SECOND AMENDMENT TO PARTICIPATION AGREEMENT
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SECOND AMENDMENT TO PARTICIPATION AGREEMENT, dated as of February 12,
2001 (this "Amendment"), to the Participation Agreement dated as of September 2,
1999, as previously amended by the First Amendment to Participation Agreement
dated as of August 7, 2000 (as further amended and/or restated, the
"Participation Agreement"), among KINDERCARE LEARNING CENTERS, INC., a Delaware
corporation (the "Lessee"), THE KINDERCARE REALTY TRUST 1999, a Delaware
business trust (the "Trust" or the "Lessor"), THE CHASE MANHATTAN BANK, a New
York banking corporation, as agent (in such capacity, the "Agent") for the
Lenders, SCOTIABANC INC., as an investor ("Scotiabanc" or an "Investor"), and
the Required Lenders.
Preliminary Statement
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WHEREAS, pursuant to the Participation Agreement, the parties thereto
agreed to participate in a transaction in which, among other things, (i) the
Lenders agreed to make certain loans to the Lessor pursuant to the Credit
Agreement dated as of September 2, 1999 among the Lessor, the Agent and the
Lenders; (ii) the Lessor agreed to use the proceeds of the Loans to acquire and
construct certain properties; and (iii) the Lessor agreed to lease such
properties to Lessee pursuant to the Lease.
WHEREAS, the Lessee has requested, and, upon this Amendment becoming
effective, the Lenders have agreed that certain provisions of the Participation
Agreement be amended in the manner provided for in this Amendment;
NOW, THEREFORE, the parties hereto hereby agree as follows:
1. Defined Terms. (a) General. Terms defined in the Participation
Agreement and used herein shall, unless otherwise indicated, have the meanings
given to them in the Participation Agreement. Terms defined and used in this
Amendment shall have the meanings given to them in this Amendment.
(b) Deletion of Definitions. The definitions of "Consolidated Senior
Debt" and "Consolidated Senior Debt to Consolidated EBITDA Ratio" are hereby
deleted.
(c) Addition of Definitions. The following definitions are hereby
added to Annex A of the Participation Agreement in appropriate alphabetical
order:
"Cash Collateral Agreement" shall mean the Cash Collateral
Agreement dated as of February 12, 2001 between the Construction Agent
and the Agent, as amended, supplemented or otherwise modified from
time to time in accordance with the terms thereof.
"Consolidated Total Debt to Consolidated EBITDA Ratio" shall
mean, as of any date of determination, the ratio of (a) Consolidated
Total Debt as of the last day of the relevant Test Period to (b)
Consolidated EBITDA for such Test Period.
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"Expected Project Costs" shall mean those Project Costs not yet
incurred by and invoiced to the Construction Agent that the
Construction Agent reasonably expects to incur and be invoiced on
within 120 days of the date of the Cash Collateral Agreement, for work
performed and services rendered on Properties on which Completion has
occurred by the date of the Cash Collateral Agreement.
(d) Replacement of Definitions. The definitions of "Security
Documents", and "Status" are hereby deleted and replaced in their entirety with
the following:
"Security Documents" shall mean the collective reference to the
Mortgage, the Deed of Trust, the Lease, the Memorandum of Lease, the
Assignment of Lease, the Contract Assignment, and the Cash Collateral
Agreement, and all other security documents hereafter delivered to the
Agent granting a Lien on any asset or assets of any Person to secure
the obligations and liabilities of the Lessor under the Credit
Agreement and/or under any of the other Credit Documents or to secure
any guarantee of any such obligations and liabilities.
"Status" shall mean, as to the Company as of any date, the
existence of Level I Status, Level II Status, Level III Status, Level
IV Status or Level V Status, as the case may be, on such date. Changes
in Status resulting from changes in the Consolidated Total Debt to
Consolidated EBITDA Ratio shall become effective (the date of such
effectiveness, the "Status Effective Date") as of the first day
following the most recent fiscal year or period for which (a) Section
9.1 Financials are delivered to the Lenders and (b) an officer's
certificate is delivered by the Company to the Lenders setting forth,
with respect to such Section 9.1 Financials, the then-applicable
Status, and shall remain in effect until the next change to be
effected pursuant to this definition, provided that (i)
notwithstanding the foregoing, for the period from and including the
Initial Closing Date to but excluding the initial Status Effective
Date the Status of the Company shall be deemed to be Level III and
(ii) each determination of the Consolidated Total Debt to Consolidated
EBITDA Ratio pursuant to this definition shall be made with respect to
the Test Period ending at the end of the fiscal period covered by the
relevant financial statements.
(e) Modification of Definitions. The definition of Operative
Agreements is hereby modified by deleting the end of the definition as follows:
"(m) the Requisitions; and (n) the Trust Agreement" and replacing it with the
following:
"(m) the Requistions;
(n) the Trust Agreement; and
(o) the Cash Collateral Agreement."
2. Amendment to Section 5.2(b). Section 5.2(b) of the Participation
Agreement is hereby deleted and the following inserted in its place:
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"(b) Each Requisition shall: (i) be irrevocable; and (ii)
request funds in an amount of at least $500,000 (or such lesser amount
representing Property Acquisition Costs for any Property or such
lesser amount as shall be equal to the total aggregate of the
Available Commitments plus the Available Investor Commitment at such
time) for the payment of Project Costs which have previously been
incurred and/or Expected Project Costs and were not the subject of and
funded pursuant to a prior Requisition, in each case as specified in
the Requisition."
3. Amendment to Section 5.2(c). Section 5.2(c) of the Participation
Agreement is hereby modified by deleting the period at the end of the paragraph
and adding the following:
"and/or Expected Project Costs. Notwithstanding anything to the
contrary in this Agreement, all funds advanced as Expected Project
Costs shall be deposited in the Cash Collateral Agreement and shall be
released therefrom strictly in accordance with the terms thereof."
4. Payment of Expenses. The Lessee agrees to pay or reimburse the
Agent for all of its out-of-pocket costs and expenses incurred in connection
with the Amendment, any other documents prepared in connection herewith and the
transactions contemplated hereby, including, without limitation, the reasonable
fees and disbursements of counsel to the Agent.
5. Reference to and Effect on the Operative Agreements; Limited
Effect. On and after the date hereof, each reference in the Participation
Agreement to "this Agreement", "hereunder", "hereof" or words of like import
referring to the Participation Agreement, and each reference in the other
Operative Agreements to "the Participation Agreement", "thereunder", "thereof"
or words of like import referring to the Participation Agreement, shall mean and
be a reference to the Participation Agreement as amended hereby. The execution,
delivery and effectiveness of this Amendment shall not, except as expressly
provided herein, operate as a waiver of any right, power or remedy of any Lender
or any Agent under any of the Operative Agreements, nor constitute a waiver of
any provisions of any of the Operative Agreements. Except as expressly amended
herein, all of the provisions and covenants of the Participation Agreement and
the other Operative Agreements are and shall continue to remain in full force
and effect in accordance with the terms thereof and are hereby in all respects
ratified and confirmed.
6. Counterparts. This Amendment may be executed by one or more of
the parties hereto in any number of separate counterparts (which may include
counterparts delivered by facsimile transmission) and all of said counterparts
taken together shall be deemed to constitute one and the same instrument. Any
executed counterpart delivered by facsimile transmission shall be effective for
all purposes hereof.
7. GOVERNING LAW. THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF
THE PARTIES HERETO SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be duly executed and delivered by their respective proper and duly authorized
officers as of the day and year first above written.
KINDERCARE LEARNING CENTERS, INC.
By: /s/ XXX X. XXXXXXXXX
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Name: Xxx X. Xxxxxxxxx
Title: VP, General Counsel & Secretary
THE KINDERCARE REALTY TRUST 1999
By: WILMINGTON TRUST COMPANY, not
in its individual capacity but
solely as Trustee
By: /s/ XXXXXX X. XXXX
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Name: Xxxxxx X. Xxxx
Title: Senior Financial Services
Officer
SCOTIABANC INC., as an Investor
By: /s/ XXXXXXX X. XXXXXXX
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Name: Xxxxxxx X. Xxxxxxx
Title: Managing Director
Required Lenders:
THE CHASE MANHATTAN BANK, as Agent
and a Lender
By: /s/ XXXXXXX X. XXXXXX
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Name: Xxxxxxx X. Xxxxxx
Title: Vice President
BANK OF AMERICA, N.A.
By: /s/ XXXXX LEADER
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Name: Xxxxx Leader
Title: Managing Director
THE BANK OF NOVA SCOTIA, as Lender
By: /s/ XXXXX X. XXXXX
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Name: Xxxxx X. Xxxxx
Title: Director
BANKERS TRUST COMPANY
By: /s/ XXXX XX XXXXX
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Name: Xxxx Xx Xxxxx
Title: Assistant Vice President
CITICORP, USA
By: /s/ XXXXXXX XXXXXXX
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Name: Xxxxxxx Xxxxxxx
Title: VP
CREDIT SUISSE FIRST BOSTON
By: /s/ XXXXXX XXXX
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Name: Xxxxxx Xxxx
Title: Director
By: /s/ XXXXXXX X. XXXXXXX
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Name: Xxxxxxx X. Xxxxxxx
Title: Vice President
FIRSTRUST BANK
By: /s/ XXXX XXXXXX
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Name: Xxxx Xxxxxx
Title: Vice President
