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Exhibit 10.3
CAPITAL CONTRIBUTION AGREEMENT
By this Capital Contribution Agreement (this "Agreement") dated as of
this 30th day of June, 1997, THE LEARNING COMPANY, INC., a Delaware corporation
("TLC"), TLC MULTIMEDIA INC., a Minnesota corporation ("TLC Multimedia") and THE
LEARNING COMPANY FUNDING, INC., a Delaware corporation ("SPC"), covenant and
agree as follows:
Section 1. Background.
(a) SPC, as Seller, TLC Multimedia, as the initial Servicer, Fleet
National Bank ("Fleet") as Agent and Lexington ▇▇▇▇▇▇ Capital Company, LLC as
Purchaser ("Lexington") are parties to a Receivables Purchase Agreement dated as
of the date hereof.
(b) TLC Multimedia, as seller, and SPC, as purchaser, are also parties
to a Receivables Sale Agreement dated as of the date hereof.
(c) Pursuant to the Receivables Sale Agreement, TLC Multimedia and
possibly certain Transferring Subsidiaries shall sell to SPC and/or contribute
to SPC certain Receivables existing as of the date hereof or arising hereafter.
SPC shall thereafter offer to sell undivided beneficial interests in certain of
such Receivables to Lexington in accordance with the Receivables Purchase
Agreement.
(d) TLC owns all of the issued and outstanding capital stock of TLC
Multimedia and TLC Multimedia owns all of the issued and outstanding capital
stock in SPC.
(e) In this Capital Contribution Agreement, the parties desire to set
forth their agreement regarding TLC's and TLC Multimedia's obligations to make
capital contributions to SPC.
Section 2. Definitions.
Capitalized terms used herein and not defined herein shall have the
same meaning as in the Receivables Purchase Agreement.
Section 3. Capital Contributions.
(a) TLC or TLC Multimedia shall not later than the date hereof make a
contribution to the SPC of not less than $750,000 in cash, representing the
$487,500 Structuring Fee due to Fleet under the Fee Letters, legal fees and
disbursements due to Fleet's counsel not to exceed $100,000 and an additional
sum to capitalize SPC in an amount adequate for its intended business. TLC
and/or TLC Multimedia further agree that in the event that the SPC cannot pay
amounts required to be paid by the SPC to Lexington on account of Deemed
Collections under Section 1.8 of the Receivables Purchase Agreement, then in
addition to any obligation which they may have to advance funds to SPC on
account of such Deemed Collections pursuant to the Receivables Sale Agreement or
Deemed Collection Guaranty, TLC and TLC Multimedia shall advance the amounts
required to pay the full amount of such Deemed Collections as an additional
contribution to SPC's capital. TLC shall make such advance within two (2)
business days of its
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receipt of a notice from Lexington or the SPC that the full amount of any Deemed
Collections has not been paid on the date when due under the Receivables
Purchase Agreement.
(b) Each contribution to the capital of SPC by TLC and/or TLC
Multimedia hereunder shall be in the form of a deposit of immediately available
funds to such bank account as SPC shall designate by notice to TLC and/or TLC
Multimedia.
(c) SPC covenants and agrees that, upon its receipt from TLC or TLC
Multimedia of any contribution of capital described in Section 3(a) hereof, on
account of Deemed Collections, it shall deposit such funds into the Collection
Account as required by the provisions of the Receivables Purchase Agreement for
distribution as provided thereunder.
Section 4. Representations and Warranties.
Each of TLC, TLC Multimedia and SPC hereby represents and warrants to
the other that: (a) its execution and delivery of this Agreement, and its
performance of the transactions contemplated hereby, has been duly authorized by
all necessary corporate action on its part, and (b) this Agreement constitutes
its legal, valid and binding agreement enforceable against it in accordance with
its terms, subject to bankruptcy, moratorium, insolvency and other laws
affecting creditors' rights in general and the availability of equitable
remedies.
Section 5. Miscellaneous
(a) This Agreement may be amended from time to time by TLC, TLC
Multimedia and SPC only by a written agreement signed by TLC, TLC Multimedia and
SPC and consented to by Lexington and by its successors or assigns.
(b) This Agreement may be executed in any number of counterparts, each
of which counterpart shall be deemed to be an original, and such counterparts
shall constitute but one and the same instrument.
(c) This Agreement shall be governed by and construed in accordance
with the internal laws of the Commonwealth of Massachusetts and the obligations,
rights and remedies of the parties hereunder shall be determined in accordance
with such laws.
(d) All demands, notices and communications hereunder shall be in
writing and shall be given to the addressee at its address then in effect in the
manner permitted pursuant to, and shall be deemed received at the times
indicated in, Section 9.3 of the Receivables Purchase Agreement.
(e) If any one or more of the covenants, agreements, provisions or
terms of this Agreement shall be for any reason whatsoever held invalid, then
such covenants, agreements, provisions or terms shall be deemed severable from
the remaining covenants, agreements, provisions or terms of this Agreement and
shall in no way affect the validity or enforceability of the other provisions of
this Agreement.
(f) This Agreement shall inure to the benefit of and be binding upon
TLC, TLC Multimedia and SPC and their respective successors and assigns.
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(g) TLC hereby waives all defenses which might constitute a legal or
equitable discharge of a surety or guarantor and agrees that its liability
hereunder will not be affected or impaired by the invalidity or unenforceability
of the Receivables Sale Agreement or Receivables Purchase Agreement, and any
amendments made thereto, any indulgences granted to it or the SPC thereunder,
failure of any party to perfect an interest in the Receivables, the SPC's or
Lexington's bankruptcy or insolvency or any other action which the SPC or its
successors or assigns (including but not limited to, the Liquidity Bank and
Lexington) may take or fail to take.
(h) In addition to being for the benefit of SPC, each covenant,
representation and warranty of TLC under this Agreement is expressly for the
direct benefit of Lexington, as Purchaser under the Receivables Purchase
Agreement, the Liquidity Banks under the Liquidity Agreement and any other
subsequent assignees or purchasers (collectively, the "Third-Party
Beneficiaries") as fully as if the Third Parties Beneficiaries were parties to
this Agreement and such covenants were made with, and such representations and
warranties were made to, the Third Parties Beneficiaries. TLC acknowledges that
Lexington has entered into the Receivables Purchase Agreement and the Liquidity
Bank has entered into the Liquidity Agreement in reliance, in material part, on
TLC' s covenants, representations and warranties under this Agreement. The
Third-Party Beneficiaries may directly enforce against TLC in their own names
each of TLC's covenants, representations and warranties under this Agreement,
without the joinder of SPC or TLC Multimedia or the necessity of proceeding
first against SPC or TLC Multimedia. Notwithstanding any other term or provision
hereof, no amendment of this Agreement shall be effective as to any of the
Third-Party Beneficiaries unless such amendment has been approved by Lexington
and the Liquidity Bank. None of the Third-Party Beneficiaries assume, and shall
have no liability for, any of the obligations of SPC under this Agreement.
IN WITNESS WHEREOF, TLC and SPC have caused their names to be signed
hereto as an instrument under seal by their respective officers thereunto duly
authorized as of the day and year first above written.
THE LEARNING COMPANY, INC.
By:_________________________________________
Name:_______________________________________
Title:______________________________________
TLC MULTIMEDIA INC.
By:_________________________________________
Name:_______________________________________
Title:______________________________________
THE LEARNING COMPANY FUNDING, INC.
By:_________________________________________
Name:_______________________________________
Title:______________________________________
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