EXHIBIT 10.1
AMENDMENT NO. 3
TO CREDIT AGREEMENT AND WAIVER
THIS AMENDMENT NO. 3 TO CREDIT AGREEMENT AND WAIVER (this "Amendment")
is entered into as of November 14, 2001 among LA PETITE ACADEMY, INC., a
Delaware corporation (the "Borrower"), LPA HOLDING CORP., a Delaware corporation
("Holdings"), the Lenders party thereto, BANK OF AMERICA, N.A. (formerly
NationsBank, N.A.), as Administrative Agent, Documentation Agent and Collateral
Agent for the Lenders and as Issuing Bank and Swingline Lender (collectively, in
such capacities, the "Administrative Agent"), and CHASE BANK OF TEXAS, NATIONAL
ASSOCIATION, formerly The Chase Manhattan Bank, as Syndication Agent (in such
capacity, the "Syndication Agent"). Capitalized terms used herein and not
otherwise defined shall have the meanings ascribed thereto in the Credit
Agreement (as defined below).
RECITALS
WHEREAS, the Borrower, Holdings, the Lenders, the Administrative Agent
and the Syndication Agent entered into that certain Credit Agreement, dated as
of May 11, 1998 (as previously amended and modified by Amendment No. 1, dated as
of December 13, 1999, and Amendment No. 2, dated as of June 29, 2000, and as
otherwise amended or modified from time to time, the "Credit Agreement");
WHEREAS, Events of Default exist under the Credit Agreement as a result
of the failure of the Borrower to comply with the terms of (a) Sections 6.13,
6.14 and 6.15 of the Credit Agreement for the fourth fiscal quarter of 2001
which ended June 30, 2001 (the "June 2001 Defaults"); (b) Sections 6.13, 6.14
and 6.15 of the Credit Agreement for the first fiscal quarter of 2002 which
ended closest to September 30, 2001 (the "September 2001 Defaults"); (c)
Sections 5.01(a), 5.01(c), 5.01(d), 5.01(e) and 5.01(f) of the Credit Agreement,
solely with respect to the financial statements and other related documents that
have not been delivered to the Administrative Agent prior to the date hereof
(the "Information Defaults"); and (d) Section 5.01(g) and 5.10 of the Credit
Agreement, solely with respect to the failure of the Borrower to timely file
2001 fiscal year end financial statements with the Securities and Exchange
Commission (the "SEC Reporting Default"; together with the June 2001 Defaults,
the September 2001 Defaults and the Information Defaults, collectively, the
"Existing Defaults");
WHEREAS, Holdings intends to issue, in one or more issuances, equity
securities to one or more of its stockholders (including LPA Investment LLC, a
Delaware limited liability company ("LPA Investment")) in consideration of an
aggregate amount of at least $4,250,000 in cash;
WHEREAS, one or more stockholders of Holdings (including LPA
Investment) will commit to purchase additional equity securities of Holdings in
an aggregate amount equal to at least $10,750,000 in cash;
WHEREAS, the Borrower has requested that the Lenders waive the Existing
Defaults and that the Lenders agree to modify certain terms of the Credit
Agreement;
WHEREAS, the Required Lenders are willing to provide a waiver of the
Existing Defaults, based upon and subject to the terms and conditions specified
in this Amendment; and
WHEREAS, the Required Lenders and the Loan Parties have agreed to
modify the Credit Agreement as more fully set forth herein.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants contained herein, and for other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the parties hereto
agree as follows:
AGREEMENT
SECTION 1
REAFFIRMATION/WAIVER
1.1 Reaffirmation of Existing Debt and Liens. The Borrower acknowledges
and confirms that: (a) as of the date hereof, the outstanding principal amount
of Revolving Loans and issued Letters of Credit is $24,036,234.05 and the
outstanding principal amount of Term Loans is $37,000,000,(b) the Lenders have a
Lien on all Collateral and the Collateral is not subject to any Lien other than
those specifically permitted under the Loan Documents, (c) the Maturity Date is
May 11, 2005, at which time all obligations under the Loan Documents will be due
and payable in full if not accelerated sooner pursuant to the terms of the
Credit Agreement, (d) the Borrower's obligation to repay the outstanding
principal amount of the Loans and to reimburse the Issuing Bank for any drawing
on a Letter of Credit is unconditional and, as of the date hereof, is not
subject to any offsets, defenses or counterclaims, (e) the Administrative Agent
and the Lenders have performed fully all of their respective obligations to the
Loan Parties under the Credit Agreement and the other Loan Documents, and (f) by
entering into this Amendment, the Lenders party hereto do not waive, modify or
release (except as specifically set forth herein) any term or condition of the
Credit Agreement or any of the other Loan Documents or any of their rights or
remedies under such Loan Documents or applicable law or any of the obligations
of the Loan Parties thereunder.
1.2 Waiver.
(a) The Borrower acknowledges the existence and continuation of the
Existing Defaults. The Required Lenders hereby waive the Existing Defaults
subject to the following terms and conditions: (i) the Leverage Ratio shall not
be in excess of 6.50 to 1.00 as of the fiscal quarters ending on June 30, 2001
and closest to September 30, 2001; (ii) the Consolidated Fixed
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Charge Coverage Ratio (as defined prior to the effective date of this Amendment)
shall not be less than .92 to 1.00 as of the fiscal quarter ending on June 30,
2001 and shall not be less than 1.00 to 1.00 as of the fiscal quarter ending
closest to September 30, 2001; (iii) Consolidated EBITDA shall not be less than
$32,000,000 for the four fiscal quarter period ending on June 30, 2001 and shall
not be less than $5,750,000 for the one fiscal quarter period ending closest to
September 30, 2001; and (iv) the requirements set forth in Section 3.1 shall be
satisfied, or otherwise waived by the Required Lenders.
(b) Except for the specific waiver set forth above, nothing contained
herein shall be deemed to constitute a waiver of (i) any rights or remedies the
Administrative Agent or any Lender may have under the Credit Agreement or any
other Loan Document or under applicable law or (ii) the Loan Parties' obligation
to comply fully with any duty, term, condition, obligation or covenant contained
in the Credit Agreement and the other Loan Documents not specifically waived.
The specific waiver set forth herein is a one-time waiver and shall be
effective only in this specific instance, and shall not obligate the Lenders to
waive any Default or Event of Default other than the Existing Defaults, now
existing or hereafter arising.
SECTION 2
AMENDMENTS TO CREDIT AGREEMENT
2.1 Existing Definitions.
(a) Applicable Rate. The pricing grid contained in the definition
of "Applicable Rate" set forth in Section 1.01 of the Credit Agreement is
amended and restated in its entirety to read as follows:
Commitment
ABR Eurodollar Fee
Pricing Level Leverage Ratio: Spread Spread Rate
------------- -------------- ------ ------ ----
Category I Greater than or 3.25% 4.25% 0.750%
equal to
5.0 to 1.0
Category II Greater than or 3.00% 4.00% 0.750%
equal to
4.5 to 1.0 and
less than 5.0 to 1.0
Category III Greater than or 2.50% 3.50% 0.500%
equal to
4.0 to 1.0 and
less than 4.5 to 1.0
Category Less than 4.0 to 1.0 2.00% 3.00% 0.500%
IV
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(b) Change of Control. Clause (a)(i) of the definition of
"Change of Control" set forth in Section 1.01 of the Credit Agreement is amended
and restated in its entirety to read as follows:
(i) Investor or an entity controlled by Sponsor or Investor
ceases to be the "beneficial owner" (as defined in Rule 13d-3 and 13d-5
under the Securities Exchange Act), directly or indirectly, of at least
51% of the capital stock or other equity interests of Holdings
ordinarily having the right to vote at an election of directors;
(c) Consolidated EBITDA. The definition of "Consolidated EBITDA"
set forth in Section 1.01 of the Credit Agreement is amended and restated in its
entirety as follows:
"Consolidated EBITDA" means, for any period, Consolidated Net
Income for such period, plus, without duplication and to the extent
deducted from revenues in determining Net Income for such period, the
sum of (a) the aggregate amount of Consolidated Interest Expense for
such period, (b) the aggregate amount of letter of credit fees paid
during such period, (c) the aggregate amount of income tax expense for
such period, (d) all amounts attributable to depreciation, amortization
and other non-cash charges or losses for such period, (e) (i) all fees,
costs and expenses to be paid by the Loan Parties (including, but not
limited to, the fees, costs and expenses to be reimbursed by the Loan
Parties to the Administrative Agent and the Lenders) in connection with
the negotiation, execution and delivery of Amendment No. 3 and the
fees, costs and expenses of any consultants or advisors required by the
Required Lenders to be engaged pursuant to the terms thereof and (ii)
all fees, costs and expenses associated with the New Equity Issuance
and Equity Commitment (including, but not limited to, legal fees) ((i)
and (ii) collectively referred to as the "Amendment No. 3 Expenses");
and (f) non-cash expenses resulting from the grant of stock options to
any director, officer or employee of Holdings, the Borrower or any
Subsidiary pursuant to a written plan or agreement, all as determined
on a consolidated basis with respect to Holdings, the Borrower and the
Subsidiaries in accordance with GAAP.
(d) Consolidated EBITDAR. The definition of "Consolidated EBITDAR"
set forth in Section 1.01 of the Credit Agreement is amended and restated in its
entirety to read as follows:
"Consolidated EBITDAR" means, for any period, the sum of (a)
Consolidated EBITDA for such period plus (b) Consolidated Lease Expense
for such period.
(e) Consolidated Fixed Charges. The definition of "Consolidated
Fixed Charges" set forth in Section 1.01 of the Credit Agreement is amended and
restated in its entirety to read as follows:
"Consolidated Fixed Charges" means, with respect to any
period, the sum (without duplication) of (a) Consolidated Lease Expense
(excluding interest expense, if any, associated with Capital Lease
Obligations) for such period plus (b) Consolidated Interest Expense
(excluding interest expense, if any, incurred as a result of the
incurrence of Amendment No. 3 Expenses) for such period plus (c)
scheduled principal payments of
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Indebtedness made by the Borrower or any Subsidiary to any person other
than the Borrower or any wholly owned Subsidiary of the Borrower during
such period plus (d) cash dividends paid by Holdings during such period
(less the amount of any Indebtedness incurred by Holdings or any of its
subsidiaries to fund such dividends) on the Preferred Stock after the
fifth anniversary of the Effective Date as permitted under this
Agreement.
(f) Consolidated Fixed Charge Coverage Ratio. The definition of
"Consolidated Fixed Charge Coverage Ratio" set forth in Section 1.01 of the
Credit Agreement is amended and restated in its entirety to read as follows:
"Consolidated Fixed Charge Coverage Ratio" means, with respect
to any period, the ratio of (a) Consolidated EBITDAR for such period
minus Capital Expenditures (excluding Capital Expenditures to the
extent financed by third parties) made during such period to (b)
Consolidated Fixed Charges for such period; provided that, for the
purpose of calculating this definition, $5,000,000 shall be added to
EBITDAR for each of the fiscal quarters ending September 30, 2001,
December 31, 2001, March 31, 2002 and June 30, 2002.
(g) LIBO Rate. The definition of "LIBO Rate" set forth in Section
1.01 of the Credit Agreement is amended by adding the following sentence at the
end of such definition:
Notwithstanding anything to the contrary contained herein, at
no time shall the LIBO Rate equal an amount less than 2.50% per annum.
(h) Leverage Ratio. The definition of "Leverage Ratio" set forth
in Section 1.01 of the Credit Agreement is amended and restated in its entirety
to read as follows:
"Leverage Ratio" means, as of the last day of each fiscal
quarter for the four quarter period ending on such date, the ratio of
(a) Total Debt as of the last day of such period to (b) Consolidated
EBITDA for such period, all as determined on a consolidated basis in
accordance with GAAP.
(i) Prepayment Event. A new clause (c)(iv) is added to the
definition of "Prepayment Event" set forth in Section 1.01 of the Credit
Agreement to read as follows:
or (iv) the New Equity Issuance, any equity securities issued
pursuant to the Equity Commitment or the contribution of any proceeds
thereof to the Borrower;
2.2 New Definitions. Section 1.01 of the Credit Agreement is
amended to add, in the appropriate alphabetical order, the following new
definitions:
"Amendment No. 3" means that certain Amendment No. 3 to Credit
Agreement and Waiver dated as of November 14, 2001 among the Borrower,
Holdings and the Lenders party thereto.
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"Equity Commitment" means the commitment by one or more
stockholders of Holdings (including LPA Investment) to purchase equity
securities of Holdings in an aggregate amount equal to at least
$10,750,000 in excess of the New Equity Issuance pursuant to the
Securities Purchase Agreement and the other Transaction Documents.
"LPA Investment" means LPA Investment, LLC, a Delaware limited
liability company.
"Xxxxxx Guarantee" means the Guarantee issued by X.X. Xxxxxx
Partners (23A SBIC), LLC, a Delaware limited liability company, on
November 15, 2001 in favor of the Lenders.
"New Equity Issuance" means the issuance by Holdings, in one
or more issuances, of equity securities to one or more of its
stockholders (including LPA Investment) in consideration of an
aggregate amount of at least $4,250,000 pursuant to the Initial
Closings (as defined in the Securities Purchase Agreement).
"Securities Purchase Agreement" means the Securities Purchase
Agreement of even effective date with Amendment No. 3 among Holdings,
LPA Investment and the other signatories thereto from time to time.
"Transaction Documents" has the meaning given to such term in
the Securities Purchase Agreement.
2.3 Default Rate of Interest. Section 2.13(c) of the Credit
Agreement is amended and restated in its entirety to read as follows:
(c) Notwithstanding the foregoing, upon the occurrence, and
during the continuation of an Event of Default, the principal of and,
to the extent permitted by law, interest on, the Loans and any other
amounts owing hereunder or under the other Loan Documents shall bear
interest, payable on demand, at a per annum rate equal to two percent
(2%) plus the rate which would otherwise be applicable (or if no rate
is applicable, then the rate applicable to ABR Revolving Loans plus two
percent (2%) per annum).
2.4 Equity Commitment. A new Section 5.16 is added to the Credit
Agreement to read as follows:
SECTION 5.16. The Borrower shall take such action as is
necessary to maintain the Equity Commitment and to keep the Transaction
Documents in full force and effect and enforce its rights thereunder.
2.5 Indebtedness; Certain Equity Securities. Section 6.01(c) of
the Credit Agreement is amended and restated to read as follows:
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(c) Neither Holdings nor the Borrower will, nor will it permit any of
its Subsidiaries to, issue any preferred stock (other than (a) the currently
outstanding preferred stock of Holdings and the preferred stock of Holdings to
be issued in connection with the New Equity Issuance and the Equity Commitment
and (b) any preferred stock issued by Holdings which is not Disqualified Stock
(as defined in the Senior Unsecured Notes Indenture)) or become liable in
respect of any obligation (contingent or otherwise) to purchase, redeem, retire,
acquire or make any other payment in respect of any shares of capital stock of
Holdings, the Borrower or any Subsidiary or any option, warrant or other right
to acquire any such shares of capital stock.
2.6 Acquisitions. Section 6.04(a)(ii) of the Credit Agreement is
amended and restated in its entirety to read as follows:
(ii) with the prior written consent of the Required
Lenders, Permitted Acquisitions;
2.7 Asset Sales. Section 6.05(d) of the Credit Agreement is hereby
amended and restated in its entirety to read as follows:
(d) with the prior written consent of the Required Lenders,
sales, transfers and dispositions of other assets (including, without
limitation, assets constituting Collateral) and are not otherwise permitted by
any other clause of this Section,
2.8 Restricted Payments; Certain Payments of Indebtedness. Section
6.08(a)(v) of the Credit Agreement is amended and restated in its entirety to
read as follows:
(v) with the prior written consent of the Required Lenders,
the proceeds of which shall be applied by Holdings to pay in cash
scheduled dividends on the Preferred Stock in accordance with its
terms, provided that such Restricted Payments shall not exceed in any
quarterly period the amounts scheduled with respect to the Preferred
Stock for such quarter.
2.9 Amendment of Material Documents. Section 6.11 of the Credit
Agreement is amended and restated in its entirety to read as follows:
SECTION 6.11. Amendment of Material Documents. Except for
amendments and modifications to the Certificate of Incorporation of
Holdings in connection with the New Equity Issuance and the Transaction
Documents (a) Holdings and the Borrower will not, and will not permit
any Subsidiary to, amend, modify or waive any of its rights under (i)
their respective certificates of incorporation, by-laws or other
organizational documents, (ii) the Management Agreement, (iii) the
Merger Agreement, (iv) the Certificate of Designations, (v) the Senior
Unsecured Notes or the Senior Unsecured Notes Indenture or (vi) the
Stockholders Agreement, in each case other than amendments,
modifications or waivers that would not reasonably be expected to
adversely affect the interests of the Lenders.
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2.10 Capital Expenditures. Section 6.12 of the Credit Agreement is
amended and restated in its entirety to read as follows:
SECTION 6.12. Capital Expenditures. The Borrower will not
permit the aggregate amount of Capital Expenditures made by Holdings,
the Borrower and their Subsidiaries in any four fiscal quarter period
to exceed the sum of (a) the amount of depreciation of Holdings, the
Borrower and their Subsidiaries on a consolidated basis (as determined
in accordance with GAAP) during such period plus (b) 20% of
Consolidated EBITDA for such period.
2.11 Leverage Ratio. Section 6.13 of the Credit Agreement is
amended and restated in its entirety to read as follows:
SECTION 6.13. Leverage Ratio.
(a) The Borrower will not permit the Leverage Ratio, as of the
last day of any fiscal quarter ending closest to the date set forth
below, to be in excess of the ratio set forth opposite such date:
Quarter Ending Closest To: Maximum Ratio
------------------------- -------------
December 31, 2001 6.25 to 1.00
March 31, 2002 6.00 to 1.00
June 30, 2002 5.75 to 1.00
September 30, 2002 5.75 to 1.00
December 31, 2002 5.75 to 1.00
March 31, 2003 5.375 to 1.00
June 30, 2003 5.125 to 1.00
September 30, 2003 4.85 to 1.00
December 31, 2003 4.75 to 1.00
March 31, 2004 4.50 to 1.00
June 30, 2004 4.25 to 1.00
September 30, 2004 4.00 to 1.00
December 31, 2004 3.50 to 1.00
March 31, 2005 and thereafter 3.50 to 1.00
2.12 Consolidated Fixed Charge Coverage Ratio. Section 6.14 of the
Credit Agreement is amended and restated in its entirety to read as follows:
SECTION 6.14. Consolidated Fixed Charge Coverage Ratio. The
Borrower will not permit the Consolidated Fixed Charge Coverage Ratio
for any period set forth below to be less than the ratio set forth
opposite such period:
Period: Maximum Ratio
For the two fiscal quarter period
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ending closest to
December 31, 2001 1.00 to 1.0
For the three fiscal quarter
period ending closest to
March 31, 2002 1.00 to 1.0
For the four fiscal quarter
period ending closest to
June 30, 2002 and the last day of
each calendar quarter thereafter
to and including March 31, 2003 1.00 to 1.0
For the four fiscal quarter period
ending closest to June 30, 2003
and the last day of each calendar
quarter thereafter to and including
March 31, 2004 1.05 to 1.0
For the four fiscal quarter period
ending closest to June 30, 2004
and thereafter 1.10 to 1.0
2.13 Minimum Consolidated EBITDA. Section 6.15 of the Credit
Agreement is amended and restated in its entirety to read as follows:
SECTION 6.15. Minimum Consolidated EBITDA. The Borrower will
not permit Consolidated EBITDA for any period set forth below to be
less than the amount set forth below opposite such period:
Minimum
Consolidated
Period: EBITDA
For the two fiscal quarter period
ending closest to
December 31, 2001 $12,250,000
For the three fiscal quarter
period ending closest to
March 31, 2002 $24,500,000
For the four fiscal quarter
period ending closest to
June 30, 2000 and the last
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day of each calendar quarter
thereafter to and including
December 31, 2002 $34,500,000
For the four fiscal quarter
period ending closest to
March 31, 2003 and for each
four fiscal quarter period ending
thereafter $37,000,000
2.14 Management Fees. A new Section 6.17 is added to the Credit
Agreement to read as follows:
SECTION 6.17 Management and Other Fees. Without the prior
written consent of the Required Lenders, Holdings and the Borrower will
not, nor will it permit any of its Subsidiaries to, pay or accrue any
fees to the Sponsor or any of its Affiliates pursuant to any Management
Agreement or otherwise; provided that the Sponsor may be reimbursed for
reasonable out-of-pocket expenses actually incurred and paid by the
Sponsor on behalf of Holdings, the Borrower and their Subsidiaries and
which are customarily reimbursed in the financial advisory services
industry (excluding, however, any fees and expenses incurred to perform
any administrative or management functions which are typically
performed by officers, directors and employees of companies similar to
Holdings, the Borrower and its Subsidiaries).
2.15 Equity Documents. A new Section 6.18 is added to the Credit
Agreement to read as follows:
SECTION 6.18 Equity Documents. The Borrower will not permit
any of the Transaction Documents to be modified or amended without the
prior written consent of the Required Lenders.
2.16 Events of Default.
(a) Clause (e) of Article VII of the Credit Agreement is amended
and restated in its entirety to read as follows:
(e) any Loan Party shall fail to observe or perform any
covenant or agreement contained in Section 5.01 (other than Section
5.01(h)) and such failure shall continue unremedied for a period of
five Business Days or any Loan Party shall fail to observe or perform
any other covenant or agreement contained in any Loan Document (other
than those specified in clause (a), (b), (c) or (d) of this Article),
and such failure shall continue unremedied for a period of 30 days
after written notice thereof is given from the Administrative Agent to
the Borrower (which notice will be given at the request of any Lender);
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(b) Article VII of the Credit Agreement is amended by adding the word
"or" at end of clause (n) of Article VII and adding a new clause (o) to
read as follows:
(o) Holdings has not received proceeds from the Equity
Commitment equal to at least $10,750,000 on or prior to May 14, 2002;
provided, however, that notwithstanding anything to contrary contained
herein, the occurrence of the default described in this clause (o)
shall not entitle the Lenders to terminate the Commitments or declare
the Loans then outstanding to be due and payable in whole or in part
(except to the extent necessary to apply any payments made under the
Xxxxxx Guarantee to reduce the outstanding principal balance of the
Term Loans, such payments to be applied in reverse order of maturity)
unless the Lenders shall have first requested payment under the Xxxxxx
Guarantee, in writing, and the Lenders shall not have received full
payment thereunder within 3 Business Days following such request;
(c) The last paragraph of Article VII is hereby amended by replacing
the phrase "the Administrative Agent may, and at the request of the
Required Lenders shall," with the phrase "and at the direction of the
Required Lenders the Administrative Agent shall,".
2.17 Successors and Assigns. Section 9.04(b)(i) of the Credit
Agreement is amended to add the following clause to the end thereof:
provided, however, that the consent of the Borrower shall not
be required during the existence of an Event of Default,
2.18 Amended Schedules. Schedules 1.01(a), 3.05, 3.06, 3.07, 3.12,
3.13, 6.01, 6.02, 6.09 and 6.10 to the Credit Agreement attached hereto as
Exhibit A have been delivered by the Borrower and will replace the corresponding
schedules in the Credit Agreement upon written approval of the Required Lenders.
SECTION 3
CONDITIONS PRECEDENT
3.1 Conditions Precedent. This Amendment shall not be effective
until the following conditions have been satisfied (or waived by the Required
Lenders):
(a) Documentation. Receipt by the Administrative Agent of
counterparts of this Amendment executed by each of the Loan Parties
and the Required Lenders.
(b) Authority. Receipt by the Administrative Agent of a
certificate of the secretary of each of the Borrower, Holdings and the
Subsidiary Loan Parties certifying as to resolutions or authorization
of the Board of Directors approving and adopting this Amendment and the
transactions contemplated herein and authorizing the execution,
delivery and performance hereof.
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(c) Good Standing. Copies of certificates of good standing,
existence or its equivalent with respect to each Loan Party certified
as of a recent date by the appropriate Governmental Authority of the
state or other jurisdiction of its formation and the state of its chief
executive office and principal place of business.
(d) Incumbency. An incumbency certificate of each Loan Party
and X.X. Xxxxxx Partners (23A SBIC), LLC, a Delaware limited liability
company (JPMP"), certified by a secretary of such Loan Party or JPMP,
as applicable, to be true and correct as of the date hereof.
(e) Opinions. Receipt by the Administrative Agent of an
opinion or opinions from counsel to the Loan Parties relating to this
Amendment and the transactions contemplated herein, in form and
substance satisfactory to the Administrative Agent, addressed to the
Administrative Agent on behalf of the Lenders and dated as of the date
hereof.
(f) Schedules to Loan Documents. Receipt by the Administrative
Agent of (i) revised Schedules 1.01(a), 3.05, 3.06, 3.07, 3.12, 3.13,
6.01, 6.02, 6.09 and 6.10 to the Credit Agreement, (ii) revised
Schedules I and II to the Pledge Agreement and (iii) revised Schedules
I, II, III, IV and V to the Security Agreement.
(g) Collateral. Receipt by the Administrative Agent of duly
executed (i) Uniform Commercial Code financing statements (or
amendments thereto), (ii) patent/ trademark/copyright filings, (iii)
Mortgages (or amendments thereto) and (iv) such other documentation,
policies or opinions with respect to the Collateral as may be
reasonably requested on or prior to the date hereof by the Required
Lenders in order to perfect and protect the Lenders' security interest
in the Collateral.
(h) Fees and Expenses. The payment by the Borrower of (i) an
amendment fee to each Lender who duly executes and delivers this
Amendment on or before 12:00 p.m., Eastern Time, on November 15, 2001
of fifty basis points (0.50%) of its aggregate Commitments and (ii) an
arrangement fee to Highland Capital Management, L.P. in an amount equal
to $300,000.
(i) Transaction Documents. Holdings shall have entered into
documentation evidencing the Equity Commitment in an amount equal to at
least $10,750,000 in the aggregate (to be used for general working
capital and liquidity needs) in form and substance reasonably
satisfactory to the Required Lenders. The Administrative Agent shall
have received a copy, certified by an officer of Holdings as true and
complete, of each Equity Commitment Document as originally executed and
delivered, together with all exhibits and schedules thereto.
(j) Management Fees. The Sponsor shall have acknowledged and
agreed in writing that it will not accept fees from the Borrower,
Holdings or their Subsidiaries except as permitted pursuant to the
terms of the new Section 6.17 to the Credit Agreement.
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(k) New Equity Issuance. The transactions contemplated by the
New Equity Issuance shall have been consummated by LPA Investment and
Holdings shall have received, in immediately available funds from such
investment by LPA Investment at least $3,400,000. The New Equity
Issuance shall have been consummated on terms reasonably acceptable to
the Required Lenders.
(l) Xxxxxx Guarantee. JPMP shall have executed and delivered
the Xxxxxx Guarantee, in form and substance satisfactory to the
Required Lenders.
3.2 Condition Subsequent.
(a) This Amendment shall be void ab initio and of no further
force and effect if Holdings shall not have received, on or prior to
the fortieth day following the effectiveness of this Amendment, an
additional amount, in immediately available funds, from the proceeds of
the New Entity Issuance which, when added to the amount received by
Holdings pursuant to Section 3.1(k) of this Amendment, will equal at
least $4,250,000.
(b) This Amendment shall be void ab initio and of no further
force and effect if the Borrower shall not have paid prior to the later
of (x) two Business Days following receipt by the Borrower of an
invoice for payment and (y) November 19, 2002 (i) all out-of-pocket
expenses incurred to date by the Administrative Agent in connection
with the negotiation, preparation, execution and delivery of this
Amendment and the other transactions contemplated herein, and in
connection with the Credit Agreement including, without limitation, the
legal fees and expenses of Xxxxx & Xxx Xxxxx, PLLC, counsel to the
Administrative Agent, and (ii) all out-of-pocket expenses incurred to
date by KZH - Highland 2 LLC, Pamco Cayman LTD and SRV - Highland, Inc.
(together with any other Lender managed by or affiliated with Highland
Capital Management, L.P., the "Highland Lenders") in connection with
the negotiation, preparation, execution and delivery of this Amendment
and the other transactions contemplated herein, including without
limitation the legal fees and expenses of Xxxxxx and Xxxxx, L.L.P.
SECTION 4
MISCELLANEOUS
4.1 Ratification of Credit Agreement. The terms "Credit Agreement" and
"Agreement" as used in each of the Loan Documents shall hereafter mean the
Credit Agreement as amended by this Amendment. Except as herein specifically
agreed, the Credit Agreement is hereby ratified and confirmed and shall remain
in full force and effect according to its terms.
4.2 Authority/Enforceability. Each of the Loan Parties, the
Administrative Agent and the Lenders party hereto represents and warrants as
follows:
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(a) It has taken all necessary action to authorize the
execution, delivery and performance of this Amendment.
(b) This Amendment has been duly executed and delivered by
such Person and constitutes such Person's legal, valid and binding
obligations, enforceable in accordance with its terms, except as such
enforceability may be subject to (i) bankruptcy, insolvency,
reorganization, fraudulent conveyance or transfer, moratorium or
similar laws affecting creditors' rights generally and (ii) general
principles of equity (regardless of whether such enforceability is
considered in a proceeding at law or in equity).
(c) No material consent, approval, authorization or order of,
or filing, registration or qualification with, any court or
Governmental Authority or third party is required in connection with
the execution, delivery or performance by such Person of this
Amendment.
4.3 Representation and Warranties. Each of the Borrower and
Holdings represents and warrants to the Lenders that:
(a) the representations and warranties of the Borrower and
Holdings set forth in Article III of the Credit Agreement qualified as
to materiality are true and correct as of the date hereof and those not
so qualified are true and correct in all material respects as of the
date hereof, except, in each case, for those that specifically relate
to an earlier date;
(b) no event has occurred and is continuing which constitutes
a Default or an Event of Default (other than as specifically waived
hereby); and
(c) The Security Documents create a valid security interest
in, and Lien upon, the Collateral.
4.4 Financial Consultant; other Professionals. Upon the request of the
Required Lenders, the Administrative Agent shall retain a financial consultant,
attorneys or other professionals to advise the Lenders, such financial
consultant, attorneys or other professionals to be approved by the Required
Lenders. The Borrower acknowledges and agrees that, upon the request of the
Required Lenders, it will grant access to its senior officers and to its books
and records, during the normal business hours of the Borrower, to such financial
consultant and that it will be responsible for such financial consultant's fees
and reasonable expenses; provided that if no Default or Event of Default exists,
the Borrower shall not be responsible for fees and expenses of such financial
consultant in excess of $150,000 in the aggregate. If a Default or Event of
Default (other than the Existing Defaults) shall exist, it is understood and
agreed that the Borrower shall be responsible for all fees and expenses of such
financial consultant. Upon the request of the Required Lenders the Borrower will
forward $75,000 as an initial retainer to be used for the fees and expenses of
such financial consultant and that the Borrower will replenish such retainer
from time to time, as necessary, upon request of the Required Lenders. The
Borrower hereby agress to pay promptly upon demand all reasonable out-of-pocket
expenses incurred by any Highland Lender, including the reasonable fees and
expenses of counsel for the Highland Lenders, in connection with the
administration of the Loan Documents or any
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amendments or modifications thereof and the enforcement or protection of its
rights in connection with the Loan Documents, including any such fees and
expenses incurred during any workout, restructuring or negotiations in respect
thereof. Notwithstanding anything to the contrary contained herein, the Highland
Lenders shall not be reimbursed for fees or expenses associated with the
administration of the Loan Documents to the extent such administrative services
were performed by, or are in the process of being performed by, the
Administrative Agent.
4.5 General Release. In consideration of the Required Lenders entering
into this Amendment, the Loan Parties hereby release the Administrative Agent,
the Lenders, and the Administrative Agent's and the Lenders' respective
officers, employees, representatives, agents, counsel and directors from any and
all actions, causes of action, claims, demands, damages and liabilities of
whatever kind or nature, in law or in equity, now known or unknown, suspected or
unsuspected to the extent that any of the foregoing arises from any action or
failure to act under the Credit Agreement on or prior to the date hereof.
4.6 Counterparts/Telecopy. This Amendment may be executed in any number
of counterparts, each of which when so executed and delivered shall be an
original, but all of which shall constitute one and the same instrument.
Delivery of executed counterparts by telecopy shall be effective as an original
and shall constitute a representation that an original will be delivered if
requested.
4.7 Further Assurances. The Borrower agrees to promptly take such
action, upon the reasonable request of the Required Lenders, as is reasonably
necessary to carry out the intent of this Amendment, the Security Documents and
the Loan Documents, including, but not limited to, such actions as are necessary
to ensure that the Lenders have a perfected security interest in the Collateral
subject to no Liens other than the Liens permitted by Section 6.02 of the Credit
Agreement.
4.8 GOVERNING LAW. THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE
PARTIES HEREUNDER SHALL BE GOVERNED BY AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
[remainder of page intentionally left blank]
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Signature Page
Amendment No. 3 to Credit Agreement and Waiver
La Petite Academy, Inc.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed and delivered by their proper and duly authorized officers or
attorneys-in-fact as of the day and year first above written.
BORROWER: LA PETITE ACADEMY INC.
By: /s/ Xxxxxxx Xxxxxxxx
-----------------------------
Name: Xxxxxxx Xxxxxxxx
Title: Secretary and Chief Financial Officer
HOLDINGS: LPA HOLDING CORP.
By: /s/ Xxxxxxx Xxxxxxxx
-----------------------------
Name: Xxxxxxx Xxxxxxxx
Title: Secretary and Chief Financial Officer
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Signature Page
Amendment No. 3 to Credit Agreement and Waiver
La Petite Academy, Inc.
Each of the undersigned are unconditional guarantors of all obligations
of the Borrower under the Loan Documents and acknowledge and agree that (a) this
Amendment does not modify or waive any of its obligations under the Loan
Documents, including the Guarantee Agreements and (b) all Liens granted by it to
support its obligations remain in full force and effect.
LPA HOLDING CORP.
By: /s/ Xxxxxxx Xxxxxxxx
-----------------------------
Name: Xxxxxxx Xxxxxxxx
Title: Secretary and Chief Financial Officer
LPA SERVICES, INC.
By: /s/ Xxxxxxx Xxxxxxxx
-----------------------------
Name: Xxxxxxx Xxxxxxxx
Title: Secretary and Chief Financial Officer
BRIGHT START, INC.
By: /s/ Xxxxxxx Xxxxxxxx
-----------------------------
Name: Xxxxxxx Xxxxxxxx
Title: Secretary and Chief Financial Officer
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Signature Page
Amendment No. 3 to Credit Agreement and Waiver
La Petite Academy, Inc.
LENDERS: BANK OF AMERICA, N.A. (formerly
NationsBank, N.A.)
By: /s/ Xxxxx X. Xxxx
--------------------------------------
Name: Xxxxx X. Xxxx
Title: Managing Director
JPMORGAN CHASE BANK (formerly The Chase
Manhattan Bank)
By: /s/ Xxxxxxx Xxxxxx
-----------------------------
Name: Xxxxxxx Xxxxxx
Title: Vice President
PB CAPITAL CORPORATION (formerly BHF
(USA) Capital Corporation)
By: /s/ Xxxxxx Xxxxxxxxx
-----------------------------
Name: Xxxxxx Xxxxxxxxx
Title: Associate
MERCANTILE BANK NATIONAL
ASSOCIATION
By: /s/
--------------------------------------
Name:
Title:
ML CBO IV CAYMAN
By: /s/ Xxxxx Xxxxxxx
-----------------------------
Name: Xxxxx Xxxxxxx
Title: President
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Signature Page
Amendment No. 3 to Credit Agreement and Waiver
La Petite Academy, Inc.
HIGHLAND LEGACY, LTD
By: /s/ Xxxxx Xxxxxxx
-----------------------------
Names: Xxxxx Xxxxxxx
Title: President
PAMCO CAYMAN LTD
By: Highland Capital Management, L.P. as
Collateral Manager
By: /s/ Xxxxx Xxxxxxx
-----------------------------
Names: Xxxxx Xxxxxxx
Title: President
KZH HIGHLAND-2 LLC
By: /s/ Xxxxx Xxx
--------------------------------------
Names: Xxxxx Xxx
Title: Authorized Agent
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