EXHIBIT 4.12
EXECUTION COPY
EIGHTH AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT
THIS EIGHTH AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT, dated
as of June 24, 2004 (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, the Second
Amendment to Amended and Restated Credit Agreement dated as of July 19, 2002,
the Third Amendment to Amended and Restated Credit Agreement dated as of
February 14, 2003, the Fourth Amendment to Amended and Restated Credit Agreement
dated as of June 25, 2003, the Fifth Amendment to Amended and Restated Credit
Agreement dated as of November 19, 2003, the Sixth Amendment to Amended and
Restated Credit Agreement dated as of December 29, 2003, and the Seventh
Amendment to Amended and Restated Credit Agreement dated as of January 20, 2004
(the "Credit Agreement").
B. The Company has requested the Bank to modify the Credit Agreement in
certain respects, and the Bank is willing to so amend the Credit Agreement 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 definition of the term "Acceptable Letter of Credit Advances",
which was added to Section 1.1 pursuant to the Third Amendment referenced above,
is deleted.
1.2 The definition of the term "Applicable Margin" in Section 1.1 is
amended and restated in full as follows:
"Applicable Margin" means, for purposes of determining the Eurodollar
Rate applicable to Eurodollar Rate Loans outstanding at any time, the Floating
Rate applicable to Floating Rate Loans outstanding at any time, the commitment
fees payable under Section 2.3(a) and the Letter of Credit fees payable under
Section 2.3(c), the applicable percentage set forth below:
APPLICABLE
MARGIN FOR
DETERMINING THE APPLICABLE MARGIN
FIXED CHARGE EURODOLLAR RATE APPLICABLE MARGIN FOR DETERMINING
COVERAGE AND THE LETTER OF FOR DETERMINING THE COMMITMENT
RATIO CREDIT FEES UNDER THE FLOATING RATE FEES UNDER SECTION
SECTION 2.3(c) 2.3(a)
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Less than or
equal to 1.05 3.00% 0.50% 0.50%
to 1.00
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Greater than
1.05 to 1.00
and less than 2.75% 0.25% 0.50%
or equal to
1.15 to 1.00
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Greater than
1.15 to 1.00 2.50% 0.25% 0.50%
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The Applicable Margin shall be adjusted quarterly (upward or downward),
if necessary, on the first day of the month following the month in
which the financial statements are required to be delivered under
Section 5.1(d)(iii) or Section 5.1(d)(iv), as the case may be, based on
the Fixed Charge Coverage Ratio for the period of determination of such
ratio under Section 5.2(c) as of the end of the period reflected in
such financial statements, beginning with the financial statements to
be delivered for the fiscal quarter ending on or about July 23, 2004;
provided that, notwithstanding the foregoing, (a) the Applicable Margin
as of the Eighth Amendment Date and through the effective date of such
first adjustment, if any, shall be set at the level corresponding to a
Fixed Charge Coverage Ratio of less than or equal to 1.05 to 1.00 and
(b) upon and during the continuance at any time of any Event of
Default, the Applicable Margin shall be set at the level corresponding
to a Fixed Charge Coverage Ratio of less than or equal to 1.05 to 1.00.
1.3 The definition of the term "Commitment" in Section 1.1 is amended
and restated in full as follows:
"Commitment" means the commitment of the Bank to make Advances
pursuant to Section 2.1, in amounts not exceeding an aggregate
principal amount
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outstanding of $13,700,000, as such amount may be reduced from time to time
pursuant to Section 2.2.
1.4 The following definitions of the terms "Eighth Amendment" and
"Eighth Amendment Date" are added to Section 1.1 in alphabetical order,
respectively, as follows:
"Eighth Amendment" means the Eighth Amendment to this Agreement dated
as of June 24, 2004.
"Eighth Amendment Date" means the Amendment Date (as defined in the
Eighth Amendment).
1.5 The definition of the term "Letter of Credit" in Section 1.1 is
amended and restated in full as follows:
"Letter of Credit" means a standby letter of credit having a stated
expiry date or date upon which the draft must be reimbursed not later than
twelve months after the Termination Date, issued by the Bank for the
account of the Company under an application and related documentation
acceptable to the Bank requiring, among other things, immediate
reimbursement by the Company to the Bank in respect of all drafts or other
demand for payment honored thereunder and all expenses paid or incurred by
the Bank relative thereto.
1.6 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) June 30, 2005,
and (b) the date on which the Commitment shall be terminated pursuant to
Section 2.2 or 6.2.
1.7 Section 2.1(a) is amended and restated in full as follows:
(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).
1.8 The first sentence of Section 2.1(b) is amended and restated in
full as follows:
(b) Limitation on Amount of Advances. 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
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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 $5,000,000.
1.9 Section 3.1(c) (which was added pursuant to the Sixth Amendment
referenced above) is amended and restated in full as follows:
(c) In addition to all other payments required under this
Agreement and the Note, immediately upon the consummation of such
transaction, the Company shall prepay the principal of the Loans with
a portion of the net proceeds from the sale of the Sterling Heights
Property contemplated under Section 5.2(h)(v) in an amount as may be
required by the Bank in its sole discretion after consultation with
the Company, and in connection with such prepayment the Commitment
shall be deemed permanently reduced by such amount as the Bank may
require in its sole discretion after consultation with the Company
(notwithstanding any failure to comply with the requirements of
Section 2.2 in connection with such reduction of the Commitment).
1.10 Subpart (vi) of Section 5.1(f) (as last modified pursuant to the
Sixth Amendment referenced above) is amended and restated in full as follows:
(vi) Exchange of Canton Property for Sterling Heights
Property, and Sale of Sterling Heights Property. Notwithstanding
anything to the contrary, (A) the Bank agrees to release from its
Mortgage the Company's property commonly known as 0000 Xxxxxx Xxxx,
Xxxxxx, Xxxxxxxx (the "Canton Property"), upon the exchange by the
Company of the Canton Property for the property commonly known as 0000
00 Xxxx Xxxx, Xxxxxxxx Xxxxxxx, Xxxxxxxx (the "Sterling Heights
Property"), such that the Company becomes the fee owner of the
Sterling Heights Property subject to no Liens except Permitted Liens,
if any, other than Permitted Liens under Section 5.2(f)(vi), and (B)
the Company shall not be required to grant to the Bank a mortgage lien
on the Sterling Heights Property so long as by not later than sixty
(60) days after acquiring the Sterling Heights Property the Company
has sold the Sterling Heights Property and applied the proceeds
thereof as required under this Agreement. If the Company has not sold
the Sterling Heights Property and so applied such proceeds within such
sixty (60)-day period, the Company immediately shall grant to the Bank
a first-priority mortgage lien on the Sterling Heights Property and
execute and deliver, or cause to be executed and delivered, to the
Bank all items of the types described in Section 5.1(f), all in form
and substance satisfactory to the Bank.
1.11 Sections 5.2(a), (b) and (c) 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 less than the amount equal to (i) $9,000,000 at all
times prior to the end of the Parent
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Guarantor's fiscal year ending on or about April 1, 2005 or (ii)
$9,500,000 as of the end of the Parent Guarantor's fiscal year ending
on or about April 1, 2005 and at all times thereafter.
(b) EBITDA. Permit or suffer the Consolidated EBITDA of the
Parent Guarantor and its Subsidiaries to be less than (i) $1,975,000 as
of the end of the Parent Guarantor's fiscal quarter ending on or about
July 23, 2004, for the period of the single fiscal quarter then ending,
(ii) $2,445,000 as of the end of the Parent Guarantor's fiscal quarter
ending on or about October 15, 2004, for the period of the two
consecutive fiscal quarters then ending, (iii) $4,250,000 as of the end
of the Parent Guarantor's fiscal quarter ending on or about January 7,
2005, for the period of the three consecutive fiscal quarters then
ending, or (iv) $7,000,000 as of the end of the Parent Guarantor's
fiscal year ending on or about April 1, 2005 for such fiscal year.
(c) Fixed Charge Coverage Ratio. Permit or suffer the
Consolidated Fixed Charge Coverage Ratio of the Parent Guarantor and
its Subsidiaries to be less than 1.00 to 1.00 (i) as of the end of the
Parent Guarantor's fiscal quarter ending on or about July 23, 2004, for
the period of the three consecutive fiscal quarters then ending, or
(ii) as of the end of any subsequent fiscal quarter of the Parent
Guarantor, for the period of the four consecutive fiscal quarters then
ending.
1.12 The last sentence of Section 5.2(g) (as last modified pursuant to
the Fourth Amendment referenced above), is amended and restated in full as
follows:
Notwithstanding anything in this Agreement to the contrary, the Company
and the Guarantors may purchase up to twelve (12) franchisee childcare
centers during any fiscal year of the Parent Guarantor so long as: (i)
the Company and the Guarantors at all times shall be in compliance with
Section 2.10(e) of this Agreement requiring first-priority mortgage
liens in favor of the Bank on all real property of the Company and the
Guarantors and shall have delivered to the Bank, in connection with all
such mortgages, all items of the types required under Section 5.1(f),
and (ii) during any fiscal year of the Parent Guarantor, (A) the
aggregate consideration, including without limitation any Indebtedness
assumed in connection therewith, all guarantees or other liabilities
incurred in connection therewith, and all deferred payments and other
direct or indirect consideration in connection therewith, but excluding
the value of future operating lease obligations assumed in connection
therewith (collectively, "Consideration"), paid or payable in
connection with all such purchases of franchisee centers, including
cash and non-cash components, shall not exceed $2,500,000 and (B) the
aggregate cash Consideration paid or payable in connection with all
such purchases of franchisee centers shall not exceed $2,000,000.
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1.13 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, (ii) the sale by the Company and the Guarantors
in any fiscal year of up to eight (8) childcare centers owned by them;
provided that, if any such center is subject to a Mortgage in favor of
the Bank, the Company shall first have obtained the prior written
consent of the Bank, which consent from time to time may be subject to
such conditions as the Bank may require in its sole discretion, (iii)
the sale by the Company or any of the Guarantors of their rights under
any ground leases to which any of them is a party; provided that all of
the obligations of the Company and the Guarantors relating thereto are
assumed by the transferee in connection therewith, (iv) the sale by the
Company or any of the Guarantors of any vacant land or other real
property owned by it that is not used for a childcare center; provided
that, if any such land or other real property is subject to a Mortgage
in favor of the Bank, the Company shall first have obtained the prior
written consent of the Bank, which consent from time to time may be
subject to such conditions as the Bank may require in its sole
discretion, and (v) the exchange of the Canton Property for the
Sterling Heights Property and the subsequent sale of the Sterling
Heights Property within sixty (60) days thereafter, all in accordance
with Section 5.1(f)(vi) and subject to the requirements of Section
3.1(c).
1.14 The address for notices to the Company set forth in Section 7.2
is amended to be as follows: 00000 Xxxxxxxx Xxxx, Xxxxx 000, Xxxx, Xxxxxxxx
00000, Attention: Chief Financial Officer, Facsimile No. (000) 000-0000,
Facsimile Confirmation No. (000) 000-0000.
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 and the Replacement Note (as defined below) 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, and the Replacement Note when delivered
hereunder will be, a legal, valid and binding obligation of the Company,
enforceable against the Company in accordance with its respective terms.
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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 Replacement Note or
the transactions contemplated hereby or as a condition to the legality, validity
or enforceability of this Amendment or the Replacement Note.
2.4 After giving effect to this Amendment and the Replacement Note,
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.
2.5 Schedule A attached to this Amendment sets forth an accurate and
complete list of all parcels of real property owned by the Company and each of
the Guarantors as of the Amendment Date, in each case identified by each such
parcel's commonly used street address.
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 been executed by a duly authorized officer on behalf of
each of the Guarantors, in the respective spaces so provided, and this Amendment
shall have been delivered to the Bank.
3.2 The Company shall have executed and delivered to the Bank a
replacement Revolving Credit Note in substantially the form of annexed to the
Credit Agreement as Exhibit B and in the principal amount of $13,700,000 (the
"Replacement Note"), which Replacement Note shall be issued in replacement of
the Revolving Credit Note presently outstanding under the Credit Agreement and
thereafter shall be the "Revolving Credit Note" as such term is used in the
Credit Agreement.
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.
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ARTICLE 4. MISCELLANEOUS
4.1 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.
4.2 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
4.3 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.
4.4 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 the Replacement Note, 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.
4.5 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.
4.6 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
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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.
4.7 The Loan Documents and, subject to the amendments herein provided,
the Credit Agreement shall in all respects continue in full force and effect.
4.8 Capitalized terms used but not defined herein shall have the
respective meanings ascribed thereto in the Credit Agreement.
4.9 This Amendment shall be governed by and construed in accordance
with the laws of the State of Michigan.
4.10 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.
4.11 This Amendment may be executed upon any number of counterparts
with the same effect as if the signatures thereto were upon the same instrument.
[The remainder of this page intentionally left blank.]
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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 Xxxxxxxxx
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Its Vice President and Chief Financial Officer
BANK ONE, NA
By: /s/ Xxxxxxx X. Xxxxx
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Its First Vice President
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GUARANTOR ACKNOWLEDGEMENT
Each of the undersigned hereby acknowledges that it has reviewed and
fully consents to the foregoing Eighth 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 effect 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 Xxxxxxxxx
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Its Vice President and Chief Financial Officer
CHILDTIME CHILDCARE-PMC, INC.
By: /s/ Xxxxx Xxxxxxxxx
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Its Vice President and Chief Financial Officer
CHILDTIME CHILDCARE-MICHIGAN, INC.
By: /s/ Xxxxx Xxxxxxxxx
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Its Vice President and Chief Financial Officer
TUTOR TIME LEARNING CENTERS, LLC
(formerly known as TT Acquisition LLC)
By: /s/ Xxxxx Xxxxxxxxx
----------------------------------------------
Its Vice President and Chief Financial Officer
TUTOR TIME INTERNATIONAL LEARNING CENTERS, INC.
(formerly known as CTT Acquisition Corp.)
By: /s/ Xxxxx Xxxxxxxxx
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Its Vice President and Chief Financial Officer
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