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EXHIBIT 10.12
FIRST AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT
FIRST AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT (this
"Amendment"), dated as of _____________, 1997, between LA PETITE ACADEMY, INC.,
a Delaware corporation (the "Borrower"), LA PETITE HOLDINGS CORP., a Delaware
corporation ("Holdings"), the financial institutions which are a party to the
Credit Agreement referred to below, (the "Banks"), Bankers Trust Company, as
Administrative Agent, and Mercantile Bank, as Co-Agent. All capitalized terms
defined in the Credit Agreement referred to below shall have the same meanings
when used herein unless otherwise defined herein.
W I T N E S S E T H :
WHEREAS, Holdings, the Borrower, the Banks and the Agents are parties to
the Amended and Restated Credit Agreement dated as of July 10, 1996
(collectively, the "Credit Agreement");
WHEREAS, Holdings intends to merge with and into the Borrower, with the
Borrower being the sole surviving entity (the "Merger"). The effective date of
the Merger is referred to herein as the "Merger Date;"
WHEREAS, pursuant to Section 8.02(ix) of the Credit Agreement, the Banks
and the Administrative Agents must consent to the Merger;
WHEREAS, Holdings, the Borrower, the Banks and the Agents wish to amend
the Credit Agreement as herein provided;
NOW, THEREFORE, the parties agree as follows:
1. Consent to Merger.
The Banks and the Agents hereby consent to the Merger and the Conforming
Amendments (as defined in Section 4 below), subject, however, to the terms and
conditions of this Amendment and provided that the Borrower and Holdings
consummate the Merger on or before June 15, 1997.
2. Waiver of Lien on the Borrower's Capital Stock.
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The Banks and the Agents hereby waive their right, pursuant to Section
8.02(ix)(y) of the Credit Agreement, to require that all of the outstanding
capital stock of the Borrower be pledged to secure the Obligations of the
Borrower under the Credit Documents.
3. Representations, Warranties and Covenants.
(a) Capitalization. The Borrower represents, warrants and covenants
to the Banks that, effective as of the Merger Date, (i) the authorized
capital stock of the Borrower shall consist of (x) 1,000 shares of common
stock, $.01 par value per share, 100 of which shall be issued and
outstanding and owned by Vestar LPA and (y) 2,000,000 shares of preferred
stock, of which 800,000 shares shall be issued and outstanding, (ii) all
such outstanding shares have been duly and validly issued, are fully paid
and nonassessable and (iii) the Borrower will not have outstanding any
securities convertible into or exchangeable for its capital stock or
outstanding any rights to subscribe for or purchase, or any options for
the purchase of, or any agreements providing for the issuance (contingent
or otherwise) of or any calls, commitments or claims of any character
relating to, its capital stock.
(b) No Default; Continuing Representations. Each of Holdings and
the Borrower hereby represents and warrants that (i) immediately before
and after giving effect to the Merger, no Default or Event of Default
will occur or be continuing and (ii) each of the representations and
warranties contained in the Credit Agreement are true and correct in all
material respects both before and after giving effect to this Amendment.
4. Conforming Amendments.
Effective as of the Merger Date, the Credit Agreement shall be
amended as follows (collectively, the "Conforming Amendments"):
(a) General References to Holdings. All references to Holdings in
Sections 1, 5, 7, 8, 9, 10, and 12 of the Credit Agreement shall be
deemed to refer instead to the Borrower.
(b) Rights and Obligations. All rights, if any, and obligations of
Holdings under the Credit Agreement shall be the rights and obligations
of the Borrower.
(c) Credit Party. The meaning of the term "Credit Party" as defined
in Section 10.01 of the Credit Agreement shall be deleted in its entirety
and the following inserted in lieu thereof:
"Credit Party" shall mean the Borrower and each other Subsidiary
of the Borrower that is a party to any Credit Document.
(d) Permitted Dividends. Section 8.03 of the Credit Agreement shall
be deleted in its entirety and the following inserted in lieu thereof:
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8.03 Dividends. The Borrower will not, and will not permit any
of its Subsidiaries to, authorize, declare or pay any Dividends with
respect to any capital stock of the Borrower or any of its
Subsidiaries except that
(i) if no Default or Event of Default then exists or would
result therefrom, the accretion to the liquidation value in lieu of
cash Dividends on the Borrower's Preferred Stock in accordance with
the Certificate of Designation shall be permitted;
(ii) if no Default or Event of Default then exists or would
result therefrom, cash Dividends may be paid in respect of the
Borrower's Preferred Stock (to the extent such payment is made in
accordance with the Certificate of Designation) and the Borrower's
Common Stock and the purchase or redemption of the Borrower's
Preferred Stock shall be permitted so long as
(x) at the time cash Dividends are paid pursuant to
this Section 8.03(ii), and after giving effect thereto and to
any repurchase of Senior Notes on such date pursuant to Section
8.12(c), the aggregate amount of all cash Dividends paid
pursuant to this Section 8.03(ii) since the Closing Date
(together with the aggregate amount expended to repurchase
Senior Notes pursuant to Section 8.12(c) since the Closing
Date) shall not exceed the Accumulated Excess Earnings as of
the last day of the most recently ended fiscal quarter of the
Borrower,
(y) at the time cash Dividends are paid pursuant to
this Section 8.03(ii), and after giving effect thereto and to
any other cash Dividends paid pursuant to this Section 8.03 and
to any repurchase of Senior Notes pursuant to Section 8.12(c)
on such date, the Borrower and its Subsidiaries shall have
unrestricted cash and Cash Equivalents on hand in an aggregate
amount of not less than the sum of (a) $5,000,000, plus (b) the
aggregate principal balance of Revolving Loans then
outstanding, and
(z) no event of default then exists or would result
therefrom, and
(iii) if no Default or Event of Default then exists or would
result therefrom, cash Dividends may be paid in respect of the
Borrower's Common Stock in the amounts and at the times necessary to
permit the acquisition of the common stock of Vestar LPA from members
of management of the
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Borrower who have died or whose employment has terminated, provided
that (x) the aggregate amount of all such Dividends paid after the
Closing Date does not exceed an amount equal to $2,000,000 plus the
net cash proceeds of common stock of Vestar LPA issued to management
of the Borrower after the Closing Date which net cash proceeds are
contributed by Vestar LPA as common equity capital to the Borrower,
(y) no such payment made to any one Person shall exceed $1,000,000
and (z) in no event shall any such payment exceed the amount
permitted under the Senior Note Indenture; and
(iv) any Subsidiary of the Borrower may pay Dividends to the
Borrower or any wholly-owned Subsidiary of the Borrower.
(e) Permitted Debt. Section 8.05 of the Credit Agreement shall be
deleted in its entirety and the following inserted in lieu thereof:
8.05 Indebtedness. The Borrower will not, and will not permit
any of its Subsidiaries to, contract, create, incur, assume or suffer
to exist any Indebtedness, except:
(i) Indebtedness incurred pursuant to this Agreement and the
other Credit Documents;
(ii) Existing Indebtedness shall be permitted to the extent the
same is listed on Schedule III of this Agreement, together with any
renewals or refinancing thereof, so long as (x) the amount of
refinancing Indebtedness incurred pursuant to this clause (ii) does
not exceed the principal amount of the Indebtedness being refinanced
at the time of such refinancing and (y) the terms of such refinancing
Indebtedness incurred pursuant to this clause (ii) are no more
restrictive in any material respect as applied to the Borrower or any
of its Subsidiaries than the terms of the Indebtedness being
refinanced;
(iii) accrued expenses and current trade accounts payable
incurred in the ordinary course;
(iv) general unsecured Indebtedness of the Borrower in an
aggregate principal amount not to exceed $2,000,000 at any one time
outstanding;
(v) Indebtedness (including, without limitation, Capitalized
Lease Obligations) subject to Liens permitted under Section 8.01(vii)
not to exceed $500,000 at any one time outstanding;
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(vi) Indebtedness of the Borrower or any of its Subsidiaries
subject to Liens permitted under Section 8.01(viii) not to exceed
90% of the fair market value (as determined in good faith by the
Board of Directors of the Borrower) of the Real Property at the time
such Real Property is made subject to such Lien, provided that
(except in the case of the Gramercy Financing, if entered into) the
weighted average life to maturity of such Indebtedness shall not be
less than five years at the time of the incurrence of such
Indebtedness;
(vii) Indebtedness under Interest Rate Protection Agreements,
provided that after giving effect to such Interest Rate Protection
Agreements at all times thereafter the effective interest cost to
the Borrower in respect of at least 40% of the outstanding principal
amount of the Senior Notes shall be the fixed rate set forth
therein;
(viii) Indebtedness of any wholly-owned Subsidiary of the
Borrower to the Borrower or any other wholly-owned Subsidiary of the
Borrower, to the extent permitted by Section 8.06(vi);
(ix) Indebtedness of the Borrower under the Senior Notes in an
aggregate principal amount not to exceed $85,000,000 (less any
repayments of principal thereof); and
(x) Indebtedness of the Borrower under the Convertible
Subordinated Debentures in an aggregate principal amount not to
exceed $2,200,000 (less any repayments of principal thereof after
the Closing Date).
(f) Permitted Investments. Sections 8.06(iv) and (vii) of the Credit
Agreement shall be deleted in their entirety and shall be of no force or effect.
(g) Transactions with Affiliates. Section 8.07 of the Credit
Agreement shall be deleted in its entirety and the following inserted in lieu
thereof:
8.07 Transactions with Affiliates. The Borrower will not, and
will not permit any of its Subsidiaries to, enter into any
transaction or series of related transactions, whether or not in the
ordinary course of business, with any Affiliate of Borrower or any
of its Subsidiaries, other than in the ordinary course of business
and on terms and conditions substantially as favorable to the
Borrower or such Subsidiary as would reasonably be obtained by the
Borrower or such Subsidiary at that time in a comparable
arm's-length transaction with a Person other than an Affiliate,
except that (i) Dividends may be paid to the extent provided in
Section 8.03 and (ii) loans may be made and other transactions may
be entered into to the extent permitted by Sections 8.05 and 8.06.
Without limiting the foregoing, in no event shall any
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management or similar fees be paid by the Borrower or any of its
Subsidiaries to any Person, provided that management fees may be
paid to Vestar and certain other shareholders of Vestar LPA, so long
as the aggregate amount of such fees paid in any fiscal year shall
not exceed $500,000.
(h) Voluntary Payments and Modifications. Section 8.12 of the
Credit Agreement shall be deleted in its entirety and the following inserted in
lieu thereof:
8.12 Limitation on Voluntary Payments and Modifications of
Indebtedness; Modifications of Certificate of Incorporation, By-Laws
and Certain Other Agreements; etc. (a) The Borrower will not, or
will not permit any of its Subsidiaries to,
(i) make (or give any notice in respect of) any voluntary or
optional payment or prepayment on or redemption or acquisition for
value of (including, without limitation, by way of depositing with
the trustee with respect thereto money or securities before due for
the purpose of paying when due) any Senior Notes, Preferred Stock or
Convertible Subordinated Debentures, provided that the Borrower may
(x) repurchase Preferred Stock to the extent permitted by Section
8.03(ii), (y) repurchase Senior Notes to the extent permitted by
Section 8.12(c), and (z) repurchase Convertible Subordinated
Debentures to the extent permitted by Section 8.12(b),
(ii) amend or modify, or permit the amendment or modification
of, any provision of the Senior Notes, the Convertible Subordinated
Debentures or the Preferred Stock (including, without limitation,
the Senior Note Indenture, the Certificate of Designation or the
Convertible Subordinated Debenture Indenture), or
(iii) amend, modify or change its Certificate of Incorporation
(including, without limitation, by the filing or modification of any
certificate of designation) or By-Laws, or any Shareholders'
Agreement, in each case, if such amendment, modification or change
would materially and adversely affect the interests of the Banks, or
enter into any new agreement with respect to its capital stock.
(b) Notwithstanding the foregoing, the Borrower may repurchase the
Convertible Subordinated Debentures for cash, provided that (x) the
purchase price therefor shall not exceed 75% of the face amount of
the Convertible Subordinated Debentures being repurchased, and (y)
no Default or Event of Default then exists or would result
therefrom.
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(c) Notwithstanding the foregoing, the Borrower may repurchase
Senior Notes, provided that (x) at the time of such repurchase and
after giving effect thereto and to any Dividends paid on such date
pursuant to Section 8.03(ii), the aggregate amount expended to
repurchase Senior Notes pursuant to this Section 8.12(c) since the
Closing Date (together with the aggregate amount of cash Dividends
paid pursuant to Section 8.03(ii) since the Closing Date) shall not
exceed the Accumulated Excess Earnings as of the last day of the
most recently ended fiscal quarter of the Borrower, (y) at the time
of such repurchase, and after giving effect thereto and to any
Dividends paid on such date pursuant to Section 8.03, the Borrower
and its Subsidiaries shall have unrestricted cash and Cash
Equivalents on hand in an aggregate amount of not less than the sum
of (a) $5,000,000, plus (b) the aggregate principal balance of
Revolving Loans then outstanding and (z) no Default or Event of
Default then exists or would result therefrom.
(i) Business Activities. Section 8.13 of the Credit Agreement
shall be deleted in its entirety and the following inserted in lieu
thereof:
8.13 Business. The Borrower will not, and will not permit
any of its Subsidiaries to, engage (directly or indirectly) in any
business other than the business in which the Borrower is engaged
on the Effective Date and any other reasonably related businesses.
(j) Intercompany Notes and Tax Sharing Agreement. Section 8.14 of
the Credit Agreement shall be deleted in its entirety and shall be of no
force or effect.
(k) Tax Sharing Agreement, Default. Section 9.08 of the Credit
Agreement shall be deleted in its entirety and shall be of no force or
effect.
5. Effective Date.
This Amendment shall not become effective (the "Amendment Effective
Date") until the date on which the Borrower, Holdings, the Agents and the
Required Banks shall have executed a counterpart hereof and shall have
delivered (including by way of telecopier) the same to the Administrative
Agent.
6. Governing Law.
THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES
HEREUNDER SHALL BE CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED BY THE LAWS OF
THE STATE OF NEW YORK.
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7. Miscellaneous.
The amendments set forth herein are limited precisely as written and shall
not be deemed to be an amendment, consent, waiver or modification of any other
term or condition of the Credit Agreement or any of the instruments or
agreements referred to therein, or prejudice any right or rights which the
Agents or the Banks may now have or may have in the future under or in
connection with the Credit Agreement or any of the instruments or agreements
referred to therein. Except as expressly modified hereby, the terms and
provisions of the Credit Agreement shall continue in full force and effect.
Whenever the Credit Agreement is referred to in the Credit Agreement or any of
the instruments, agreements, or other documents or papers executed and
delivered in connection therewith, such reference shall be deemed to mean the
Credit Agreement as modified hereby.
8. Duplicate Originals.
This Amendment may be executed in two or more counterparts which shall be
deemed an original but all of which together shall constitute one and the same
instrument.
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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed and delivered by their respective duly authorized officers as of
the date first above written.
LA PETITE ACADEMY, INC.
By:__________________________
Xxxxxxx X. Xxxx
Chief Financial Officer
LA PETITE HOLDINGS CORP.
By:__________________________
Xxxxxxx X. Xxxx
Chief Financial Officer
BANKERS TRUST COMPANY,
Individually and as Administrative Agent
By:____________________________
Name: Xxxxxxxx Xxxxx
Title: Vice President
MERCANTILE BANK,
Individually and as Co-Agent
By:____________________________
Name: Xxxxx Xxxxxx
Title: Senior Vice President
NORWEST BANK IOWA, N.A.
By:____________________________
Name: Xxxx X. Xxxxxx
Title: Asst. Vice President
First Amendment--Signature Page
