SECOND AMENDMENT TO
SECURED CREDIT AGREEMENT
This SECOND AMENDMENT TO SECURED CREDIT AGREEMENT AND RELATED DOCUMENTS
(this "AMENDMENT"), dated as of May 27, 1999, is among THE ROACH
ORGANIZATION, INC., a Delaware corporation, TRO LEARNING (CANADA), INC., a
Canadian corporation ("TRO CANADA"; Roach and TRO Canada are hereinafter
referred to, collectively, as "BORROWERS" and individually, as a "BORROWER")
and FIRST SOURCE FINANCIAL LLP, an Illinois registered limited liability
partnership ("LENDER") (this and all other capitalized terms used herein are
defined in Section 1 of the Credit Agreement defined below).
R E C I T A L S:
A. Borrowers and Lender are parties to that certain Secured Credit
Agreement dated as of February 26, 1999, as amended (the "CREDIT AGREEMENT"),
subject to the terms and conditions of which Lender has agreed to make loans
and other financial accommodations to Borrowers.
B. Borrower has requested an increase and extension of the Special
Overadvance, and Lender is willing to agree to such request subject to the
terms and conditions of this Amendment.
NOW, THEREFORE, in consideration of the foregoing and the mutual
agreements contained herein, and subject to the terms and conditions hereof,
Borrowers and Lender hereby agree as follows:
1. DEFINITIONS. All capitalized terms used but not elsewhere defined
in this Amendment shall have the respective meanings ascribed thereto in the
Credit Agreement.
2. AMENDMENTS TO CREDIT AGREEMENT. The Credit Agreement is amended as
follows:
2.01. The definition of "Overadvance Amount" appearing in Section 1.1
of the Credit Agreement is hereby deleted and the following definition is
substituted in lieu thereof:
""OVERADVANCE AMOUNT" shall mean an amount equal to the sum of
(x) $1,500,000 (the "BASE OVERADVANCE") and (y)(i) during the period
beginning March 24, 1999 and ending May 31, 1999, $1,000,000, (ii) during the
period beginning June 1, 1999 and ending June 30, 1999, $1,500,000 and
(iii) during the period beginning July 1, 1999 and ending July 31, 1999,
$2,000,000 (the amounts under clause (y) hereof are referred to as the
"SPECIAL OVERADVANCE")."
3. CONDITIONS TO EFFECTIVENESS. The effectiveness of this Amendment
shall be subject to the satisfaction of all of the following conditions in a
manner, form and substance satisfactory to Lender:
(a) DELIVERY OF DOCUMENTS. The following shall have been
delivered to Collateral Agent, each duly authorized and executed:
(1) this Amendment;
(2) such other instruments, documents, certificates,
consents, waivers and opinions as Lender reasonably may request; and
(3) TRO Learning, Inc. shall have executed and delivered
to the Lender its consent to this Amendment in the form set forth below.
(b) PAYMENT OF SPECIAL OVERADVANCE FEE. The Borrowers shall
have paid to Lender a fee in the amount $28,500 for providing the
extension of the Special Overadvance. Lender and Borrowers agree such
fee shall be paid from the proceeds of a Loan which Borrowers hereby
request Lender to make on the date hereof.
(c) NO MATERIAL ADVERSE EFFECT. No Material Adverse Effect shall
have occurred since the date of the most recent financial statements
for Borrowers received by Lender.
(d) PAYMENT OF COSTS. Borrowers shall have paid or caused
to be paid to Lender all out of pocket expenses of Lender relating to
this Amendment and the transactions contemplated herein, including,
without limitation, the expenses and reasonable fees of Lender's counsel.
(e) SATISFACTION OF LENDER'S COUNSEL. All legal matters
incident to the transactions contemplated hereby shall be reasonably
satisfactory to counsel for Lender.
The date on which all of the conditions set forth in this Paragraph 3 have
been satisfied (or waived by Lender) is referred to herein as the "Effective
Date."
4. REFERENCES. From and after the Effective Date, all references in
the Credit Agreement and the Related Documents to the Credit Agreement shall
be deemed to refer to the Credit Agreement, as amended hereby.
5. REPRESENTATIONS AND WARRANTIES. Borrowers hereby confirms to
Lender that the representations and warranties set forth in the Credit
Agreement and the Related Documents to which it is a party are true and
correct as of the date hereof, except to the extent
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such representations and warranties expressly relate to an earlier date and
except as disclosed in the schedules attached to the most recent Notice Prime
Rate Activity, Notice of LIBOR Activity or LC Guaranty Request. Each Borrower
represents and warrants to Lender that (a) it has full power and authority to
execute and deliver this Amendment and to perform its obligations hereunder,
(b) upon the execution and delivery hereof, this Amendment will be valid,
binding and enforceable upon it in accordance with its terms, (c) the
execution and delivery of this Amendment does not and will not contravene,
conflict with, violate or constitute a default under (A) the organizational
documents or operating agreement of any Borrower or (B) any applicable law,
rule, regulation, judgment, decree or order of which such Borrower has
knowledge or any agreement, indenture or instrument to which such Borrower is
a party or is bound or which is binding upon or applicable to all or any
portion of its property, (d) no Unmatured Event of Default or Event of
Default presently exists and (e) no Material Adverse Effect has occurred
since the date if the last financial statements delivered by Borrowers to
Lender.
6. COSTS AND EXPENSES. Borrowers agree, jointly and severally, to
reimburse Lender for all out of pocket expenses incurred in the preparation,
negotiation and execution of this Amendment and the consummation of the
transactions contemplated hereby, including, without limitation, the expenses
and fees of counsel for Lender.
7. NO FURTHER AMENDMENTS; RATIFICATION OF LIABILITY. Except as
amended hereby, the Credit Agreement and each of the Related Documents shall
remain in full force and effect in accordance with their respective terms.
Each Borrower hereby ratifies and confirms its liabilities, obligations and
agreements under the Credit Agreement and the Related Documents to which it
is a party, all as amended by this Amendment, and the liens and security
interests created thereby, and each acknowledges that (a) it has no defenses,
claims or set-offs to the enforcement of such liabilities, obligations and
agreements, (b) Lender has fully performed all obligations to Borrowers which
it may have had or have on and as of the date hereof and (c) other than as
specifically set forth herein, Lender does not waive, diminish or limit any
term or condition contained in any of the Credit Agreement or the Related
Documents. Lender's agreement to the terms of this Amendment or any other
amendment of the Credit Agreement or Related Documents shall not be deemed to
establish or create a custom or course of dealing among Lender and Borrowers.
This Amendment and the documents executed and delivered pursuant to this
Amendment contain the entire agreement among Lender and Borrowers with
respect to the transactions contemplated by this Amendment.
8. COUNTERPARTS. This Amendment may be executed in one or more
counterparts, each of which shall be deemed an original, and all of which,
when taken together, shall constitute one and the same instrument.
9. FURTHER ASSURANCES. Each Borrower covenants and agrees that it
will at any time and from time to time do, execute, acknowledge and deliver,
or will cause to be done,
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executed, acknowledged and delivered, all such further acts, documents and
instruments as reasonably may be required by Lender in order to effectuate
fully the intent of this Amendment.
10. SEVERABILITY. If any term or provision of this Amendment or the
application thereof to any party or circumstance shall be held to be invalid,
illegal or unenforceable in any respect by a court of competent jurisdiction,
the validity, legality and enforceability of the remaining terms and
provisions of this Amendment shall not in any way be affected or impaired
thereby, and the affected term or provision shall be modified to the minimum
extent permitted by law so as most fully to achieve the intention of this
Amendment.
11. CAPTIONS. The captions in this Amendment are inserted for
convenience of reference only and in no way define, describe or limit the
scope or intent of this Amendment or any of the provisions hereof.
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IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Amendment at Chicago, Illinois as of the day and year first above written.
THE ROACH ORGANIZATION, INC.
By:
---------------------------
Steven R. Schuster
Vice President
TRO LEARNING (CANADA), INC.
By:
---------------------------
Steven Schuster
Vice President
FIRST SOURCE FINANCIAL LLP
By: First Source Financial, Inc.
Its: Manager
By:
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Name:
-------------------------
Title:
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GUARANTOR'S CONSENT
The undersigned, TRO Learning, Inc., has heretofore executed and
delivered to the Lender a Guaranty dated as of February 26, 1999 and hereby
consents to the Amendment as set forth above and confirms that its Guaranty
and all of the undersigned's obligations thereunder remain in full force and
effect. The undersigned further agrees that the consent of the undersigned to
any further amendments to the Credit Agreement shall not be required as a
result of this consent having been obtained, except to the extent, if any,
required by the Guaranty referred to above.
TRO LEARNING, INC.
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Steven R. Schuster
Vice President