dollar amount of the interests in accounts receivable and related
assets of such Person at such time sold, encumbered, or otherwise disposed of
thereunder to a Person or Persons other than such first Person and its
Subsidiaries.
DEFAULT. An Event of Default or event or condition that, but for the
requirement that time elapse or notice be given, or both, would constitute an
Event of Default.
DESIGNATED FOREIGN SUBSIDIARIES. SoftKey Canada, each of the European TLCs
and TLC (Bermuda) Ltd.
DESIGNATED SOFTWARE PRODUCTS. See Section 5.13.
DRAWDOWN DATE. The Business Day on which any Revolving Credit Loan is made
or is to be made.
EBITDA. For any fiscal period, an amount equal to Consolidated Net Income
for such period (A) PLUS the following (without duplication), to the extent
deducted from gross revenues in computing such Consolidated Net Income: (i)
Interest Expense, (ii) tax expense for such period, (iii) amortization of
goodwill, software development expenses, financing costs and other intangibles,
(iv) depreciation, and (v) post closing restructuring charges taken in
conjunction with, and within 12 months following the closing of, any acquisition
permitted hereunder (B) MINUS software development expenses capitalized during
such period; and (C) after appropriate adjustments for non-cash charges,
including, without limitation, any equity-based compensation charges.
ENCUMBRANCES. See Section 7.3.
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ERISA. The Employee Retirement Income Security Act of 1974 and the rules
and regulations thereunder, collectively, as the same may from time to time be
supplemented or amended and remain in effect.
ENVIRONMENTAL LAWS. Any and all applicable federal, state and local
environmental, health or safety statutes, laws, regulations, rules and
ordinances (whether now existing or hereafter enacted or promulgated), and all
applicable judicial, administrative and regulatory decrees, judgments and
orders, including common law rulings and determinations, relating to injury to,
or the protection of, real or personal property or human health or the
environment, including, without limitation, all requirements pertaining to
reporting, licensing, permitting, investigation, remediation and removal of
emissions, discharges, releases or threatened releases of Hazardous Materials
into the environment or relating to the manufacture, processing, distribution,
use, treatment, storage, disposal, transport or handling of such Hazardous
Materials.
EURODOLLAR LOAN. Any Revolving Credit Loan bearing interest at a rate
determined with reference to the Eurodollar Rate.
EURODOLLAR RATE. With respect to any Eurodollar Loan for any Interest
Period, the rate of interest determined by the Agent to be the prevailing rate
per annum at which deposits in U.S. Dollars are offered to the Agent by
first-class banks in the interbank Eurodollar market in which it regularly
participates on or about 10:00 a.m. (Boston time) two Business Days before the
first day of such Interest Period in an amount approximately equal to the
principal amount of the Eurodollar Loan to which such Interest Period is to
apply for a period of time approximately equal to such Interest Period.
EURODOLLAR RESERVE PERCENTAGE. For any Interest Period, the aggregate of
the maximum reserve percentages (including any marginal, special, emergency or
supplemental reserves), expressed as a decimal, established by the Board of
Governors of the Federal Reserve System and any other banking authority,
domestic or foreign, to which any Lender is subject with respect to
"Eurocurrency Liabilities" (as defined in regulations issued from time to time
by such Board of Governors). The Eurodollar Reserve Percentage shall be adjusted
automatically on and as of the effective date of any change in any such reserve
percentage.
EUROPEAN TLCS. See definition of "Receivables Purchase Transactions".
EVENT OF DEFAULT. Any event described in Section 8.1.
FUNDED INDEBTEDNESS. As applied to any Person, without duplication, (i) all
funded recourse obligations for borrowed money or other extensions of credit
whether secured or unsecured (including, without limitation or duplication, the
Deemed Principal Amount of any Accounts Receivable Financing Facility of such
Person; specifically in the case of the Parent, the Borrowers and their
Subsidiaries, including the Deemed Principal Amount under
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the Securitization, but excluding the Deemed Principal Amount under the other
Receivables Purchase Transactions) absolute or contingent, including, without
limitation, unmatured reimbursement obligations with respect to guarantees
issued on behalf of such Person or its Subsidiaries and all obligations
representing the deferred purchase price of property, other than (x) accounts
payable and accrued liabilities arising in the ordinary course of business and
payable in accordance with customary practices, and (y) in the case of the
Parent, the Borrowers and their Subsidiaries, earnouts in connection with any
acquisitions occurring prior to the date of this Agreement or in connection with
Permitted Acquisitions hereafter, provided that (A) the rights to receive such
earnout payments are not secured, and (B) such earnouts are payable at the
option of the Parent or the acquiring Subsidiary (as applicable) solely in
capital stock of the Parent or such earnouts are payable within twelve (12)
months of the closing date of the relevant acquisition, (ii) all obligations of
such Person or its Subsidiaries, including without limitation, unmatured
reimbursement obligations, with respect to letters of credit issued for the
account of such Person or its Subsidiaries but only to the extent of the maximum
amount available to be drawn thereunder, and excluding those letters of credit
which are fully secured by cash or issued as security for indebtedness described
elsewhere in this definition of Funded Indebtedness, (iii) all obligations
evidenced by bonds, notes, debentures or other similar debt instruments, (iv)
all obligations secured by any mortgage, pledge, security interest or other lien
on property owned or acquired by such Person or its Subsidiaries whether or not
the obligation secured thereby shall have been assumed, (v) that portion of all
obligations arising under leases that is required to be capitalized on the
consolidated balance sheet of such Person and its Subsidiaries and (vi) all
Guarantees.
GAAP. Generally Accepted Accounting Principles in the United States.
GUARANTEES. As applied to any Person, all guarantees, endorsements or other
contingent or surety obligations with respect to obligations of others whether
or not reflected on the consolidated balance sheet of such Person and its
Subsidiaries, including any obligation to furnish funds, directly or indirectly
(whether by virtue of partnership arrangements, by agreement to keep-well or
otherwise), through the purchase of goods, supplies or services, or by way of
stock purchase, capital contribution, advance or loan, or to enter into a
contract for any of the foregoing, for the purpose of payment of obligations of
any other Person.
HAZARDOUS MATERIAL. Any substance (i) the presence of which requires or may
hereafter require notification, investigation, removal or remediation under any
Environmental Law; (ii) which is or becomes defined as a "hazardous waste",
"hazardous material" or "hazardous substance" or "pollutant" or "contaminant"
under any present or future Environmental Law or amendments thereto including,
without limitation, the Comprehensive Environmental Response, Compensation and
Liability Act (42 U.S.C. Section 9601 ET SEQ.) and any applicable local statutes
and the regulations promulgated thereunder; (iii) which is toxic, explosive,
corrosive, flammable, infectious, radioactive, carcinogenic, mutagenic or
otherwise hazardous and which is or becomes regulated
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pursuant to any Environmental Law by any governmental authority, agency,
department, commission, board, agency or instrumentality of the United States,
any state of the United States, or any political subdivision thereof; or (iv)
without limitation, which contains gasoline, diesel fuel or other petroleum
products, asbestos or polychlorinated biphenyls ("PCB's").
INDEBTEDNESS. As applied to any Person, without duplication, (i) all Funded
Indebtedness of such Person, and (ii) all other obligations which, in accordance
with GAAP, would be included as a liability on the consolidated balance sheet of
such Person and its Subsidiaries, but excluding anything in the nature of
capital stock, capital surplus and retained earnings.
INITIAL FINANCIAL STATEMENT. See Section 4.6.
INSTRUMENT OF JOINDER. See Exhibit G.
INTELLECTUAL PROPERTY. See Section 4.21.
INTEREST EXPENSE. For any fiscal period, the consolidated interest expense
(including imputed interest on capitalized lease obligations) and amortized debt
discount on Indebtedness of the Parent, the Borrowers and their Subsidiaries for
such period.
INTEREST PERIOD. With respect to each Eurodollar Loan, the period
commencing on the date of the making or continuation of or conversion to such
Eurodollar Loan and ending one (1), two (2), three (3) or six (6) months
thereafter, as the Borrowers may elect in the applicable Notice of Borrowing or
Conversion; PROVIDED that:
(i) any Interest Period (other than an Interest Period determined
pursuant to clause (iii) below) that would otherwise end on a day that is
not a Business Day shall be extended to the next succeeding Business Day
unless such Business Day falls in the next calendar month, in which case
such Interest Period shall end on the immediately preceding Business Day;
(ii) any Interest Period that begins on the last Business Day of a
calendar month (or on a day for which there is no numerically corresponding
day in the calendar month at the end of such Interest Period) shall,
subject to clause (iii) below, end on the last Business Day of a calendar
month;
(iii) any Interest Period that would otherwise end after the Maturity
Date shall end on the Maturity Date; and
(iv) notwithstanding clause (iii) above, no Interest Period shall have
a duration of less than one month, and if any Interest Period applicable to
a Loan would be for a shorter period, such Interest Period shall not be
available hereunder.
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INVESTMENT. As applied to the Borrowers and their Subsidiaries, the
purchase or acquisition of any share of capital stock, partnership interest,
evidence of indebtedness or other equity security of any other Person (including
any Subsidiary), any loan, advance or extension of credit (excluding accounts
receivable arising in the ordinary course of business) to, or contribution to
the capital of, any other Person (including any Subsidiary), any real estate
held for sale or investment, any securities or commodities futures contracts
held for investment purposes, any other investment in any other Person
(including any Subsidiary), and the making of any commitment or acquisition of
any option to make an Investment.
ISSUING BANK. Fleet.
LENDERS. See Preamble.
LETTERS OF CREDIT. See Section 2A.l.
LETTER OF CREDIT APPLICATIONS. Applications for Letters of Credit in such
form as may be required by the Issuing Bank from time to time which are executed
and delivered by TLC, as agent for the Borrowers, to the Issuing Bank pursuant
to Section 2A, as the same may be amended or supplemented from time to time.
LETTER OF CREDIT FEE. See Section 2.6.
LETTER OF CREDIT PARTICIPATION. See Section 2A.1.
LETTER OF CREDIT SUBLIMIT. $25,000,000.
LEVERAGE RATIO. As of the end of any fiscal quarter of the Borrowers the
ratio of (i) total Funded Indebtedness of the Parent and its Subsidiaries
(including the Borrowers), less the aggregate amount of cash or cash equivalents
(including those items set forth in subsections 7.8(c) through (h) hereof) on
hand of the Parent and its Subsidiaries (including the Borrowers) in excess of
$30,000,000, as of the end of such fiscal quarter to (ii) EBITDA for the four
consecutive fiscal quarters then ended.
LIQUIDITY AGREEMENT. That certain Liquidity Agreement dated as of June 30,
1997, as amended, between Lexington Xxxxxx Capital Company, LLC, the Agent and
the financial institutions named therein entered into in connection with the
Securitization.
LOAN DOCUMENTS. This Agreement, the Revolving Credit Notes, the Letter of
Credit Applications and the Security Documents.
LOANS. The loans made or to be made by the Lenders to the Borrowers
pursuant to Section II of this Agreement, including Revolving Credit Loans and
unpaid Reimbursement Obligations.
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MAJORITY LENDERS. As of any date, the holders of fifty-one percent (51%) of
the outstanding principal amount of the Loans on such date; and if no such
principal is outstanding, the holders of fifty-one percent (51%) of the total
Commitments.
MATERIAL LICENSE AGREEMENTS. Collectively, the licenses disclosed on
SCHEDULE 3 hereto and identified as such, as each may hereafter be amended,
supplemented or restated from time to time in the ordinary course of business.
MATURITY DATE. June 30, 2000.
MAXIMUM DRAWING AMOUNT. The maximum aggregate amount from time to time that
beneficiaries may draw under outstanding Letters of Credit.
NOTE RECORD. Any internal record, including a computer
record, maintained by any Lender with respect to any Loan.
NOTICE OF BORROWING OR CONVERSION. The notice, substantially in the form of
EXHIBIT B hereto, to be given by TLC, as agent for the Borrowers, to the Agent
to request a Revolving Credit Loan or to convert an outstanding Revolving Credit
Loan of one Type into a Revolving Credit Loan of another Type, in accordance
with Section 2.3.
OBLIGATIONS. Any and all obligations of the Borrowers to the Agent, the
Issuing Bank and the Lenders of every kind and description pursuant to or in
connection with the Loan Documents, direct or indirect, absolute or contingent,
primary or secondary, due or to become due, now existing or hereafter arising,
regardless of how they arise or by what agreement or instrument, if any, and
including obligations to perform acts and refrain from taking action as well as
obligations to pay money.
ORIGINAL CREDIT AGREEMENT. See the first recital hereto.
PARENT. The Learning Company, Inc., a Delaware corporation.
PARENT GUARANTY. The unconditional guaranty of the Parent in favor of the
Lenders in the form and substance satisfactory to the Agent.
PARTICIPANT. See Section 9.2.
PAYMENT DEFAULT. A Default described in Section 8.1(a).
PBGC. The Pension Benefit Guaranty Corporation or any entity succeeding to
any or all of its functions under ERISA.
PENSION PLAN. Any Plan which is an "employee pension benefit plan" (as
defined in ERISA).
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PERMITTED ACQUISITIONS. See Section 7.4.
PERMITTED ENCUMBRANCES. See Section 7.3.
PERSON. Any individual, corporation, partnership, trust, unincorporated
association, business or other legal entity, and any government or governmental
agency or political subdivision thereof.
PLAN. Any "employee pension benefit plan" or "employee welfare benefit
plan" (each as defined in ERISA) maintained by the Borrower or any Subsidiary.
PROHIBITED TRANSACTION. Any "prohibited transaction" as defined in ERISA
and the Code.
PURCHASE MONEY INDEBTEDNESS. Indebtedness incurred to finance the
acquisition of assets or the cost of improvements on real property or
leaseholds, in each case in an amount not in excess of the lesser of (a) the
purchase price or acquisition cost of said assets or the cost of said
improvements and (b) the fair market value of said assets or said improvements
on the date of the acquisition of said assets or contract for said improvements.
QUICK RATIO. At any time, the ratio of (i) all cash and cash equivalents
(including those items set forth in subsections 7.8(c) through (h) hereof) and
accounts receivable of the Parent and its Subsidiaries (including the Borrowers)
at such time net of all reserves, as reflected on the consolidated financial
statements furnished to the Agent pursuant to Section 5.1, calculated on a
consolidated basis and in accordance with GAAP, to (ii) all current liabilities
of the Parent and its Subsidiaries (including the Borrowers) at such time, as
reflected on the consolidated financial statements furnished to the Agent
pursuant to Section 5.1, calculated on a consolidated basis and in accordance
with GAAP, EXCLUDING, however, the amount (i) of the then outstanding
Obligations hereunder and (ii) the current portion of the Senior Convertible
Notes.
REPLACED LENDER. See Section 2.14.
REPLACEMENT LENDER. See Section 2.14.
RECEIVABLES PURCHASE TRANSACTIONS. The transactions contemplated by (i)
four Master Purchase Terms and Conditions, each dated as of October 3, 1997,
between Royal Bank of Canada Europe Limited ("ROYAL BANK") and The Learning
Company (UK) Limited ("TLC UK"), The Learning Company (Ireland) Limited ("TLC
Ireland"), TLC Tewi Verlag GmbH ("TLC Germany") and The Learning Company Holland
B.V. ("TLC Holland"), respectively, (ii) the Master Purchase Terms and
Conditions, dated as of December 30, 1997, between Royal Bank and TLC Edusoft
S.A. ("TLC France", together with TLC UK, TLC Ireland, TLC Germany, TLC Holland,
collectively, the "European
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TLCs"), (iii) the Master Purchase Terms and Conditions and Conditions, dated
January 2, 1998, between Royal Bank and European TLCs, (iv) a certain Purchase
Agreement, effective as of October 4, 1996, between Sanwa Business Credit
Corporation and SoftKey Inc., and the documents related to the foregoing,
provided that only Accounts (a) where the account debtor is an original
equipment manufacturer or (b) arising from license-based contracts, shall be
sold under this facility, (v) any Accounts Receivable Financing Facility of any
Subsidiary of the Parent whose jurisdiction of organization is not a political
subdivision of the United States, provided that such Accounts Receivable
Financing Facility is a non-recourse facility under GAAP as confirmed to the
reasonable satisfaction of the Agent and (iv) any amendments, substitutions or
replacements thereof.
REIMBURSEMENT OBLIGATION. The Obligation of the Borrowers to reimburse the
Issuing Bank and the Lenders on account of any drawing under any Letter of
Credit as provided in Section 2A.2.
RESPONSIBLE OFFICER. The chief financial officer of TLC or any other
officer of TLC designated by the chief financial officer to sign Notices of
Borrowing or Conversion.
RESTRICTED PAYMENT. Any dividend, distribution, loan, advance, guaranty or
extension of credit, whether in cash or property to or for the benefit of any
Person who holds an equity interest in any Borrower or any of its Subsidiaries,
whether or not such interest is evidenced by a security, and any purchase,
redemption, retirement or other acquisition for value of any capital stock of
any Borrower or any of its Subsidiaries, whether now or hereafter outstanding,
or of any options, warrants or similar rights to purchase such capital stock or
any security convertible into or exchangeable for such capital stock.
REVOLVING CREDIT LOAN. See Section 2.1(a) hereof.
REVOLVING CREDIT NOTES. See Section 2.2 hereof.
SECURITIZATION. Transactions contemplated by a certain Receivables Purchase
Agreement, dated as of June 30, 1997, as amended, among The Learning Company
Funding, Inc., Lexington Xxxxxx Capital Company, LLC, Fleet, TLC and the Parent,
and related documents, and any replacements or substitutions thereof.
SECURITY DOCUMENTS. A security agreement executed by the Borrowers, a
security agreement executed by the Parent, the Parent Guaranty, a copyright
security agreement, a trademark security agreement, and pledge agreements
pledging all the outstanding shares of capital stock of TLC, Properties, Direct,
Services, Skills Bank, Microsystems, Mindscape, The Learning Company Funding,
Inc., and the Significant Subsidiaries set forth in Schedule 2, and pledging
approximately 65% (but in any event less than 66%) of the outstanding Shares of
the Designated Foreign Subsidiaries, each dated as of the date hereof (or, in
the case of the pledge agreements pledging shares in the Designated Foreign
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Subsidiaries, a date within thirty (30) days of the Closing Date), in form and
substance satisfactory to the Agent and in each case as amended and in effect
from time to time, and any additional documents evidencing or perfecting the
Agent's lien on the Collateral.
SENIOR CONVERTIBLE NOTES. See Section 7.7.
SETTLEMENT DATE. See Section 2.4(b).
SIGNIFICANT SUBSIDIARIES. Those Subsidiaries listed on Schedule 2 hereto
and any future Subsidiary of the Parent or any Borrower which, on any date of
determination, (i) had gross revenues equivalent to or in excess of $10,000,000
or 5% of the consolidated net revenues during the four (4) consecutive fiscal
quarters of the Subsidiary then most recently completed or (ii) had total assets
equivalent to or in excess of $10,000,000 or 5% of the book value of the assets
of the Parent, the Borrowers and their Subsidiaries calculated on a consolidated
basis.
SOFTKEY CANADA. SoftKey Software Products, Inc., a Canadian corporation.
SUBSIDIARY. With reference to any Person, any corporation, association,
joint stock company, business trust, limited liability company or other similar
organization of which 50% or more of the ordinary voting power for the election
of a majority of the members of the board of directors or other governing body
of such entity is held or controlled directly or indirectly through one or more
Subsidiaries by such Person; or any other such organization the management of
which is directly or indirectly controlled by such Person through the exercise
of voting power or otherwise; or any joint venture, whether incorporated or not,
in which such Person has a 50% or greater ownership interest.
TOTAL COMMITMENT. The sum of the Commitments of the Lenders as in effect
from time to time, which as of the Closing Date shall be $148,500,000 and which
may be any lesser amount, including zero, resulting from a termination or
reduction of such amount in accordance with Sections 2.1 or 8.2 hereof.
TOTAL OUTSTANDINGS. At any time, the sum of (i) the aggregate outstanding
principal balance of the Loans at the time and (ii) the Maximum Drawing Amount
at the time.
TYPE. A Eurodollar Loan or a Base Rate Loan.
YEAR 2000 PROBLEM. Any significant risk that computer hardware or software
used in the businesses or operations of the Parent, the Borrowers or their
Subsidiaries will not, in the case of dates or time periods occurring after
December 31, 1999, function at least as effectively as in the case of dates or
time periods occurring prior to January 1, 2000.
1.2 RULES OF INTERPRETATION.
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(a) All terms of an accounting character used herein but not
defined herein shall have the meanings assigned thereto by GAAP applied on a
consistent basis. All calculations for the purposes of Section VI hereof shall
be made in accordance with GAAP.
(b) A reference to any document or agreement shall include such
document or agreement as amended, modified or supplemented and in effect from
time to time in accordance with its terms and the terms of this Agreement.
(c) The singular includes the plural and the plural includes the
singular. Whenever the context may require, any pronoun shall include the
corresponding masculine, feminine and neuter forms.
(d) A reference to any Person includes its permitted successors
and permitted assigns.
(e) The words "include", "includes" and "including" are not
limiting.
(f) The words "herein", "hereof", "hereunder" and words of like
import shall refer to this Agreement as a whole and not to any particular
section or subdivision of this Agreement.
(g) All terms not specifically defined herein or by GAAP that are
defined in the Uniform Commercial Code as in effect in The Commonwealth of
Massachusetts, have the meanings assigned to them in such Uniform Commercial
Code.
SECTION II.
DESCRIPTION OF CREDIT
---------------------
2.1 LOANS.
(a) REVOLVING CREDIT LOANS. Upon the terms and subject to the
conditions of this Agreement, and in reliance upon the representations,
warranties and covenants of the Borrowers herein, each of the Lenders agrees,
severally and not jointly, to make revolving credit loans (the "REVOLVING CREDIT
LOANS") to the Borrowers and to acquire Letter of Credit Participations at the
Borrowers' request, from time to time, from and after the Closing Date and prior
to the Maturity Date, PROVIDED that the Total Outstandings (after giving effect
to all requested Revolving Credit Loans and Letters of Credit) shall not at any
time exceed the Total Commitment, and PROVIDED, FURTHER, that the sum of the
aggregate principal amount of outstanding Revolving Credit Loans made by each
Lender and all outstanding Letter of Credit Participations of such Lender shall
not at any time (after giving effect to all requested Revolving Credit Loans and
Letters of Credit) exceed such Lender's
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Commitment. Subject to the terms and conditions of this Agreement, the Borrowers
may borrow, repay, prepay and reborrow Revolving Credit Loans, up to the limits
imposed by this Section 2.1, from time to time between the Closing Date and the
Maturity Date upon request given to the Agent pursuant to Section 2.3. Each
request for a Revolving Credit Loan or Letter of Credit hereunder, shall
constitute a representation and warranty by the Borrowers that the conditions
set forth in Section 3.2 (and, in the case of a request for an initial Loan,
Section 3.1) have been satisfied as of the date of such request.
(b) LIMITATIONS. Each Eurodollar Loan shall be in a minimum
principal amount of $1,000,000 or in integral multiples of $500,000 in excess of
such minimum amount, and each Base Rate Loan shall be in a minimum principal
amount of $1,000,000 or in integral multiples of $500,000 in excess of such
minimum amount. No more than five (5) Eurodollar Loans may be outstanding at any
time.
(c) CONVERSIONS OF REVOLVING CREDIT LOANS. Upon the terms and
subject to the conditions of this Agreement, the Borrowers may convert all or
any part (subject to the limitations of subsection (b) above) of any outstanding
Revolving Credit Loan into a Revolving Credit Loan of another Type on any
Business Day (which, in the case of a conversion of an outstanding Eurodollar
Loan shall be the last day of the Interest Period applicable to such Eurodollar
Loan). The Borrowers shall give the Agent prior notice of each such conversion
(which notice shall be effective upon receipt) in accordance with Section 2.3.
(d) TERMINATION OR REDUCTION OF COMMITMENTS.
(i) The Total Commitment shall terminate at 5:00 p.m. Boston time
on the Maturity Date.
(ii) Subject to the provisions of Section 2.7 regarding mandatory
payments, the Borrowers shall have the right at any time and from time to
time upon five (5) Business Days' prior written notice to the Agent given
by TLC as the agent for the Borrowers to reduce by $10,000,000, and in
integral multiples of $1,000,000 if in excess thereof, the Total Commitment
or to terminate entirely the Lenders' Commitments to make Loans hereunder,
whereupon the Commitments of the Lenders shall be reduced PRO RATA by the
aggregate amount specified in such notice or shall, as the case may be, be
terminated entirely. No such reduction or termination of any Commitment may
be reinstated.
(iii) If, as a result of any such reduction of any Commitment as
described in clause (ii) above, the Maximum Drawing Amount at the time
would exceed the Total Commitment or the amount of Letters of Credit
permitted to be outstanding under Sections 2.1(a) and 2A.1(a) hereof, the
Borrowers shall, as a condition precedent to any such reduction, deposit
with and pledge to the Agent for the benefit of the Lenders and the Issuing
Bank cash in an amount equal to 105% of such
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excess. If any Letters of Credit would remain outstanding after the
effective date of any such termination as described in clauses (i) and (ii)
above, in addition to satisfaction of all other applicable terms and
conditions of this Agreement, the Borrowers shall deposit with and pledge
to the Agent for the benefit of the Lenders and the Issuing Bank cash in an
amount equal to 105% of the Maximum Drawing Amount at the effective date of
such termination.
2.2 THE REVOLVING CREDIT NOTES.
(a) The Revolving Credit Loans shall be evidenced by separate
promissory notes for each Lender, each such note to be in substantially the form
of EXHIBIT A hereto, dated as of the Closing Date and completed with appropriate
insertions (each such note being referred to herein as a "REVOLVING CREDIT NOTE"
and collectively as the "REVOLVING CREDIT NOTES"). One Revolving Credit Note
shall be payable to the order of each Lender in a principal amount equal to such
Lender's Commitment.
(b) The Borrowers irrevocably authorize each of the Lenders to make or
cause to be made, at or about the time of the Drawdown Date of any Loan or at
the time of receipt of any payment of principal on any Revolving Credit Note, an
appropriate notation on its Note Record reflecting (as the case may be) the
making of such Loan or the receipt of such payment. The outstanding amount of
the Loans set forth on the Note Records shall be PRIMA FACIE evidence of the
principal amount thereof owing and unpaid to such Lenders, but the failure to
record, or any error in so recording, any such amount on any Lender's Note
Record shall not limit or otherwise affect the obligations of the Borrowers
hereunder or under any Revolving Credit Note to make payments of principal of or
interest on any Revolving Credit Note when due.
2.3 NOTICE AND MANNER OF BORROWING OR CONVERSION OF LOANS.
(a) Whenever the Borrowers desire to obtain or continue a Revolving
Credit Loan hereunder or convert an outstanding Revolving Credit Loan into a
Revolving Credit Loan of another Type, the Borrowers shall give the Agent a
written Notice of Borrowing or Conversion (or a telephonic notice promptly
confirmed by a written Notice of Borrowing or Conversion), which Notice shall be
irrevocable and which must be received (i) no later than 10:00 a.m. Boston time
on the date on which the requested Revolving Credit Loan is to be made as or
converted to a Base Rate Loan, and (ii) no later than 2:00 p.m. Boston time on
the date three (3) Business Days before the day on which the requested Revolving
Credit Loan is to be made or continued as or converted to a Eurodollar Loan.
Such Notice of Borrowing or Conversion shall specify (i) the effective date and
amount of each Revolving Credit Loan or portion thereof requested to be made,
continued or converted, subject to the limitations set forth in Section 2.1,
(ii) the interest rate option requested to be applicable thereto, and (iii) the
duration of the applicable Interest Period, if any (subject to the provisions of
the definition of the term "Interest Period"). If such Notice fails to specify
the interest rate option to be applicable to the requested Revolving
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Credit Loan, then the Borrowers shall be deemed to have requested a Base Rate
Loan. If the written confirmation of any telephonic notification differs in any
material respect from the action taken by the Agent, the records of the Agent
shall control absent manifest error.
(b) Subject to the provisions of the definition of the term "Interest
Period" herein, the duration of each Interest Period for a Eurodollar Loan shall
be as specified in the applicable Notice of Borrowing or Conversion. If no
Interest Period is specified in a Notice of Borrowing or Conversion with respect
to a requested Eurodollar Loan, then the Borrowers shall be deemed to have
selected an Interest Period of one month's duration. If the Agent receives a
Notice of Borrowing or Conversion after the time specified in subsection (a)
above, such Notice shall not be effective. If the Agent does not receive an
effective Notice of Borrowing or Conversion with respect to an outstanding
Eurodollar Loan, or if, when such Notice must be given prior to the end of the
Interest Period applicable to such outstanding Eurodollar Loan, the Borrowers
shall have failed to satisfy any of the conditions hereof, the Borrowers shall
be deemed to have elected to convert such outstanding Eurodollar Loan in whole
into a Base Rate Loan on the last day of the then current Interest Period with
respect thereto.
2.4 FUNDING OF LOANS.
(a) Revolving Credit Loans shall be made by the Lenders PRO RATA in
accordance with their respective Commitment Percentages, PROVIDED, HOWEVER that
the failure of any Lender to make any Loan shall not relieve any other Lender of
its obligation to lend hereunder (it being understood, however, that no Lender
shall be responsible for the failure of any other Lender to make any Loan
required to be made by such other Lender).
(b) The Agent shall promptly notify the Lenders of each Notice of
Borrowing or Conversion received pursuant to Section 2.3 and of each Lender's
portion of the requested Loan. Not later than 1:00 p.m. (Boston time) on the
proposed Drawdown Date of any Loan, each Lender will make available to the
Agent, at its head office, in immediately available funds, the amount of such
Lender's Commitment Percentage of the amount of any requested Loans. Upon
receipt by the Agent of such amount, and upon receipt of the documents required
by Section 3 and the satisfaction of the other conditions set forth therein, to
the extent applicable, the Agent will make available to the Borrowers the
aggregate amount of such Loan. The failure or refusal of any Lender to make
available to the Agent at the aforesaid time and place on any Drawdown Date the
amount of its Commitment Percentage of any requested Loans shall not relieve any
other Lender from its several obligation hereunder to make available to the
Agent the amount of such other Lender's Commitment Percentage of any requested
Loans.
(c) The Agent may, unless notified to the contrary by any Lender prior
to a Drawdown Date, assume that each Lender has made available to the Agent on
such Drawdown Date the amount of such Lender's Commitment Percentage of the
Loans to be made on such Drawdown Date, and the Agent may (but it shall not be
required to), in
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reliance upon such assumption, make available to the Borrowers
a corresponding amount. If any Lender makes available to the Agent such amount
on a date after such Drawdown Date, such Lender shall pay to the Agent on demand
an amount equal to the product of (i) the average, computed for the period
referred to in clause (iii) below, of the weighted average interest rate paid by
the Agent for federal funds acquired by the Agent during each day included in
such period, TIMES (ii) the amount of such Lender's Commitment Percentage of any
such Loans TIMES (iii) a fraction, the numerator of which is the number of days
that elapse from and including such Drawdown Date to the date on which the
amount of such Lender's Commitment Percentage of such Loans shall become
immediately available to the Agent, and the denominator of which is 360. A
statement of the Agent submitted to such Lender with respect to any amounts
owing under this paragraph shall be PRIMA FACIE evidence of the amount due and
owing to the Agent by such Lender. If the amount of such Lender's Commitment
Percentage of such Loans is not made available to the Agent by such Lender with
three (3) Business Days following such Drawdown Date, the Agent shall be
entitled to recover the corresponding principal amount of the Loans from the
Borrowers on demand, with accrued interest thereon at the rate per annum
applicable to the Loans made on such Drawdown Date.
2.5 INTEREST RATES AND PAYMENTS OF INTEREST.
(a) Each Revolving Credit Loan which is a Base Rate Loan shall bear
interest on the outstanding principal amount thereof at a rate per annum equal
to the Base Rate plus the Applicable Margin, which rate shall change
contemporaneously with any change in the Base Rate or the Applicable Margin, as
provided below. Such interest shall be payable monthly in arrears on the
fifteenth day of each calendar month, commencing May 15, 1998.
(b) Each Revolving Credit Loan which is a Eurodollar Loan shall bear
interest on the outstanding principal amount thereof, for each Interest Period
applicable thereto, at a rate per annum equal to the Eurodollar Rate plus the
Applicable Margin, which rate shall change with any change in the Applicable
Margin, as provided below. Such interest shall be payable for such Interest
Period on the last day thereof and, if such Interest Period is longer than three
months, at intervals of three months after the first day thereof.
(c) The Applicable Margin and the Leverage Ratio shall be determined as
of the end of each fiscal quarter of the Borrowers based upon the quarterly
financial statements to be delivered pursuant to Section 5.1(b) and any change
in the Applicable Margin shall not be effective until the delivery of such
financial statements, PROVIDED, HOWEVER, that during any period when the
Borrowers have failed to deliver such financial statements as required by
Section 5.1(b), the Leverage Ratio shall be deemed to be greater than 3.00:1.00
for purposes of determining the Applicable Margin until delivery to the Agent of
such financial statements at which time the appropriate Applicable Margin will
become effective.
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(d) If an Event of Default shall occur, then at the option of the
Agent or the direction of the Majority Lenders (i) the unpaid balance of Loans
shall bear interest, compounded daily, at an interest rate equal to 2% per annum
above the then otherwise applicable interest rates on the outstanding Loans.
(e) So long as any Lender shall be required under regulations of the
Board of Governors of the Federal Reserve System (or any other banking
authority, domestic or foreign, to which such Lender is subject) to maintain
reserves with respect to liabilities or assets consisting of or including
"Eurocurrency Liabilities" (as defined in regulations issued from time to time
by such Board of Governors), the Borrowers shall pay to the Agent for the
account of each such Lender additional interest on the unpaid principal amount
of each Eurodollar Loan made by such Lender from the date of such Loan until
such principal amount is paid in full, at an interest rate per annum equal at
all times to the remainder (rounded upwards, if necessary, to the next higher
1/100 of 1%) obtained by subtracting (i) the Eurodollar Rate for the Interest
Period for such Eurodollar Loan from (ii) the rate obtained by dividing such
Eurodollar Rate by a percentage equal to 100% minus the Eurodollar Reserve
Percentage of such Lender for such Interest Period. Such Lender shall determine
such additional interest and notify the Borrowers, through the Agent, and such
additional interest shall be payable on each date on which interest is payable
on such Eurodollar Loan.
2.6 FEES.
(a) The Borrowers shall pay to the Agent for the benefit of the
Lenders a commitment fee (the "COMMITMENT FEE"), computed on a daily basis and
payable quarterly in arrears on the fifteenth calendar day of the first month of
each calendar quarter, commencing July 15, 1998, equal to the Commitment Fee
Percentage per annum of the excess of (i) the Total Commitment on each day
during such just completed calendar quarter over (ii) the Total Outstandings on
each day during such just completed calendar quarter. The Leverage Ratio and the
Commitment Fee Percentage shall be determined as of the end of each fiscal
quarter of the Borrowers based upon the quarterly financial statements to be
delivered pursuant to Section 5.1(b) and any change in the Commitment Fee
Percentage shall not be effective until delivery of such financial statements,
PROVIDED, HOWEVER, that during any period when the Borrowers have failed to
deliver such financial statements as required by Section 5.1(b), the Leverage
Ratio shall be deemed to be greater than 3.00:1.00 for purposes of determining
the Commitment Fee Percentage until delivery to the Agent of such financial
statements at which time the appropriate Commitment Fee Percentage will become
effective.
(b) The Borrowers shall pay to the Agent (i) for the benefit of the
Issuing Bank and the Lenders a fee (the "LETTER OF CREDIT FEE") at a rate per
annum equal to (y) the Maximum Drawing Amount of each Letter of Credit
multiplied by (z) the then Applicable Margin for Eurodollar Loans, provided that
at the option of the Agent or the direction of the Majority Lenders, the Letter
of Credit Fees payable during the continuance of an Event
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of Default shall be equal to (y) the Maximum Drawing Amount of each Letter of
Credit multiplied by (z) the sum of the then Applicable Margin for Eurodollar
Loans plus 2% per annum, and (ii) for the benefit of the Issuing Bank, any
applicable fronting, issuance, amendment, transfer and similar fees in
accordance with the Issuing Bank's customary charges. The Agent shall, based on
the Commitment Percentage of each Lender, ratably distribute the Letter of
Credit Fee to the Lenders. The Letter of Credit Fees shall be paid quarterly in
arrears on the first Business Day of each calendar quarter.
(c) The Borrowers shall pay to the Agent, solely for the account of
the Agent, such other fees as the Borrowers and the Agent shall have agreed in
writing.
2.7 PAYMENTS AND PREPAYMENTS OF THE LOANS.
(a) Revolving Credit Loans that are Eurodollar Loans may be prepaid
at any time, subject to the provisions of Section 2.9, upon three (3) Business
Days' notice. Revolving Credit Loans that are Base Rate Loans may be prepaid at
any time, without premium or penalty, on the same day that notice is given,
provided that such notice is given prior to 10:00 a.m. Boston time. Any such
notice of prepayment shall be irrevocable. Prepayments of Revolving Credit Loans
may be reborrowed to the extent provided in Section 2.1.
(b) On the Maturity Date, the Borrowers shall pay in full the unpaid
principal balance of the Revolving Credit Loans, together with all unpaid
interest thereon and all fees and other amounts due with respect thereto. If at
any time the Total Outstandings exceed the Total Commitment, the Borrower shall
immediately pay the amount of any such excess to the Agent for application to
the Revolving Credit Loans.
(c) The Borrowers authorize the Agent, the Issuing Bank and the
Lenders to charge to their Note Records or to any deposit account which any of
the Borrowers may maintain with any of them the interest, fees, charges, taxes
and expenses provided for in this Agreement, the other Loan Documents or any
other document executed or delivered in connection herewith or therewith. The
party making such charge will use reasonable efforts to notify the Borrowers
thereof, but the failure to give such a notice shall not create a cause of
action against such party or create any claim or right on behalf of the
Borrowers.
2.8 METHOD AND ALLOCATION OF PAYMENTS.
(a) All payments by the Borrowers hereunder and under any of the
other Loan Documents shall be made without set-off or counterclaim and free and
clear of and without deduction for any taxes, levies, imposts, duties, charges,
fees, deductions, withholdings, compulsory loans, restrictions or conditions of
any nature now or hereafter imposed or levied by any jurisdiction or any
political subdivision thereof or taxing or other authority therein unless the
Borrowers are compelled by law to make such deduction or withholding. If any
such obligation is imposed upon the Borrowers with respect to any
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amount payable by them hereunder or under any of the other Loan Documents,
subject to compliance by the Lenders or their Assignees with the provisions of
Section 9.1(b) hereof, the Borrowers will pay to each Lender or Assignee such
additional amount in U.S. Dollars as shall be necessary to enable such party to
receive the same net amount which such party would have received on such due
date had no such obligation been imposed upon the Borrowers. The Borrowers will
deliver promptly to each Lender certificates or other valid vouchers or other
evidence of payment reasonably satisfactory to the Agent for all taxes or other
charges deducted from or paid with respect to payments made by the Borrowers
hereunder or under such other Loan Document. The Lenders may, and each Borrower
hereby authorizes the Lenders to, debit the amount of any payment not made by
such time to the demand deposit accounts of such Borrower with the Lenders or to
their Note Records; each Lender that makes such a debit shall use reasonable
efforts to notify the Borrowers thereof, but the failure to give such a notice
shall not create a cause of action against such Lender or create any claim or
right on behalf of any Borrower.
(b) All payments of principal of and interest in respect of Loans and
payments of Commitment Fees shall be made to the Agent for the benefit of the
Lenders, PRO RATA in accordance with their Commitments, and payments of any
other amounts due hereunder shall be made to the Agent to be allocated among the
Agent, the Lenders and the Issuing Bank as their respective interests appear.
All such payments shall be made at the Agent's head office or at such other
location that the Agent may from time to time designate, in each case in
immediately available funds.
(c) If the Commitments shall have been terminated or the Obligations
shall have been declared immediately due and payable pursuant to Section 8.2,
all funds received from or on behalf of any Borrower (including as proceeds of
Collateral) by any Lender or the Issuing Bank in respect of Obligations (except
funds received by any Lender as a result of a purchase of a participant interest
pursuant to Section 2.8(d) below) shall be remitted to the Agent, and all such
funds, together with all other funds received by the Agent from or on behalf of
the Borrower (including proceeds of Collateral) in respect of Obligations, shall
be applied by the Agent in the following manner and order: (i) first, to
reimburse the Agent, the Issuing Bank and the Lenders, in that order, for any
amounts payable pursuant to Sections 11.2 and 11.3 hereof; (ii) second, to the
payment of Commitment Fees, Letter of Credit Fees and any other fees payable
hereunder; (iii) third, to the payment of interest due on the Revolving Credit
Loans and the Reimbursement Obligations; (iv) fourth, to the payment of the
outstanding principal balance of the Revolving Credit Loans and the
Reimbursement Obligations; (v) fifth, to the payment of any other Obligations
payable by the Borrowers; and (vi) any remaining funds shall be paid to whoever
shall be entitled thereto or as a court of competent jurisdiction shall direct.
(d) Each of the Lenders and the Agent hereby agrees that if it should
receive any amount (whether by voluntary payment, by realization upon security,
by the exercise of the right of set-off or banker's lien, by counterclaim or
cross action, by the enforcement of any right under the Loan Documents, or
otherwise) in respect of principal
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of, or interest on, the Loans or any fees which are to be shared PRO RATA among
the Lenders, which, as compared to the amounts theretofore received by the other
Lenders with respect to such principal, interest or fees, is in excess of such
Lender's PRO RATA share of such principal, interest or fees, such Lender shall
share such excess, less the costs and expenses (including, reasonable Attorneys'
Fees and disbursements) incurred by such Lender in connection with such
realization, exercise, claim or action, PRO RATA with all other Lenders in
proportion to their respective Commitments for such Loans, and such sharing
shall be deemed a purchase (without recourse) by such sharing party of
participant interests in the Loans or such fees, as the case may be, owed to the
recipients of such shared payments to the extent of such shared payments;
provided, however, that if all or any portion of such excess amount is
thereafter recovered from such Lender, such purchase shall be rescinded and the
purchase price restored to the extent of such recovery, but without interest.
2.9 EURODOLLAR INDEMNITY. If the Borrowers for any reason (including,
without limitation, pursuant to Sections 2.7, 2.11, 2.12 and 8.2 hereof) make
any payment of principal with respect to any Eurodollar Loan on any day other
than the last day of an Interest Period applicable to such Eurodollar Loan, or
fail to borrow or continue or convert to a Eurodollar Loan after giving a Notice
of Borrowing or Conversion thereof pursuant to Section 2.3, or fail to prepay a
Eurodollar Loan after having given notice thereof, the Borrowers shall pay to
the Agent for the benefit of the Lenders any amount required to compensate the
Lenders for any additional losses, costs or expenses which they may reasonably
incur as a result of such payment or failure, including, without limitation, any
loss (including any loss arising from any difference in the applicable
Eurodollar Rate in effect at the commencement of the Interest Period in question
and the date upon which the event giving rise to indemnity under this Section
2.9 occurs), costs or expense incurred by reason of the liquidation or
re-employment of deposits or other funds required by the Lenders to fund or
maintain such Eurodollar Loan. The Borrower shall pay such amount upon
presentation by the Agent of a statement setting forth the amount and the
Agent's (or the affected Lenders') calculation thereof pursuant hereto, which
statement shall be deemed true and correct absent manifest error.
2.10 COMPUTATION OF INTEREST AND FEES. Interest and all fees payable
hereunder shall be computed daily on the basis of a year of 360 days and paid
for the actual number of days for which due. If the due date for any payment of
principal is extended by operation of law, interest shall be payable for such
extended time. If any payment required by this Agreement becomes due on a day
that is not a Business Day such payment may be made on the next succeeding
Business Day (subject to the definition of the term "Interest Period"), and such
extension shall be included in computing interest in connection with such
payment.
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2.11 CHANGED CIRCUMSTANCES; ILLEGALITY.
(a) Notwithstanding any other provision of this Agreement, in the
event that:
(i) on any date on which the Eurodollar Rate would otherwise be set
the Agent shall have determined in good faith (which determination shall be
final and conclusive) that adequate and fair means do not exist for
ascertaining the Eurodollar Rate, or
(ii) at any time the Agent or any Lender shall have determined in good
faith (which determination shall be final and conclusive and, if made by
any Lender, shall have been communicated to the Agent in writing) that:
(A) the making or continuation of or conversion of any Loan to a
Eurodollar Loan has been made impracticable or unlawful by (1) the
occurrence of a contingency that materially and adversely affects the
interbank Eurodollar market or (2) compliance by the Agent or such Lender
in good faith with any applicable law or governmental regulation, guideline
or order or interpretation or change thereof by any governmental authority
charged with the interpretation or administration thereof or with any
request or directive of any such governmental authority (whether or not
having the force of law); or
(B) the Eurodollar Rate shall no longer represent the effective cost
to the Agent or such Lender for U.S. dollar deposits in the interbank
market for deposits in which it regularly participates;
then, and in any such event, the Agent shall forthwith so notify the Borrowers
thereof. Until the Agent notifies TLC that the circumstances giving rise to such
notice no longer apply, the obligation of the Lenders to allow selection by the
Borrowers of the Type of Revolving Credit Loan affected by the contingencies
described in this Section (herein called "AFFECTED LOANS") shall be suspended.
If, at the time the Agent so notifies the Borrowers, the Borrowers have
previously given the Agent a Notice of Borrowing or Conversion with respect to
one or more Affected Loans but such Revolving Credit Loans have not yet gone
into effect, such notification shall be deemed to be a request for Base Rate
Loans.
(b) In the event of a determination of illegality pursuant to
subsection (a)(ii)(A) above, the Borrowers shall, with respect to the
outstanding Affected Loans, prepay the same, together with interest thereon and
any amounts required to be paid pursuant to Section 2.9, on such date as shall
be specified in such notice (which shall not be earlier than the date such
notice is given) and may, subject to the conditions of this Agreement, borrow
Base Rate Loans in accordance with Section 2.1 hereof by giving a Notice of
Borrowing or Conversion pursuant to Section 2.3 hereof.
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2.12 INCREASED COSTS. In case after the date hereof any change in law,
regulation, treaty or official directive or the interpretation or application
thereof by any court or by any governmental authority charged with the
administration thereof or the compliance with any guideline or request of any
central bank or other governmental authority (whether or not having the force of
law):
(i) subjects any Lender to any tax with respect to payments of
principal or interest or any other amounts payable hereunder by the
Borrowers or otherwise with respect to the transactions contemplated hereby
(except for taxes on the overall net income of such Lender imposed by the
United States of America or any political subdivision thereof), or
(ii) imposes, modifies or deems applicable any deposit insurance,
reserve, special deposit or similar requirement against assets held by, or
deposits in or for the account of, or loans by, any Lender (other than as
provided in Section 2.5(e) and other than such requirements as are already
included in the determination of the Eurodollar Rate).
and the result of any of the foregoing is to increase the cost to the Lender,
reduce the income receivable by such Lender or impose any expense upon such
Lender with respect to any Loans or its obligations under this Agreement or in
respect of any Letter of Credit, such Lender may notify the Borrowers, and the
Agent thereof. Each Lender agrees that it will, if requested by the Borrowers
and to the extent permitted by law or by the relevant government authority, for
a period of thirty (30) days endeavor in good faith to avoid or minimize such
increase in cost or reduction in income, PROVIDED, that such Lender can do so in
such a manner that such Lender, in its sole determination, suffers no economic,
legal, regulatory or other disadvantage. Any reasonable expense incurred by such
Lender in so doing shall be paid by the Borrowers (on a PRO RATA basis with all
of such Lender's other borrowers obligated to contribute to such expense). Upon
demand by such Lender, the Borrowers agree to pay to such Lender the amount of
such increase in cost, reduction in income or additional expense (together with
the Borrowers' PRO RATA share of such Lender's expense in attempting to minimize
such increase or reduction) as and when such cost, reduction or expense is
incurred or determined, upon presentation by such Lender of a statement in the
amount and setting forth in reasonable detail such Lender's calculation thereof
and the assumptions upon which such calculation was based, which statement shall
be deemed true and correct absent manifest error.
2.13 CAPITAL REQUIREMENTS. If any Lender determines that (i) the adoption
of or change, after the date hereof, in any law, rule, regulation or guideline
regarding capital requirements for banks or bank holding companies, or any
change, after the date hereof, in the interpretation or application thereof by
any governmental authority charged with the administration thereof, or (ii)
compliance by such Lender or its parent bank holding company with any guideline,
request or directive of any such entity regarding capital adequacy (whether or
not having the force of law), has the effect of reducing the return on
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such Lender's or such holding company's capital as a consequence of such
Lender's Commitment to make Loans hereunder or its obligations in respect of any
Letter of Credit to a level below that which such Lender or such holding company
could have achieved but for such adoption, change or compliance (taking into
consideration such Lender's or such holding company's then existing policies
with respect to capital adequacy and assuming the full utilization of such
entity's capital) by any amount deemed by such Lender to be material, then such
Lender may notify the Borrowers and the Agent thereof. The Borrowers agree to
pay to such Lender on demand the amount of such reduction of return on capital
as and when such reduction is determined PROVIDED HOWEVER the date of the event
which gave rise to such reduction of return on capital may not be more than 120
days prior to the date of notice from the affected Lender to the Borrowers. Such
amounts shall be payable within 90 days after presentation by such Lender of a
statement in the amount and setting forth in reasonable detail such Lender's
calculation thereof and the assumptions upon which such calculation was based
(which statement shall be deemed true and correct absent manifest error) unless
within such 90 day period the Borrowers shall have prepaid in full all
Obligations to such Lender, in which event no amount shall be payable to such
Lender under this Section 2.13. In determining such amount, such Lender may use
any reasonable averaging and attribution methods.
2.14 REMOVAL OF LENDER. In the event that any Lender (i) fails to make a
Loan as required under Section 2.4, (ii) notifies the Borrowers, pursuant to
Sections 2.11(a)(ii)(A) or 2.11(a)(ii)(B), respectively, that it is
impracticable or unlawful for such Lender to make or to continue a Eurodollar
Loan or that the Eurodollar Rate no longer represents the effective cost of a
Eurodollar Loan to such Lender (subject to such Lender's right to rescind such
demand or assertion within 7 days after the notice from the Borrowers referred
to below), or (iii) demands payment of costs and additional amounts pursuant to
Sections 2.11(b), 2.12 or 2.13, the Borrowers may, provided that no Default or
Event of Default shall have occurred and be continuing, upon 15 days' prior
written notice to such Lender and the Agent, elect to cause such Lender (the
"Replaced Lender") to assign its Loans and Commitment in full to an assignee
financial institution selected by the Borrowers and acceptable to the Agent (a "
Replacement Lender"), so long as at the time of such replacement (A) such
Replacement Lender shall enter into one or more joinder agreements as required
by Section 9.1(a) (with all fees required pursuant to Section 9.1(a) to be paid
by either the Borrowers or the Replacement Lender) pursuant to which the
Replacement Lender shall acquire all the Commitments and all outstanding Loans
of, and in each case participations in Letters of Credit by, the Replaced
Lender, and (B) such Replaced Lender (w) receives payment in full in cash of the
outstanding principal amount of all Revolving Credit Loans made by it and
accrued and unpaid interest thereon, (x) receives an amount equal to all unpaid
drawings that have been funded by (and not reimbursed to) the Replaced Lender,
together with all then unpaid interest thereon, (y) is relieved of its
obligations as a participant under the then outstanding Letters of Credit, and
(z) receives payment in full in cash of all accrued and unpaid fees and other
amounts due and payable to such Replaced Lender as of the date of such
assignment (including without limitation, amounts owing pursuant to Sections
2.11(b), 2.12 and, if applicable, 2.13). Upon payment of the amounts
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required above, the Replaced Lender shall make such assignment in accordance
with the requirements of Section 9.1(a) and upon execution of the respective
joinder agreement by the Replacement Lender, recordation of the assignment by
the Agent and delivery to the Replacement Lender of the appropriate Note or
Notes executed by the Borrowers, the Replacement Lender shall become a Lender
hereunder and the Replaced Lender shall cease to be a Lender hereunder, except
with respect to indemnification provisions under this Agreement (including
without limitation, pursuant to Section 11.3), which shall survive as to such
Replaced Lender.
SECTION IIA
LETTERS OF CREDIT
-----------------
2A.1 ISSUANCE.
(a) Upon the terms and subject to the conditions hereof, the Issuing
Bank, in reliance upon the representations and warranties of the Borrowers
contained herein, agrees to issue standby letters of credit (the "LETTERS OF
CREDIT") for the account of the Borrowers in such form as may be requested from
time to time by the Borrowers and agreed to by the Issuing Bank, PROVIDED that
the Maximum Drawing Amount (after giving effect to all requested Letters of
Credit) shall not at any time exceed the Letter of Credit Sublimit, PROVIDED,
FURTHER that the Total Outstandings (after giving effect to all requested
Revolving Credit Loans and Letters of Credit) shall not at any time exceed the
Total Commitment, and provided further that no Letter of Credit shall have an
expiration date later than 60 days after the Maturity Date. At least three (3)
Business Days prior to the proposed issuance date of any Letter of Credit, the
Borrowers shall deliver to the Issuing Bank a Letter of Credit Application
setting forth the Maximum Drawing Amount of all Letters of Credit (including the
requested Letter of Credit), the requested language of the requested Letter of
Credit and such other information as the Issuing Bank shall require. Each
request for the issuance of a Letter of Credit hereunder shall constitute a
representation and warranty by the Borrowers that the conditions set forth in
Section 3.2 (and, in the case of a request for an initial Letter of Credit,
Section 3.1) have been satisfied as of the date of such request. To the extent
there is a conflict between the provisions of any such Letter of Credit
Application and/or related documents and this Agreement, the terms of this
Agreement shall be controlling.
(b) Effective upon the issuance of each Letter of Credit and without
any further action on the part of the Issuing Bank or the Lenders in respect
thereof, the Issuing Bank hereby grants to each Lender, and each such Lender
hereby acquires from the Issuing Bank, a participating interest in such Letter
of Credit in proportion to such Lender's Commitment Percentage (the "LETTER OF
CREDIT PARTICIPATION"), and each Lender severally agrees that it shall be
absolutely liable, without regard to the occurrence of any Default or Event of
Default, to the extent of such Lender's Commitment Percentage, to reimburse the
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Issuing Bank on demand for the amount of each draft paid by the Issuing Bank
under each Letter of Credit to the extent that such amount is not reimbursed by
the Borrowers.
(c) All letters of credit issued under the Original Credit Agreement
and outstanding as of the Closing Date shall be deemed to be Letters of Credit
issued and outstanding under this Agreement.
2A.2 REIMBURSEMENT OBLIGATION OF THE BORROWERS. In order to induce the
Issuing Bank to issue, extend and renew each Letter of Credit, the Borrowers
hereby agree to jointly and severally reimburse or pay to the Issuing Bank, for
the account of the Issuing Bank or (as the case may be) the Lenders, with
respect to each Letter of Credit issued, extended or renewed by the Issuing Bank
hereunder as follows:
(a) on each date that any draft presented under any Letter of Credit
is honored by the Issuing Bank or the Issuing Bank otherwise makes payment with
respect thereto, (i) the amount paid by the Issuing Bank under or with respect
to such Letter of Credit, and (ii) the amount of any taxes, fees, charges or
other necessary or reasonable costs and expenses whatsoever incurred by the
Issuing Bank or any Lender in connection with any payment made by the Issuing
Bank under, or with respect to, such Letter of Credit; and
(b) on the Maturity Date or the acceleration of the Reimbursement
Obligations pursuant to Section 8, an amount equal to 105% of the then Maximum
Drawing Amount of all Letters of Credit, which amount shall be held by the
Issuing Bank as cash collateral for all Reimbursement Obligations.
Each such payment shall be made to the Issuing Bank at its head office in
immediately available funds. Interest on any and all amounts remaining unpaid by
the Borrowers under this Section 2A.2 at any time from the date such amounts
become due and payable (whether as stated in this Section 2A.2, by acceleration
or otherwise) until payment in full (whether before or after judgment) shall be
payable to the Agent, for the account of Issuing Bank or (as the case may be)
the Lenders, on demand at a rate per annum equal to 2% above the Interest Rate
applicable to Base Rate Loans at the time in the absence of an Event of Default.
2A.3 LETTER OF CREDIT PAYMENTS. If any draft shall be presented or other
demand for payment shall be made under any Letter of Credit, the Issuing Bank
shall notify the Borrowers of the date and amount of the draft presented or
demand for payment and of the date and time when it expects to pay such draft or
honor such demand for payment. The responsibility of the Issuing Bank to the
Borrowers shall be only to determine that the documents (including each draft)
delivered under each Letter of Credit in connection with such presentment shall
be in conformity in all material respects with such Letter of Credit. If on the
date that such draft is paid or other payment is made by the Issuing Bank the
Borrowers shall not have promptly satisfied in full their Reimbursement
Obligations in
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connection therewith, the Issuing Bank shall promptly notify the Lenders of the
amount of any unpaid Reimbursement Obligation. All such unpaid Reimbursement
Obligations with respect to Letters of Credit shall be deemed to be Revolving
Credit Loans. No later than 1:00 p.m. (Boston time) on the Business Day next
following the receipt of such notice, each Lender shall make available to the
Agent, at the Agent's head office, in immediately available funds, such Lender's
Commitment Percentage of such unpaid Reimbursement Obligation, together with an
amount equal to the product of (i) the average, computed for the period referred
to in clause (iii) below, of the weighted average interest rate paid by the
Agent for federal funds acquired by the Agent during each day included in such
period, TIMES (ii) the amount equal to such Lender's Commitment Percentage of
such unpaid Reimbursement Obligation, TIMES (iii) a fraction, the numerator of
which is the number of days that have elapsed from and including the date the
Issuing Bank paid the draft presented for honor or otherwise made payment until
the date on which such Lender's Commitment Percentage of such unpaid
Reimbursement Obligation shall become immediately available to the Agent, and
the denominator of which is 360.
2A.4 OBLIGATIONS ABSOLUTE.
(a) The Borrowers' Reimbursement Obligations shall be absolute and
unconditional under any and all circumstances and irrespective of the occurrence
of any Default or Event of Default or any condition precedent whatsoever or any
set off, counterclaim or defense to payment which any Borrower may have or have
had against the Issuing Bank, the Agent, the Lenders or any beneficiary of a
Letter of Credit. Each Borrower further agrees that the Issuing Bank, the Agent
and the Lenders, as long as they have acted in good faith and absent gross
negligence or willful misconduct on their part, shall not be responsible for,
and the Borrowers' Reimbursement Obligations shall not be affected by, among
other things, the validity or genuineness of documents or of any endorsements
thereon, even if such documents should in fact prove to be in any or all
respects invalid, fraudulent or forged, or any dispute between or among any of
the Borrowers, the beneficiary of any Letter of Credit or any financing
institution or other party to which any Letter of Credit may be transferred or
any claims or defenses whatsoever of any of the Borrowers, against the
beneficiary of any Letter of Credit or any such transferee.
(b) The Issuing Bank, the Agent and the Lenders shall not be liable
for any error, omission, interruption or delay in transmission, dispatch or
delivery of any message or advice, however transmitted, in connection with any
Letter of Credit. Each Borrower agrees that any action taken or omitted by the
Issuing Bank, the Agent or the Lenders under or in connection with each Letter
of Credit and the related drafts and documents, if done in good faith and absent
the gross negligence or willful misconduct of the Issuing Bank, the Agent, or
the Lenders, shall be binding upon such Borrower and shall not result in any
liability on the part of the Issuing Bank, the Agent or the Lenders to any
Borrower.
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2A.5 RELIANCE BY THE ISSUING BANK AND THE AGENT. To the extent not
inconsistent with Section 2A.4, the Issuing Bank and the Agent shall be entitled
to rely, and shall be fully protected in relying upon, any Letter of Credit,
draft writing, resolution, notice, consent, certificate, affidavit, letter,
cablegram, telegram, telecopy, telex or teletype message, statement, order or
other document believed by it to be genuine and correct and to have been signed,
sent or made by the proper Person or Persons and upon advice and statements of
legal counsel and other experts selected by the Issuing Bank or the Agent.
SECTION III.
CONDITIONS OF LOANS AND LETTERS OF CREDIT
-----------------------------------------
3.1 CONDITIONS PRECEDENT TO INITIAL REVOLVING CREDIT LOANS. The obligation
of the Lenders to make the initial Revolving Credit Loans and of the Issuing
Bank to issue the initial Letter(s) of Credit is subject to the satisfaction or
waiver by the Agent of the following conditions precedent on or prior to the
Closing Date:
(a) The Agent shall have received the following agreements,
documents, certificates and opinions in form and substance satisfactory to the
Agent and duly executed and delivered by the parties thereto:
(i) This Agreement;
(ii) The Revolving Credit Notes, substantially in the form of EXHIBIT
A hereto;
(iii) The Security Documents;
(iv) UCC-1 Financing Statements and UCC-3 Amendments to the extent
applicable;
(v) Compliance Report of the chief financial officer of TLC as of
the Closing Date;
(vi) Certificates of insurance or insurance binders evidencing
compliance with Section 5.3 hereof and the applicable provisions of the
Security Documents;
(vii) Notice of Borrowing or Conversion as of the Closing Date;
(viii) A certificate from the chief financial officer of each of the
Borrowers with respect to solvency and other matters;
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(xi) A certificate of the Secretary or an Assistant Secretary of the
Parent and each Borrower with respect to resolutions of the Board of
Directors of such entity authorizing the execution and delivery of the Loan
Documents to which it is a party and identifying the officer(s) authorized
to execute, deliver and take all other actions required under this
Agreement, and providing specimen signatures of such officers;
(x) The corporate charter of the Parent and each Borrower and all
amendments and supplements thereto, as filed in the office of the Secretary
of State of its jurisdiction of incorporation, certified by said Secretary
of State as being a true and correct copy thereof;
(xi) The Bylaws of the Parent and each Borrower and all amendments
and supplements thereto, certified by the Secretary or an Assistant
Secretary of such entity as being a true and correct copy thereof;
(xii) A certificate of the Secretary of State of the state of
incorporation of the Parent and each Borrower as to legal existence of such
entity;
(xiii) A certificate of the Secretary of State of each jurisdiction in
which the Parent and each Borrower is required to be qualified to do
business as to the due qualification and good standing of such entity in
such state;
(xiv) Favorable legal opinions addressed to the Lenders from counsel
to the Borrowers; and
(xv) Such other documents, instruments, opinions and certificates
and completion of such other matters, as the Agent may reasonably deem
necessary or appropriate.
(b) Amendment(s) to the Liquidity Agreement, in form and substance
acceptable to the Agent, shall have been duly executed and delivered by each of
the parties thereto;
(c) No litigation, arbitration, proceeding or investigation shall
be pending or threatened which questions the validity or legality of the
transactions contemplated by any Loan Document or seeks a restraining order,
injunction or damages in connection therewith, or which, might have a material
adverse effect on the transactions contemplated hereby or might have a material
adverse effect on the condition, assets, business, operations, or prospects of
the Parent, the Borrowers and their Subsidiaries, taken as a whole.
(d) All necessary filings and recordings against the Collateral
shall have been completed and the Agent's liens on the Collateral shall have
been perfected, as contemplated by the Security Documents. (1)
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(e) The Borrower shall have paid to the Agent all fees to be paid
hereunder (including pursuant to Section 2.6(c) hereof) on or prior to the
Closing Date.
In addition, within thirty (30) days of the Closing Date hereof (but
not as a condition to the initial Revolving Credit Loans and the initial Letters
of Credit), the Borrowers shall cause to be pledged to the Agent approximately
65% (but in any event less than 66_%) of the outstanding shares of each of the
Designated Foreign Subsidiaries or, to the extent such pledge of shares of any
Designated Foreign Subsidiary would result in adverse tax consequences or is
prohibited under applicable law, cause to pledge to the Agent approximately 65%
(but in any event less than 66_%) of the outstanding shares of the entity or
entities which directly or indirectly own 100% of the outstanding shares of such
Designated Foreign Subsidiary, pursuant to documentation reasonably acceptable
to the Agent.
3.2 CONDITIONS PRECEDENT TO ALL LOANS AND LETTERS OF CREDIT. The
obligation of the Lenders to make any Revolving Credit Loan, including the
initial Revolving Credit Loans, or continue or convert Revolving Credit Loans to
Revolving Credit Loans of another Type, and of the Issuing Bank to issue any
Letter of Credit is further subject to the following conditions:
(a) timely receipt by the Agent of a Notice of Borrowing or
Conversion with respect to any Revolving Credit Loan, or by the Issuing Bank of
a Letter of Credit Application with respect to any Letter of Credit;
(b) the outstanding Revolving Credit Loans and Letters of Credit do
not and, after giving effect to any requested Revolving Credit Loan or Letter of
Credit, will not exceed the limitations set forth in Sections 2.1 and 2A.1
hereof;
(c) the representations and warranties contained in Section IV shall
be true and accurate in all material respects on and as of the date of such
Notice of Borrowing or Conversion or Letter of Credit Application and on the
effective date of the making, continuation or conversion of each Revolving
Credit Loan or issuance of each Letter of Credit as though made at and as of
each such date (except to the extent that such representations and warranties
expressly relate to an earlier date or are inaccurate as a result of changes or
transactions expressly permitted hereunder);
(d) no Default or Event of Default shall have occurred and be
continuing at the time of and immediately after the making of such requested
Revolving Credit Loan or the issuance of such requested Letter of Credit;
(e) the resolutions referred to in Section 3.1(a)(ix) shall remain in
full force and effect; and
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(f) no change shall have occurred in any law or regulation or
interpretation thereof that, in the opinion of counsel for any Lender, would
make it illegal or against the policy of any governmental agency or authority
for such Lender to make Revolving Credit Loans hereunder or, in the opinion of
counsel for the Issuing Bank, for the Issuing Bank to issue Letters of Credit
hereunder (as the case may be).
The making, continuation or conversion of each Revolving Credit Loan and
the issuance of each Letter of Credit shall be deemed to be a representation and
warranty by the Borrower on the date of the making, continuation or conversion
of such Revolving Credit Loan or the issuance of such Letter of Credit as to the
accuracy of the facts referred to in subsection (c) of this Section 3.2 and of
the satisfaction of all of the conditions set forth in this Section 3.2.
SECTION IV.
REPRESENTATIONS AND WARRANTIES
------------------------------
In order to induce the Agent, the Issuing Bank and the Lenders to enter
into this Agreement and to make Revolving Credit Loans and to issue Letters of
Credit hereunder, the Borrowers represent and warrant to the Agent, the Issuing
Bank and the Lenders that except as disclosed on SCHEDULE 3 attached hereto:
4.1 ORGANIZATION; QUALIFICATION; BUSINESS.
(a) Each Borrower and each of its Significant Subsidiaries (i) is a
corporation duly organized and validly existing under the laws of its
jurisdiction of incorporation, (ii) has all requisite corporate power to own its
property and conduct its business as now conducted and as presently contemplated
and (iii) is duly qualified and in good standing as a foreign corporation and is
duly authorized to do business in each jurisdiction (all of which are listed on
SCHEDULE 3 attached hereto) where the nature of its properties or business
requires such qualification, except where the failure to be so qualified would
not have a material adverse effect on the condition, assets, business,
operations or prospects of the Parent, the Borrowers and their Subsidiaries,
taken as a whole.
(b) Since the date of the Initial Financial Statement, each Borrower
has continued to engage in a business substantially similar to that in which it
was then engaged and is engaged in no unrelated business.
4.2 CORPORATE AUTHORITY. The execution, delivery and performance of the
Loan Documents and the transactions contemplated hereby are within the corporate
power and authority of each Borrower and have been authorized by all necessary
corporate proceedings, and do not and will not (a) contravene any provision of
the charter documents or by-laws of any Borrower or any law, rule or regulation
applicable to any Borrower, (b)
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contravene any provision of, or constitute an event of default or event that,
but for the requirement that time elapse or notice be given, or both, would
constitute an event of default under, any other material agreement, instrument,
order or undertaking binding on any Borrower, or (c) result in or require the
imposition of any Encumbrance on any of the properties, assets or rights of any
Borrower, except in favor of the Agent, the Issuing Bank and the Lenders.
4.3 VALID OBLIGATIONS. The Loan Documents and all of their respective
terms and provisions are the legal, valid and binding obligations of each of the
Borrowers, enforceable in accordance with their respective terms except as
limited by bankruptcy, insolvency, reorganization, moratorium or other laws
affecting the enforcement of creditors' rights generally, and except as the
remedy of specific performance or of injunctive relief is subject to the
discretion of the court before which any proceeding therefor may be brought.
Upon delivery of stock certificates to the Agent and filing of UCC financing
statements in appropriate filing offices, the Security Documents will create in
favor of the Agent, the Issuing Bank and the Lenders legal, valid and
enforceable security interests in the Collateral and such security interests
will be fully perfected first priority security interests subject to Permitted
Encumbrances.
4.4 CONSENTS OR APPROVALS. The execution, delivery and performance of the
Loan Documents and the transactions contemplated herein do not require any
approval or consent of, or filing or registration with, any governmental or
other agency or authority, or any other Person, except (i) under or as
contemplated by the Security Documents, (ii) filings of the UCC financing
statements and (iii) filings with the United States Patent and Trademark Office
and the United States Copyright Office.
4.5 TITLE TO PROPERTIES; ABSENCE OF ENCUMBRANCES. Each Borrower and each
of its Significant Subsidiaries has good and marketable title to all of the
properties, assets and rights of every name and nature now purported to be owned
by it, including, without limitation, such properties, assets and rights as are
reflected in the Initial Financial Statement (except such properties, assets or
rights as have been disposed of in the ordinary course of business since the
date thereof), free from all Encumbrances except Permitted Encumbrances, and,
except as so disclosed, free from all defects of title that might materially
adversely affect such properties, assets or rights, taken as a whole. Each of
the Borrowers enjoys peaceful and undisturbed possession under all leases
necessary in any material respect for the operation of its properties and assets
and no default exists under such leases which would give the landlord the right
to terminate such leases. All such leases are valid and subsisting and are in
full force and effect.
4.6 FINANCIAL STATEMENTS. The Borrowers have furnished to the Lenders
audited consolidated balance sheets of the Parent and its Subsidiaries as of
January 3, 1998 and related, statements of operations, income, stockholders'
equity (deficits) and cash flows for the fiscal year then ended, and related
footnotes, audited and certified by the Borrower's Accountants (the "INITIAL
FINANCIAL STATEMENT"). The Initial Financial Statements were
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prepared in accordance with GAAP applied on a consistent basis throughout the
periods specified and present fairly the consolidated financial position of the
Parent and its Subsidiaries as of such dates and the consolidated results of the
operations of the Parent and its Subsidiaries for such periods.
4.7 CHANGES. Since the date of the Initial Financial Statement, there have
been no changes in the condition (financial or otherwise), assets, liabilities,
business, operations or prospects of any Borrower or any of its Significant
Subsidiaries, other than changes in the ordinary course of business, the effect
of which has not, in the aggregate, been materially adverse to the Parent, the
Borrowers and their Subsidiaries, taken as a whole.
4.8 SOLVENCY. The Parent and its Subsidiaries, taken as a whole, have and,
after giving effect to the Revolving Credit Loans, will have, assets (both
tangible and intangible) having a fair saleable value in excess of the amount
required to pay the probable liability on its then-existing debts (whether
matured or unmatured, liquidated or unliquidated, fixed or contingent); each
Borrower and each of its Significant Subsidiaries has and will have access to
adequate capital for the conduct of its business and the discharge of its debts
incurred in connection therewith as such debts mature; no Borrower and no
Significant Subsidiary of any Borrower was insolvent immediately prior to the
making of the Revolving Credit Loans and immediately after giving effect
thereto, no Borrower and no Significant Subsidiary of any Borrower will be
insolvent.
4.9 DEFAULTS. As of the date of this Agreement, no Default exists.
4.10 TAXES. The Parent, each Borrower, each of their Subsidiaries has filed
all U.S. Federal tax returns and all material other tax returns (state, local
and foreign) required to be filed, and has paid all taxes, assessments and other
governmental charges shown thereon to be due except in each case for (a)
delinquencies or payment of taxes that are not material and (b) such taxes,
assessments or charges that are being contested in good faith by appropriate
proceedings and with respect to which adequate reserves have been established
and are being maintained in accordance with GAAP. All such contests at the
Closing Date are described on SCHEDULE 3 hereto. Income tax returns of each
Borrower and each of its Subsidiaries have not been audited or otherwise
examined by any federal or state taxing authority except as disclosed to the
Agent. Each Borrower and each of its Subsidiaries has established on its books
reserves adequate under GAAP for the payment of all federal, state, foreign and
other tax liabilities. No issues have been raised by the Internal Revenue
Service or other taxing authority that could reasonably be expected to have a
material adverse effect on the condition, assets, business, operations or
prospects of the Parent, the Borrowers and their Subsidiaries, taken as a whole.
4.11 LITIGATION. Except as disclosed on SCHEDULE 3, there is no litigation,
arbitration, proceeding or investigation pending, or, to the knowledge of any
Borrower's or any of its Subsidiaries' officers, threatened, against any
Borrower or any of its Subsidiaries that, if adversely determined, may
reasonably be expected to result in a material judgment
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not fully covered by insurance, may reasonably be expected to result in a
forfeiture of all or any substantial part of any property of any Borrower or any
of its Significant Subsidiaries, or may reasonably be expected to have a
material adverse effect on the condition, assets, business or prospects of the
Parent, the Borrowers and their Subsidiaries, taken as a whole.
4.12 SUBSIDIARIES. All the Subsidiaries of each Borrower are listed on
SCHEDULE 3 hereto. Each Borrower is the owner, free and clear of all
Encumbrances other than those in favor of the Lenders and Permitted
Encumbrances, of all of the issued and outstanding stock of each of its
Subsidiaries. All shares of such stock have been validly issued and are fully
paid and nonassessable, and no rights to subscribe to any additional shares have
been granted, and no options, warrants or similar rights are outstanding.
4.13 INVESTMENT COMPANY ACT. Neither any Borrower nor any of its
Subsidiaries is subject to regulation under the Investment Company Act of 1940,
as amended.
4.14 COMPLIANCE. Each Borrower and each of its Significant Subsidiaries has
all necessary permits, approvals, authorizations, consents, licenses,
franchises, registrations and other rights and privileges (including
Intellectual Property) to allow it to own and operate its business without any
violation of law or the rights of others (including with respect to Intellectual
Property) except to the extent that any such violation would not have a material
adverse effect on the condition, assets, business, operations or prospects of
the Parent, the Borrowers and their Subsidiaries, taken as a whole; and each
Borrower and each of its Significant Subsidiaries are duly authorized, qualified
and licensed under and in compliance with all applicable laws, regulations,
authorizations and orders of public authorities, including, without limitation,
Environmental Laws, except to the extent that any such failure to be so
authorized, qualified, licensed or in compliance would not have a material
adverse effect on the condition, assets, business, operations, or prospects of
the Parent, the Borrowers and their Subsidiaries, taken as a whole. Each
Borrower and each of its Significant Subsidiaries has performed all obligations
required to be performed by it under, and is not in default under or in
violation of, its corporate charter or by-laws, or any agreement, lease,
mortgage, note, bond, indenture, license or other instrument or undertaking to
which it is a party or by which any of it or any of its properties are bound,
except for violations none of which, either individually or in the aggregate,
would have any material adverse effect on the conditions, assets, business,
operations or prospects of the Parent, the Borrowers and their Subsidiaries,
taken as a whole.
4.15 ERISA. Each Borrower and each of its Affiliates are in compliance in
all material respects with ERISA and the provisions of the Code applicable to
any Plans; no Borrower nor any Affiliate of a Borrower has engaged in a
Prohibited Transaction which would subject any Borrower, any Affiliate of a
Borrower or any Plan to a material tax or penalty imposed on a Prohibited
Transaction which may have a material adverse effect on the condition, assets,
business, operations or prospects of the Parent, the Borrowers and their
Subsidiaries, taken as a whole; no Plan has incurred any "accumulated funding
deficiency" (as defined in ERISA) which may have a material adverse effect on
the
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condition, assets, business, operations or prospects of the Parent, the
Borrowers and their Subsidiaries, taken as a whole; except as set forth in the
Initial Financial Statement, the aggregate fair market value of all assets of
the Plans which are single-employer plans is at least equal to the aggregate
present value of all accrued benefits under such Plans, both as determined in
the most recent actuarial reports for such Plans using the actuarial assumptions
used for funding purposes therein; no Borrower nor any Affiliate of a Borrower
has incurred any liability to the Pension Benefit Guaranty Corporation over and
above premiums required by law which may have a material adverse effect on the
condition, assets, business, operations, or prospects of the Parent, the
Borrowers and their Subsidiaries, taken as a whole; and no Borrower nor any
Affiliate of a Borrower has terminated any Plan in a manner which could result
in the imposition of a lien on the property of any Borrower or any Affiliate of
a Borrower which may have a material adverse effect on the condition, assets,
business, operations or prospects of the Parent, the Borrowers and their
Subsidiaries, taken as a whole.
4.16 ENVIRONMENTAL MATTERS.
(a) Each Borrower and each of its Subsidiaries has obtained all
permits, licenses and other authorizations which are required under all
Environmental Laws, except to the extent failure to have any such permit,
license or authorization would not have a material adverse effect on the
condition, assets, business, operations or prospects of the Parent, the
Borrowers and their Subsidiaries, taken as a whole. Each Borrower and each of
its Subsidiaries are in compliance with the terms and conditions of all such
permits, licenses and authorizations, and are also in compliance with all
applicable orders, decrees, judgments and injunctions, issued, entered,
promulgated or approved under any Environmental Law, except to the extent
failure to comply would not have a material adverse effect on the condition,
assets, business, operations or prospects of the Parent, the Borrowers and their
Subsidiaries, taken as a whole.
(b) No written notice, notification, demand, request for information,
citation, summons or order has been received by any Borrower, and to the best of
each Borrower's knowledge, no complaint has been filed, and to the best of each
Borrower's knowledge, no penalty has been assessed and no investigation or
review is pending or, to the best of each Borrower's knowledge, threatened by
any governmental or other entity (i) with respect to any alleged failure by any
Borrower or any of its Subsidiaries to have any permit, license or authorization
required in connection with the conduct of its business or to comply with any
Environmental Laws, or (ii) regarding the presence of any Hazardous Material at,
on or under any property now or previously owned, leased or used by any Borrower
or any of its Subsidiaries or any other location to which Hazardous Materials
from such property had been transported or which they have been disposed of.
(c) To the best of each Borrower's knowledge, no material oral or
written notification of a release of a Hazardous Material has been filed by or
on behalf of any Borrower or any of its Subsidiaries and no property now or
previously owned, leased or
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used by any Borrower or any of its Subsidiaries is listed or proposed for
listing on the National Priorities List under the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended, or on any similar
state list of sites requiring investigation or clean-up.
(d) To the best of each Borrower's knowledge, there are no liens or
Encumbrances arising under or pursuant to any Environmental Law on any of the
real property or properties owned, leased or used by any Borrower or any of its
Subsidiaries which constitutes a material part of the assets of the Borrowers
and their Subsidiaries, taken as a whole or which may have a material adverse
effect on the condition, assets, business, operations or prospects of the
Parent, the Borrowers and their Subsidiaries, taken as a whole, and no
governmental actions have been taken or, to the best of each Borrower's
knowledge, are in process which could subject any of such properties to such
liens or Encumbrances or, as a result of which any Borrower or any of its
Subsidiaries would be required to place any notice or restriction relating to
the presence of Hazardous Materials at any property owned by it.
(e) No Borrower nor any Subsidiary of any Borrower nor, to the best
knowledge of each Borrower, any previous owner, tenant, occupant or user of any
property owned, leased or used by any Borrower or any of its Subsidiaries has
(i) engaged in or permitted any operations or activities upon or any use or
occupancy of such property, or any portion thereof, for the handling,
manufacture, treatment, storage, use, generation, release, discharge, refining,
dumping or disposal of any Hazardous Materials on, under, in or about such
property, except to the extent (x) commonly used in day-to-day operations of
such property and in such case only in compliance in all material respects with
all Environmental Laws or (y) as would not have a material adverse effect on the
conditions, assets, business, operations or prospects of the Parent, the
Borrowers and their Subsidiaries, taken as a whole, or (ii) transported any
Hazardous Materials to, from or across such property except to the extent (x)
commonly used in day-to-day operations of such property and, in such case, in
compliance in all material respects with, all Environmental Laws or (y) as would
not have a material adverse effect on the conditions, assets, business,
operations or prospects of the Parent, the Borrowers and their Subsidiaries,
taken as a whole; nor to the best knowledge of each Borrower have any Hazardous
Materials migrated from other properties upon, about or beneath such property,
nor, to the best knowledge of the Borrower, are any Hazardous Materials
presently constructed, deposited, stored or otherwise located on, under, in or
about such property except to the extent commonly used in day-to-day operations
of such property and, in such case, in compliance in all material respects with
all Environmental Laws.
4.17 RESTRICTIONS ON THE BORROWERS. Except as disclosed on SCHEDULE 3, no
Borrower nor any Significant Subsidiary of any Borrower is party to or bound by
any contract, agreement or instrument, nor subject to any charter or other
corporate restriction which will, under current or reasonably foreseeable
conditions, materially and adversely
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affect the business, property, assets, operations or conditions, financial or
otherwise of any Borrower or any of its Significant Subsidiaries.
4.18 LABOR RELATIONS. There is (i) no unfair labor practice complaint
pending against any Borrower or any of its Significant Subsidiaries or, to the
best knowledge of each Borrower, threatened, before the National Labor Relations
Board, and no grievance or arbitration proceeding arising out of or under any
collective bargaining agreement is so pending against any Borrower or any of its
Significant Subsidiaries or, to the best knowledge of each Borrower, threatened,
except for such complaints, grievances and arbitration proceedings which, if
adversely decided, would not have a material adverse effect on the condition,
assets, business, operations or prospects of the Parent, the Borrowers and their
Subsidiaries, taken as a whole, (ii) no strike, labor dispute, slowdown or
stoppage pending against any Borrower or any of its Significant Subsidiaries or,
to the best knowledge of each Borrower, threatened against any Borrower or any
of its Significant Subsidiaries, except for any such labor action as would not
have a material adverse effect on the condition, assets, business, operations or
prospects of the Parent, the Borrowers and their Subsidiaries, taken as a whole
and (iii) to the best knowledge of each Borrower, no union representation
question existing with respect to the employees of any Borrower or any of its
Significant Subsidiaries and, to the best knowledge of each Borrower, no union
organizing activities are taking place, except for any such question or
activities as would not have a material adverse effect on the condition, assets,
business, operations or prospects of the Parent, the Borrowers and their
Subsidiaries taken as a whole.
4.19 MARGIN RULES. No portion of any Revolving Credit Loan shall be used
for a "purpose loan" as such term is used in Regulations G, U or X of the Board
of Governor's of the Federal Reserve System.
4.20 INTELLECTUAL PROPERTY.
(a) All of the U.S. registered copyrights, patents, trademarks and
similar rights ("Intellectual Property") owned by the Parent, any of the
Borrowers or their Subsidiaries are set forth in SCHEDULE 3 with respect to
products currently sold or licensed by the Parent, any Borrower or any
Significant Subsidiary. To the best knowledge of each of the Borrowers, each
item of such Intellectual Property is valid, unexpired and in full force and
effect, has not been adjudged invalid or unenforceable, in whole or in part, and
has not, except in the reasonable business judgment of the Parent, a Borrower or
one of their Subsidiaries, been abandoned and, no holding, decision or judgment
has been rendered by any governmental authority which would be reasonably likely
to limit, cancel or question the validity of any such Intellectual Property. To
the best knowledge of each of the Borrowers, there is no infringement by others
of any right of any Borrower or any of its Subsidiaries with respect to such
Intellectual Property.
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(b) As of the Closing Date, the Material License Agreements are in
full force and effect and, to the best knowledge of the Borrowers, are not
prohibited under applicable law, and no party thereto is in default thereunder.
4.21 FISCAL YEAR. The fiscal year of each Borrower and each of its
Subsidiaries runs on the 52 or 53 week period ending on the Saturday on or
immediately after December 31 of each Calendar Year.
4.22 ADDRESSING THE YEAR 2000 PROBLEM. Except as disclosed to the Agent
from time to time in writing (including without limitation through the
furnishing of copies of the Parent's filings with the Securities and Exchange
Commission), the Borrowers have no reason to believe that there will be a
material adverse effect on the condition, assets, business, operations or
prospects of the Parent, the Borrowers and their Subsidiaries, taken as a whole,
resulting from a Year 2000 Problem.
4.23 DISCLOSURE. No representation or warranty made by any Borrower in any
Loan Document and no document or information furnished to the Lenders by or on
behalf of or at the request of any Borrower in connection with any of the
transactions contemplated by the Loan Documents contains any untrue statement of
a material fact or omits to state any material fact necessary in order to make
the statements contained therein not misleading in light of the circumstances in
which they are made.
SECTION V.
AFFIRMATIVE COVENANTS
---------------------
Each Borrower covenants that so long as any Revolving Credit Loan, Letter
of Credit or other Obligation remains outstanding or the Lenders or the Issuing
Bank have any obligation to lend or to issue any Letter of Credit hereunder:
5.1 FINANCIAL STATEMENTS. The Borrowers shall furnish to the Lenders:
(a) as soon as available to the Borrowers, but in any event within
120 days after the end of each fiscal year of the Borrowers, the consolidated
and consolidating balance sheets of the Parent and its Subsidiaries (including
the Borrowers) as of the end of such fiscal year and related consolidated and
consolidating statements of income, consolidated retained earnings and cash
flow, for such fiscal year, prepared in accordance with GAAP and audited and
certified by the Borrowers' Accountants in the case of such consolidated
statements, and certified by the chief financial officer of TLC, as agent for
the Borrowers, in the case of such consolidating statements;
(b) as soon as available to the Borrowers, but in any event within
45 days after the end of each of the first three (3) fiscal quarters of the
Borrowers, a consolidated
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and consolidating balance sheet as of the end of, and related consolidated and
consolidating statements of income for, the fiscal quarters then ended and the
portion of the fiscal year then ended, prepared in accordance with GAAP and
certified by the chief financial officer of TLC, subject to normal, recurring
year-end adjustments (that shall not in the aggregate be material in amount) and
the absence of footnotes to such financial statements;
(c) concurrently with the delivery of each annual and quarterly
financial statement pursuant to subsections (a) and (b) of this Section 5.1, a
report in substantially the form of EXHIBIT C hereto signed by the chief
financial officer of TLC which report shall specifically point out any change in
the Leverage Ratio which would trigger an adjustment to the Applicable Margin or
Commitment Fee Percentage hereunder;
(d) prior to the first day of each fiscal year of the Borrowers, the
Borrowers' and their Subsidiaries' combined operating budget for such fiscal
year including projections, prepared on a quarterly basis and including combined
balance sheets and statements of income;
(e) promptly after the receipt thereof by any of the Borrowers,
copies of any reports (including any so-called internal control letters issued
in accordance with AICPA's Statement on Auditing Standards No. 60, Communication
of Internal Control Structure Related Matters Noted in an Audit) submitted to
the Parent or any of the Borrowers by independent public accountants in
connection with any annual review of the accounts of any of the Borrowers made
by such accountants;
(f) promptly after the same are delivered to its stockholders or the
Securities and Exchange Commission, copies of all proxy statements, financial
statements and reports as the Parent or any Borrower shall send to its
stockholders or as any Borrower may file with the Securities and Exchange
Commission or any governmental authority at any time having jurisdiction over
the Parent or any of its Subsidiaries (including the Borrowers), including,
without limitation, any reports filed with the Securities and Exchange
Commission on Forms 10-Q, 10-K, 8-K (or their equivalent if such forms no longer
exist); and
(g) from time to time, such other financial data and information
about the Parent, any of its Subsidiaries (including the Borrowers) as the Agent
or the Lenders may reasonably request.
5.2 CONDUCT OF BUSINESS. Each Borrower and each of its Significant
Subsidiaries shall:
(a) duly observe and comply in all material respects with all
applicable laws (including without limitation all Environmental Laws and ERISA),
regulations, decrees, orders, judgments and valid requirements of any
governmental authorities relative to its corporate existence, rights and
franchises, to the conduct of its business and to its
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property and assets (including the Collateral), and shall maintain and keep in
full force and effect and comply with all licenses and permits necessary in any
material respect to the proper conduct of its business;
(b) except to the extent permitted under Sections 7.4 or 7.5 hereof,
maintain its corporate existence and remain or engage substantially in a
business substantially similar to that in which it is now engaged.
5.3 MAINTENANCE AND INSURANCE.
(a) Each Borrower and each of its Significant Subsidiaries shall
maintain its properties in good repair, working order and condition as required
for the normal conduct of its business.
(b) Each Borrower and each of its Subsidiaries shall at all times
maintain liability and property damage insurance on its properties (including
all Collateral) with financially sound and reputable insurers qualified to do
business in the states in which they are providing coverage, in such amounts and
with such coverages, endorsements, deductibles and expiration dates as the
officers of such Borrower or its Subsidiaries, as the case may be, in the
exercise of their reasonable judgment deem to be adequate, as are customary in
the industry for companies of established reputation engaged in the same or
similar business and owning or operating similar properties. The Agent shall be
named as loss payee, additional insured and/or mortgagee, as applicable, under
such insurance as the Agent shall require from time to time, and the Borrowers
shall provide to the Agent lender's loss payable endorsements in form and
substance reasonably satisfactory to the Agent. All such insurance shall contain
a waiver of subrogation clause. In addition, the Agent shall be given fifteen
(15) days advance notice of any cancellation, material modification or
non-renewal of insurance. In the event of failure to provide and maintain
insurance as herein provided, the Agent may, at its option, provide such
insurance and charge the cost thereof to the Borrowers as a Revolving Credit
Loan. The Borrowers shall furnish to the Agent certificates or other evidence
satisfactory to the Agent in its sole discretion of compliance with the
foregoing insurance provisions. The Agent shall not, by the fact of approving,
disapproving or accepting any such insurance, incur any liability for the form
or legal sufficiency of insurance contracts, solvency of insurance companies or
payment of losses, and each Borrower jointly and severally hereby expressly
assumes full responsibility therefor and liability, if any, thereunder.
5.4 TAXES. Each Borrower and each of its Subsidiaries shall pay or cause
to be paid all taxes, assessments or governmental charges on or against it or
any of its Subsidiaries or its or their properties (including Collateral) on or
prior to the time when they become due; except for any tax, assessment or charge
that is being contested in good faith by appropriate proceedings and with
respect to which adequate reserves have been established and are being
maintained in accordance with GAAP.
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5.5 INSPECTION. Each Borrower and each of its Subsidiaries shall permit
the Agent (and its designees), at any reasonable time and at reasonable
intervals of time, and upon reasonable notice and during normal business hours
(or if an Event of Default shall have occurred and is continuing, at any time
and without prior notice), to (i) visit, enter and inspect the properties
(including all Collateral) of any Borrower and any of its Subsidiaries, (ii)
examine and make copies of and take abstracts from the books and records of any
Borrower and any of its Subsidiaries, and (iii) discuss the affairs, finances
and accounts of any Borrower and any of its Subsidiaries with their appropriate
officers and accountants, provided however, so long as an Event of Default will
not have occurred and be continuing, such inspections and examinations shall be
at the Lenders' expense and shall not exceed two (2) during any calendar year.
In the event that an Event of Default shall have occurred and be continuing,
such inspections and examinations shall be at the expense of the Borrowers and
there will be no limitation on the number of such inspections and examinations
during such period. Without limiting the generality of the foregoing, each
Borrower and each of its Subsidiaries will permit such periodic reviews (as
determined by the Agent) of the books and records of such Borrower and its
Subsidiaries to be carried out by the Agent's commercial finance examiners.
5.6 MAINTENANCE OF BOOKS AND RECORDS. Each Borrower and each of its
Significant Subsidiaries shall keep adequate books and records of account, in
which true and complete entries will be made reflecting all of its business and
financial transactions in accordance with GAAP and applicable law.
5.7 USE OF PROCEEDS.
(a) The Borrower will use the proceeds of the Revolving Credit Loans
for (i) working capital, including payment of the costs and expenses of the
transactions contemplated hereby, (ii) financing of any Permitted Acquisitions
and related transaction costs, (iii) financing the purchase by any of the
Borrowers or the Parent of the Senior Convertible Notes subject to the
limitations set forth in Section 7.7 and (iv) Capital Expenditures.
(b) No portion of any Revolving Credit Loan shall be used for a
"purpose loan" as such term is used in Regulations G, U and X of the Board of
Governors of the Federal Reserve System.
5.8 FURTHER ASSURANCES. At any time and from time to time each Borrower
shall, and shall cause each of its Subsidiaries to, execute and deliver such
further documents and take such further action as may reasonably be requested by
the Agent to effect the purposes of the Loan Documents.
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5.9 NOTIFICATION REQUIREMENTS. The Borrowers shall furnish to the Agent:
(a) immediately upon any Borrower or any of its Subsidiaries becoming
aware of the existence of any condition or event that constitutes an Event of
Default, written notice thereof specifying the nature and duration thereof and
the action being or proposed to be taken with respect thereto;
(b) promptly upon becoming aware of any litigation or of any
investigative proceedings by a governmental agency or authority commenced or
threatened against any of the Parent, the Borrowers or any of their Subsidiaries
of which they have notice, the outcome of which could reasonably be expected to
have a material adverse effect on the condition, assets, business, operations or
prospects of the Parent, the Borrowers and their Subsidiaries, taken as a whole,
written notice thereof and the action being or proposed to be taken with respect
thereto; and
(c) promptly after becoming aware of any occurrence or condition
affecting any Borrower or any of its Subsidiaries which could reasonably be
expected to have a material adverse effect on the condition, assets, business,
operations or prospects of the Parent, the Borrowers and their Subsidiaries,
taken as a whole, written notice thereof.
5.10 ERISA REPORTS. With respect to any Plan, the Borrowers shall, or shall
cause its Affiliates to, furnish to the Agent promptly (i) written notice of the
occurrence of a "reportable event" (as defined in Section 4043 of ERISA),
excluding any such event notice of which has been waived by regulation, (ii) a
copy of any request for a waiver of the funding standards or an extension of the
amortization periods required under Section 412 of the Code and Section 302 of
ERISA, (iii) a copy of any notice of intent to terminate any Pension Plan and
(iv) notice that any Borrower or any Affiliate will or may incur any liability
to or on account of a Plan under Sections 4062, 4063, 4064, 4201 or 4204 of
ERISA. Any notice to be provided to the Agent under this Section shall include a
certificate of the chief financial officer of TLC setting forth details as to
such occurrence and the action, if any, which such Borrower or Affiliate, as the
case may be, is required or proposes to take, together with any notices required
or proposed to be filed with or by such Borrower, any Affiliate, the PBGC, the
IRS, the trustee or the plan administrator with respect thereto. Promptly after
the adoption of any Pension Plan, the Borrowers shall notify the Agent of such
adoption.
5.11 ENVIRONMENTAL COMPLIANCE.
(a) Each Borrower and its Subsidiaries will comply in all material
respects with all applicable Environmental Laws in all jurisdictions in which
any of them operates now or in the future, and each Borrower and its
Subsidiaries will comply in all material respects with all such Environmental
Laws that may in the future be applicable to such Borrower's or any of its
Subsidiaries' business, properties and assets, except to the extent,
non-compliance with such Environmental Laws would not have a material adverse
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effect on the condition, assets, business, operations or prospects of the
Parent, the Borrowers and their Subsidiaries, taken as a whole.
(b) If any Borrower or any of its Subsidiaries shall (i) receive
notice that any violation of any Environmental Law may have been committed or is
about to be committed by any Borrower or any of its Subsidiaries, (ii) receive
notice that any administrative or judicial complaint or order has been filed or
is about to be filed against any Borrower or any of its Subsidiaries alleging a
violation of any Environmental Law requiring such Borrower or such Subsidiary to
take any action in connection with the release of Hazardous Materials into the
environment, (iii) receive any notice from a federal, state or local government
agency or private party alleging that any Borrower or any of its Subsidiaries
may be liable or responsible for any costs associated with a response to or
cleanup of a release of Hazardous Materials into the environment or any damages
caused thereby, or (iv) become aware of any investigative proceedings by a
governmental agency or authority commenced or threatened against any Borrower or
any of its Subsidiaries regarding any potential violation of Environmental Laws
or any spill, release, discharge or disposal of any Hazardous Material, the
Borrowers shall promptly notify the Agent thereof (together with a copy of any
such notice) and of any action being or proposed to be taken with respect
thereto.
5.12 SUBSIDIARIES.
(a) The Borrowers shall provide to the Agent written notice of any
acquisition of any foreign or domestic Subsidiaries of any of the Borrowers or
the Parent. Such notice shall be given within ten (10) days of the closing of
such acquisition, except for any acquisition involving cash consideration equal
to or in excess of Twenty Million Dollars ($20,000,000) in which case such
notice shall be given at least ten (10) days prior to its closing and shall be
accompanied by PRO FORMA financials of the type required under Section 7.4, the
financial statements of such target entity as of the end of its most recent
fiscal year for which such financial statements are available, including its
balance sheets and statements of income.
(b) To the extent such target entity had net revenues in excess of
$50,000,000 during its most recently reported fiscal year, and in the event all
or substantially all of its assets have not been transferred to one or more of
the Borrowers, (i) to the extent such Subsidiary is a domestic Subsidiary, such
Subsidiary shall, within sixty (60) days following its becoming a Subsidiary of
the Parent, the Borrowers or their Subsidiaries, execute an Instrument of
Joinder and any and all other documents necessary or desirable to become a
Borrower hereunder, and to grant to the Agent a security interest in all of its
assets, and (ii) to the extent such Subsidiary is an entity organized under the
laws of any jurisdiction other than any political sub-division of the United
States, the Borrowers shall cause to be pledged to the Agent approximately 65%
(but in any event less than 66_%) of the outstanding capital stock of such
foreign Subsidiary or, to the extent such pledge of stock of such foreign
subsidiary would result in adverse tax consequences or is
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prohibited under applicable law, cause to pledge to the Agent approximately 65%
(but in any event less than 66_%) of the outstanding stock of the entity or
entities which directly or indirectly own 100% of the outstanding stock of such
foreign Subsidiary.
(c) In the report required to be furnished by the Borrowers pursuant
to Section 5.1(c) in connection with the furnishing of quarterly financial
statements, the chief financial officer of TLC shall indicate whether the net
revenue, EBITDA and book value of the assets of the Borrowers for and as of the
end of such fiscal quarter each constitute at least ninety percent (90%) of the
net revenue, EBITDA and book value of assets of the Parent, the Borrowers and
their Subsidiaries on a consolidated basis for the same period. In the event
that the chief financial officer of TLC is not able to so certify in the
affirmative with respect to each of the three indicated financial criteria
(which shall not in and of itself constitute a Default or Event of Default
hereunder unless the Borrowers are unable to achieve compliance with such
financial criteria by taking the actions specified in this Section 5.12(c)
within 60 days of the date of submission of such report), the Borrowers shall
promptly (but in any event within sixty (60) days of the submission of such
report) (i) first, cause one or more of their U.S. Subsidiaries to execute
Instruments of Joinder and any and all other documents necessary or desirable to
become Borrower(s) hereunder and to grant to the Agent a security interest in
all of its or their assets in order that the foregoing requirement might be met
and so confirmed in writing following the addition of such additional
Borrower(s) and (ii) second, only to the extent the Borrowers are unable to meet
the requirements of this Section 5.12(c) without including as Borrowers
hereunder Subsidiaries organized under the laws of any jurisdiction other than
any political sub-division of the United States, the Borrowers may, in lieu of
causing such foreign Subsidiaries to become Borrowers hereunder, pledge
approximately 65% (but in any event less than 66_%) of the outstanding capital
stock of such foreign Subsidiaries or, to the extent such pledge of stock of
such foreign subsidiary would result in adverse tax consequences or is
prohibited under applicable law, cause to pledge to the Agent approximately 65%
(but in any event less than 66_%) of the outstanding stock of the entity or
entities which directly or indirectly own 100% of the outstanding stock of such
foreign Subsidiary. Upon the pledge of such stock, the net revenue, EBITDA, and
the book value of the assets attributable to such foreign Subsidiaries shall be
included in the calculation set forth in this Section 5.12(c) as being
attributable to the Borrowers. Without limiting the foregoing, to the extent
stock of foreign Subsidiaries have been pledged to the Agent pursuant to Section
5.12(b), the net revenue, EBITDA, and the book value of the assets attributable
to such foreign Subsidiaries shall be included in the calculation set forth in
this Section 5.12(c) as being attributable to the Borrowers.
(d) Neither the Parent, the Borrowers nor any Subsidiary thereof may
sell any of its accounts receivable under the Securitization unless it first
executes an Instrument of Joinder and any and all other documents necessary or
desirable to become a Borrower under this Agreement and grants a security
interest in substantially all its assets to the Agent.
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5.13 INTELLECTUAL PROPERTY UPDATES AND HYPOTHECATION.
(a) The Borrowers, shall provide to the Agent a then current
comprehensive list and description of all U.S. registered Intellectual Property
owned by the Parent, any Borrower or any Subsidiary thereof with respect to (i)
products currently sold or licensed by the Parent, the Borrower or any
Subsidiary, and (ii) material trade names and brand names utilized by the
Parent, any Borrower or Subsidiary thereof, (A) within forty-five (45) days
after the completion of each fiscal quarter of the Borrowers, and (B) more
frequently upon the request of the Agent if an Event of Default has occurred and
is continuing.
(b) Following the delivery of the list referenced in 5.13(a), the
Parent, each Borrower and each U.S. Subsidiary thereof shall promptly take all
necessary action, including the execution and delivery of patent and trademark
security agreements, copyright security agreements and any other instruments
reasonably requested by the Agent to provide the Agent with, to the extent it
does not already have, a first priority security interest relating to each item
of U.S. registered Intellectual Property owned by the Parent, any Borrower or
any U.S. Subsidiary thereof with respect to products currently sold or licensed
by, the Parent, the Borrower or any U.S. Subsidiary. The Borrowers and their
U.S. Subsidiaries shall register with the appropriate U.S. governmental
authorities all Intellectual Property associated with software titles that they
sell or license and Intellectual Property that they otherwise utilize in
conducting their businesses and shall maintain such registrations, provided,
however, the foregoing requirements shall be subject to the exercise of the
Borrowers' reasonable business judgment as to when any such attempted
registration would not be cost effective or could reasonably be expected to be
rejected or relates to Intellectual Property that is immaterial; provided,
however, Borrowers and their U.S. Subsidiaries shall in any case with reasonable
diligence and promptness file and maintain the registration of copyright
registration of all computer sourcecode for all software titles owned by the
Parent, any Borrower or any U.S. Subsidiary that generate (or can reasonably be
expected to generate) annual sales in excess of $500,000.
(c) Properties shall within 180 days of the Closing Date, grant one
or more licenses to TLC and any other Borrower or their Subsidiaries which sells
products utilizing Intellectual Property owned by or licensed to Properties, for
the use of such Intellectual Property which licenses shall be in writing and
shall be furnished to the Agent promptly on request and none of which licenses
shall impair or interfere in any material respect with the ability of the
Parent, the Borrowers or any of their Subsidiaries to carry out their
obligations under the Loan Documents to which they are a party.
5.14 MAINTENANCE OF CORPORATE SEPARATENESS. The Parent and each Borrower
will, and will cause each of their Subsidiaries to, maintain customary corporate
and/or partnership records.
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SECTION VI.
FINANCIAL COVENANTS
-------------------
Each Borrower covenants that so long as any Revolving Credit Loan, Letter
of Credit or other Obligation remains outstanding or the Lenders or the Issuing
Bank have any obligation to make any Loan or issue any Letter of Credit
hereunder:
6.1 LEVERAGE RATIO. The Borrowers shall not permit the Leverage Ratio
(calculated as of the end of each fiscal quarter of the Borrowers) to exceed
3.75 to 1.00.
6.2 INTEREST COVERAGE RATIO. The Borrowers shall not permit the ratio of
(i) EBITDA to (ii) Interest Expense, each calculated as of the end of each
fiscal quarter of the Borrowers for the four fiscal quarters then ended, to be
less than 3.00 to 1.00.
6.3 QUICK RATIO. The Borrowers shall not permit the Quick Ratio,
calculated as of the end of each fiscal quarter of the Borrowers, to be less
than 1.15 to 1.00.
6.4 CAPITAL EXPENDITURES. The Parent, the Borrowers and their Subsidiaries
shall not make aggregate Capital Expenditures during (i) the 1998 fiscal year,
in excess of $15,000,000, (ii) the 1999 fiscal year, in excess of $20,000,000;
and (iii) the period from the beginning of the 2000 fiscal year through the
Maturity Date, in excess of $12,500,000; provided, however, to the extent that
the Parent, the Borrowers and their Subsidiaries do not make Capital
Expenditures in an aggregate amount equal to the maximum sum permitted in either
of the periods described in clauses (i) or (ii) above, the maximum permissible
amount for the immediately succeeding period shall be increased (but in no event
by more than 25% of the maximum amount for such period as set forth above, prior
to such adjustment) by an amount equal to the maximum permitted Capital
Expenditure for the preceding period, prior to any adjustment, LESS the
aggregate amount of actual Capital Expenditures for such prior period.
SECTION VII.
NEGATIVE COVENANTS
-------------------
Each Borrower covenants that so long as any Revolving Credit Loan, Letter
of Credit or other Obligation remains outstanding or the Lenders or the Issuing
Bank have any obligation to make any Revolving Credit Loan or to issue any
Letter of Credit hereunder:
7.1 INDEBTEDNESS. Neither any Borrower nor any of its Subsidiaries shall
create, incur, assume, guarantee or be or remain liable with respect to any
Indebtedness other than the following:
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(a) Obligations;
(b) Indebtedness existing as of the date of this Agreement and
disclosed on SCHEDULE 3 hereto and renewals and refinancings thereof, but not
any increase in the principal amounts thereof;
(c) Indebtedness for taxes, assessments or governmental charges to
the extent that payment therefor shall at the time not be required to be made in
accordance with Section 5.4;
(d) current liabilities on open account for the purchase price of
services, materials, supplies, royalties and product advances incurred by any
Borrower in the ordinary course of business (not as a result of borrowing), so
long as all of such open account Indebtedness shall be paid and discharged in
conformity with such Borrower's customary trade terms and practices, except for
any such open account Indebtedness which is being contested in good faith by any
Borrower, as to which adequate reserves required by GAAP have been established
and are being maintained and as to which no Encumbrance has been placed on any
property of any Borrower or any of its Subsidiaries;
(e) Guarantees permitted under Section 7.2 hereof;
(f) Purchase Money Indebtedness and capital lease obligations of the
Borrowers and their Subsidiaries in an aggregate principal amount outstanding at
any time not to exceed $15,000,000;
(g) Open account intercompany Indebtedness by and between any
Borrower and another Borrower, the Parent or any Subsidiary;
(h) Indebtedness relating to the Securitization;
(i) Indebtedness relating to the Receivables Purchase Transactions;
(j) Obligations with respect to mortgages not to exceed $5,000,000
outstanding at any date; and
(k) Indebtedness of the Borrowers or the Subsidiaries in addition to
Indebtedness of the types described above in an aggregate amount not to exceed
$20,000,000 at any time.
7.2 CONTINGENT LIABILITIES. Neither any Borrower nor any of its
Subsidiaries shall create, incur, assume, guarantee or be or remain liable with
respect to any Guarantees other than (i) Guarantees existing on the date of this
Agreement and disclosed on SCHEDULE 3 hereto, (ii) Guarantees resulting from the
endorsement of negotiable instruments for deposit
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or collection in the ordinary course of business and (iii) Guarantees in
connection with the Indebtedness permitted under Section 7.1.
7.3 ENCUMBRANCES. Neither any Borrower nor any of its Subsidiaries shall
create, incur, assume or suffer to exist any mortgage, pledge, security
interest, lien or other charge or encumbrance of any kind, including the lien or
retained security title of a conditional vendor upon or with respect to any of
its property or assets ("ENCUMBRANCES"), or assign or otherwise convey any right
to receive income, including the sale or discount of accounts receivable with or
without recourse, except the following ("PERMITTED ENCUMBRANCES"):
(a) Encumbrances in favor of the Agent, the Issuing Bank or any of
the Lenders to secure the Obligations;
(b) Encumbrances existing as of the date of this Agreement and
disclosed in SCHEDULE 3 hereto (including, without limitation, those
Encumbrances relating to the Securitization and the Receivables Purchase
Transactions);
(c) Encumbrances securing Indebtedness for Purchase Money
Indebtedness to the extent such Indebtedness is permitted by Section 7.1(f),
PROVIDED that (i) each such Encumbrance is given solely to secure the purchase
price of the property which is the subject of such Purchase Money Indebtedness,
does not extend to any other property and is given at the time of acquisition of
the property, and (ii) the Purchase Money Indebtedness secured thereby does not
exceed the lesser of the cost of such property or its fair market value at the
time of acquisition;
(d) liens for taxes, fees, assessments and other governmental charges
to the extent that payment of the same may be postponed or is not required in
accordance with the provisions of Section 5.4;
(e) landlords' and lessors' liens in respect of rent not in default
or liens in respect of pledges or deposits under workmen's compensation,
unemployment insurance, social security laws, or similar legislation (other than
ERISA) or in connection with appeal and similar bonds incidental to litigation;
mechanics', warehouseman's, laborers' and materialmen's and similar liens, if
the obligations secured by such liens are not then delinquent; liens securing
the performance of bids, tenders, contracts (other than for the payment of
money); and liens securing statutory obligations or surety, indemnity,
performance, or other similar bonds incidental to the conduct of any Borrower's
or its Subsidiary's business in the ordinary course and that do not in the
aggregate materially detract from the value of its property or materially impair
the use thereof in the operation of its business;
(f) judgment liens securing judgments that (i) are fully covered by
insurance, or (ii) shall not have been in existence for a period longer than 20
days after the
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creation thereof or, if a stay of execution shall have been obtained, for a
period longer than 20 days after the expiration of such stay;
(g) rights of lessors under capital leases to the extent such capital
leases are permitted hereunder;
(h) easements, rights of way, restrictions and other similar charges
or Encumbrances relating to real property and not interfering in a material way
with the ordinary conduct of any of the Borrowers' business; and
(i) liens constituting a renewal, extension or replacement of any
Permitted Encumbrance.
7.4 CONSOLIDATION, MERGER OR ACQUISITION. Except for "Permitted
Acquisitions" as defined below, neither any Borrower nor any of its Subsidiaries
shall merge or consolidate with or into any other Person, or make any
acquisition of the business of any other Person unless it obtains the prior
written consent of the Majority Lenders; PROVIDED that any Subsidiary of a
Borrower may merge into any Borrower or any wholly-owned Subsidiary of any
Borrower, and any Borrower may merge into any other Borrower.
For purposes hereof a "Permitted Acquisition" is an acquisition which
satisfies the following requirements:
(a) if it involves a merger or consolidation, a Borrower shall be the
surviving party;
(b) at the time of such acquisition no Default or Event of Default
shall have occurred and be continuing;
(c) no Default or Event of Default or violation of any covenant under
this Agreement shall arise or be reasonably anticipated to arise as a result of
such acquisition, which the Borrowers shall confirm by furnishing to the Agent
at least ten (10) days prior to the closing date for such acquisition PRO FORMA
financial statements reasonably satisfactory to the Agent giving effect to such
acquisition; and
(d) the target of such acquisition must be engaged in a line of
business similar to the then current businesses of the Borrowers or their
Subsidiaries.
Notwithstanding anything to the contrary contained herein, the prior
written consent of the Majority Lenders shall be required for any individual
acquisition involving cash consideration (including assumption of indebtedness
and any post-closing restructuring charges taken in conjunction with and to be
taken within 12 months following the closing of such acquisition to the extent
such charges have been included in the calculation of EBITDA) in excess of
$100,000,000, provided, however, the dollar limitation set forth
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above shall be increased in an amount equal to the net cash proceeds to the
Parent, of any offering of capital stock of the Parent or SoftKey Canada, from
and after the Closing Date but only to the extent such proceeds have not been
previously used to purchase Senior Convertible Notes or finance any acquisition.
7.5 DISPOSITION OF ASSETS. Neither any Borrower nor any of its
Subsidiaries shall convey, sell, lease, transfer or otherwise dispose of any of
its property, business or assets (including, without limitation, accounts
receivable), whether now owned or hereafter required, except for any of the
following, provided that, in the case of dispositions of the type described in
clauses (c) and (e) below no Event of Default shall have occurred and be
continuing or could be reasonably anticipated to arise as a result thereof:
(a) obsolete or worn out property disposed of in the ordinary course
of business (with standard discounts) or leasehold assets not necessary for
operations;
(b) the sale or license of inventory or any technology or related
rights or brands in the ordinary course of business;
(c) the sale of certain accounts receivable pursuant to the (i)
Securitization and (ii) the Receivables Purchase Transactions, provided that
with respect to any Receivables Purchase Transaction facility entered into after
the Closing Date, the Agent shall be given notice of any such transaction within
five (5) days of its being entered into which notice shall include a description
of the approximate amount and type of accounts receivable to be sold and the
purchasers thereof together with a copy of the transaction documents;
(d) transfer by any Borrower or any Subsidiary of any Borrower of its
assets to a Borrower; and
(e) the sale or other disposition of any other property or assets,
provided that the aggregate book value of all such property or assets (other
than inventory) so sold or disposed of in any period of twelve consecutive
months shall not exceed Fifteen Million Dollars ($15,000,000) in any one
instance or Thirty Million Dollars ($30,000,000) in the aggregate.
7.6 SUBSIDIARY STOCK. The Borrowers shall not permit any of their
Subsidiaries to issue any additional shares of its capital stock or other equity
securities, any options therefor or any securities convertible thereto other
than to the Borrowers and their wholly-owned Subsidiaries. Neither the Borrowers
nor any of their Subsidiaries shall sell, transfer or otherwise dispose of any
of the capital stock or other equity securities of a Subsidiary of a Borrower,
except to a Borrower or any wholly-owned Subsidiary of a Borrower. For the
avoidance of doubt, the parties hereto agree that SoftKey Canada may issue and
sell its capital stock, from time to time, in public or private offerings.
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7.7 RESTRICTED PAYMENTS.
(a) Neither any Borrower nor any of its Subsidiaries shall pay, make,
declare or authorize any Restricted Payment other than:
(i) compensation (including incentive plans) paid to employees,
officers and directors in the ordinary course of business and as approved
by the Board of Directors of such Borrower or Subsidiary;
(ii) dividends payable solely in common stock;
(iii) dividends paid by any Borrower or Subsidiary of a Borrower to
any Borrower or any of its wholly-owned Subsidiaries; and
(iv) as long as no Event of Default has occurred and is continuing or
could reasonably be expected to arise therefrom:
(A) cash dividends to the Parent in an amount sufficient to allow
the Parent to make regularly scheduled cash payments of interest on the
Parent's 5 1/2% Senior Convertible Notes due 2000 (the "Senior Convertible
Notes");
(B) cash dividends to the Parent in an amount sufficient to allow
the Parent to purchase outstanding Senior Convertible Notes, provided,
however, other than as permitted by the next sentence, in no event may
Senior Convertible Notes in an aggregate face amount in excess of
twenty-five million dollars ($25,000,000) be purchased in any six month
period without the prior written consent of the Majority Lenders.
Notwithstanding the foregoing, the Parent may purchase Senior Convertible
Notes in excess of the above limit to the extent such purchases are
financed from the net cash proceeds received by the Parent from any
offering of the capital stock of the Parent or any of its Subsidiaries from
and after the Closing Date; and
(C) cash dividends to the Parent in an amount sufficient to pay
the Parent's ordinary operating expenses.
7.8 INVESTMENTS; PURCHASES OF ASSETS. Neither any Borrower nor any of its
Subsidiaries shall make or maintain any Investments or purchase or otherwise
acquire any material amount of assets other than:
(a) Investments in any Borrower or any of its Subsidiaries, PROVIDED
that the sum of Investments made after the date hereof by the Borrowers in their
Subsidiaries (other than as otherwise permitted hereunder) may not exceed
$25,000,000;
(b) Investments made pursuant to a Permitted Acquisition;
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(c) marketable obligations issued or guaranteed by the United States
of America having a maturity of three (3) years or less from the date of
purchase;
(d) certificates of deposit, Eurodollar timed deposits, commercial
paper or any other obligation of any of the Lenders or of any other bank or
trust company organized or licensed to conduct banking business under the laws
of the United States or any State thereof and which has (or which is a
Subsidiary of a bank holding company which has) publicly traded debt securities
rated A or higher by Standard & Poor's Corporation or A-2 or higher by Xxxxx'x
Investors Services, Inc.;
(e) commercial paper with maturities of not more than 270 days having
the highest rating than given by Xxxxx'x Investors Services, Inc. or Standard &
Poor's Corporation;
(f) repurchase obligations with a term of not more than thirty (30)
days for underlying securities of the types described in subparagraph (d) above
entered into with the institutions referred to in subparagraph (e) above;
(g) shares in money market mutual funds substantially all the assets
which are comprised of securities and other obligations of the types described
in subparagraphs (d) through (f) above;
(h) depositary accounts at any of the Lenders or any other bank;
(i) stock or obligations issued to any Borrower or any of its
Subsidiaries in settlement of claims against others by reason of an event of
bankruptcy or a composition or the readjustment of debt or reorganization of any
debtor of any one Borrower or any of its Subsidiaries;
(j) loans or advances not exceeding $2,000,000 in aggregate principal
amount at any one time outstanding to officers and employees of the Parent, the
Borrowers or their Subsidiaries;
(k) intercompany loans permitted under Section 7.1(g); and
(l) loans or advances to officers, directors or employees of the
Parent, any Borrower or its Subsidiaries to exercise stock options or purchase
capital stock of the Parent or any of its Subsidiaries pursuant to plans
approved by the Boards of Directors of such entities.
7.9 ERISA COMPLIANCE. Neither any Borrower nor any of its Affiliates nor
any Plan shall (i) engage in any Prohibited Transaction which would have a
material adverse effect on the condition, assets, business, operations or
prospects of the Parent,
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the Borrowers and their Subsidiaries, taken as a whole, (ii) incur any
"accumulated funding deficiency" (as defined in Section 412(a) of the Code and
Section 302 of ERISA) whether or not waived which would have a material adverse
effect on the condition, assets, business, operations or prospects of the
Parent, the Borrowers and their Subsidiaries, taken as a whole, (iii) fail to
satisfy any additional funding requirements set forth in Section 412 of the Code
and Section 302 of ERISA which would have a material adverse effect on the
condition, assets, business, operations or prospects of the Parent, the
Borrowers and their Subsidiaries, taken as a whole, or (iv) terminate any
Pension Plan in a manner which could result in the imposition of a lien on any
property of any Borrower or any of its Subsidiaries which would have a material
adverse effect on the condition, assets, business, operations or prospects of
the Parent, the Borrowers and their Subsidiaries, taken as a whole. Each Plan
shall comply in all material respects with ERISA, except to the extent failure
to comply in any instance would not have a material adverse effect on the
condition, assets, business, operations or prospects of the Parent, the
Borrowers and their Subsidiaries, taken as a whole.
7.10 TRANSACTIONS WITH AFFILIATES. Except as otherwise expressly permitted
hereunder, the Borrowers will not, and will not permit any of their Subsidiaries
to, directly or indirectly, enter into any purchase, sale, lease or other
transaction with any Affiliate except (i) transactions in the ordinary course of
business on terms that are no less favorable to the Borrowers than those which
might be obtained at the time in a comparable arm's-length transaction with any
Person who is not an Affiliate and (ii) employment contracts or arrangements and
incentive plans with senior management of Borrowers entered into in the ordinary
course of business and consistent with prudent business practices.
7.11 FISCAL YEAR. Neither the Borrowers nor any of their Subsidiaries shall
change their fiscal year without the prior written consent of the Agent.
7.12 ADDITIONAL NEGATIVE PLEDGES. None of the Parent, any Borrower or any
of their Significant Subsidiaries shall, directly or indirectly, create or
otherwise cause or suffer to exist or become effective, directly or indirectly,
(a) any prohibition or restriction (including any agreement to provide equal and
ratable security to any Person in the event an Encumbrance is granted to or for
the benefit of any other Person) on the creation or existence of any Encumbrance
upon its assets other than (i) prohibitions or restrictions in favor of the
Agent, the Issuing Bank or any of the Lenders to secure the Obligations; (ii)
prohibitions or restrictions existing as of the date of this Agreement; (iii)
prohibitions or restrictions in connection with any Purchase Money Indebtedness
or capital lease obligation permitted under Section 7.1(f); (iv) prohibitions or
restrictions in connection with any Guarantees permitted under Section 7.2; (v)
prohibitions or restrictions in connection with the Securitization; (vi)
prohibitions or restrictions in connection with any Receivables Purchase
Transactions; (vii) prohibitions or restrictions in connection with any
Indebtedness permitted under Section 7.1(j); and (viii) prohibitions or
restrictions in connection with any right, title or interest of the Parent, the
Borrowers or any of their Subsidiaries to any technology contract, license or
agreement to which they may be a party to the extent
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requested by a third party, or (b) any contractual obligation which may restrict
or inhibit Agent's rights or ability to sell or otherwise dispose of the
Collateral or any part thereof after the occurrence of an Event of Default other
than those described in Section 7.12(a).
SECTION VIII.
DEFAULTS
--------
8.1 EVENTS OF DEFAULT. There shall be an Event of Default hereunder if any
of the following events occurs:
(a) the Borrowers shall fail to pay any principal of any Loan, any
Reimbursement Obligation or any interest, fees or other amounts owing under any
Loan Document or in respect of any Obligation when the same shall become due and
payable, whether at maturity or at any accelerated date of maturity or at any
other date fixed for payment;
(b) any Borrower or any of its Subsidiaries shall fail to perform or
comply with any term, covenant or agreement applicable to it contained in
Sections 5.1(a), 5.1(b), 5.1(c), 5.2(b), 5.5, 5.6, 5.7, 5.9, VI and VII of this
Agreement; or
(c) any Borrower or any of its Subsidiaries shall fail to perform any
term, covenant or agreement applicable to it (other than as specified in
subsections 8.1(a) or (b) hereof), contained in this Agreement or any other Loan
Document and such default shall continue for 20 days; or
(d) any representation or warranty of the Parent or any Borrower made
in this Agreement or any other Loan Document or in any certificate, notice or
other writing delivered hereunder or thereunder shall prove to have been false
in any material respect upon the date when made deemed to have been made; or
(e) the Parent, any Borrower or any of their Subsidiaries shall fail
to pay when due (after any applicable period of grace) any amount payable under
any of its Indebtedness exceeding $20,000,000 in principal amount, or fail to
observe or perform any term, covenant or agreement evidencing or securing such
Indebtedness, which, if uncured or unwaived, permits the acceleration of such
Indebtedness, or any default or event of default shall have been declared under
any agreement relating to such Indebtedness; or
(f) the Parent, any Borrower or any of their Subsidiaries shall (i)
apply for or consent to the appointment of, or the taking of possession by, a
receiver, custodian, trustee, liquidator or similar official of itself or of all
or a substantial part of its property, (ii) be generally not paying its debts as
such debts become due, (iii) make a general assignment for the benefit of its
creditors, (iv) commence a voluntary case under the United
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States Bankruptcy Code (as now or hereafter in effect), (v) take any action or
commence any case or proceeding under any law relating to bankruptcy,
insolvency, reorganization, winding-up or composition or adjustment of debts, or
any other law providing for the relief of debtors, (vi) fail to contest in a
timely or appropriate manner, or acquiesce in writing to, any petition filed
against it in an involuntary case under the United States Bankruptcy Code or
other law, (vii) take any action under the laws of its jurisdiction of
incorporation or organization similar to any of the foregoing, or (viii) take
any corporate action for the purpose of effecting any of the foregoing; or
(g) a proceeding or case shall be commenced against the Parent, any
Borrower or any of their Subsidiaries, without the application or consent of
such Borrower or such Subsidiary in any court of competent jurisdiction, seeking
(i) the liquidation, reorganization, dissolution, winding up, or composition or
readjustment of its debts, (ii) the appointment of a trustee, receiver,
custodian, liquidator or the like of it or of all or any substantial part of its
assets, or (iii) similar relief in respect of it, under any law relating to
bankruptcy, insolvency, reorganization, winding-up or composition or adjustment
of debts or any other law providing for the relief of debtors, and such
proceeding or case shall continue undismissed, or unstayed and in effect, for a
period of 90 days; or an order for relief shall be entered in an involuntary
case under the Federal Bankruptcy Code, against the Parent, any Borrower or any
of their Subsidiaries; or action under the laws of the jurisdiction of
incorporation or organization of the Parent, any Borrower or any of their
Subsidiaries similar to any of the foregoing shall be taken with respect to the
Parent, any Borrower or any of their Subsidiaries and shall continue unstayed
and in effect for a period of 90 days; or
(h) a judgment or order for the payment of money shall be entered
against the Parent, any Borrower or any of their Subsidiaries by any court, or a
warrant of attachment or execution or similar process shall be issued or levied
against property of the Parent, any Borrower or any of their Subsidiaries, that
in the aggregate exceeds $10,000,000 (net of insurance proceeds), and such
judgment, order, warrant or process shall continue undischarged or unstayed for
30 days; or
(i) the Parent, any Borrower or any Affiliate shall fail to pay when
due any amount that it shall have become liable to pay to the PBGC or to a Plan
under Title IV of ERISA, unless (i) such liability is being contested in good
faith by appropriate proceedings, the Parent, such Borrower or such Affiliate,
as the case may be, has established and is maintaining adequate reserves in
accordance with GAAP and no lien shall have been filed to secure such liability
or (ii) which would not have a material adverse effect on the condition, assets,
business, operations or prospects of the Parent, the Borrowers and their
Subsidiaries, taken as a whole; or the PBGC shall institute proceedings under
Title IV of ERISA to terminate or to cause a trustee to be appointed to
administer any such Plan or Plans; or a condition shall exist by reason of which
the PBGC would be entitled to obtain a decree adjudicating that any such Plan or
Plans must be terminated; or
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(j) any of the Loan Documents shall be canceled, terminated, revoked,
rescinded otherwise then in accordance with the express terms thereof or with
the express prior written agreement, consent or approval of the Lenders, or any
action at law or in equity or other legal proceeding to cancel, revoke or
rescind any Loan Document shall be commenced by or on behalf of the Parent, any
Borrower, or any court or other governmental or regulatory authority or agency
of competent jurisdiction shall make a determination that, or shall issue a
judgment, order, decree or ruling to the effect that, any one or more of the
Loan Documents is illegal, invalid or unenforceable in accordance with the terms
thereof; or
(k) any Security Document shall cease for any reason to be in full
force and effect or shall cease to be effective to grant a perfected security
interest in the collateral described in such Security Document with the priority
stated to be granted thereby; or
(l) an Event of Default (as defined therein) shall have occurred
under the Guarantor Security Agreement, dated as of the date hereof, executed by
the Parent in favor of the Agent.
8.2 REMEDIES. Upon the occurrence of an Event of Default described in
subsections 8.1(f) and (g), immediately and automatically, and upon the
occurrence of any other Event of Default, at any time thereafter while such
Event of Default is continuing, at the option of the Agent or the Majority
Lenders and upon the Agent's declaration:
(a) the obligation of the Lenders to make any further Revolving
Credit Loans and of the Issuing Bank to issue any Letters of Credit hereunder
shall terminate;
(b) the unpaid principal amount of the Revolving Credit Loans
together with accrued interest, all Reimbursement Obligations and all other
Obligations shall become immediately due and payable without presentment,
demand, protest or further notice of any kind, all of which are hereby expressly
waived; and
(c) the Agent, the Issuing Bank and the Lenders may exercise any and
all rights they have under this Agreement, the other Loan Documents or at law or
in equity, and proceed to protect and enforce their respective rights by any
action at law or in equity or by any other appropriate proceeding.
No remedy conferred upon the Agent, the Issuing Bank and the Lenders in the Loan
Documents is intended to be exclusive of any other remedy, and each and every
remedy shall be cumulative and shall be in addition to every other remedy given
hereunder or now or hereafter existing at law or in equity or by statute or by
any other provision of law. Without limiting the generality of the foregoing or
of any of the terms and provisions of any of the Security Documents, if and when
the Agent exercises remedies under the Security Documents with respect to
Collateral, the Agent may, in its sole discretion, determine which items and
types of Collateral to dispose of and in what order and may
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dispose of Collateral in any order the Agent shall select in its sole
discretion, and the Borrower consents to the foregoing and waives all rights of
marshalling with respect to all Collateral.
SECTION IX.
ASSIGNMENT AND PARTICIPATION
----------------------------
9.1 ASSIGNMENT.
(a) Each Lender shall have the right to assign at any time any
portion of its Commitment hereunder and its interests in the risk relating to
any Revolving Credit Loans and Letter of Credit Participations in an amount
equal to or greater than $5,000,000 to other Lenders or to banks or financial
institutions acceptable to the Agent (each an "ASSIGNEE"), PROVIDED that any
Lender which proposes to assign less than its total Commitment must retain a
Commitment of at least $5,000,000, and PROVIDED, further, that if no Default or
Event of Default shall have occurred and be continuing, each Assignee which is
not a Lender, an Affiliate of a Lender or a Federal Reserve Bank or to whom an
assignment is not required by law shall be subject to prior approval by the
Borrowers (such approval not to be unreasonably withheld or delayed). Each
Assignee shall execute and deliver to the Agent and the Borrower a counterpart
joinder in the form of EXHIBIT D hereto and shall pay to the Agent, solely for
the account of the Agent, an assignment fee of $3,500. Upon the execution and
delivery of such counterpart joinder, (a) such Assignee shall, on the date and
to the extent provided in such counterpart joinder, become a "Lender" party to
this Agreement and the other Loan Documents for all purposes of this Agreement
and the other Loan Documents and shall have all rights and obligations of a
"Lender" with a Commitment as set forth in such counterpart joinder, and the
transferor Lender shall, on the date and to the extent provided in such
counterpart joinder, be released prospectively from its obligations hereunder
and under the other Loan Documents to a corresponding extent (and, in the case
of an assignment covering all of the remaining portion of an assigning Lender's
rights and obligations under this Agreement, such transferor shall cease to be a
party hereto but shall continue to be entitled to the benefits of Section 11.3
and to any fees accrued for its account hereunder and not yet paid); (b) the
assigning Lender shall promptly surrender its Revolving Credit Notes to the
Agent for cancellation and delivery to the Borrowers, provided that if the
assigning Lender has retained any Commitment, the Borrowers shall execute and
deliver to the Agent for delivery to such assigning Lender new Revolving Credit
Notes in the aggregate amount of the assigning Lender's retained Commitment; (c)
the Borrowers shall issue to such Assignee Revolving Credit Notes in the
aggregate amount of such Assignee's Commitment dated the Closing Date or such
other date as may be specified by such Assignee; (d) this Agreement shall be
deemed appropriately amended to reflect (i) the status of such Assignee as a
party hereto and (ii) the status and rights of the Lenders hereunder; and (e)
the Borrowers shall take such action as the Agent may reasonably request to
perfect any security interests or
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mortgages in favor of the Lenders, including any Assignee which becomes a party
to this Agreement.
(b) If the Assignee, or any Participant pursuant to Section 9.2
hereof, is organized under the laws of a jurisdiction other than the United
States or any state thereof, such Assignee shall execute and deliver to the
Borrowers, simultaneously with or prior to such Assignee's execution and
delivery of the counterpart joinder described above in Section 9.1(a), and such
Participant shall execute and deliver to the Lender granting the participation,
a United States Internal Revenue Service Form 4224 or Form 1001 (or any
successor form), appropriately completed, wherein such Assignee or Participant
claims entitlement to complete exemption from United States Federal Withholding
Tax on all interest payments hereunder and all fees payable pursuant to any of
the Loan Documents. The Borrowers shall not be required to pay any increased
amount to any Assignee or other Lender on account of taxes to the extent such
taxes would not have been payable if the Assignee or Participant had furnished
the Forms referenced in this Section 9.1(b) unless the failure to furnish such a
Form results from (i) any act of or failure to act by any of the Borrowers or
(ii) the adoption of or change in any law, rule, regulation or guideline
affecting such Assignee or Participant occurring (y) after the date on which any
such Assignee executes and delivers the counterpart joinder and complies with
all other applicable provisions of Section 9.1(a) or (z) after the date a
Participant is granted its participation.
9.2 PARTICIPATIONS. Each Lender shall have the right, with the consent of
the Agent (which consent shall not be unreasonably withheld or delayed), to
grant participations to one or more banks or other financial institutions (each
a "PARTICIPANT") in all or any part of any Loans and Letter of Credit
Participations owing to such Lender and the Revolving Credit Notes held by such
Lender. Each Lender shall retain the sole right to approve, without the consent
of any Participant, any amendment, modification or waiver of any provision of
the Loan Documents, PROVIDED that the documents evidencing any such
participation may provide that, except with the consent of such Participant,
such Lender will not consent to (a) the reduction in or forgiveness of the
stated principal of or rate of interest on or commitment fee with respect to the
portion of any Revolving Credit Loan subject to such participation, (b) the
extension or postponement of any stated date fixed for payment of principal or
interest or commitment fee with respect to the portion of any Revolving Credit
Loan subject to such participation, or (c) the waiver or reduction of any right
to indemnification of such Lender hereunder. Notwithstanding the foregoing, no
participation shall operate to increase the Total Commitment hereunder or
otherwise alter the substantive terms of this Agreement. In the event of any
such sale by a Lender of participating interests to a Participant, such Lender's
obligations under this Agreement shall remain unchanged, such Lender shall
remain solely responsible for the performance thereof, such Lender shall remain
the holder of such Revolving Credit Notes for all purposes under this Agreement
and the Borrowers and Agent shall continue to deal solely and directly with such
Lender in connection with such Lender's rights and obligations under this
Agreement. Notwithstanding anything to the contrary contained herein, the
Borrowers agree that
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provisions of Sections 2.8(a), 2.9, 2.11, 2.12 and 2.13 shall inure to the
benefit of each Participant, and each Lender may enforce such provisions on
behalf of any of its Participants; PROVIDED, however, in no event shall the
Borrowers be required to pay to the Participants of a Lender and such Lender, in
the aggregate, any amounts in excess of the total amount they would otherwise be
obligated to pay to such Lender under the applicable section referred above had
such Lender not granted participations pursuant to this Section 9.2.
SECTION X.
THE AGENT
---------
10.1 APPOINTMENT OF AGENT; POWERS AND IMMUNITIES.
(a) Each Lender and the Issuing Bank hereby irrevocably appoints and
authorizes the Agent to act as its agent hereunder and under the other Loan
Documents and to execute the Loan Documents (other than this Agreement) and all
other instruments relating thereto. Each Lender and the Issuing Bank irrevocably
authorizes the Agent to take such action on behalf of each of the Lenders and
the Issuing Bank and to exercise all such powers as are expressly delegated to
the Agent hereunder and in the other Loan Documents and all related documents,
together with such other powers as are reasonably incidental thereto. The
obligations of the Agent hereunder are only those expressly set forth herein.
The Agent shall not have any duties or responsibilities or any fiduciary
relationship with any Lender or the Issuing Bank except those expressly set
forth in this Agreement.
(b) Neither the Agent nor any of its directors, officers, employees
or agents shall be responsible for any action taken or omitted to be taken by
any of them hereunder or in connection herewith, except for their own gross
negligence or willful misconduct. Without limiting the generality of the
foregoing, neither the Agent nor any of its Affiliates shall be responsible to
the Lenders or the Issuing Bank for or have any duty to ascertain, inquire into
or verify: (i) any recitals, statements, representations or warranties made by
any Borrower or any of its Subsidiaries or any other Person whether contained
herein or otherwise; (ii) the value, validity, effectiveness, genuineness,
enforceability or sufficiency of this Agreement, the other Loan Documents or any
other document referred to or provided for herein or therein; (iii) any failure
by any Borrower or any of its Subsidiaries or any other Person to perform its
obligations under any of the Loan Documents;(iv) the satisfaction of any
conditions specified in Section 3 hereof, other than receipt of the documents,
certificates and opinions specified in Section 3.1(a) hereof; (v) the existence,
value, collectibility or adequacy of the Collateral or any part thereof or the
validity, effectiveness, perfection or relative priority of the liens and
security interests of the Lenders and the Issuing Bank therein; or (vi) the
filing, recording, refiling, continuing or re-recording of any financing
statement or other document or instrument evidencing or
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relating to the security interests or liens of the Lenders and the Issuing Bank
in the Collateral.
(c) The Agent may employ agents, attorneys and other experts, shall
not be responsible to any Lender or the Issuing Bank for the negligence or
misconduct of any such agents, attorneys or experts selected by it with
reasonable care and shall not be liable to any Lender or the Issuing Bank for
any action taken, omitted to be taken or suffered in good faith by it in
accordance with the advice of such agents, attorneys and other experts. Fleet,
in its separate capacity as a Lender shall have the same rights and powers under
the Loan Documents as any other Lender and may exercise or refrain from
exercising the same as though it were not the Agent, and Fleet and its
Affiliates may accept deposits from, lend money to and generally engage in any
kind of business with the Borrowers as if it were not the Agent.
10.2 ACTIONS BY AGENT.
(a) The Agent shall be fully justified in failing or refusing to take
any action under this Agreement as it reasonably deems appropriate unless it
shall first have received such advice or concurrence of the Lenders and shall be
indemnified to its reasonable satisfaction by the Lenders against any and all
liability and expense which may be incurred by it by reason of taking or
continuing to take any such action. The Agent shall in all cases be fully
protected in acting, or in refraining from acting, under this Agreement or any
of the Loan Documents in accordance with a request of the Lenders, and such
request and any action taken or failure to act pursuant thereto shall be binding
upon the Lenders and all future holders of the Revolving Credit Notes.
(b) Whether or not an Event of Default shall have occurred, the Agent
may from time to time exercise such rights of the Agent and the Lenders under
the Loan Documents as it determines may be necessary or desirable to protect the
Collateral and the interests of the Agent, the Issuing Bank and the Lenders
therein and under the Loan Documents. In addition, the Agent may, without the
consent of the Lenders, (i) in any Fiscal Year release Collateral having an
aggregate book value of not more than $5,000,000, (ii) release all Collateral
when all Obligations have been indefeasibly paid in full and all Commitments
have been terminated and (iii) release Collateral with respect to sales or other
dispositions expressly permitted hereunder. The Agent will use reasonable
efforts to notify the Lenders of any release of Collateral pursuant to clause
(i) of the preceding sentence.
(c) Neither the Agent nor any of its directors, officers, employees
or agents shall incur any liability by acting in reliance on any notice,
consent, certificate, statement or other writing (which may be a bank wire,
telex, facsimile or similar writing) believed by any of them to be genuine or to
be signed by the proper party or parties.
10.3 INDEMNIFICATION. Without limiting the obligations of the Borrowers
hereunder or under any other Loan Document, the Lenders agree to indemnify the
Agent and the
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Issuing Bank, ratably in accordance with their respective Commitment
Percentages, for any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements of any
kind or nature whatsoever which may at any time be imposed on, incurred by or
asserted against the Agent or the Issuing Bank in any way relating to or arising
out of this Agreement or any other Loan Document or any documents contemplated
by or referred to herein or therein or the transactions contemplated hereby or
thereby or the enforcement of any of the terms hereof or thereof or of any such
other documents; PROVIDED, THAT no Lender shall be liable for any of the
foregoing to the extent they result from the gross negligence or willful
misconduct of the Agent or the Issuing Bank, as the case may be.
10.4 REIMBURSEMENT. Without limiting the provisions of Section 10.3, the
Lenders, the Issuing Bank and the Agent hereby agree that the Agent shall not be
obliged to make available to any Person any sum which the Agent is expecting to
receive for the account of that Person until the Agent has determined that it
has received that sum. The Agent may, however, disburse funds prior to
determining that the sums which the Agent expects to receive have been finally
and unconditionally paid to the Agent if the Agent wishes to do so. If and to
the extent that the Agent does disburse funds and it later becomes apparent that
the Agent did not then receive a payment in an amount equal to the sum paid out,
then any Person to whom the Agent made the funds available shall, on demand from
the Agent refund to the Agent the sum paid to that Person. If the Agent in good
faith reasonably concludes that the distribution of any amount received by it in
such capacity hereunder or under the other Loan Documents might involve it in
liability, it may refrain from making distribution until its right to make
distribution shall have been adjudicated by a court of competent jurisdiction.
If a court of competent jurisdiction shall adjudge that any amount received and
distributed by the Agent is to be repaid, each Person to whom any such
distribution shall have been made shall either repay to the Agent its
proportionate share of the amount so adjudged to be repaid or shall pay over the
same in such manner and to such Persons as shall be determined by such court.
10.5 NON-RELIANCE ON AGENT AND OTHER LENDERS. Each Lender represents that
it has, independently and without reliance on the Agent or any other Lender, and
based on such documents and information as it has deemed appropriate, made its
own appraisal of the financial condition and affairs of the Borrowers and
decision to enter into this Agreement and the other Loan Documents and agrees
that it will, independently and without reliance upon the Agent or any other
Lender, and based on such documents and information as it shall deem appropriate
at the time, continue to make its own appraisals and decision in taking or not
taking action under this Agreement or any other Loan Document. The Agent shall
not be required to keep informed as to the performance or observance by the
Borrowers of this Agreement, the other Loan Documents or any other document
referred to or provided for herein or therein or by any other Person of any
other agreement or to make inquiry of, or to inspect the properties or books of,
any Person. Except for notices, reports and other documents and information
expressly required to be furnished to the Lenders by the Agent hereunder, the
Agent shall not have any duty or
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responsibility to provide any Lender with any credit or other information
concerning any Person which may come into the possession of the Agent or any of
its affiliates. Each Lender shall have access to all documents relating to the
Agent's performance of its duties hereunder at such Lender's request. Unless any
Lender shall promptly object to any action taken by the Agent hereunder (other
than actions to which the provisions of Section 11.7(b) are applicable and other
than actions which constitute gross negligence or willful misconduct by the
Agent), such Lender shall conclusively be presumed to have approved the same.
10.6 RESIGNATION OF AGENT. The Agent may resign at any time by giving 30
days prior written notice thereof to the Lenders and the Borrowers. Upon any
such resignation, the Lenders shall have the right to appoint a successor Agent
which shall be reasonably acceptable to the Borrowers, and shall be a financial
institution having a combined capital and surplus in excess of $1,000,000,000.
If no successor Agent shall have been so appointed by the Lenders and shall have
accepted such appointment within 30 days after the retiring Agent's giving of
notice of resignation, then the retiring Agent may, on behalf of the Lenders,
appoint a successor Agent which shall be reasonably acceptable to the Borrowers
and shall be a financial institution having a combined capital and surplus in
excess of $1,000,000,000. Upon the acceptance of any appointment as Agent
hereunder by a successor Agent, such successor Agent shall thereupon succeed to
and become vested with all the rights, powers, privileges and duties of the
retiring Agent, and the retiring Agent shall be discharged from its duties and
prospective obligations hereunder. After any retiring Agent's resignation, the
provisions of this Agreement shall continue in effect for its benefit in respect
of any actions taken or omitted to be taken by it while it was acting as Agent.
SECTION XI.
MISCELLANEOUS
-------------
11.1 NOTICES. Unless otherwise specified herein, all notices hereunder to
any party hereto shall be in writing and shall be deemed to have been given when
delivered by hand, or when sent by electronic facsimile transmission or by
telex, answer back received, or on the first Business Day after delivery to any
overnight delivery service, freight pre-paid, or three days after being sent by
certified or registered mail, return receipt requested, postage pre-paid, and
addressed to such party at its address indicated below:
If to the Borrowers:
TLC Multimedia, Inc.
Xxx Xxxxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Attention: Mr. R. Xxxxx Xxxxxx,
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Chief Financial Officer
Facsimile: (000) 000-0000
and
TLC Multimedia, Inc.
Xxx Xxxxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Attention: Xxxx Xxxxxx, Esq.
General Counsel
Facsimile: (000) 000-0000
with a copy to:
Xxxx and Xxxx LLP
00 Xxxxx Xxxxxx
Xxxxxx, XX 00000
Attention: Xxxx X. Xxxxxx, Esq.
Facsimile: (000) 000-0000
If to the Agent or Fleet, at
Xxx Xxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000-0000
Attention: Xx. Xxxxxx X. Xxxxxx, Senior Vice President
Facsimile: (000) 000-0000
with a copy to:
Xxxxxxxx & Worcester LLP
Xxx Xxxx Xxxxxx Xxxxxx
Xxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxx, Esq.
Facsimile: (000) 000-0000
If to any other Lender, to its address set forth on Schedule 1 attached
hereto;
or at any other address specified by such party in writing.
11.2 EXPENSES. Whether or not the transactions contemplated herein shall be
consummated, the Borrowers, jointly and severally, promise to reimburse (a) the
Agent and the Issuing Bank for all reasonable out-of-pocket fees and
disbursements (including all Attorneys' Fees, consultants, appraisal and
collateral examination fees and costs, due diligence investigation expenses and
syndication expenses) in connection with the
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preparation, filing or recording, interpretation and administration of this
Agreement and the other Loan Documents, the consummation of the transactions
contemplated hereby, and any amendment, modification, approval, consent or
waiver hereof or thereof, and (b) the Agent, the Issuing Bank and all of the
Lenders for all reasonable out-of-pocket costs, fees and disbursements
(including all Attorneys' Fees, consultants, appraisal and collateral
examination fees and costs (including the allocated costs of the Agent's own
internal commercial finance examiners) and collection expenses) incurred or
expended in connection with the enforcement of any Obligations, the perfection
and protection of rights and the exercise of any remedies under any Loan
Documents or applicable law or with respect to the Collateral or the
satisfaction of any indebtedness of any Borrower hereunder or thereunder, or in
connection with any litigation, proceeding or dispute in any way related to the
credit hereunder. The Borrowers will pay any stamp, document or similar taxes
(including any interest and penalties in respect thereof), payable on or with
respect to the transactions contemplated by the Loan Documents (the Borrower
hereby agreeing to, jointly and severally, indemnify the Agent, the Issuing Bank
and the Lenders with respect thereto). For purposes of this Agreement and the
other Loan Documents, "ATTORNEYS' FEES" shall mean the reasonable fees and
disbursements of attorneys (including all paralegals and other staff employed by
such attorneys and the reasonably allocated costs of the Agent's or a Lender's
internal counsel) whether incurred at arbitration, trial, on appeal, in a
bankruptcy proceeding or in any other way relating to Obligations, the Loan
Documents and the transactions contemplated thereby, including, without
limitation, as provided in Sections 11.2 and 11.3 hereof.
11.3 INDEMNIFICATION. The Borrowers agree to, jointly and severally,
indemnify and hold harmless the Agent, the Issuing Bank and the Lenders, as well
as their respective shareholders, directors, officers, agents, partners,
attorneys, subsidiaries and affiliates, from and against all damages, losses,
settlement payments, obligations, liabilities, claims, suits, penalties,
assessments, citations, directives, demands, judgments, actions or causes of
action, whether statutorily created or under the common law, all reasonable
costs and expenses (including, without limitation, Attorneys' Fees and
reasonable fees and disbursements of engineers and consultants) and all other
liabilities whatsoever (including, without limitation, liabilities under
Environmental Laws) which shall at any time or times be incurred, suffered,
sustained or required to be paid by any such indemnified Person (except any of
the foregoing which result from the gross negligence or willful misconduct of
the indemnified Person) on account of or in relation to or any way in connection
with any of the arrangements or transactions contemplated by, associated with or
ancillary to this Agreement, the other Loan Documents or any other documents
executed or delivered in connection herewith or therewith, all as the same may
be amended from time to time, or with respect to any Letters of Credit, whether
or not all or part of the transactions contemplated by, associated with or
ancillary to this Agreement, any of the other Loan Documents or any such other
documents are ultimately consummated. In any investigation, proceeding or
litigation, or the preparation therefor, the Lenders shall select their own
counsel and, in addition to the foregoing indemnity, the Borrowers agree to,
jointly and severally, pay promptly the Attorneys' Fees and expenses of such
counsel. In the event of
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the commencement of any such proceeding or litigation, the Borrowers shall be
entitled to participate in such proceeding or litigation with counsel of their
choice at their expense, provided that such counsel shall be reasonably
satisfactory to the Agent. The Borrowers authorize the Agent, the Issuing Bank
and the Lenders to charge any deposit account or Note Record which they may
maintain with any of them for any of the foregoing; the party making any such
charge will use reasonable efforts to notify TLC, as agent for the Borrowers,
thereof, but the failure to give such a notice shall not create a cause of
action against such party or create any claim or right on behalf of the
Borrower. The covenants of this Section 11.3 shall survive payment or
satisfaction of payment of all amounts owing with respect to the Revolving
Credit Notes, any other Loan Document or any other Obligation.
11.4 SURVIVAL OF COVENANTS, ETC. Unless otherwise stated herein, all
covenants, agreements, representations and warranties made herein, in the other
Loan Documents or in any documents or other papers delivered by or on behalf of
the Borrowers pursuant hereto shall be deemed to have been relied upon by the
Agent, the Issuing Bank and the Lenders, notwithstanding any investigation
heretofore or hereafter made by any of them, and shall survive the making by the
Lenders of the Loans as herein contemplated, and shall continue in full force
and effect so long as any Obligation remains outstanding and unpaid or any
Lender has any obligation to make any Loans hereunder or the Issuing Bank has
any obligation to issue any Letter of Credit. All statements contained in any
certificate, report, notice and other document (including those attached hereto
as Exhibits) delivered by or on behalf of the Borrowers pursuant hereto or in
connection with the transactions contemplated hereby shall constitute
representations and warranties by the Borrowers hereunder.
11.5 SET-OFF. Regardless of the adequacy of any Collateral or other means
of obtaining repayment of the Obligations, any deposits, balances or other sums
credited by or due from the head office of any Lender or any of its branch
offices to any Borrower may, at any time and from time to time after the
occurrence of an Event of Default hereunder, without prior notice to any
Borrower or compliance with any other condition precedent now or hereafter
imposed by statute, rule of law, or otherwise (all of which are hereby expressly
waived) be set off, appropriated, and applied by such Lender against any and all
Obligations of the Borrowers in such manner as the head office of such Lender or
any of its branch offices in its sole discretion may determine, and each
Borrower hereby grants each such Lender a continuing security interest in such
deposits, balances or other sums for the payment and performance of all such
Obligations.
11.6 NO WAIVERS. No failure or delay by the Agent, the Issuing Bank or any
Lender in exercising any right, power or privilege hereunder, under the
Revolving Credit Notes or under any other Loan Document shall operate as a
waiver thereof; nor shall any single or partial exercise thereof preclude any
other or further exercise thereof or the exercise of any other right, power or
privilege. No waiver shall extend to or affect any Obligation not expressly
waived or impair any right consequent thereon. No course of dealing or omission
on the part of the Agent, the Issuing Bank or the Lenders in exercising
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any right shall operate as a waiver thereof or otherwise be prejudicial thereto.
No notice to or demand upon any Borrower shall entitle any Borrower to other or
further notice or demand in similar or other circumstances. The rights and
remedies herein and in the Revolving Credit Notes and the other Loan Documents
are cumulative and not exclusive of any rights or remedies otherwise provided by
agreement or law.
11.7 AMENDMENTS, WAIVERS, ETC.
(a) Neither this Agreement nor the Revolving Credit Notes nor any
other Loan Document nor any provision hereof or thereof may be amended, waived,
discharged or terminated except by a written instrument signed by the number of
Lenders required under Section 11.7(b), or by the Agent on behalf of such
Lenders and, with respect to Letters of Credit, by the Issuing Bank, and, in the
case of amendments, by the Borrower.
(b) Except where this Agreement or any of the other Loan Documents
authorizes or permits the Agent to act alone and except as otherwise expressly
provided in this Section 11.7(b), any action to be taken (including the giving
of notice) by the Lenders may be taken, and any consent or approval required or
permitted by this Agreement or any other Loan Document to be given by the
Lenders may be given, and any term of this Agreement, any other Loan Document or
any other instrument, document or agreement related to this Agreement or the
other Loan Documents or mentioned therein may be amended, and the performance or
observance by any Borrower or any other Person of any of the terms thereof and
any Default or Event of Default (as defined in any of the above-referenced
documents or instruments) may be waived (either generally or in a particular
instance and either retroactively or prospectively), in each case only with the
written consent of the Majority Lenders; PROVIDED, HOWEVER, that no such consent
or amendment which alters the rights, duties or liabilities of the Agent or
Issuing Bank shall be effective without the written consent of the Agent or
Issuing Bank, respectively. Notwithstanding the foregoing, no amendment, waiver
or consent shall do any of the following unless in writing and signed by ALL of
the Lenders: (i) increase the Total Commitment (or subject the Lenders to any
additional obligations) (ii) reduce the principal of or interest on any of the
Revolving Credit Notes (including, without limitation, interest on overdue
amounts) or any fees payable hereunder, (iii) postpone any date fixed for any
payment in respect of principal of or interest (including, without limitation,
interest on overdue amounts) on the Revolving Credit Notes, or any fees payable
hereunder, (iv) change the definition of "Majority Lenders" or the number of
Lenders which shall be required for the Lenders or any of them to take any
action under the Loan Documents; (v) change the definition of "Letter of Credit
Sublimit" set forth in Section 1.1, amend Sections 2.1(a) or 2A.1(a) or waive
the limitations set forth in Sections 2.1(a) or 2A.1(a); (vi) amend this Section
11.7(b); (vii) change the Commitment of any Lender, except as permitted under
Section IX hereof; (viii) release any Collateral except as permitted by Section
10.2(b) hereunder; or (ix) amend Sections 2.5 or 2.6 hereof.
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11.8 BINDING EFFECT OF AGREEMENT. This Agreement shall be binding upon and
inure to the benefit of the Borrowers, the Agent, the Issuing Bank, the Lenders
and their respective successors and assigns; PROVIDED that no Borrower may
assign or transfer its rights or obligations hereunder.
11.9 CAPTIONS; COUNTERPARTS. The captions in this Agreement are for
convenience of reference only and shall not define or limit the provisions
hereof. This Agreement and any amendment hereof or document delivered pursuant
hereto may be executed in several counterparts and by each party on a separate
counterpart, each of which when so executed and delivered shall be an original,
but all of which together shall constitute one instrument. In proving this
Agreement it shall not be necessary to produce or account for more than one such
counterpart signed by the party against whom enforcement is sought.
11.10 ENTIRE AGREEMENT; CONFLICTS.
(a) The Loan Documents and any other documents executed in connection
herewith or therewith express the entire understanding of the parties with
respect to the transactions contemplated hereby, except for the letter agreement
dated March __, 1998 between TLC and Fleet with respect to fees payable to
Fleet, which letter agreement shall continue in full force and effect and shall
not be superseded by any of the Loan Documents. This Agreement amends and
restates in its entirety that certain Credit Agreement among Fleet, TLC and
certain Affiliates of TLC.
(b) In the event of any conflict between the terms of this Agreement
and the terms of any of the other Loan Documents, the terms of this Agreement
shall control and govern in all respects.
11.11 WAIVER OF JURY TRIAL. EACH BORROWER AND EACH OF THE LENDERS HEREBY
WAIVES ITS RIGHT TO A JURY TRIAL WITH RESPECT TO ANY ACTION OR CLAIM ARISING OUT
OF ANY DISPUTE IN CONNECTION WITH THIS AGREEMENT, THE REVOLVING CREDIT NOTES OR
ANY OF THE OTHER LOAN DOCUMENTS, ANY RIGHTS OR OBLIGATIONS HEREUNDER OR
THEREUNDER OR THE PERFORMANCE OF SUCH RIGHTS AND OBLIGATIONS. EXCEPT AS
PROHIBITED BY LAW, EACH BORROWER AND EACH OF THE LENDERS HEREBY WAIVES ANY RIGHT
IT MAY HAVE TO CLAIM OR RECOVER IN ANY LITIGATION REFERRED TO IN THE PRECEDING
SENTENCE ANY SPECIAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES OR ANY
DAMAGES OTHER THAN, OR IN ADDITION TO, ACTUAL DAMAGES. EACH BORROWER (a)
CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF THE LENDERS HAS
REPRESENTED, EXPRESSLY OR OTHERWISE, THAT THE LENDERS WOULD NOT, IN THE EVENT OF
LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVERS AND (b) ACKNOWLEDGES THAT THE
LENDERS HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS TO WHICH EACH IS A PARTY BECAUSE OF, AMONG
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OTHER THINGS, EACH BORROWER'S WAIVERS AND CERTIFICATIONS CONTAINED HEREIN.
11.12 GOVERNING LAW. THIS AGREEMENT AND EACH OF THE OTHER LOAN DOCUMENTS
ARE CONTRACTS UNDER THE LAWS OF THE COMMONWEALTH OF MASSACHUSETTS AND SHALL FOR
ALL PURPOSES BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF SAID
COMMONWEALTH (EXCLUDING THE LAWS APPLICABLE TO CONFLICTS OR CHOICE OF LAW). EACH
BORROWER CONSENTS TO THE JURISDICTION OF ANY OF THE FEDERAL OR STATE COURTS
LOCATED IN THE COMMONWEALTH OF MASSACHUSETTS IN CONNECTION WITH ANY SUIT TO
ENFORCE THE RIGHTS OF THE LENDERS UNDER THIS AGREEMENT OR ANY OF THE OTHER LOAN
DOCUMENTS. EACH BORROWER IRREVOCABLY WAIVES ANY OBJECTION WHICH IT MAY NOW OR
HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUCH ACTION BROUGHT IN THE COURTS
REFERRED TO IN THE PRECEDING SENTENCE AND IRREVOCABLY WAIVES AND AGREES NOT TO
PLEAD OR CLAIM IN ANY SUCH ACTION THAT SUCH ACTION HAS BEEN BROUGHT IN AN
INCONVENIENT FORUM.
11.13 SEVERABILITY. The provisions of this Agreement are severable and if
any one clause or provision hereof shall be held invalid or unenforceable in
whole or in part in any jurisdiction, then such invalidity or unenforceability
shall affect only such clause or provision, or part thereof, in such
jurisdiction, and shall not in any manner affect such clause or provision in any
other jurisdiction, or any other clause or provision of this Agreement in any
jurisdiction.
11.14 JOINT AND SEVERAL OBLIGATIONS. Each and every representation,
warranty, covenant and agreement made by any of the Borrowers, hereunder and
under the Loan Documents, shall be joint and several, whether or not so
expressed, and such obligations of the Borrowers shall not be subject to any
counterclaim, setoff, recoupment or defense based upon any claim any one of the
Borrowers may have against the other Borrowers or the Lenders or the Agent or
the Issuing Bank, and shall remain in full force and effect without regard to,
and shall not be released, discharged or in any way affected by any circumstance
or condition affecting the other Borrowers, including, without limitation (a)
any waiver, consent, extension, renewal, indulgence or other action or inaction
under or in respect of this Agreement or any other Loan Document, or any
agreement or other document related thereto with respect to the other Borrowers,
or any exercise or nonexercise of any right, remedy, power or privilege under or
in respect to any such agreement or instrument with respect to the other
Borrowers, or the failure to give notice of any of the foregoing to the other
Borrowers; (b) any invalidity, unenforceability, in whole or in part, of any
such agreement or instrument with respect to the other Borrowers; (c) any
failure on the part of the other Borrowers for any reason to perform or comply
with any term or any such agreement or instrument; (d) any bankruptcy,
insolvency, reorganization, arrangement, readjustment, composition, liquidation
or similar proceeding with respect to the other
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Borrowers or their properties or creditors; or (e) any other occurrence
whatsoever whether similar or dissimilar to the foregoing, with respect to the
other Borrowers. Each Borrower hereby waives any requirement of diligence or
promptness on the part of the Lender, Agent, Issuing Bank in the enforcement of
their rights under this Agreement or under any other Loan Document with respect
to the obligations of itself or of the other Borrowers. Without limiting the
foregoing, any failure to make any demand upon, or to pursue or exhaust any
rights or remedies against, a Borrower, or any delay with respect thereto, shall
not affect the obligations of the other Borrowers hereunder or under any other
Loan Document.
11.15 TLC AS AGENT FOR THE BORROWERS. Each Borrower hereby appoints TLC as
its agent with respect to the receiving and giving of any notices, requests,
instructions, reports, schedules, revisions, financial statements or any other
written or oral communications hereunder. TLC shall keep complete, correct and
accurate records of all Revolving Credit Loans and the applications of proceeds
thereof, all Letters of Credit and all payments in respect of Revolving Credit
Loans and other amounts due hereunder. TLC shall determine the allocation of
proceeds of Loans among the Borrowers, subject to the other terms and conditions
hereof. Unless otherwise expressly provided herein, the Lenders are hereby
entitled to rely on any communication given or transmitted by TLC as if such
communication were given or transmitted by each and every Borrower; PROVIDED,
HOWEVER, that any communication given or transmitted by any Borrower shall be
binding with respect to such Borrower. Any communication given or transmitted by
the Agent or any Lender or the Issuing Bank, to TLC shall be deemed given and
transmitted to each and every Borrower.
11.16 RELEASE OF MECC FROM ITS OBLIGATIONS. The parties hereto agree that
upon the execution of the Release (in the form attached hereto as Exhibit F) by
MECC and Fleet, which shall occur on the Closing Date, MECC shall be released
from its obligations under the Original Credit Agreement and related documents
and shall be deemed not to be a Borrower thereunder or hereunder.
11.17 CONFIDENTIALITY. Each of the Lenders and the Agent will endeavor in
good faith to maintain the confidentiality of any non-public information
relating to the Parent, the Borrowers and their Subsidiaries which has been
identified in writing as confidential on the information itself or otherwise
(the "Confidential Information") and, except as provided below, will exercise
the same degree of care that each such party exercises with respect to its own
proprietary information to prevent the unauthorized disclosure of the
Confidential Information to third parties. Confidential Information shall not
include information that either: (a) is in the public domain; or (b) is
disclosed to any of the Lenders or the Agent by a third party, provided any of
the Lenders or the Agent does not have actual knowledge that such third party is
prohibited from disclosing such information. The terms of this Section shall not
apply to disclosure of Confidential Information by any of the Lenders or the
Agent that is, in the good faith opinion of any of the Lenders or the Agent,
compelled by laws, regulations, rules, orders or legal process or proceedings or
is disclosed to: (a)
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any party, including a prospective participant, who has signed a confidentiality
agreement containing terms substantially similar to those contained herein; (b)
legal counsel, examiners, auditors and directors of any of the Lenders or the
Agent and examiners, auditors and investigators having regulatory authority over
any of the Lenders or the Agent; or (c) any party in connection with the
exercise of remedies by any of the Lenders or the Agent after default in the
performance of the Obligations. Neither the Agent nor any Lender shall, without
the prior written consent of TLC, granted in its sole discretion, make any press
releases or other general advertising (including, public notices commonly
referred to as "tombstones") in connection with the transactions contemplated by
the Loan Documents.
[SIGNATURES TO FOLLOW]
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IN WITNESS WHEREOF, the undersigned have duly executed this Agreement under
seal as of the date first above written.
TLC MULTIMEDIA INC.
By: /s/ R. Xxxxx Xxxxxx
-----------------------------------
Name: R. Xxxxx Xxxxxx
Title: Chief Financial Officer
LEARNING COMPANY PROPERTIES INC.
By: /s/ R. Xxxxx Xxxxxx
-----------------------------------
Name: R. Xxxxx Xxxxxx
Title: Chief Financial Officer
TEC DIRECT, INC.
By: /s/ R. Xxxxx Xxxxxx
-----------------------------------
Name: R. Xxxxx Xxxxxx
Title: Chief Financial Officer
LEARNING SERVICES, INC.
By: /s/ R. Xxxxx Xxxxxx
-----------------------------------
Name: R. Xxxxx Xxxxxx
Title: Chief Financial Officer
SKILLS BANK CORPORATION
By: /s/ R. Xxxxx Xxxxxx
-----------------------------------
Name: R. Xxxxx Xxxxxx
Title: Chief Financial Officer
78
MICROSYSTEMS SOFTWARE, INC.
By: /s/ R. Xxxxx Xxxxxx
-----------------------------------
Name: R. Xxxxx Xxxxxx
Title: Chief Financial Officer
MINDSCAPE, INC.
By: /s/ R. Xxxxx Xxxxxx
-----------------------------------
Name: R. Xxxxx Xxxxxx
Title: Vice President
FLEET NATIONAL BANK, individually
and as Agent
By: /s/ Xxxxxx X. Xxxxxx
-----------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Senior Vice President
XXXXXXX XXXXX CREDIT PARTNERS L.P.,
individually and as Syndication Agent
By: /s/ Xxxxxx X. Xxxxx
-----------------------------------
Name: Xxxxxx X. Xxxxx
Title: Managing Director
79
SCHEDULE 1
----------
COMMITMENTS OF THE LENDERS
--------------------------
Lender Commitment
------ ----------
Fleet National Bank $123,500,000
Xxx Xxxxxxx Xxxxxx
Xxxxxx, XX 00000-0000
Xxxxxxx Sachs Credit Partners $ 25,000,000
00 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
TOTAL: $148,500,000
============
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