EXHIBIT 4.1
THIRD AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT
THIS THIRD AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT, dated as
of February 14, 2003 (this "Amendment"), is by and between CHILDTIME CHILDCARE,
INC., an Illinois corporation (the "Company"), and BANK ONE, NA, with its main
office in Chicago, Illinois, and successor by merger to Bank One, Michigan, a
Michigan banking corporation (the "Bank").
INTRODUCTION
A. The Company and the Bank have entered into an Amended and Restated
Credit Agreement dated as of January 31, 2002, as amended by the First Amendment
to Amended and Restated Credit Agreement dated as of April 1, 2002, and the
Second Amendment to Amended and Restated Credit Agreement dated as of July 19,
2002 (the "Credit Agreement").
B. The Company has requested the Bank to amend the Credit Agreement in
certain respects, and the Bank is willing to do so on the terms and conditions
set forth in this Amendment.
NOW, THEREFORE, in consideration of the premises and of the mutual
agreements herein and in the Credit Agreement contained, the parties hereto
agree as follows:
ARTICLE 1. AMENDMENTS TO CREDIT AGREEMENT
Effective the date (the "Amendment Date") the conditions precedent set
forth in Article 3 are satisfied, the Credit Agreement hereby is amended as
follows:
1.1 The following definition of the term "Acceptable Letter of Credit
Advances" is added to Section 1.1 in alphabetical order:
"Acceptable Letter of Credit Advances" means (i) renewals of Letters
of Credit existing on the Third Amendment Date and (ii) the issuance of
Letters of Credit as reasonably necessary for the Company's worker's
compensation insurance requirements, so long as in each case under the
foregoing clauses (i) and (ii) all conditions for the making of Advances
under Sections 2.5 and 2.6 of this Agreement are satisfied.
1.2 The definition of the term "Applicable Margin" in Section 1.1 is
amended and restated in full as follows:
"Applicable Margin" means (a) for purposes of determining the
commitment fees payable under Section 2.3(a), 0.75% per annum, (b) for
purposes of determining the Eurodollar Rate applicable to Eurodollar Rate
Loans outstanding at any time and the Letter of Credit fees payable under
Section 2.3(c), 3.75% per annum, and (c) for
purposes of determining the Floating Rate applicable to Floating Rate Loans
outstanding at any time, 1.50% per annum.
1.3 The definition of the term "Floating Rate" in Section 1.1 is
amended and restated in full as follows:
"Floating Rate" means the per annum rate equal to the sum of (a) plus
(b), where "(a)" is the greater of (i) the Prime Rate in effect from time
to time or (ii) the sum of one percent (1%) per annum plus the Federal
Funds Rate in effect from time to time, and "(b)" is the Applicable Margin;
which Floating Rate shall change simultaneously with any change in such
Prime Rate or Federal Funds Rate, as the case may be.
1.4 The definition of the term "Termination Date" in Section 1.1 is
amended and restated in full as follows:
"Termination Date" means the earlier to occur of (a) July 31, 2003,
and (b) the date on which the Commitment shall be terminated pursuant to
Section 2.2 or 6.2.
1.5 The following definitions of the terms "Third Amendment" and "Third
Amendment Effective Date" are added to Section 1.1 in alphabetical order,
respectively, as follows:
"Third Amendment" means the Third Amendment to this Agreement dated as
of February 14, 2003.
"Third Amendment Date" means the Amendment Date (as defined in the
Third Amendment).
1.6 The following sentence is added to the end of Section 1.2:
Notwithstanding anything to the contrary, for purposes of calculating and
determining compliance with the financial covenants under Sections 5.2(a)
and 5.2(d), the parties shall disregard the effects of all non-cash
accounting charges and adjustments, e.g., impairment losses with respect to
intangible assets recognized in accordance with Financial Accounting
Standard 142.
1.7 Section 2.1(a) is amended and restated in full as follows:
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(a) Advances. The Bank agrees, subject to the terms and conditions of
this Agreement, to make Revolving Credit Loans to the Company pursuant to
Section 2.4 and Section 3.3, and to make Letter of Credit Advances to the
Company pursuant to Section 2.4, from time to time from and including the
Effective Date to but excluding the Termination Date, not to exceed in
aggregate principal amount at any time outstanding the amount determined
pursuant to Section 2.1(b); provided that, on and after the Third Amendment
Date, other than Acceptable Letter of Credit Advances, all Letter of Credit
Advances, if any, shall be made by the Bank in its sole discretion
notwithstanding satisfaction of any or all conditions for the making of
Advances under Sections 2.5 and 2.6 of this Agreement.
1.8 The first sentence of Section 2.1(b) is amended and restated in
full as follows:
Notwithstanding anything in this Agreement to the contrary, the aggregate
principal amount of the Advances made by the Bank at any time outstanding
shall not exceed the amount of the Commitment as of the date any such
Advance is made, provided, however, that the aggregate principal amount of
Letter of Credit Advances outstanding at any time shall not exceed
$4,000,000.
1.9 Subpart (e) of Section 2.10 is amended and restated in full as
follows:
(e) In accordance with Section 5.1(f), first-priority mortgage liens
on all real property of the Company and the Guarantors.
1.10 Subpart (vii) of Section 5.1(d) is amended and restated in full as
follows:
(vii) (A) As soon as available and in any event not later than
April 15, 2003, updated financial projections for the Parent Guarantor and
its Subsidiaries for the fiscal years of the Parent Guarantor ending in
March of 2004 and March of 2005, which shall include, in each case, for the
first of such two fiscal years a balance sheet and statements of income and
cash flows, and for the second of such two fiscal years, only a summary
statement of income, and (B) as soon as available and in any event within
90 days after the end of each fiscal year of the Parent Guarantor
commencing with such fiscal year ending in March of 2004, updated financial
projections for the Parent Guarantor and its Subsidiaries for the next two
fiscal years of the Parent Guarantor, which shall include, in each case,
for the first of such two fiscal years a balance sheet and statements of
income and cash flows, and for the second of such two fiscal years, only a
summary statement of income; and
1.11 Section 5.1(f) is amended and restated in full as follows:
(f) Real Property Collateral.
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(i) Updated Identification of Real Property. Within three (3)
Business Days after the Third Amendment Date, deliver to the Bank a
schedule setting forth all real property owned by the Company and each
Guarantor, and, within ten (10) Business Days after the Third Amendment
Date, deliver all other information reasonably required for the Bank to
obtain appraisals, if required by the Bank, of all such property with
respect to which the Bank does not presently have current appraisals,
certified as true and correct by a duly authorized officer of the Company.
(ii) Environmental Investigation. Within thirty (30) Business
Days after the Third Amendment Date, deliver to the Bank the Bank's
standard form of environmental questionnaire duly completed with respect to
each property owned or leased by the Company and the Guarantors for which
the Company and the Guarantors have not previously delivered such a
questionnaire, together with such other information as the Bank may deem
necessary or desirable in order to complete its environmental investigation
with respect thereto. The Bank shall provide to the Company a list of
approved environmental consultants for each respective state within seven
(7) Business Days after the Third Amendment Date.
(iii) Complete Mortgage Collateral Items within Sixty (60) Days.
Within sixty (60) calendar days after the Third Amendment Date, deliver to
the Bank, or cause to be delivered to the Bank, the following; provided
that the Company agrees to execute and deliver, or cause to be executed and
delivered, the Mortgage forms required below within two (2) Business Days
after the Bank provides them to the Company:
(A) The Mortgages duly executed on behalf of the Company
and the Guarantors, as applicable, granting to the Bank first-priority
mortgage liens on all real property owned by the Company and the
Guarantors, together with:
(B) Evidence of the recordation, filing and other action
(including payment of any applicable taxes or fees) in such jurisdictions
as the Bank may deem necessary or appropriate with respect to the Security
Documents, including the filing of financing statements and similar
documents which the Bank may deem necessary or appropriate to create,
preserve or perfect the liens, security interests and other rights intended
to be granted to the Bank thereunder;
(C) Policies of mortgage title insurance in form and
amounts, and issued by an insurer, satisfactory to the Bank, insuring the
interest of the Bank under the Mortgage without standard exceptions and
without any special exceptions not acceptable to the Bank and containing
such further endorsements, affirmative coverage and other terms as the Bank
may reasonably request;
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(D) Surveys of the property to be subject to the
Mortgages, made by a land surveyor licensed in the State in which such
property is located and acceptable to the Bank complying with the Minimum
Standard Detail Requirements for Land Title Surveys as adopted by the
American Title Association and the American Congress on Surveying and
Mapping and showing such details as the Bank may reasonably request,
certified to the Bank and the issuer of such mortgage title insurance
policy in form reasonably acceptable to the Bank;
(E) Flood-zone certifications, in form and substance
satisfactory to the Bank, with respect to all properties subject to the
Mortgages;
(F) Evidence that the casualty and other insurance
required pursuant to the Mortgages is in full force and effect;
(G) The favorable written opinions of counsel for the
Company and the Guarantors, including, if requested by the Bank, local
counsel for the Company and the Guarantors in the jurisdictions in which
the mortgaged properties are located other than Arizona, California,
Georgia, Ohio and Oklahoma, as to such matters with respect to the
Mortgages as the Bank may reasonably request;
(H) Environmental Certificates with respect to all
mortgaged properties, or confirmations thereof, duly executed on behalf of
the Company and the Guarantors; and
(I) Copies of all governmental and nongovernmental
consents, approvals, authorizations, declarations, registrations or
filings, if any, required on the part of the Company or the Guarantors in
connection with the execution, delivery and performance of the Mortgages or
as a condition to the legality, validity or enforceability of the
Mortgages, certified as true and correct and in full force and effect as of
the date of the Mortgages by a duly authorized officer of the Company, or,
if none is required, a certificate of such officer to that effect.
Notwithstanding the foregoing, the Company shall be entitled to additional
time to deliver any of the items set forth in (iii)(A)-(I) above to the
extent necessary to compensate for any delay caused by the Bank or the
Bank's agents or contractors.
(iv) Previously Required Mortgage Documents by February 28,
2003. Notwithstanding anything to the contrary, by not later than February
28, 2003, the Company shall deliver, or caused to be delivered, to the Bank
all items identified under clause (iii) above relating to the Mortgages
previously required to be delivered to the Bank under this Agreement,
including without
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limitation pursuant to the Second Amendment to this Agreement. As of the
Third Amendment Date those items include, without limitation, the
following:
1. Owner's affidavits satisfactory to the title
company for each of such Mortgages;
2. Discharges of existing liens as requested by
the Bank for: (A) Site #5 being mortgaged by the Company in the
State of California; (B) Site #15 being mortgaged by the Company
in the State of Georgia, (C) Site #17 being mortgaged by the
Company in the State of Georgia, (D) all properties being
mortgaged by the Company in the State of Virginia (Sites #23-26,
inclusive), (E) Site #28 being mortgaged by the Company in the
State of Ohio, and (F) all properties being mortgaged by the
Company in the State of Arizona (Sites #35 and 36); or in the
alternative, if the Company cannot obtain such discharges by
February 28, 2003 and the Bank does not elect to extend such
deadline, the Company shall provide by such date title insurance
insuring over such liens in form and substance satisfactory to
the Bank; and
3. Payment of all title insurance premiums and
other costs relating to such Mortgages in the States of Arizona
and Ohio. The Company further agrees to promptly pay the title
insurance company all amounts for title insurance premiums and
recording charges relating to all properties from time to time
being mortgaged by the Company in favor of the Bank when and as
invoiced by the title insurance company, and if the Company fails
to promptly pay such amounts, the Company hereby authorizes the
Bank to debit its account for payment of all such amounts.
(v) Conditional Exclusion of Proposed Sale Properties.
Notwithstanding anything to the contrary, each of the properties commonly
known as 0000 Xxxxxx Xxxxxxx Xxxxxxxxx, Xxxxxxxxxxxx, Xxxxxxxx, 000 Xxxxxxx
Xxxx, Xxxxxxxxxxxxx, Xxx Xxxx, and 0000 Xxxxxxxx Xxxxxx, Xxxxxxxxxx Xxxxx,
Xxxxxxxxxx (each a "Sale Property"), shall be excluded from the
requirements of clause (iii) above so long as by not later than June 30,
2003 each such Sale Property has been sold outright or is the subject of a
valid and bona fide sale/leaseback transaction on terms and conditions
satisfactory to the Bank. In the event any Sale Property has not been so
sold or is not so subject to such a transaction by such date, the Company
shall deliver, or cause to be delivered, to the Bank all the items required
under clause (iii) above with respect to such Sale Property as soon as
practicable and in any event by not later than July 15, 2003.
1.12 Sections 5.2(a), (b), (c) and (d) are amended and restated
in full, respectively, as follows:
(a) Tangible Capital Funds. Permit or suffer Consolidated
Tangible Capital Funds of the Parent Guarantor and its Subsidiaries at any
time to be
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less than the amount equal to 80% of the amount of Consolidated Tangible
Capital Funds of the Parent Guarantor and its Subsidiaries as of the end of
the Parent Guarantor's interim fiscal period ended January 3, 2003.
(b) Senior Debt to EBITDA. [intentionally omitted]
(c) Debt Service Coverage Ratio. [intentionally omitted]
(d) EBITDA. Permit or suffer the Consolidated EBITDA of
the Parent Guarantor and its Subsidiaries to be less than (i) $410,000 as
of the end of the Parent Guarantor's fiscal quarter ending on or about
January 3, 2003, for the period of the fiscal quarter then ended, (ii)
$279,000 as of the end of the third to last four-week fiscal period of the
Parent Guarantor's fiscal year ending on or about March 31, 2003, for the
four-week fiscal period then ending, (iii) $697,000 as of the end of the
second to last four-week fiscal period of the Parent Guarantor's fiscal
year ending on or about March 31, 2003, for the period of the two four-week
fiscal periods then ending, (iv) $1,194,000 as of the end of the last
four-week fiscal period of the Parent Guarantor's fiscal year ending on or
about March 31, 2003, for the period of the three four-week fiscal periods
then ending, (v) $300,000 as of the end of the first four-week fiscal
period of the Parent Guarantor's fiscal year ending on or about March 31,
2004, for the four-week fiscal period then ending, (vi) $600,000 as of the
end of the second four-week fiscal period of the Parent Guarantor's fiscal
year ending on or about March 31, 2004, for the period of the two four-week
fiscal periods then ending, or (vii) $900,000 as of the end of the third
four-week fiscal period of the Parent Guarantor's fiscal year ending on or
about March 31, 2004, for the period of the three four-week fiscal periods
then ending.
1.13 Clause (iii) of Section 5.2(e) (as added pursuant to the
Second Amendment to the Credit Agreement referenced above) is amended and
restated in full as follows:
(iii) Subordinated Debt that constitutes Initial Subordinated Debt (as
defined in Section 5.2(g)) provided by the Investors (as defined in Section
5.2(g)) to the Company or the Parent Guarantor in accordance with Section
5.2(g) in an aggregate principal amount of not more than $14,000,000 plus
the aggregate principal amount of any notes representing Initial
Subordinated Debt PIK Interest, and Subordinated Debt that constitutes
Rights Offering Subordinated Debt (as defined in Section 5.2(g)) in an
aggregate principal amount not exceeding $3,500,000 incurred in accordance
with the terms of this Agreement, the proceeds of which are used to
refinance such Subordinated Debt; and
1.14 The last sentence of Section 5.2(g) (as added pursuant to
the Second Amendment to the Credit Agreement referenced above), including
subparts (1) through (9) thereof, is amended and restated in full as follows:
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Notwithstanding anything in this Section 5.2(g) or any other provision of
this Agreement, the Bank agrees that in the event Tutor Time Learning
Systems, Inc. ("Tutor Time") is the subject of proceedings under the United
States Bankruptcy Code and the trustee in the proceedings elects to sell
property of the Tutor Time estate, the Company and/or any of the Guarantors
may purchase all or any portion of such property (the "Tutor Time Property
Purchase"), subject to the satisfaction of each of the following
conditions:
(1) the assets of Tutor Time subject of the Tutor Time Property
Purchase shall have been approved by the Bank in its sole discretion, the
Bank shall otherwise have completed all due diligence required by the Bank
with respect to the Tutor Time Property Purchase, and the results of all
such due diligence shall be satisfactory to the Bank in its sole
discretion,
(2) the assets of Tutor Time purchased in the Tutor Time Property
Purchase shall be free and clear of all Liens, claims and other
encumbrances and interests, and the Tutor Time Property Purchase shall have
been approved under Section 363 of the Bankruptcy Code pursuant to terms
and an order acceptable to the Bank in its sole discretion,
(3) the maximum aggregate principal amount of the Loans the Company
may use for the Tutor Time Property Purchase shall be the amount equal to
the then unused Commitment minus $2,000,000 (such amount so used,
hereinafter the "Credit Facility Usage"),
(4) for every $1.00 of Credit Facility Usage used to fund the
consideration paid by the Company and the Guarantors for the Tutor Time
Property Purchase, JP Acquisition Fund III L.P., other shareholders of the
Parent Guarantor acceptable to the Bank or other investors acceptable to
the Bank (collectively, the "Investors") shall have contributed to the
Company net $1.00 cash of Subordinated Debt on terms and conditions
satisfactory to the Bank (the "Initial Subordinated Debt"), and such cash
likewise shall have been used by the Company to fund the Tutor Time
Property Purchase (or contributed by the Company to the Subsidiary
Guarantors and used by them for such purpose); provided that:
(i) the terms of the Initial Subordinated Debt must
include without limitation: (A) the first required principal payment
with respect to the Initial Subordinated Debt shall be not earlier
than December 31, 2004, (B) the total interest, commissions,
discounts, fees, charges and other consideration and compensation
(collectively, "Interest") stated to be payable by the Company and the
Guarantors with respect to the Initial Subordinated Debt, including
without limitation all Interest payable in kind with the issuance of
additional securities and all Interest payable in cash and cash
equivalents, shall not in the aggregate exceed an amount equal to a
per annum rate of return of 15% (plus any applicable default rate of
return), (C) the total Interest with respect to the Initial
Subordinated
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Debt which by its terms is stated to be payable by the Company and the
Guarantors in cash or cash equivalents prior to December 31, 2004
shall not, except as otherwise provided in clause (iii) below, in the
aggregate exceed an amount equal to a per annum rate of return of 7%
(all Interest with respect to the Initial Subordinated Debt in excess
of a per annum rate of return of 7% hereinafter is called the "Initial
Subordinated Debt PIK Interest"), and (D) notwithstanding anything to
the contrary, no Interest, whether Initial Subordinated Debt PIK
Interest or other Interest, shall be paid in cash on the Initial
Subordinated Debt prior to December 31, 2004, except as provided in
clauses (iii) and (iv) below;
(ii) the Initial Subordinated Debt and, subject to the
conditions set forth in clause (iii) below, accrued and unpaid
Interest thereon (including Initial Subordinated Debt PIK Interest),
may be repaid with the proceeds of equity and Subordinated Debt, or
cancelled in connection with the payment of a portion of the purchase
price for such securities, pursuant to a rights offering (the "Rights
Offering") by the Company and/or the Parent Guarantor to shareholders
of the Parent Guarantor to purchase common stock of the Parent
Guarantor (the "Rights Offering Equity") and Subordinated Debt of the
Company or the Parent Guarantor in an aggregate principal amount of
not more than $3,500,000 on terms and conditions satisfactory to the
Bank (the "Rights Offering Subordinated Debt"), so long as the terms
of the Rights Offering Subordinated Debt include without limitation:
(A) the first required principal payment with respect to the Rights
Offering Subordinated Debt shall be not earlier than December 31,
2004, and (B) subject to clause (iv) below, the total Interest payable
by the Company and the Guarantors with respect to the Rights Offering
Subordinated Debt shall not in the aggregate exceed an amount equal to
a per annum rate of return of 15% (plus any applicable default rate of
return) all of which may be payable in cash;
(iii) Interest on the Initial Subordinated Debt may be
paid only if the aggregate amount of the net proceeds of the Rights
Offering Equity and the Rights Offering Subordinated Debt exceeds
$14,000,000 (without the Rights Offering Subordinated Debt exceeding
$3,500,000), in which case Interest on the Initial Subordinated Debt
(including Initial Subordinated PIK Interest and any Interest
constituting penalty interest or interest accrued on overdue amounts)
may be paid out of such proceeds in excess of $14,000,000 so long as
no Default or Event of Default shall have then occurred and be
continuing or would be caused thereby; and
(iv) if the Company and/or the Parent Guarantor has not
cancelled Initial Subordinated Debt in connection with its tender in
payment of the purchase price of, and/or received net cash proceeds
from, the Rights Offering Equity in an aggregate amount of $7,500,000
or more by July 19, 2003, then at all times thereafter until the
earlier of December 31, 2004 or the Company's and/or the Parent
Guarantor's cancellation of
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Initial Subordinated Debt in payment of the purchase price of, and/or
receipt of net cash proceeds from, the Rights Offering Equity in such
amount, all Interest with respect to both the Initial Subordinated
Debt and the Rights Offering Subordinated Debt must be stated to be
payable only in kind with the issuance of additional securities and no
Interest with respect to either the Initial Subordinated Debt or the
Rights Offering Subordinated Debt may be payable in cash or cash
equivalents,
(5) all consideration paid by the Company and the Guarantors for the
Tutor Time Property Purchase in excess of the sum of the Credit Facility
Usage plus the equal amount contributed by the Investors and used to fund
the Tutor Time Property Purchase under the foregoing clause (4), shall have
been contributed by the Investors to the Company in the form of new cash
equity or Subordinated Debt and used by the Company to fund the Tutor Time
Property Purchase (or contributed by the Company to the Subsidiary
Guarantors and used by them for such purpose),
(6) immediately before and after giving effect to the Tutor Time
Property Purchase, no Default or Event of Default shall exist or shall have
occurred and be continuing, all Subsidiaries, including without limitation
TT Acquisition LLC and CTT Acquisition Corp., shall have become Guarantors
and the Company otherwise shall have complied with the requirements of
clause (ii) of Section 5.1(g) with respect to all new Subsidiaries of the
Company or any Guarantor (without regard for the 30-day period referenced
therein which the Company hereby waives), and the representations and
warranties contained in Article IV of the Credit Agreement and in the other
Loan Documents shall be true and correct on and as of the date thereof
(both before and after the Tutor Time Property Purchase is consummated) as
if made on the date the Tutor Time Property Purchase is consummated, and,
without limiting the foregoing, immediately before and after giving effect
to the Tutor Time Property Purchase, the Parent Guarantor and its
Subsidiaries shall be in compliance on a pro forma basis with all financial
covenants under this Agreement (including without limitation as amended in
accordance with the Second Amendment to this Agreement), on a pro forma
basis consistent with Section 1.2 of this Agreement and otherwise
acceptable to the Bank,
(7) by not later than October 4, 2002, the Company shall have executed
and delivered to the Bank additional Mortgages covering not less than ten
(10) facilities of the Company in locations acceptable to the Bank in its
sole discretion, together with the related items contemplated under Section
5.1(f)(iii); provided that the Bank shall not require appraisals or surveys
of such additional mortgaged facilities,
(8) the Tutor Time Property Purchase shall close on or before August
15, 2002, and
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(9) prior to the consummation of the Tutor Time Property Purchase, the
Company shall have paid to the Bank a fee in the amount of $50,000 in
immediately available funds and all other amounts owing to the Bank, or for
which the Company has agreed with the Bank to be responsible, under this
Agreement or otherwise, including without limitation all fees and expenses
of counsel to the Bank and all appraisal fees.
1.15 Section 5.2(h) is amended and restated in full as follows:
(h) Disposition of Assets; Etc. Sell, lease, license, transfer,
assign or otherwise dispose of all or a substantial portion of its
business, assets, rights, revenues or property, real, personal or mixed,
tangible or intangible, whether in one or a series of transactions, other
than (i) inventory sold in the ordinary course of business upon customary
credit terms and sales of scrap or obsolete material or equipment and (ii)
the sale of the Sale Properties (as defined in Section 5.1(f)(v)) prior to
June 30, 2003, either outright or pursuant to sale/leaseback transactions
on terms and conditions satisfactory to the Bank.
1.16 Section 5.2(n) is amended and restated in full as follows:
(n) Payments and Modification of Subordinated Debt. (i)
Notwithstanding any terms of the Initial Subordinated Debt or any Rights
Offering Subordinated Debt to the contrary, make any payment of Interest on
the Initial Subordinated Debt except in accordance with Section 5.2(g) (as
amended by the Third Amendment) or make any payment in cash or cash
equivalents of Interest on the Rights Offering Subordinated Debt that is
prohibited under Section 5.2(g) (as amended by the Third Amendment), (ii)
make any optional payment, prepayment or redemption of any Subordinated
Debt, other than the surrender and cancellation of the Initial Subordinated
Debt in accordance with Section 5.2(g) (as amended by the Third Amendment)
and the other terms of this Agreement, (iii) amend or modify, or consent or
agree to any amendment or modification, which would shorten any maturity or
increase the amount of any payment of principal or increase the rate (or
require earlier payment) of Interest on any Subordinated Debt, (iv) amend
any agreement under which any Subordinated Debt is issued or created or
otherwise related thereto, (v) enter into any agreement or arrangement
providing for the defeasance of any Subordinated Debt; provided that this
Section 5.2(n) shall not prohibit (1) the prepayment, in accordance with
subpart (4) of the last sentence of Section 5.2(g), of the Initial
Subordinated Debt (as defined in such subpart (4)) with the proceeds of the
equity and Subordinated Debt issued pursuant to the Rights Offering
described in such subpart (4), or (2) the payment of interest on the
Initial Subordinated Debt with certain excess proceeds of the Rights
Offering Equity in accordance with such subpart (4) of the last sentence of
Section 5.2(g). As of the date of execution of the Third Amendment, the
Company has voluntarily determined to provide for the additional
restrictions on the payment of Interest on the Initial Subordinated Debt
and the Rights Offering Subordinated Debt set forth in Section 5.2(g) (as
amended by the Third
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Amendment). If, notwithstanding such determination and the terms of
Section 5.2(g), the Company at any time elects to make any scheduled
payment of Interest on the Initial Subordinated Debt or the Rights Offering
Subordinated Debt in cash or cash equivalents contrary to the terms of
Section 5.2(g), the Company will provide not less than ten (10) Business
Days' advance written notice to the Bank of the Company's intention to make
any such payment. Upon the issuance of any such written notice, an Event of
Default shall be deemed to have occurred.
ARTICLE 2. REPRESENTATIONS AND WARRANTIES
In order to induce the Bank to enter into this Amendment, the Company
represents and warrants that:
2.1 The execution, delivery and performance by the Company of this
Amendment are within its corporate powers, have been duly authorized by all
necessary corporate action and are not in contravention of any law, rule or
regulation, or any judgment, decree, writ, injunction, order or award of any
arbitrator, court or governmental authority, or of the terms of the Company's
charter or by-laws, or of any contract or undertaking to which the Company is a
party or by which the Company or its property is or may be bound or affected.
2.2 This Amendment is a legal, valid and binding obligation of the
Company, enforceable against the Company in accordance with its terms.
2.3 No consent, approval or authorization of or declaration,
registration or filing with any governmental authority or any nongovernmental
person or entity, including without limitation any creditor or stockholder of
the Company, is required on the part of the Company in connection with the
execution, delivery and performance of this Amendment or the transactions
contemplated hereby or as a condition to the legality, validity or
enforceability of this Amendment.
2.4 After giving effect to the amendments contained in Article 1 of
this Amendment, the representations and warranties contained in Article IV of
the Credit Agreement and in the Loan Documents are true on and as of the date
hereof with the same force and effect as if made on and as of the date hereof,
and no Default or Event of Default has occurred and is continuing; provided that
such representations and warranties contained in Section 4.6 of the Credit
Agreement shall be deemed made with respect to the most recent fiscal year-end
and interim financial statements, respectively, of the Parent Guarantor and its
Subsidiaries delivered pursuant to Section 5.1(d) of the Credit Agreement.
ARTICLE 3. CONDITIONS PRECEDENT
The amendments set forth in Article 1 of this Amendment shall not
become effective until each of the following has been satisfied:
3.1 This Amendment shall have been executed by a duly authorized
officer on behalf of the Company, and the acknowledgements at the end of this
Amendment shall have
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[Third Amendment to Childtime Childcare, Inc. Second
Amended and Restated Credit Agreement]
been executed by a duly authorized officer on behalf of each of the Guarantors
and executed by each of the Investors (whether by the Company as
attorney-in-fact for each of them or directly, as the case may be), in the
respective spaces so provided, and this Amendment shall have been delivered to
the Bank.
3.2 The Investors and all other holders, if any, of the Initial
Subordinated Debt shall have acknowledged and agreed in writing for the benefit
of the Bank, in form and substance satisfactory to the Bank, that (a) they
approve the terms of this Amendment, (b) no interest on the Initial Subordinated
Debt may be paid except in accordance with subpart (4) of Section 5.2(g) of the
Credit Agreement as amended by this Amendment, and (c) the Subordination
Agreement made by each of them in favor of the Bank with respect to the Initial
Subordinated Debt continues in full force and effect, subject to the
modification contemplated by the foregoing clause (b), and none of them has any
defense, counterclaim or offset with respect thereto.
3.2 The Company shall have paid (a) to the Bank a fee for this
Amendment in the amount of $50,000, which shall be deemed fully earned upon
receipt and nonrefundable and (b) to Xxxxxxxxx Xxxxxx PLLC, counsel for the
Bank, all reasonable fees and expenses of Xxxxxxxxx Xxxxxx PLLC in connection
with the Credit Agreement, including without limitation the Mortgage collateral
matters under Section 5.1(f) of the Credit Agreement, in connection with the
negotiation and preparation of this Amendment and the consummation of the
transactions contemplated hereby, and in connection with advising the Bank as to
its rights and responsibilities with respect thereto.
3.3 Such other documents, and evidence of completion of such other
matters, as the Bank may reasonably request shall have been duly executed, if
applicable, and delivered to the Bank.
ARTICLE 4. WAIVER
The Company and the Guarantors have informed the Bank that Events of
Default have occurred due to (1) breaches of Sections 5.2(c) and 5.2(d) of the
Credit Agreement as of the end of the Parent Guarantor's fiscal quarter ended on
or about October 11, 2002 (the "Subject Quarter End"), (2) breaches of Section
5.1(b) due to the Parent Guarantor's failure to file timely Form 8K with the
Securities and Exchange Commission (the "SEC") in connection with the Tutor Time
Property Purchase, subsequently to timely file with the SEC the related
financial statements and to timely file with the SEC the Parent Guarantor's Form
10Q for the Subject Quarter End, and (3) breaches of Section 5.1(d)(ii) and
Section 5.1(d)(iii) due to the failure to deliver timely the financial
statements and certificates of the chief financial officer required thereunder
for the Subject Quarter End and due to the failure to deliver timely the
financial statements and certificate of the chief financial officer required
under Section 5.1(d)(ii) for periods prior to the Subject Quarter End and for
subsequent periods through December 27, 2002 (all of the foregoing,
collectively, the "Known Defaults"), and the Company and the Guarantors have
requested that the Bank waive the Known Defaults subject to the terms and
conditions set forth herein. Pursuant to such request, upon the occurrence of
the Amendment Date, the Bank hereby waives the Known Defaults, provided that the
Bank is not waiving any other Defaults, Events of Default or other breaches of
Section 5.1(b), 5.1(d), 5.2(c) or 5.2(d) or any other provisions of the Credit
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[Third Amendment to Childtime Childcare, Inc. Second
Amended and Restated Credit Agreement]
Agreement. The Company and the Guarantors acknowledge and agree that the waiver
contained herein is a limited waiver, limited to the specific Known Defaults
described above and subject to the conditions described herein. Such limited
waiver (a) shall not waive any other term, covenant or agreement of the Credit
Agreement or any other Loan Document, (b) shall not be deemed to be a waiver of
any other term, covenant or agreement of the Credit Agreement or any other Loan
Document, and (c) shall not be deemed to prejudice any present or future right
or rights which the Bank now has or may have thereunder. Additionally, this
limited waiver shall not be deemed to waive any Event of Default, whether now
existing or hereafter existing, whether known, unknown or otherwise, except as
specifically set forth herein.
ARTICLE 5. MISCELLANEOUS
5.1 The Company acknowledges and agrees that prompt and complete
compliance by the Company with all the requirements of Section 5.1(f) of the
Credit Agreement as amended by this Amendment is a material inducement to the
Bank to enter into this Amendment and any failure by the Company so to comply
shall constitute an immediate Event of Default under the Credit Agreement.
Further, if the Company shall fail to perform or observe any term, covenant or
agreement in this Amendment, or any representation or warranty made by the
Company in this Amendment shall prove to have been incorrect in any material
respect when made, such occurrence shall be deemed to constitute an Event of
Default.
5.2 All references to the Credit Agreement in any other document,
instrument or certificate referred to in the Credit Agreement or delivered in
connection therewith or pursuant thereto hereafter shall be deemed references to
the Credit Agreement, as amended hereby
5.3 The Company represents and warrants that it is aware of no claims
or causes of action against the Bank or any of its officers, directors,
employees or agents. Notwithstanding such representation and warranty, and as
further consideration for the agreements set forth in this Amendment, each of
the Company and the Guarantors, for itself and its successors and assigns,
releases the Bank, and its officers, directors, employees, agents, attorneys,
affiliates, subsidiaries, and successors and assigns, from any liability, claim,
right or cause of action which now exists or hereafter arises, whether known or
unknown, arising from or in any way related to facts in existence as of the date
hereof.
5.4 Each party hereto, after consulting or having had the opportunity
to consult with counsel, knowingly, voluntarily, and intentionally waives any
right any of them may have to a trial by jury in any litigation based upon or
arising out of this Amendment, or any agreement referenced herein or other
related instrument or agreement, or any of the transactions contemplated by this
Amendment, or any course of conduct, dealing, statements (whether oral or
written) or actions of any of them. None of the parties hereto shall seek to
consolidate, by counterclaim or otherwise, any such action in which a jury trial
has been waived with any other action in which a jury trial cannot be or has not
been waived. These provisions shall not be deemed to have been modified in any
respect or relinquished by any party hereto except by a written instrument
executed by all of them.
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[Third Amendment to Childtime Childcare, Inc. Second
Amended and Restated Credit Agreement]
5.5 This Amendment and the other agreements and documents executed in
connection with this Amendment constitute the entire understanding of the
parties with respect to the subject matter hereof. This Amendment is binding on
the parties hereto and their respective successors and assigns, and shall inure
to the benefit of the parties hereto and their respective successors and
assigns. If any of the provisions of this Amendment are in conflict with any
applicable statute or rule or law or otherwise unenforceable, such offending
provisions shall be null and void only to the extent of such conflict or
unenforceability, but shall be deemed separate from and shall not invalidate any
other provision of this Amendment.
5.6 No course of dealing on the part of the Bank, nor any delay or
failure on the part of the Bank in exercising any right, power or privilege
hereunder shall operate as a waiver of such right, power or privilege or
otherwise prejudice the Bank's rights and remedies hereunder or under the Credit
Agreement, the Note, any Security Document, any other Loan Document or any other
agreement or instrument of the Company or any of the Guarantors with or in favor
of the Bank; nor shall any single or partial exercise thereof preclude any
further exercise thereof or the exercise of any other right, power or privilege.
No right or remedy conferred upon or reserved to the Bank under this Amendment
or under the Credit Agreement, the Note, any Security Document, any other Loan
Document or any other agreement or instrument of the Company or any Guarantor
with or in favor of the Bank is intended to be exclusive of any other right or
remedy, and every right and remedy shall be cumulative and in addition to every
other right or remedy granted thereunder or now or hereafter existing under any
applicable law. Every right and remedy granted by this Amendment or under the
Credit Agreement, the Note, any Security Document, any other Loan Document or
any other agreement or instrument of the Company or any Guarantor with or in
favor of the Bank or by applicable law to the Bank may be exercised from time to
time and as often as may be deemed expedient by the Bank.
5.7 The Loan Documents and, subject to the amendments herein provided,
the Credit Agreement shall in all respects continue in full force and effect.
5.8 Capitalized terms used but not defined herein shall have the
respective meanings ascribed thereto in the Credit Agreement.
5.9 This Amendment shall be governed by and construed in accordance
with the laws of the State of Michigan.
5.10 The Company agrees to pay the reasonable fees and expenses of
Xxxxxxxxx Xxxxxx PLLC, counsel for the Bank, in connection with the negotiation
and preparation of this Amendment and the consummation of the transactions
contemplated hereby, and in connection with advising the Bank as to its rights
and responsibilities with respect thereto.
5.11 This Amendment may be executed upon any number of counterparts
with the same effect as if the signatures thereto were upon the same instrument.
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[Third Amendment to Childtime Childcare, Inc. Second
Amended and Restated Credit Agreement]
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed and delivered as of the day and year first-above written.
CHILDTIME CHILDCARE, INC.
By:/s/ Xxxxx X. Xxxxxxxxx
---------------------------------
Its: Chief Financial Officer
-----------------------------
BANK ONE, NA
By: /s/ Xxxxxxx X. Xxxxx
---------------------------------
Its: Vice President
-----------------------------
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[Third Amendment to Childtime Childcare, Inc. Second
Amended and Restated Credit Agreement]
GUARANTOR ACKNOWLEDGEMENT
Each of the undersigned hereby acknowledges that it has reviewed and
fully consents to the foregoing Third Amendment to Amended and Restated Credit
Agreement (the "Amendment"), that the Guaranty Agreements and all other Loan
Documents made by each of the undersigned in favor of the Bank continue in full
force and each of the undersigned acknowledges and agrees that it has no
defenses, counterclaims or offsets with respect thereto. All references to the
Credit Agreement in the Guaranty Agreements and in all other Loan Documents or
any other document, instrument or certificate referred to in the Credit
Agreement or delivered in connection therewith or pursuant thereto, hereafter
shall be deemed references to the Credit Agreement, as amended by the Amendment.
Except as otherwise expressly set forth herein, capitalized terms used but not
defined herein shall have the respective meanings ascribed thereto in the
Amendment or the Credit Agreement, as the case may be.
CHILDTIME LEARNING CENTERS, INC.
By: /s/ Xxxxx X. Xxxxxxxxx
------------------------------------
Its: Chief Financial Officer
------------------------------
CHILDTIME CHILDCARE-PMC, INC.
By: /s/ Xxxxx X. Xxxxxxxxx
------------------------------------
Its: Chief Financial Officer
-------------------------------
CHILDTIME CHILDCARE-MICHIGAN, INC.
By: /s/ Xxxxx X. Xxxxxxxxx
------------------------------------
Its: Chief Financial Officer
-------------------------------
TUTOR TIME LEARNING CENTERS, LLC
(formerly known as TT Acquisition LLC)
By: /s/ Xxxxx X. Xxxxxxxxx
------------------------------------
Its: Chief Financial Officer
-------------------------------
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[Third Amendment to Childtime Childcare, Inc. Second
Amended and Restated Credit Agreement]
TUTOR TIME INTERNATIONAL LEARNING
CENTERS, INC. (formerly known as CTT
Acquisition Corp.)
By: /s/ Xxxxx X. Xxxxxxxxx
--------------------------------------
Its: Chief Financial Officer
----------------------------------
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[Third Amendment to Childtime Childcare, Inc. Second
Amended and Restated Credit Agreement]
SUBORDINATED LENDER ACKNOWLEDGEMENT AND AGREEMENT
As of the date first set forth above, each of the undersigned
subordinated lenders (the "Investors") party to the Subordination Agreement
dated as of July 19, 2002 among Bank One, NA, as agent, the undersigned, and the
Company (the "Subordination Agreement") hereby acknowledges and agrees that such
Investor has reviewed and fully consents to the foregoing Third Amendment to
Amended and Restated Credit Agreement (the "Amendment"), and that, subject to
the next following sentence, the Subordination Agreement continues in full force
and effect, and each of the undersigned acknowledges and agrees that, as of the
date hereof, it has no defenses, counterclaims or offsets with respect thereto.
Each of the undersigned Investors agrees that, notwithstanding anything to the
contrary in the Subordination Agreement or the Subordinated Lending Agreements
(as defined in the Subordination Agreement), no Interest on the Initial
Subordinated Debt may be paid, nor shall the Investors accept any such Interest,
except in accordance with the terms and requirements of subpart (4) of Section
5.2(g) of the Credit Agreement as amended by this Amendment, and Section 2.2(a)
of the Subordination Agreement hereby shall be deemed amended accordingly. All
references to the Credit Agreement in the Subordination Agreement or in the
Subordinated Notes or any other Subordinated Lending Agreements (as such terms
are defined in the Subordination Agreement) hereafter shall be deemed references
to the Credit Agreement, as amended by the Amendment. Except as otherwise
expressly set forth herein, capitalized terms used but not defined herein shall
have the respective meanings ascribed thereto in the Amendment or the Credit
Agreement, as the case may be.
JP Acquisition Fund II, L.P.
By: JPAF Limited Partnership
Its General Partner
By: JPAF, Inc.
Its General Partner
By:/s/ Xxxxxxxx X. Xxxxxxxx
------------------------
Xxxxxxxx X. Xxxxxxxx
President
JP Acquisition Fund III, L.P.
By: JPAF III LLC
Its General Partner
By: Xxxxxxxx Partners
Its Sole Member
By:/s/ Xxxxxxxx X. Xxxxxxxx
------------------------
Xxxxxxxx X. Xxxxxxxx
Managing Partner
/s/ Xxxxxxxx X. Xxxxxxxx
------------------------------------
Xxxxxxxx X. Xxxxxxxx
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[Third Amendment to Childtime Childcare, Inc. Second
Amended and Restated Credit Agreement]
Each of the Subordinated Lenders (as defined in
the Subordination Agreement) identified on
Schedule A attached hereto (other than Xxxxxxxx X.
Xxxxxxxx, JP Acquisition Fund II, L.P. and JP
Acquisition Fund III, L.P.) by CHILDTIME
CHILDCARE, INC., as attorney-in-fact for each of
them
By: Xxxxx X. Xxxxxxxxx
----------------------------------------------
Its: Chief Financial Officer
------------------------------------------
Accepted and agreed:
CHILDTIME CHILDCARE, INC.
By: /s/ Xxxxx X. Xxxxxxxxx
---------------------------
Its: Chief Financial Officer
------------------------
Date: February 17, 2003
-----------------
BANK ONE, NA
By: Xxxxxxx X. Xxxxx
----------------------------
Its: Vice President
------------------------
Date: February 17, 2003
--------------------------
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[Third Amendment to Childtime Childcare, Inc. Second
Amended and Restated Credit Agreement]
SCHEDULE A
Subordinated Lenders
Amcito Partners, L.P.
Xxxxxxx X. Xxxxxxxx
Barcam Holdings, Inc.
Xxxxx Xxxx
Xxxxxx Xxxxxxx
Xxxx Xxxxxxxxx and Xxxxxxx Xxxxxxxxx, JTWROS
Xxxxxx Xxxxxxx
Xxxxxx Xxxxxxxx
Xxxxx X. Xxxxxxxx
X. X. Xxxxxx, Xx.
Xxxxxxxxxxx X. Xxxxx
Xxxxxxxx X. Xxxxx
HVS Boxers LLC
Xxxxxxxx X. Xxxxxxxx
Xxxx X. Xxxxxxxx Trust, Xxxxxxx Xxxxx, Trustee
JP Acquisition Fund II, L.P.
JP Acquisition Fund III, L.P.
Xxxxxxxx Xxxxxxx
Xxxxxxx Xxxxxxx Trust, Xxxxxxx Xxxxx, Trustee
Xxxxxx X. Xxxxxxx
Xxxxx X. Xxxxxx
QFG Ventures, L.P.
Xxxxxx X. Xxxxxx
Xxxxx and Xxxxxxx Xxxxx, JTWROS
Xxxxxxx Xxxxxxxx and Xxxx X. Xxxxxxxx, JTWROS
Xxxx Xxxxxxxxxx
Xxxxxxx X. Xxxxxx
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[Third Amendment to Childtime Childcare, Inc. Second
Amended and Restated Credit Agreement]
