FIRST AMENDMENT TO LOAN AGREEMENT
THIS FIRST AMENDMENT TO LOAN AGREEMENT, dated as of August 1, 2003
(this "Amendment"), is made between XXXXXX XXXXXXX MORTGAGE CAPITAL INC., a New
York corporation, having an address at 1221 Avenue of the Americas, 00xx Xxxxx,
Xxx Xxxx, Xxx Xxxx 00000 ("Lender") and KC PROPCO, LLC, a Delaware limited
liability company, having an address at c/o KinderCare Learning Centers, Inc.,
000 X.X. Xxxxxxxx Xxxxxx, Xxxxx 0000, Xxxxxxxx, Xxxxxx 00000, Attn: Legal Dept.
("Borrower").
W I T N E S S E T H:
WHEREAS, Lender and Borrower are parties to that certain Loan
Agreement dated as of July 1, 2003 (the "Loan Agreement"), pursuant to which
Lender made a loan to Borrower (the "Loan") in the original principal amount of
$300,000,000;
WHEREAS, Lender and Borrower have agreed in the manner hereinafter set
forth to modify the terms of the Loan Agreement.
NOW, THEREFORE, in pursuance of such agreement and for good and
valuable consideration, Borrower and Lender hereby agree as follows:
1. The definition of "Net Revenue" is hereby deleted from Section 1.1
of the Loan Agreement in its entirety and the following is substituted therefor:
"Net Revenues" shall mean all Gross Revenue obtained by Operating
Company in connection with the operation of the Property less any discounts
returned.
2. The following definition of "Net Cash Flow" is hereby added to
Section 1.1 of the Loan Agreement:
"Net Cash Flow" shall mean Net Operating Income minus Capital
Expenditures and fees paid to Manager pursuant to the Management Agreement.
3. The following definition of "Net Cash Flow DSCR" is hereby added to
Section 1.1 of the Loan Agreement:
"Net Cash Flow DSCR" shall mean, as of the relevant date, the ratio of
(i) Net Cash Flow for the twelve (12) calendar month period immediately
preceding the date of calculation to (ii) the projected Debt Service that would
be due for the twelve (12) calendar month period immediately following such
calculation assuming a loan constant of nine percent (9.00%) per annum.
4. Section 4.1.6(d)(i) of the Loan Agreement is deleted in its
entirety and the following substituted therefor:
(i) quarterly and trailing twelve month statements of income and
expense prepared for such Fiscal Quarter and trailing twelve month period with
respect to each Individual
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Property, with calculations of Net Operating Income and Net Cash Flow and
reports regarding average tuition rate and full time equivalent attendance,
licensed capacity, occupancy levels reached, management fees paid and Capital
Expenditures made at each Individual Property during each such period;
5. Section 4.1.6(d)(ii) of the Loan Agreement is deleted in its
entirety and the following substituted therefor:
(ii) calculations reflecting the Debt Service Coverage Ratio and the
Net Cash Flow DSCR, each as of the last day of such Fiscal Quarter; and
6. Section 4.1.6(d)(iii) of the Loan Agreement is deleted in its
entirety and the following substituted therefor:
(iii) a comparison of the budgeted income and expenses and the actual
income and expenses for such Fiscal Quarter and Fiscal Year to date for the
Property taken as a whole, together with a detailed explanation of any variances
of (A) more than five percent (5.00%) and (B)(1) with respect to the analysis
for such Fiscal Quarter, in excess of $250,000.00 or (2) with respect to the
Fiscal Year to date analysis, in excess of $500,000.00, between budgeted and
actual amounts for such period and Fiscal Year to date.
7. Section 4.1.6 (e) of the Loan Agreement is deleted in its entirety
and the following substituted therefore:
(e) The following Fiscal Quarter and trailing twelve month information
required to be delivered pursuant to this Section 4.1.6 shall be delivered for
each Individual Property and for the Property in the aggregate, in electronic
form in Excel spreadsheet format: average tuition rate, full-time equivalent
attendance, licensed capacity, occupancy, Net Operating Income (including the
Net Revenues and Total Operating Expenses components thereof), Capital
Expenditures, Management Fees, Net Cash Flow, Debt Service Coverage Ratio and
Net Cash Flow DSCR. The comparison of budgeted and actual income and expenses
for each Fiscal Quarter and Fiscal Year to date required by Section 4.1.6
(d)(iii) shall be delivered in electronic form using pdf format and the detailed
explanation of variance shall be delivered in electronic form using Word or
Excel.
8. The following Section 4.1.18 is hereby added to the Loan Agreement:
4.1.18 Operations and Maintenance. Borrower shall implement an
operations and maintenance plan for the Individual Properties listed on Schedule
XVI which is of the type recommended in the Operations and Maintenance Programs
prepared by Environmental Management Group, Inc. dated May 30, 2003.
9. Section 5.1.1(a)(i) of the Loan Agreement is deleted in its
entirety and the following substituted therefor:
(i) comprehensive all risk insurance (which may exclude coverage for
"acts of terrorism" or other similar acts or events) on the Improvements and the
personal property at each Individual Property, including contingent liability
from Operation of Building Laws,
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Demolition Costs and Increased Cost of Construction Endorsements, in each case
(A) in an amount equal to one hundred percent (100%) of the "Full Replacement
Cost," which for purposes of this Agreement shall be satisfied by comprehensive
all risk coverage in an amount not less than One Hundred Million and No/100
Dollars ($100,000,000.00) for any one loss and in the aggregate and shall mean
actual replacement value (exclusive of costs of excavations, foundations,
underground utilities and footings) with a waiver of depreciation; (B)
containing an agreed amount endorsement with respect to the Improvements and
personal property at each Individual Property waiving all co-insurance
provisions; (C) except as set forth on Schedule XIII, providing for no
deductible in excess of Two Hundred Fifty Thousand and No/100 Dollars ($250,000)
for all such insurance coverage; and (D) containing an "Ordinance or Law
Coverage" or "Enforcement" endorsement if any of the Improvements or the use of
each Individual Property shall at any time constitute legal non-conforming
structures or uses. In addition, Borrower shall obtain: (y) if any portion of
the Improvements on any Individual Property is currently or at any time in the
future located in a federally designated "special flood hazard area", flood
hazard insurance in an amount equal to the lesser of (1) the outstanding
principal balance of the Note allocated to the Individual Property or (2) the
maximum amount of such insurance available under the National Flood Insurance
Act of 1968, the Flood Disaster Protection Act of 1973 or the National Flood
Insurance Reform Act of 1994, as each may be amended; and (z) earthquake
insurance in amounts and in form and substance satisfactory to Lender in the
event any Individual Property is located in an area designated as Seismic Zone 3
or 4, provided that the insurance pursuant to clauses (y) and (z) hereof shall
be on terms consistent with the comprehensive all risk insurance policy required
under this subsection (i).
10. Section 7.3 of the Loan Agreement is deleted in its entirety and
the following substituted therefor:
Section 7.3 Replacement of Manager.
Lender shall have the right to require Borrower to replace or to cause
Operating Company to replace the Manager with a Person which is not an Affiliate
of, but is chosen as soon as reasonably practicable by, Borrower and approved by
Lender (which approval shall be conditioned upon receipt of a Rating Agency
Confirmation) upon the occurrence of any one or more of the following events:
(i) at any time following the occurrence and during the continuance of an Event
of Default or (ii) if Manager shall be in material default under the Management
Agreement beyond any applicable notice and cure period.
11. Section 11.29.1(v) of the Loan Agreement is deleted in its
entirety and the following substituted therefor:
(v) Lender shall have received a seismic report for any Substitute
Property located in Seismic Zone 3 or Seismic Zone 4.
12. Schedule XVI hereto is hereby added to the Loan Agreement as
Schedule XVI thereto.
13. Unless otherwise defined in this Amendment, terms defined in the
Loan Agreement shall have their defined meanings when used herein.
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14. This Amendment may be executed by one or more of the parties
hereto on any number of separate counterparts, each of which shall be an
original and all of which taken together shall constitute one and the same
instrument.
15. This Amendment shall inure to the benefit of and be binding upon
Borrower and Lender, and their respective successors and assigns.
16. This Amendment shall be governed by, and construed in accordance
with, the law of the State of New York.
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IN WITNESS WHEREOF, the parties hereto have caused this First
Amendment to Loan Agreement to be duly executed by their duly authorized
representatives, all as of the day and year first above written.
KC PROPCO, LLC, a Delaware limited
liability company
By: /s/ XXX X. XXXXXXXXX
------------------------------------
Name: Xxx X. Xxxxxxxxx
Title: Senior Vice President
and General Counsel
XXXXXX XXXXXXX MORTGAGE CAPITAL INC., a
New York corporation
By: /s/ XXXXXXXXX X. XXXXXX
------------------------------------
Name: Xxxxxxxxx X. Xxxxxx
Its: Vice President
SCHEDULE XVI
INDIVIDUAL PROPERTIES FOR WHICH OPERATIONS & MAINTENANCE PLAN
SHALL BE IMPLEMENTED
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653
658
670
699
