Exhibit 10.9
SIXTH AMENDMENT TO AMENDED AND RESTATED
LOAN AND SECURITY AGREEMENT
THIS SIXTH AMENDMENT TO AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT
(this "Amendment") is made effective as of the 30th day of September, 2003, by
and among NOBEL LEARNING COMMUNITIES, INC. ("Nobel"), NEDI, INC. ("NEDI"),
MERRYHILL SCHOOLS NEVADA, INC. (" Merryhill Nevada"), PALADIN ACADEMY, L.L.C.,
formerly known as Nobel Learning Solutions, L.L.C. ("Paladin"), NOBEL EDUCATION
DYNAMICS FLORIDA, INC. ( "Nobel Florida"), THE ACTIVITIES CLUB, INC. ("TAC"),
HOUSTON LEARNING ACADEMY, INC. ("Houston"), NOBEL SCHOOL MANAGEMENT SERVICES,
INC. ("Nobel Management"), NOBEL LEARNING TECHNOLOGIES, INC. ("Nobel
Technologies") (jointly and severally, "Borrowers"), FLEET NATIONAL BANK, as
successor by merger to Summit Bank, as Agent ("Agent") and Lenders named on the
signature pages hereto (collectively, "Lenders").
BACKGROUND
A. Nobel, NEDI, Merryhill Schools, Inc., Merryhill Nevada, Paladin, Nobel
Florida, TAC and Agent are parties to that certain Amended and Restated Loan and
Security Agreement dated March 9, 1999, as amended by (i) that certain First
Amendment to Amended and Restated Loan and Security Agreement dated December 17,
1999, (ii) that certain Second Amendment to Amended and Restated Loan and
Security Agreement dated May 24, 2000, (iii) that certain Third Amendment to
Amended and Restated Loan and Security Agreement dated May 24, 2001, and (iv)
that certain Fourth Amendment to Amended and Restated Loan and Security
Agreement dated as of July 5, 2001 and that certain Fifth Amendment to Amended
and Restated Loan and Security Agreement dated as of May 28, 2003 (such Amended
and Restated Loan and Security Agreement, as amended and as the same may be
further amended, supplemented or restated from time to time, being the "Loan
Agreement").
B. Borrowers, Agent and Lenders desire to further amend the Loan Agreement
in accordance with the terms and conditions hereof.
C. Capitalized terms used herein and not otherwise defined shall have the
meanings provided for such terms in the Loan Agreement.
NOW, THEREFORE, intending to be legally bound hereby, the parties hereto
agree as follows:
1. Waiver of Existing Covenant Defaults. The Events of Default resulting
from Borrowers' failure to comply with the Fixed Charge Coverage Ratio,Leverage
Ratio, Interest Coverage Ratio,Adjusted Leverage Ratio and the Senior Debt to
EBITDA Ratio as of June 30, 2003 and the Capital Expenditure Covenant at
September 30, 2003 due to the purchase of certain real estate located in
Alpharetta, Georgia are hereby waived. Nothing contained herein constitutes a
waiver of, or an agreement or commitment by Agent or any Lender to waive or
release Borrowers from compliance with any other terms, conditions or covenants
of the Loan Agreement or any other Loan Documents.
2. Permanent Reduction to Acquisition Term Loan.
Borrowers shall, on or before September 30, 2003, make a permanent
reduction in the Acquisition Credit Facility Term Loan of not less than One
Million Dollars ($1,000,000.00).
3. Permanent Reduction in the Working Capital Credit Facility. As of the
date hereof, and subject to the limitations set forth in the Loan Agreement and
herein, the maximum amount available under the Working Capital Credit Facility
shall be reduced to Five Million Dollars ($5,000,000.00).
4. Amended Definition.
The definition of "EBITDA" contained in Article 1 of the Loan Agreement is
hereby amended to read, in its entirety, as follows:
"1.18 "EBITDA" means, for any period, combined aggregate earnings for
Borrowers for such period (excluding extraordinary earnings), plus the
aggregate amount deducted for such period in determining such earnings
in respect of (a) Interest Expense, (b) income taxes, (c) depreciation
expense, (d) amortization expense, all determined in accordance with
GAAP, (e) non-recurring transaction fees, write-down of goodwill, or
other non-recurring expenses incurred in the disposition of schools
included in Borrowers' managed assets, and (f) for the fiscal quarter
and year ended June 30, 2003 only, those one-time changes set forth on
Exhibit 1 hereto."
5. Letters of Credit. Section 3.8(a) of the Loan Agreement is amended to
read, in its entirety, as follows:
"(a) Issuing Bank may issue for the account of Borrowers under the
Consolidated Working Capital Credit Facility, commercial, documentary,
automatically renewable or standby letters of credit in form and content
satisfactory to Issuing Bank, at its sole discretion, with a term not to
exceed the earlier to occur of (i) twenty-four (24) months, or (ii) the
expiration date of the Consolidated Working Capital Contract Period.
Notwithstanding the foregoing, at no time shall the (x) aggregate face
amount of all outstanding letters of credit issued under the Consolidated
Working Capital Credit Facility exceed One Million Dollars ($1,000,000.00);
and (y) outstanding principal balance of the Consolidated Working Capital
Credit Facility, plus the aggregate face amount of all outstanding letters
of credit issued under Consolidated Working Capital Credit Facility exceed
the amount of the loans and extensions of credit then available to
Borrowers
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under the Consolidated Working Capital Credit Facility pursuant to Section
3.1 above."
6. Waiver Fee. Section 6.9 of the Loan Agreement is amended by adding a
new subsection (c) thereto as follows:
"(c) Second Waiver Fee. Borrowers shall unconditionally pay to Agent for
the pro rata benefit of Lenders a waiver fee (the "Second Waiver Fee"),
which shall become fully earned, non-refundable and payable as follows:
(1) Fifty Thousand Dollars ($50,000.00) upon the execution hereof; and
(2) Seventy-Five Thousand Dollars ($75,000.00) on the earlier to occur, if
any, of (i) the acceleration of the Lender Indebtedness following the
occurrence of an Event of Default; or (ii) January 1, 2004, provided that
any amount remains due and owing under this Agreement on the Loan Documents
at such time. The Second Waiver Fee shall be paid in addition to the Waiver
Fee set forth in Section 6.9(b), above."
7. Capital Expenditures. Section 10.4 of the Loan Agreement is amended to
read in its entirety as follows:
"10.4 Capital Expenditures. Borrowers shall not cause, suffer or
permit their aggregate Capital Expenditures to exceed, on a quarterly
non-cumulative basis: (a) $2,000,000.00 for the quarter ended
September 30, 2003; and (b) $3,300,000.00 for the quarter ended
December 31, 2003."
8. Events of Default.
Section 15.1 of the Loan Agreement is amended by adding the following
to the end of such section:
"(x) Borrowers shall not have retained, on or before October 15, 2003, an
investment bank, with both the investment bank and the terms of its
retention acceptable to the Agent in its sole discretion; (y) Borrowers
shall not have received a valid commitment to refinance all Lender
Indebtedness in full on or before October 31, 2003; or (z) Borrowers have
not repaid, on or before December 31, 2003, all Lender Indebtedness in
full."
9. Additional Documents. Borrowers covenant and agree to execute and
deliver or cause to be executed and delivered to Agent any and all documents as
Agent shall request in connection with the execution and delivery of this
Amendment or any other documents in connection herewith.
10. Other References. All references in the Loan Agreement and the other
Loan Documents to the term "Loan Documents" shall mean the Loan Documents as
defined therein and this Amendment, including the Consolidated Working Capital
Credit Facility Notes, and any
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and all other documents executed and delivered by Borrowers pursuant to and in
connection herewith. All references in the Loan Agreement and all the Loan
Documents to the term "Lender Indebtedness" shall include, but shall not be
limited to, all obligations and liabilities of Borrowers to Lenders under the
Consolidated Working Capital Credit Facility Notes, the other Notes and the Loan
Agreement, as amended hereby. All references in the Loan Agreement and all the
Loan Documents to the term "Notes" shall include, but shall not be limited to,
the Consolidated Working Capital Credit Facility Notes. All references in the
Loan Agreement and all the Loan Documents to the term "Working Capital Credit
Facility A" and the term "Working Capital Credit Facility B" and the term
"Working Capital Credit Facilities" shall be deemed references to the
Consolidated Working Capital Credit Facility.
11. Further Agreements and Representations. Borrowers do hereby:
(a) ratify, confirm and acknowledge that the Loan Agreement, as
amended, and the other Loan Documents continue to be and are valid, binding and
in full force and effect;
(b) covenant and agree to perform all obligations of Borrowers
contained herein and under the Loan Agreement, as amended, and the other Loan
Documents;
(c) acknowledge and agree that the principal amount of $-0- is
presently outstanding under the Consolidated Working Capital Facility, the
principal amount of $8,445,918.10 is presently outstanding under the Acquisition
Credit Facility Term Loan, and the principal amount of $10,178,571.39 is
presently outstanding under the Term Loan, and that Borrowers have no defense,
set-off, counterclaim or challenge against the payment of any sums owing under
Loan Documents, the enforcement of any of the terms of the Loan Agreement, as
amended, or the other Loan Documents;
(d) represent and warrant that, except for the Events of Default
waived herein, no Event of Default or event which with the giving of notice or
passage of time or both would constitute such an Event of Default exists and all
information described in the foregoing Background is true, accurate and
complete;
(e) acknowledge and agree that nothing contained herein and no action
taken pursuant to the terms hereof are intended to constitute a novation of the
Loan Agreement or any of the other Loan Documents, and (except to the extent of
events of default waived pursuant to Section 1 of this Amendment), do not
constitute a release, termination or waiver of any of the rights or remedies
granted to Agent therein, which rights and remedies are hereby ratified,
confirmed, extended and continued as security for the obligations of Borrowers
to Agent and Lenders under the Loan Agreement and the other Loan Documents,
including, without limitation, this Amendment; and
(f) acknowledge and agree that any Borrower's failure to comply with
or perform any of its covenants, agreements or obligations contained in this
Amendment shall constitute an Event of Default under the Loan Agreement and each
of the Loan Documents.
12. Costs and Expenses. Upon execution of this Amendment, Borrowers shall
pay to Agent all out-of-pocket costs and expenses incurred by Agent (i) in
connection with the review, preparation and negotiation of this Amendment and
all documents in connection
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therewith, and (ii) all currently outstanding out-of-pocket costs and expenses
of Agent with respect to the fees of its consultant and legal counsel that have
not been reimbursed as of the execution of this Amendment.
13. Release. Each Borrower hereby fully, finally and forever acquits,
quitclaims, releases and discharges each Lender and its respective officers,
directors, employees, agents, successors and assigns, in their capacities as
such, of and from any and all obligations, claims, liabilities, damages,
demands, debts, liens, deficiencies or cause or causes of action to, of or for
the benefit (whether directly or indirectly) of any Borrower, at law or in
equity, known or unknown, contingent or otherwise, whether asserted or
unasserted, whether now known or hereafter discovered, whether statutory, in
contract or in tort, as well as any other kind or character of action now held,
owned or possessed (whether directly or indirectly) by any Borrower on account
of, arising out of, related to or concerning, whether directly or indirectly,
proximately or remotely (i) the negotiation, review, preparation or
documentation of the Loan Agreement, this Amendment and the Loan Documents or
any other documents or agreements executed in connection therewith, (ii) the
administration of the Loan Documents, (iii) the enforcement, protection or
preservation of Lender's rights under the Loan Documents, or any other documents
or agreements executed in connection therewith, and/or (iv) any action or
inaction by Lender in connection with any such documents, instruments and
agreements.
14. Inconsistencies. To the extent of any inconsistency between the terms,
conditions and provisions of this Amendment and the terms, conditions and
provisions of the Loan Agreement or the other Loan Documents, the terms,
conditions and provisions of this Amendment shall prevail. All terms, conditions
and provisions of the Loan Agreement and the other Loan Documents not
inconsistent herewith shall remain in full force and effect and are hereby
ratified and confirmed by Borrowers.
15. Construction. All references to the Loan Agreement therein or in any
other Loan Documents shall be deemed to be a reference to the Loan Agreement as
amended hereby.
16. No Waiver. Except for the waiver expressly set forth above, nothing
contained herein and no actions taken pursuant to the terms hereof are intended
to nor shall they constitute a waiver by Agent of any rights or remedies
available to Agent at law or in equity or as provided in the Loan Agreement or
the other Loan Documents.
17. Binding Effect. This Amendment shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and assigns.
18. Governing Law. This Amendment shall be governed by and construed in
accordance with the laws of the Commonwealth of Pennsylvania.
19. Headings. The headings of the sections of this Amendment are inserted
for convenience only and shall not be deemed to constitute a part of this
Amendment.
IN WITNESS WHEREOF, the parties hereto have executed this Amendment
effective as of the date first above written.
BORROWERS:
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NOBEL LEARNING COMMUNITIES, INC.
By: /s/ Xxxxxxx X. Xxxxxx
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Xxxxxxx X. Xxxxxx, Executive Vice President
(SIGNATURES CONTINUED ON FOLLOWING PAGE)
NEDI, INC.
By: /s/ Xxxxxxx Xxxxx.
--------------------------------------------
Xxxxxxx Xxxxx, Vice President
MERRYHILL SCHOOLS NEVADA, INC.
By: /s/ Xxxx Xxx
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Xxxx Xxx, President
HOUSTON LEARNING ACADEMY, INC.
By: /s/ Xxxxxx XxXxxxxx
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Xxxxxx XxXxxxxx, Treasurer
PALADIN ACADEMY, L.L.C.
By: NOBEL LEARNING COMMUNITIES,
INC., its sole member
By: /s/ Xxxxxxx X. Xxxxxx
--------------------------------------------
Name/Title: Xxxxxxx X. Xxxxxx, Executive
Vice President
NOBEL LEARNING TECHNOLOGIES, INC.
By: /s/ Xxxxxxx X. Xxxxxx
--------------------------------------------
Xxxxxxx X. Xxxxxx, Treasurer
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NOBEL EDUCATION DYNAMICS FLORIDA, INC.
By: /s/ Xxxxxxx X. Xxxxxx
----------------------------------
Xxxxxxx X. Xxxxxx, Vice President
(SIGNATURES CONTINUED ON FOLLOWING PAGE)
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THE ACTIVITIES CLUB, INC.
By: NOBEL LEARNING COMMUNITIES,
INC., its sole stockholder
By: /s/ Xxxxxxx X. Xxxxxx
-------------------------------------------
Name/Title: Xxxxxxx X. Xxxxxx, Executive Vice
President
AGENT:
FLEET NATIONAL BANK, as successor by
merger to Summit Bank, as Agent
By: /s/ Xxxxxxx X. Xxxxxxxxxxxx
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Name/Title: Xxxxxxx X. Xxxxxxxxxxxx/Vice President
LENDERS:
FLEET NATIONAL BANK, as successor by
merger to Summit Bank
By: /s/ Xxxxxxx X. Xxxxxxxxxxxx
-------------------------------------------
Name/Title: Xxxxxxx X. Xxxxxxxxxxxx/Vice President
COMMERCE BANK, N.A.
By: /s/ Xxxxx X. Xxxxx
-------------------------------------------
Name/Title: Xxxxx X. Xxxxx, Senior Vice President
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