FOURTH AMENDMENT TO REVOLVING
LOAN AND SECURITY AGREEMENT
THIS FOURTH AMENDMENT TO REVOLVING LOAN AND SECURITY AGREEMENT (together
with all appendices, exhibits, schedules and attachments hereto, collectively
this "Amendment") is made and entered into as of January 23, 1997, by and
between THE XXXXX ORGANIZATION, INC., a Delaware corporation and TRO LEARNING
(CANADA), INC., a corporation organized under the laws of Canada (collectively,
the "Borrower") and SANWA BUSINESS CREDIT CORPORATION, a Delaware corporation
with its principal place of business at Xxx Xxxxx Xxxxxx Xxxxx, Xxxxxxx,
Xxxxxxxx 00000 ("Lender").
RECITALS
WHEREAS, Borrower and Lender entered into that certain Revolving Loan
and Security Agreement dated as of August 2, 1995, as amended by that certain
First Amendment to Revolving Loan and Security Agreement dated as of April 26,
1996 and as further amended by that certain Second Amendment to Revolving
Loan and Security Agreement dated as of August 1, 1996 and as further amended
by that certain Third Amendment to Revolving Loan and Security Agreement
dated as of January 6, 1997 (collectively, the "Loan Agreement"), together
with documents ancillary thereto;
WHEREAS, Borrower has advised Lender that there currently exists an
Event of Default under the Loan Agreement due to Borrower's failure to comply
with: (a) Section 10.1(B) of the Loan Agreement for the third and fourth
fiscal quarters ending July 31, 1996 and October 31, 1996 respectively
(Borrower's failure to maintain Operating Profit measured quarterly) (the
"Operating Profit Default"); (b) 10.1(H)(ii) and (iv)(the "Reporting
Default"); and (c) 10.2(J)(the "Indebtedness for Borrowed Money Default");
WHEREAS, Borrower has requested Lender to waive the Operating Profit
Default, the Reporting Default and the Indebtedness for Borrowed Money
Default (collectively, the "Events of Default") and to reset its financial
covenants for the fiscal year ending October 31, 1997;
WHEREAS, Lender has agreed to waive the Events of Default and to reset
Borrower's financial covenants upon Borrower's execution of this Amendment
and Guarantor's execution of the Reaffirmation of Guaranty of Payment and
Performance attached hereto;
NOW THEREFORE, for and in consideration of the premises, the mutual
covenants hereinafter set forth and other good and valuable consideration,
the receipt and sufficiency of which the parties hereby acknowledge, the
parties hereby agree as follows:
ARTICLE
1.
RECITALS AND DEFINITIONS
1.1. Borrower represents and warrants that the foregoing recitals are
true and correct and constitute an integral part of this Amendment and
Borrower and Lender hereby agree that all of the recitals of this Amendment
are hereby incorporated herein and made a part hereof.
1.2. Unless otherwise defined herein or the context otherwise requires,
all capitalized terms used herein shall have the same meanings as ascribed to
them in the Loan Agreement.
ARTICLE
2.
AMENDMENT OF THE LOAN AGREEMENT
2.1. Section 10.1(B)(vii-x) are deleted in their entirety and following
substituted therefor:
(vii) 1997 - First Quarter: ($4,221,000)
(viii) 1997 - Second Quarter: ($6,938,000)
(ix) 1997 - Third Quarter: ($3,721,000)
(x) 0000 - Xxxxxx Xxxxxxx: $7,875,000
ARTICLE
3.
REPRESENTATIONS AND WARRANTIES
3.1. Borrower hereby makes the following representations and warranties
to Lender, which representations and warranties shall constitute the
continuing covenants of Borrower and shall remain true and correct until all
of Borrower's liabilities are paid and performed in full:
a. The representations and warranties of Borrower contained in
the Loan Agreement are true and correct on and as of the date hereof as
though made on and as of such date;
b. Except for the Events of Default, no Event of Default or event
which, but for the lapse of time or the giving of notice, or both, would
constitute an Event of Default under the Loan Agreement has occurred and is
continuing or would result from the execution and delivery of this Amendment;
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c. Except for the Events of Default, Borrower is in full
compliance with all of the terms, conditions and all provisions of the Loan
Agreement and the other agreements;
d. This Amendment and all other agreements required hereunder to
be executed by Borrower and delivered to Lender, have been duly authorized,
executed and delivered on Borrower's behalf pursuant to all requisite
corporate authority and this Amendment and each of the other agreements
required hereunder to be executed and delivered by Borrower to Lender
constitute the legal, valid and binding obligations of Borrower enforceable
in accordance with their terms, except as enforceability thereof may be
limited by bankruptcy, insolvency, reorganization, moratorium or other
similar laws relating to creditors' rights; and
e. Borrower hereby acknowledges and agrees that Borrower has no
defense, offset or counterclaim to the payment of said principal, interest,
fees or other liabilities and hereby waives and relinquishes any such
defense, offset or counterclaim and Borrower hereby releases Lender and its
respective officers, directors, agents, affiliates, successors and assigns
from any claim, demand or cause of action, known or unknown, contingent or
liquidated, which may exist or hereafter be known to exist relating to any
matter prior to the date hereof.
ARTICLE
4.
RATIFICATION
Except as expressly amended hereby, the Loan Agreement and all other
agreements executed in connection therewith shall remain in full force and
effect. The Loan Agreement, as amended hereby, and all rights and powers
created thereby and thereunder or under such other agreements, are in all
respects ratified and confirmed. From and after the date hereof, the Loan
Agreement shall be deemed amended and modified as herein provided but, except
as so amended and modified, the Loan Agreement shall continue in full force
and effect and the Loan Agreement and this Amendment shall be read, taken and
construed as one and the same instrument. On and after the date hereof, the
term "Agreement" as used in the Loan Agreement and all other references to
the Loan Agreement therein, in any other instrument, document or writing
executed by Borrower or any guarantor or furnished to Lender by Borrower or
any guarantor in connection therewith or herewith shall mean the Loan
Agreement as amended by this Amendment.
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ARTICLE
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5.
MISCELLANEOUS
-------------
5.1. Borrower shall promptly pay to Lender a closing fee in the amount
of Five Thousand and No/100 Dollars ($5,000), which fee shall be deemed fully
earned and nonrefundable at the execution by Borrower of this Amendment and
shall be paid concurrently with Borrower's execution of this Amendment. Such
fee shall compensate Lender for the reasonable costs associated with the
origination, structuring, processing, approving and closing of the
transactions contemplated by this Amendment, including, but not limited to,
administrative, out-of-pocket, general overhead and lost opportunity costs,
but not including any expenses for which Borrower has agreed to reimburse
Lender pursuant to any other provisions of this Amendment or any other
Ancillary Agreement, such as, by way of example; reasonable legal fees and
expenses.
5.2. Borrower shall deliver to Lender for the months of November, 1996
and December, 1996 unaudited financial statements which comply with the
reporting requirements of Paragraph 10.1(H)(ii) of the Loan Agreement and
officer's certificates which comply with the reporting requirements of
Paragraph 10.1(H)(iv) of the Loan Agreement on or before February 28, 1997.
5.3. Borrower agrees to promptly pay or reimburse all out-of-pocket
costs and expenses of Lender, including without limitation, reasonable
attorneys' fees, costs, expenses incurred by Lender in connection with the
negotiation, preparation, execution and delivery of this Amendment and all
other matters pertaining hereto.
5.4. This Amendment may be signed in any number of counterparts, each
of which shall be deemed to be an original, but all of which together shall
constitute one and the same instrument.
5.5. Lender's waiver is of the Events of Default only. Nothing
contained herein shall be deemed a waiver or forbearance or create a course
of conduct or otherwise estop Lender from exercising its rights due to any
other Event of Default under the Loan Agreement.
5.6. Except as otherwise specified herein, this Amendment embodies the
entire agreement and understanding between Lender and Borrower with respect
to the subject matter hereof and supersedes all prior agreements, consents
and understandings relating to such subject matter.
5.7. The headings in this Amendment have been inserted for convenience
only and shall be given no substantive meaning or significance in construing
the terms of this Amendment.
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5.8. This Amendment shall inure to the benefit of Lender and its
successors and assigns and shall be binding upon and inure to the successors
and assigns of Borrower, except that Borrower may not assign any of its
rights in and to this Amendment.
IN WITNESS WHEREOF, Borrower and Lender have caused this Fourth
Amendment to Revolving Loan and Security Agreement to be executed and
delivered as of the day and year written above.
THE XXXXX ORGANIZATION, INC.
By: /s/Xxxxxx Xxxxxx
____________________________________
Name: Xxxxxx Xxxxxx
__________________________________
Title: SR VP & CFO
__________________________________
TRO LEARNING CANADA, INC.
By: /s/Xxxxxx Xxxxxx
____________________________________
Name: Xxxxxx Xxxxxx
__________________________________
Title: SR VP & CFO
__________________________________
SANWA BUSINESS CREDIT CORPORATION
By: /s/ Xxxxxxxx X. Xxxxxx
__________________________________
Name: Xxxxxxxx X. Xxxxxx
________________________________
Title: Vice Pres
_______________________________
AMENDMENT IS CONTINUED ON NEXT PAGE
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REAFFIRMATION OF
GUARANTY OF PAYMENT AND PERFORMANCE
-----------------------------------
THE UNDERSIGNED PARTY, as guarantor ("Guarantor") of the above Borrowers
pursuant to its Guaranty of Payment and Performance (the "Guaranty")
identified below, acknowledges the terms and conditions set forth in this
Fourth Amendment to Revolving Loan And Security Agreement and ratifies and
reaffirms its guaranty obligations as set forth in the Guaranty, as
reaffirmed. To further induce Lender to enter into this Amendment, Guarantor
hereby represents and warrants to Lender that it possesses no claims,
defenses, offsets, recoupment or counterclaims of any kind or nature against
or with respect to the enforcement of the Loan Agreement or any other
Ancillary Agreement, each as amended by this Amendment, or to the Guaranty
(collectively, the "Claims"), nor does Guarantor have any knowledge of any
facts that would or might give rise to any Claims. If facts now exist which
would or could give rise to any Claim against or with respect to the
enforcement of the Loan Agreement, any Ancillary Agreement, or the Guaranty,
Guarantor hereby unconditionally, irrevocably and unequivocally waives and
fully releases any and all such Claims as if such Claims where the subject of
a lawsuit, adjudicated to final judgment from which no appeal could be taken
and therein dismissed with prejudice.
DATED: As of January 23, 1997
TRO LEARNING, INC.
By: /s/Xxxxxx Xxxxxx
____________________________
Name: Xxxxxx Xxxxxx
__________________________
Its: SR VP & CFO
__________________________
(Guaranty of Payment and Performance dated
as of August 2, 1995, as reaffirmed from
time to time)
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