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Exhibit 10.2
RECEIVABLES SALE AGREEMENT
Dated as of June 30, 1997
by and between
TLC MULTIMEDIA INC.
and
THE LEARNING COMPANY FUNDING, INC.
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RECEIVABLES SALE AGREEMENT
RECEIVABLES SALE AGREEMENT (the "Agreement"), dated as of June
30, 1997 by and between TLC Multimedia Inc., a Minnesota corporation ("TLC
Multimedia") and The Learning Company Funding, Inc., a Delaware corporation
("Funding Entity").
W I T N E S S E T H:
WHEREAS, the Funding Entity is a limited purpose
bankruptcy-remote subsidiary of TLC Multimedia;
WHEREAS, the Funding Entity was formed for the sole purpose of
purchasing or acquiring Receivables originated by TLC Multimedia and possibly
other Transferring Subsidiaries of The Learning Company, Inc. (except for
Excluded Receivables) and selling undivided interests in such Receivables to
Lexington ▇▇▇▇▇▇ Capital Company, LLC or its assigns (the "Purchaser") pursuant
to the below-described Purchase Agreement; and
WHEREAS, TLC Multimedia intends to sell or contribute, and the
Funding Entity intends to purchase or otherwise acquire, such Receivables, from
time to time, as described herein;
NOW, THEREFORE, the parties agree as follows:
SECTION 1. Definitions. Unless otherwise defined herein, all
capitalized terms shall have the meanings set forth in the Receivables Purchase
Agreement (the "Purchase Agreement"), dated of even date herewith, by and among
the Funding Entity, the Purchaser, Fleet National Bank as "Agent" thereunder,
TLC Multimedia as the "Servicer" thereunder and TLC.
SECTION 2. Sale of Eligible Receivables.
2.1 Agreement to Sell. (a) The Funding Entity hereby
agrees to purchase and TLC Multimedia agrees to sell all of its Receivables
(except for the Excluded Receivables) existing on the date hereof and created
thereafter during the term of this Agreement. On or before every Tuesday of each
week that the Purchase Agreement is in effect (or if Tuesday is not a Business
Day, the next Business Day), TLC Multimedia will deliver or cause to be
delivered, to the Funding Entity, a notice (the "List of Receivables") itemizing
the Receivables TLC Multimedia will sell to the Funding Entity which notice
shall list all Receivables available for purchase on such date, designate those
Receivables which constitute Receivables under the Purchase Agreement, and
specify the current Outstanding Balance, invoice date and Maturity Period
(defined below) thereof and any other information required by the Funding Entity
or Funding Entity's assignees with respect thereto. The Funding Entity shall be
deemed to have purchased each Receivable included on such List of Receivables.
Notwithstanding that the
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Purchase Price for the Receivables will be determined solely with reference to
the Outstanding Balance of Eligible Receivables pursuant to Section 2.2 hereof,
TLC Multimedia agrees that on each Purchase Date (as defined below) all of its
available Receivables (except for Excluded Receivables) shall be sold to
Purchaser hereunder. Each of the Receivables to be sold hereunder shall be
referred to as a "Sold Receivable" and collectively, as the "Pool of Sold
Receivables" (the term "Pool of Sold Receivables" shall include, but not be
limited to, Receivables transferred to the Funding Entity which are not Eligible
Receivables). Each date on which Receivables are sold or contributed hereunder
or deemed sold or contributed hereunder shall be referred to as a "Purchase
Date."
(b) The ownership of each Sold Receivable
shall be vested in the Funding Entity immediately upon its Purchase Date and TLC
shall not take any action inconsistent with such ownership and shall not claim
any ownership interest in any such Sold Receivable. On the date hereof, TLC
Multimedia shall execute a Receivable Assignment in the form of Exhibit A
hereto. The delivery by TLC Multimedia to the Funding Entity of the List of
Receivables shall automatically be deemed to constitute a sale or contribution
of all Receivables included on such List of Receivables to the Funding Entity
without the necessity of execution of a subsequent instrument of assignment,
unless and except to the extent that the Funding Entity notifies TLC Multimedia
that it does not desire to purchase or accept the contribution of any of the
specific Receivables designated therein in which case such specified Receivables
shall be excluded from such assignment.
(c) TLC Multimedia shall indicate in its
Records that ownership of each Sold Receivable is held by the Funding Entity or
its assignee. In addition, TLC Multimedia shall respond to any inquiries with
respect to ownership of a Sold Receivable by stating that it is no longer the
owner of such Sold Receivable and that ownership of such Sold Receivable is held
by the Funding Entity or its assignee.
2.2 (a) Purchase Price. The Funding Entity agrees to
pay from time to time the Purchase Price for each Pool of Sold Receivables
transferred to it hereunder calculated as follows:
PP = (AOB) x AD
Where:
PP = the aggregate Purchase Price of the Pool of Sold Receivables
assigned by TLC to the Funding Entity.
AOB = the aggregate Outstanding Balance of Eligible Receivables
included in the Pool of Sold Receivables as of the Purchase
Date.
AD = 100% - (DR + PLD)
DR = as of any Purchase Date, a percentage, determined by the
Agent, equal to the Discount Rate then in effect under the
Purchase Agreement multiplied by a
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fraction, the numerator of which is the relevant Maturity
Period and the denominator of which is 360.
PLD = the Loss Percentage in effect on the Purchase Date.
The Purchase Price for the Pool of Sold Receivables will be determined
only with respect to Eligible Receivables included in the Pool of Sold
Receivables transferred on each Purchase Date to the Funding Entity,
notwithstanding that the Pool of Sold Receivables transferred on such date shall
include all Receivables TLC Multimedia has available for purchase on such date,
(except for Excluded Receivables) whether such Receivables are Eligible
Receivables or otherwise. For purposes hereof, the "Maturity Period" of a
Receivable shall be the period in which TLC Multimedia estimates that it shall
receive payment of the Outstanding Balance of the Receivable, but shall in no
event be a date greater than 120 days from the date such Receivable was
invoiced.
(c) The Purchase Price shall be payable in
cash on each Purchase Date to the extent that the Funding Entity has sufficient
cash available after it has satisfied any and all other obligations then due to
Purchaser under the Purchase Agreement and to the extent it does not, through
deferred payments evidenced by the Funding Entity Note (defined below). In the
event of the addition of any other Affiliate of TLC Multimedia as a Transferring
Subsidiary whose Receivables are eligible for purchase by Purchaser under the
Purchase Agreement, the Purchase Price shall be due and payable to TLC
Multimedia and any such Transferring Subsidiary, in the same proportion that the
Purchase Prices allocable to the Eligible Receivables originated by TLC
Multimedia and such Transferring Subsidiary included in the Pool of Sold
Receivables bears to the aggregate Purchase Price allocable to all Eligible
Receivables included in such Pool of Sold Receivables. If, on any Purchase Date,
the Funding Entity does not have sufficient available cash (in its reasonable
business judgment) to pay the full Purchase Price for the Pool of Sold
Receivables it is purchasing, then the Funding Entity shall (i) make cash
payments pro rata to TLC Multimedia and each Transferring Subsidiary based on
the relationship that the amount of the Purchase Price due to each of TLC
Multimedia and any such Transferring Subsidiary on such date bears to the amount
of the aggregate Purchase Price due to TLC Multimedia and any such Transferring
Subsidiary with respect to the Pool of Sold Receivables; and (ii) automatically
increase the principal amount outstanding under the Funding Entity Note issued
to TLC Multimedia or such Transferring Subsidiary by the amount by which the
Purchase Price due to TLC Multimedia or such Transferring Subsidiary in
connection with the Pool of Sold Receivables exceeds the amount of any cash
payment made to TLC Multimedia or such Transferring Subsidiary on such Purchase
Date pursuant to clause (i) above. The aggregate outstanding principal amount of
the Funding Entity Notes shall not as of the close of business on any Business
Day from the date hereof to the Facility Termination Date exceed twenty-five
percent (25%) of the aggregate Outstanding Balances of Receivables then owned by
the Funding Entity or Purchaser, after giving effect to all Receivables
purchases and payments made pursuant to the terms hereof on such date.
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(d) The Funding Entity Note shall be
substantially in the form of Exhibit B hereto, duly executed by the Funding
Entity in favor of TLC Multimedia or the applicable Transferring Subsidiary, as
the case may be. The Funding Entity Note shall, in accordance with its terms, be
subordinated to the Receivable Interests acquired by the Purchaser pursuant to
the Purchase Agreement and all other obligations of the Funding Entity to the
Purchaser thereunder; provided, however, that the Funding Entity may make
payments of interest and principal to TLC Multimedia and any applicable
Transferring Subsidiary under the Funding Entity Note from cash available after
payments of all amounts currently due and payable to Purchaser under the
Receivables Purchase Agreement so long as no Termination Event or Potential
Termination Event exists under the Purchase Agreement. The Funding Entity Note
shall be payable in full within two (2) calendar years after the occurrence of
the Facility Termination Date. The unpaid principal balance of each Funding
Entity Note shall bear interest at a per annum rate equal to the Discount Rate
in effect from time to time under the Purchase Agreement until fully paid.
Payments received with respect to the Funding Entity Note shall be deemed to be
applied first against any accrued, but unpaid interest and second, to the unpaid
principal balance thereof. The Funding Entity may prepay all or any part of the
outstanding balance of any or all of the Funding Entity Notes from time to time
without premium or penalty of any kind whatsoever, except to the extent that
such prepayment would result in a default by the Funding Entity with respect to
any of its obligations to the Purchaser under the Purchase Agreement. Upon the
addition of any Transferring Subsidiary, the Funding Entity shall execute and
deliver to such Transferring Subsidiary a Funding Entity Note in substantially
the same form as Exhibit B. TLC Multimedia, as Servicer, shall hold each Funding
Entity Note for the benefit of any Transferring Subsidiary to whom such Funding
Entity Note was issued, and shall make all appropriate record keeping entries
with respect to the Funding Entity Notes or otherwise to reflect payments on or
adjustments of any and all of the Funding Entity Notes. The Servicer's books and
records shall constitute rebuttable presumptive evidence of the principal amount
of and accrued interest on each Funding Entity Note at any time.
SECTION 3. Representations and Warranties of TLC Multimedia. By
execution hereof and pursuant to the Receivables Assignment, TLC Multimedia
shall be deemed to have made the representations and warranties set forth in
Article II of the Purchase Agreement with respect to TLC Multimedia and each of
the Sold Receivables for the benefit of the Funding Entity as of the date hereof
and as of each subsequent Purchase Date (substituting "TLC Multimedia" for each
reference to the "Seller" in Article II of the Purchase Agreement). Such
representations and warranties (as so modified) are incorporated by reference in
this Section 3, and the Funding Entity may rely thereon as if such
representations and warranties were fully set forth herein. It is understood and
agreed that the representations and warranties incorporated by reference in this
Section 3 shall survive the sale or assignment of the Sold Receivables to the
Funding Entity and the sale or assignment of the Sold Receivables by the Funding
Entity to the Purchaser or any other subsequent purchaser or assignee
(including, but not limited to, the Liquidity Banks) and shall continue so long
as any Sold Receivable shall remain outstanding. TLC Multimedia acknowledges
that, pursuant to the Purchase Agreement, the Funding Entity intends to assign
all of its right, title and interest in and to the Sold Receivables and its
right to exercise the remedies created by Section 4 thereof to the Purchaser and
the Purchaser intends to assign such rights to the Liquidity Banks and other
subsequent purchasers or assignees. TLC Multimedia agrees that,
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upon such assignment, Purchaser, the Liquidity Bank or any subsequent purchaser
or assignee may enforce directly against it, without joinder of the Funding
Entity, the obligations of TLC Multimedia set forth in Section 4 hereof with
respect to breaches of the representations and warranties set forth in Article
II of the Purchase Agreement.
SECTION 4. Breach of Representations and Warranties; Deemed
Collections. Upon discovery by the Funding Entity, (or the Purchaser, the Agent,
Liquidity Bank or any subsequent purchaser or assignee) of a breach of any of
the representations and warranties incorporated by reference in Section 3
hereof, which affects the value or collectibility of any Sold Receivable or the
occurrence of any Dilution with respect to a Sold Receivable, on account of
either of which event Purchaser is deemed to have received a Collection pursuant
to Section 1.8 of the Receivables Purchase Agreement, the party discovering such
occurrence giving rise to a Deemed Collection shall give prompt written notice
to the other parties (including the Purchaser and any subsequent purchaser and
assignees). Thereafter, if requested by notice from the Funding Entity,
Purchaser or any subsequent purchaser or assignee of Purchaser (including any of
the Liquidity Banks), TLC Multimedia shall within two (2) Business Days advance
the Deemed Collection Amount to the Funding Entity (or, if so designated by the
Purchaser, directly to the Purchaser on the Funding Entity's behalf) in good and
immediately available funds. Alternatively, provided that no Termination Event
or Potential Termination Event then exists, TLC Multimedia and the Funding
Entity, with Purchaser's consent, may agree to accomplish the payment of any
such Deemed Collection Amount as between TLC Multimedia and the Funding Entity
through a reduction in the cash portion of the Purchase Price which would
otherwise have been paid to TLC Multimedia for Receivables sold to the Funding
Entity during the remainder of the then current Settlement Period.
SECTION 5. Grant of Security Interest. It is the intention of
the parties hereto that each transfer of the Sold Receivables to be made
hereunder shall constitute a sale or absolute assignment thereof and not a loan.
In the event, however, that a court of competent jurisdiction were to hold that
the transactions evidenced hereby constitutes a loan and not a sale, it is the
intention of the parties hereto that this Agreement shall constitute a security
agreement under applicable law and that TLC Multimedia shall be deemed to have
granted to the Funding Entity a first priority security interest in all of its
right, title and interest in, to and under the Sold Receivables, all Collections
on account of Sold Receivables, all Related Security with respect thereto and
all proceeds thereof.
SECTION 6. Indemnification. Without limiting any other rights
that the Funding Entity or any assignee thereof, including, but not limited to,
the Purchaser and the Liquidity Bank (each, an "Indemnified Party") may have
hereunder or under applicable law, TLC Multimedia hereby agrees to indemnify
each Indemnified Party from and against any and all claims, losses and
liabilities and related out-of-pocket costs and expenses, including reasonable
attorneys' fees and disbursements (all of the foregoing being collectively
referred to as "Indemnified Amounts") which may be imposed on, incurred by or
asserted against an Indemnified Party to the extent, but only to the extent, in
any way arising out of or resulting from this Agreement, the transactions
contemplated hereby or the use by the Seller of proceeds of any Sale or in
respect of any Receivable or any Contract, excluding, however, (a) Indemnified
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Amounts to the extent resulting from gross negligence or willful misconduct on
the part of such Indemnified Party or (b) recourse for uncollectible Sold
Receivables (except as expressly provided herein). Without limiting or being
limited by the foregoing, TLC Multimedia shall pay on demand to each Indemnified
Party any and all amounts necessary to indemnify such Indemnified Party from and
against any and all Indemnified Amounts to the extent, but only to the extent
relating to or resulting from:
(a) reliance on any representation or
warranty made or deemed made by TLC Multimedia (or any of its officers) under or
in connection with this Agreement or any report or any other information
delivered by TLC Multimedia pursuant hereto, which shall have been incorrect in
any material respect when made or deemed made or delivered;
(b) the failure by TLC Multimedia to comply
in all material respects with any term, provision or covenant contained in this
Agreement, or any agreement executed in connection with this Agreement or with
any applicable law, rule or regulation with respect to any Sold Receivable or
the related Contract, or the nonconformity of any Sold Receivable or the related
Contract with any such applicable law, rule or regulation or the representations
and warranties made with respect thereto;
(c) the failure to vest and maintain vested
in the Funding Entity, or to transfer to the Funding Entity, legal and equitable
title to and ownership of the Receivables which are, or are purported to be,
Sold Receivables sold by TLC Multimedia, together with all Collections in
respect thereof, free and clear of any Adverse Claim (except as permitted
hereunder) whether existing at the time of the proposed transfer of such
Receivable or at any time thereafter and such failure is not attributable to the
actions of the Funding Entity;
(d) any act or omission of TLC Multimedia
with respect to a Receivable occurring prior to or after the applicable Purchase
Date;
(e) any dispute, claim, offset or defense
(other than discharge in bankruptcy of the Obligor) of the Obligor to the
payment of any Receivable or any other claim resulting from the goods or
services related to such Receivable or the furnishing or failure to furnish such
goods or services;
(f) any products liability claim or personal
injury or property damage suit arising out of or in conjunction with any Sold
Receivable; and
(g) any indemnity made by Purchaser pursuant
to the terms of the Purchase Agreement.
TLC Multimedia acknowledges that, pursuant
to this Agreement, the Funding Entity shall assign its rights of indemnity
granted hereunder to Purchaser and Purchaser shall assign its rights to the
Liquidity Bank and following such assignment, Purchaser shall have all rights of
the Funding Entity hereunder and may in turn assign such rights to additional
assignees. TLC Multimedia agrees that, following such assignment, Purchaser or
its assignee
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may enforce directly, without joinder of the Funding Entity, the indemnities set
forth in this Section.
SECTION 7. No Waiver; Remedies. No failure on the part of the
Funding Entity to exercise, and no delay in exercising, any right hereunder or
under any Receivables Assignment shall operate as a waiver thereof; nor shall
any single or partial exercise of any right hereunder preclude any other or
further exercise thereof or the exercise of any other right. The remedies herein
provided are cumulative and not exclusive of any other remedies provided by law.
SECTION 8. Notices, Etc. All notices and other communications
provided for hereunder shall, unless otherwise stated herein, be in writing
(including telecommunication and express mail) and mailed or telecommunicated,
or delivered as to each party hereto, in the manner and subject to the terms and
conditions specified in the Purchase Agreement.
SECTION 9. Binding Effect; Assignability. This Agreement shall
be binding upon and inure to the benefit of each of TLC Multimedia and the
Funding Entity, and their respective successors and permitted assigns. Except as
set forth in Sections 3 and 6, none of the parties may assign any of its rights
and obligations hereunder or any interest herein without the prior written
consent of the other party. Notwithstanding anything to the contrary in the
immediately preceding two sentences, TLC Multimedia acknowledges that the
Funding Entity intends to assign its rights under this Receivables Sale
Agreement and undivided interests in the Sold Receivables to the Purchaser
pursuant to the Purchase Agreement and hereby further consents to such
assignment and any subsequent assignment by the Purchaser of all or any part of
its or the Purchaser's interest hereunder or in the Sold Receivables to any
other Person (including, but not limited to, the Liquidity Banks) and further
agrees and consents that following such assignment, Purchaser and any assignee
of Purchaser may enforce the Funding Entity's rights hereunder against TLC
Multimedia directly without joinder of the Funding Entity. This Agreement shall
create and constitute the continuing obligations of the parties hereto in
accordance with its terms, and shall remain in full force and effect until its
termination; provided, that the rights and remedies with respect to any breach
of any representation and warranty made by TLC Multimedia pursuant to Section 4
shall be continuing and shall survive any termination of this Agreement.
SECTION 10. No Proceedings. TLC Multimedia hereby agrees that
it will not, directly or indirectly, institute, or cause to be instituted,
against the Funding Entity any proceeding of the type referred to in Section
6.2(f) of the Purchase Agreement so long as there shall not have elapsed one
year plus one day since the Aggregate Unpaids due to Purchaser under the
Purchase Agreement shall have been paid in full in cash.
SECTION 11. Amendments; Consents and Waivers. No modification,
amendment or waiver of, or with respect to, any provision of this Receivables
Sale Agreement, and all other agreements, instruments and documents delivered
thereto, nor consent to any departure by TLC Multimedia or the Funding Entity
from any of the terms or conditions thereof shall be effective unless it shall
be in writing and signed by each of the parties hereto, and
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following any assignment of the type described in Section 3 or 6, the Purchaser
or its assignees. Any waiver or consent shall be effective only in the specific
instance and for the purpose for which given. No consent to or demand by TLC
Multimedia or the Funding Entity in any case shall, in itself, entitle it to any
other consent or further notice or demand in similar or other circumstances.
This Agreement and the other Transaction Documents embody the entire agreement
of the parties with respect to the Sold Receivables and supersede all prior
agreements and understandings relating to the subject hereof.
SECTION 12. GOVERNING LAW; CONSENT TO JURISDICTION; WAIVER OF
JURY TRIAL. (a) THIS SALE AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE INTERNAL LAWS (AS OPPOSED TO CONFLICT OF LAWS PROVISIONS)
OF THE COMMONWEALTH OF MASSACHUSETTS.
(b) TLC MULTIMEDIA AND THE FUNDING ENTITY
HEREBY SUBMIT TO THE NON-EXCLUSIVE JURISDICTION OF THE COURTS OF THE
COMMONWEALTH OF MASSACHUSETTS AND THE UNITED STATES DISTRICT COURT LOCATED IN
BOSTON, MASSACHUSETTS, AND EACH WAIVES PERSONAL SERVICE OF ANY AND ALL PROCESS
UPON IT AND CONSENTS THAT ALL SUCH SERVICE OF PROCESS BE MADE BY REGISTERED MAIL
DIRECTED TO THE ADDRESS SET FORTH ON THE SIGNATURE PAGE HEREOF AND SERVICE SO
MADE SHALL BE DEEMED TO BE COMPLETED THREE BUSINESS DAYS AFTER THE SAME SHALL
HAVE BEEN DEPOSITED IN THE U.S. MAILS, POSTAGE PREPAID. EACH OF TLC MULTIMEDIA
AND THE FUNDING ENTITY HEREBY WAIVE ANY OBJECTION BASED ON FORUM NON CONVENIENS,
AND ANY OBJECTION TO VENUE OF ANY ACTION INSTITUTED HEREUNDER AND CONSENTS TO
THE GRANTING OF SUCH LEGAL OR EQUITABLE RELIEF AS IS DEEMED APPROPRIATE BY THE
COURT. NOTHING IN THIS SECTION SHALL AFFECT THE RIGHT OF TRANSFERRING SUBSIDIARY
OR THE FUNDING ENTITY TO SERVE LEGAL PROCESS IN ANY OTHER MANNER PERMITTED BY
LAW OR AFFECT THE RIGHT OF EITHER TO BRING ANY ACTION OR PROCEEDING IN THE
COURTS OF ANY OTHER JURISDICTION.
(c) TLC MULTIMEDIA AND THE FUNDING ENTITY
HEREBY WAIVES ANY RIGHT TO HAVE A JURY PARTICIPATE IN RESOLVING ANY DISPUTE,
WHETHER SOUNDING IN CONTRACT, TORT, OR OTHERWISE ARISING OUT OF, CONNECTED WITH,
RELATED TO, OR IN CONNECTION WITH THIS RECEIVABLES SALE AGREEMENT. INSTEAD, ANY
DISPUTE RESOLVED IN COURT WILL BE RESOLVED IN A BENCH TRIAL WITHOUT A JURY.
SECTION 13. Execution in Counterparts; Severability. This
Agreement may be executed by the parties hereto in separate counterparts, each
of which when so executed shall be deemed to be an original and both of which
when taken together shall constitute one and the same agreement. In case any
provision in or obligation under this Agreement shall be invalid, illegal or
unenforceable in any jurisdiction, the validity, legality and enforceability of
the
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remaining provisions or obligations, or of such provision or obligation, shall
not in any way be affected or impaired thereby in any other jurisdiction.
IN WITNESS WHEREOF, the parties have caused this Receivables Sale
Agreement to be executed by their respective officers thereunto duly authorized,
as of the date first above written.
TLC MULTIMEDIA INC.
By /s/ R. ▇▇▇▇▇ ▇▇▇▇▇▇
--------------------------------------
Name: R. ▇▇▇▇▇ ▇▇▇▇▇▇
---------------------------------
Title: Executive V.P. and Chief
Financial Officer
--------------------------------
Address: The Learning Company, ▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇
Telephone number: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier number: (▇▇▇) ▇▇▇-▇▇▇▇
THE LEARNING COMPANY FUNDING, INC.
By /s/ R. ▇▇▇▇▇ ▇▇▇▇▇▇
--------------------------------------
Name: R. ▇▇▇▇▇ ▇▇▇▇▇▇
---------------------------------
Title: Executive V.P. and Chief
Financial Officer
--------------------------------
Address: The Learning Company, ▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇
Telephone number: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier number: (▇▇▇) ▇▇▇-▇▇▇▇
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EXHIBIT A
[FORM OF RECEIVABLES ASSIGNMENT]
Receivables Assignment, dated as of June 30, 1997 between the TLC
Multimedia Inc. ("TLC Multimedia") and The Learning Company Funding, Inc. ("the
Funding Entity").
1. We refer to the Receivables Sale Agreement (the "Agreement"), dated
as of June 30, 1997 between TLC Multimedia and the Funding Entity. All
provisions of such Agreement are incorporated herein by reference. All
capitalized terms used herein shall have the meanings set forth in such
Agreement.
2. Pursuant and subject to the terms of the Agreement, TLC Multimedia
does hereby contribute, transfer, assign, set over and convey to the Funding
Entity, without recourse, all right, title and interest of TLC Multimedia in
and to all of the Receivables of TLC Multimedia (except Excluded Receivables)
existing as of the date hereof or hereafter arising during the term of the
Agreement (each, a "Sold Receivable") and the Funding Entity does hereby accept
each such Sold Receivables. The terms and conditions of the contribution,
transfer assignment, set over and conveyance are set forth in the Agreement.
3. TLC Multimedia does hereby make the representations and warranties
referred to in Section 3 of the Agreement with respect to each Sold Receivable
with full force and effect as is fully set forth herein.
4. In connection with each purchase or contribution of a Sold
Receivable pursuant to the Agreement, TLC Multimedia shall furnish the Funding
Entity with a separate List of Receivables to be transferred pursuant to
Section 2.1 of the Agreement, which List of Receivables (and the Receivables
covered thereby) shall be deemed incorporated into and governed by this
Assignment without the necessity of execution of subsequent instruments of
assignment. All Receivables referenced in such List of Receivables shall
automatically be deemed to have been assigned to the Funding Entity.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed as an instrument under seal by their respective officers thereunto
duly authorized, as of the date first above written.
TLC MULTIMEDIA INC.
By: ______________________________
Name:_________________________
Title:________________________
THE LEARNING COMPANY FUNDING, INC.
By: ______________________________
Name:_________________________
Title:________________________
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EXHIBIT B
[FORM OF FUNDING ENTITY NOTE]
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THE INDEBTEDNESS EVIDENCED BY THIS INSTRUMENT IS SUBORDINATED TO
THE PRIOR RECEIVABLE INTERESTS (AS DEFINED IN THE SALE AGREEMENT
HEREINAFTER DEFINED) ACQUIRED BY THE PURCHASER (AS DEFINED IN THE SALE
AGREEMENT HEREINAFTER DEFINED) PURSUANT TO, AND TO THE EXTENT PROVIDED
IN, THE RECEIVABLES SALE AGREEMENT DATED AS OF JUNE 30, 1997 BY AND
BETWEEN THE MAKER HEREOF AND THE PAYEE NAMED HEREIN (THE "SALE
AGREEMENT").
FUNDING ENTITY NOTE
Boston, Massachusetts
$18,750,000.00 Date: June 30, 1997
FOR VALUE RECEIVED, the undersigned, The Learning Company Funding, Inc., a
Delaware corporation (the "Funding Entity"), hereby promises to pay to the
order of TLC Multimedia Inc., ("TLC Multimedia"), in lawful money of the United
States of America and in immediately available funds on the date which is two
(2) calendar years after the Facility Termination Date, the principal sum of up
to EIGHTEEN MILLION SEVEN HUNDRED FIFTY THOUSAND and 00/100 DOLLARS
($18,750,000.00) or, if less than such principal sum, the aggregate unpaid
principal sum outstanding of all obligations outstanding hereunder pursuant to
a Receivables Sale Agreement dated as of the date hereof between TLC Multimedia
and the Funding Entity ("Sale Agreement"). Notwithstanding the foregoing, the
outstanding principal of, and accrued and unpaid interest on, any such
obligations under this Funding Entity Note may be prepaid on demand, in whole
or in part, to the extent permitted under the terms of the Sale Agreement.
This Funding Entity Term Note is referred to in and was executed and
delivered pursuant to the Sale Agreement. Reference to the Sale Agreement is
hereby made for a statement of the terms and conditions under which the
obligations evidenced hereby have been and will be made. All terms which are
capitalized and used herein (that are not otherwise specifically defined
herein) and that are defined in the Sale Agreement shall be used in this
Funding Entity Note as defined in the Sale Agreement.
The principal amount of this Note may be increased or decreased from
time to time in accordance with the provisions of the Sale Agreement.
The Servicer under the Purchase Agreement is authorized and directed by
the Funding Entity to enter on the grid attached hereto, or, at its option, in
its books and records, the date and amount of each advance made by it that is
evidenced by this Funding Entity Note and the amount of each payment of
principal made by the Funding Entity, and absent manifest error, such entities
shall constitute prima facie evidence of the accuracy of the information so
entered at any time; provided that neither the failure of the Servicer to make
any such entry nor any error therein shall expand, limit or affect the
obligations of the Funding Entity hereunder.
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The Funding Entity promises to pay interest on the outstanding unpaid
principal amount hereof, from the date hereof until payment in full hereof at a
rate equal to the Base Rate; provided, however, that if the Funding Entity shall
default in the payment of any principal hereof, the Funding Entity promises to,
on demand, pay interest at the rate equal to the Discount Rate then in effect
under the Purchase Agreement plus 2% on any such unpaid amounts, from the date
such payment is due to the date of actual payment. Interest shall be payable in
arrears.
The indebtedness evidenced by this instrument is subordinated to the
prior the Receivable Interests acquired by the Purchaser pursuant to, and to
the extent provided in, the Sale Agreement.
The Funding Entity may prepay this Funding Entity Note in whole or in
part at any time and from time to time without penalty or premium of any kind,
except that such a prepayment would result in a default by the Funding Entity
with respect to any of its obligations to TLC Multimedia under the Purchase
Agreement.
This Funding Entity Note has been delivered at and shall be deemed to
have been made at Boston, Massachusetts and shall be interpreted and the rights
and liabilities of the parties hereto determined in accordance with the laws of
the Commonwealth of Massachusetts, but without regard to conflict of laws
principles. Wherever possible each provision of this Funding Entity Note shall
be interpreted in such manner as to be effective and valid under applicable
law, but if any provision of this Funding Entity Note shall be prohibited by or
invalid under applicable law, such provision shall be ineffective to the extent
of such prohibition or invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Funding Entity Note.
All parties hereto, whether as makers, endorsers, or otherwise,
severally waive presentment of payment, demand, protest and notice of dishonor.
THE LEARNING COMPANY FUNDING, INC.
By: _________________________________________
Name:
Title:
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SCHEDULE TO FUNDING ENTITY NOTE
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AMOUNT OF UNPAID
AMOUNT OF PRINCIPAL PRINCIPAL NOTATION
DATE LOAN PAID BALANCE MADE BY
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