EXHIBIT 10.1
Childtime Learning Centers, Inc.
00000 Xxxx Xxx Xxxx Xxxx, Xxxxx 000
Xxxxxxxxxx Xxxxx, Xxxxxxxx 00000
July 19, 2002
JP Acquisition Fund II, L.P.
JP Acquisition Fund III, L.P.
c/o Jacobson Partners
000 Xxxxxxx Xxxxxx, Xxxxx 000
Xxx Xxxx, Xxx Xxxx 00000-0000
RE: GRANT OF OPTIONS
Gentlemen:
In consideration of the agreement of each of you and certain of your
co-investors to arrange for standby purchasers in connection with the $14
million rights offering (the "Rights Offering") contemplated by Childtime
Learning Centers, Inc. (the "Company"), as described on the attached Exhibit A,
pursuant to the terms of that certain Standby Stock Purchase Agreement described
on the attached Exhibit A to be entered into with the Company (the "Standby
Commitment"), the Company agrees as follows:
1. Subject to the approval of the Company's shareholders and paragraph
3 below, the Company hereby grants to you and your designated co-investors
(collectively, the "Optionees") options (the "Options") to acquire, in the
aggregate, 400,000 shares of the Company's common stock, no par value (the
"Common Stock"), at an exercise price of $5.00 per share. The Options may be
exercised, in whole or in part, at any time, and from time to time, after the
later of (a) the date the Options have been approved by the Company's
shareholders and (b) the consummation of the Rights Offering, until July 19,
2006.
2. The registration rights granted pursuant to the Consulting Agreement
to shares of Common Stock acquired by Xxxxxxxx Partners (and its affiliates or
designees) will cover any such shares (a) issuable upon exercise of the Options,
and (b) purchased by the Optionees pursuant to, or as a standby purchaser in
connection with, the Rights Offering.
3. Notwithstanding anything to the contrary in this letter, in the
event the Rights Offering does not take place or is not consummated in
accordance with its terms (which terms will be not less favorable to the Company
as those set forth on the attached Exhibit A) by July 19, 2003, the Options
granted under paragraph 1 above will not become effective, but will be
forfeited, and the Company will have no obligation hereunder.
4. In the event the Company is required to pay federal withholding
taxes upon the exercise of any Option granted hereunder, the Company may, in the
sole discretion of the
Compensation Committee of the Company's Board of Directors, (a) require the
exercising Optionee, as a condition to the issuance of the shares subject to the
exercised option, to submit to the Company the amount of the applicable
withholding tax or (b) retain a portion of the shares to be issued upon such
exercise having a market value, as of the exercise date, approximating the
amount of the applicable withholding tax.
If the foregoing is acceptable, please so indicate by signing below.
Very truly yours,
CHILDTIME LEARNING CENTERS, INC.
By: /s/ Xxxxxxx X. Xxxxx
------------------------------------
Xxxxxxx X. Xxxxx, Interim Chief
Financial Officer
Agreed to and Accepted by:
JP Acquisition Fund II, L.P. JP Acquisition Fund III, L.P.
By: JPAF, Limited Partnership, By: JPAF III, LLC,
its general partner its general partner
By: Xxxxxxxx Partners, By: Xxxxxxxx Partners,
its general partner its sole member
By: /s/ Xxxxxxxx X. Xxxxxxxx By: /s/ Xxxxxxxx X. Xxxxxxxx
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2
Memorandum
TO: Xxx Xxxxx
FROM: Xxx Xxxxxxxx
DATE: 7/19/2002
RE: Rights Offering Term Sheet
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The following represents the terms under which we prepare to underwrite a Rights
Offering:
Transaction: $14 million rights offering (75% in the form
of equity and 25% in the form of
subordinated debt) commenced shortly after
completion of the Tutor Time deal, but in
any event completed no later than July 19,
2003.
Structure: Pro-rata offering to all Childtime
shareholders.
JP Back Stop: JP Acquisition Fund II, L.P., JP Acquisition
Fund III, L.P., and other investors
(collectively "JP Funds") will underwrite
100% of the offering.
Price: $3.50 per share.
JP Options: JP Funds will be granted 400,000 options at
a price of $5.00 per share that will have a
July 19, 2006 expiration date. The options
can be exercised at any time after the
rights offering, however, in the event the
rights offering does not take place prior to
July 19, 2003, the options will be
terminated.
Ability to Terminate: JP Funds will only be able to terminate its
commitment to invest up to $14 million in
the event of a Childtime bankruptcy filing.
Childtime Election: Childtime must make the election to
undertake the rights offering based on the
terms herein within 30 days of closing of
the Tutor Time transaction.
