EXHIBIT 10.41
AMENDMENT NO. 5
TO CREDIT AGREEMENT AND WAIVER
THIS AMENDMENT NO. 5 TO CREDIT AGREEMENT AND WAIVER (this "Amendment")
is entered into as of February 10, 2003, among LA PETITE ACADEMY, INC., a
Delaware corporation (the "Borrower"); LPA HOLDING CORP., a Delaware corporation
("Holdings"); the Lenders party hereto; and U.S. BANK NATIONAL ASSOCIATION, as
Administrative Agent, Documentation Agent and Collateral Agent for the Lenders
and as Issuing Bank and Swingline Lender (in such capacities, the
"Administrative Agent"). Capitalized terms used herein and not otherwise defined
shall have the meanings ascribed thereto in the Credit Agreement (as defined
below).
RECITALS
WHEREAS, the Borrower, Holdings, the Lenders and certain other persons
signatory thereto entered into the Credit Agreement dated as of May 11, 1998 (as
previously amended and modified by Amendment No. 1, dated as of December 13,
1999; Amendment No. 2, dated as of June 29, 2000; Amendment No. 3, dated as of
November 14, 2002; and Amendment No. 4, dated as of February 5, 2002, and as
otherwise amended or modified from time to time, the "Credit Agreement");
WHEREAS, Events of Default exist under the Credit Agreement as a result
of the failure of the Borrower to comply with the terms of (a) Sections 6.13,
6.14 and 6.15 of the Credit Agreement for each of the quarters ending (i) during
fiscal years 1999, 2000, 2001 and 2002; (ii) nearest to September 30, 2002 and
(iii) nearest to December 31, 2002 (the "Financial Covenant Defaults"); (b)
Sections 5.01(a), 5.01(b), 5.01(c), 5.01(d), 5.01(e), 5.01(f), 5.03(b) and 5.09
of the Credit Agreement during the period commencing June 30, 1998 and ending on
the date hereof (the "Information Defaults"); (c) Sections 5.01(g) and 5.10 of
the Credit Agreement during the period commencing June 30, 2002 and ending on
the date hereof (the "SEC Reporting Defaults"); and (d) Section 5.13 of the
Credit Agreement with respect to the acquisition of assets and the related
notification requirements thereunder (the Property Disclosure Defaults"); (e)
the Credit Agreement with respect to the failure to deliver a Reinvestment
Certificate to the Administrative Agent in connection with the sale of the real
property identified on Schedule I hereto (the "Certificate Defaults"); and (f)
Section 6.05(d) of the Credit Agreement with respect to the failure to obtain
the consent of the Required Lenders prior to disposing of the real property
identified on Schedule II hereto (the "Disposition Defaults"; and together with
the Financial Covenant Defaults, the Information Defaults, the SEC Reporting
Defaults, the Property Disclosure Defaults and the Certificate Defaults, the
"Existing Defaults");
WHEREAS, one or more stockholders of Holdings (including LPA
Investment) will commit to purchase equity securities of Holdings in an
aggregate amount up to $14,500,000 in cash;
WHEREAS, the Borrower has requested that the Lenders waive the Existing
Defaults and that the Lenders agree to modify certain terms of the Credit
Agreement;
WHEREAS, the Lenders are willing to provide a waiver of the Existing
Defaults, based upon and subject to the terms and conditions specified in this
Amendment; and
WHEREAS, the Lenders and the Loan Parties have agreed to modify the
Credit Agreement as more fully set forth herein.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants contained herein, and for other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the parties hereto
agree as set forth below.
AGREEMENT
SECTION 1
REAFFIRMATION/WAIVERS
1.1 Reaffirmation of Existing Debt and Liens. The Borrower
acknowledges and confirms that: (a) as of the date hereof, the outstanding
principal amount of Revolving Loans and issued Letters of Credit is $24,569,056
and the outstanding principal amount of Term Loans is $35,750,000; (b) the
Lenders have a Lien on all Collateral and the Collateral is not subject to any
Lien other than those specifically permitted under the Loan Documents; (c) all
obligations under the Loan Documents will be due and payable in full on the
Maturity Date if not accelerated sooner pursuant to the terms of the Credit
Agreement; (d) the Borrower's obligation to repay the outstanding principal
amount of the Loans and to reimburse the Issuing Bank for any drawing on a
Letter of Credit is unconditional and, as of the date hereof, is not subject to
any offsets, defenses or counterclaims; (e) the Administrative Agent and the
Lenders have performed fully all of their respective obligations to the Loan
Parties under the Credit Agreement and the other Loan Documents; and (f) by
entering into this Amendment, the Lenders party hereto do not waive, modify or
release (except as specifically set forth herein) any term or condition of the
Credit Agreement or any of the other Loan Documents or any of their rights or
remedies under such Loan Documents or applicable law or any of the obligations
of the Loan Parties thereunder.
1.2 Waiver.
(a) The Borrower acknowledges the existence and continuation of
the Existing Defaults. The Lenders hereby waive the Existing Defaults subject to
the satisfaction of the terms and conditions set forth in Article III (unless
such terms and conditions are otherwise waived by the Lenders); provided,
however, that with respect to the Property Disclosure Defaults only, such waiver
shall apply only to the extent the Borrower has satisfied, on or prior to the
date hereof, the requirements of Section 5.13(b) with respect to the assets
which are the subject of the Property Disclosure Defaults.
(b) Except for the specific waiver set forth above, nothing
contained herein shall be deemed to constitute a waiver of (i) any rights or
remedies the Administrative Agent or any Lender may have under the Credit
Agreement or any other Loan Document or under applicable
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law or (ii) the Loan Parties' obligation to comply fully with any duty, term,
condition, obligation or covenant contained in the Credit Agreement and the
other Loan Documents not specifically waived.
(c) The specific waiver set forth herein is a one-time waiver and
shall be effective only in this specific instance, and shall not obligate the
Lenders to waive any Default or Event of Default other than the Existing
Defaults, now existing or hereafter arising.
SECTION 2
AMENDMENTS TO CREDIT AGREEMENT
Effective as of the date hereof (or at such other time specified
herein, as applicable), the Credit Agreement is amended as set forth below.
2.1 Existing Definitions.
(a) Consolidated EBITDA. The definition of "Consolidated EBITDA"
set forth in Section 1.01 of the Credit Agreement is amended and restated in its
entirety as follows:
"Consolidated EBITDA" means, for any period, Consolidated Net
Income for such period, plus, without duplication and to the extent
deducted from revenues in determining Net Income for such period, the
sum of (a) the aggregate amount of Consolidated Interest Expense for
such period, (b) the aggregate amount of letter of credit fees paid
during such period, (c) the aggregate amount of income tax expense for
such period, (d) all amounts attributable to depreciation, amortization
and other non-cash charges or losses for such period, (e) (i) all fees,
costs and expenses to be paid by the Loan Parties (including, but not
limited to, the fees, costs and expenses to be reimbursed by the Loan
Parties to the Administrative Agent and the Lenders) in connection with
the negotiation, execution and delivery of Amendment Xx. 0, Xxxxxxxxx
Xx. 0 and Amendment No. 5 and the fees, costs and expenses of any
consultants or advisors required by the Lenders to be engaged pursuant
to the terms thereof (including, but not limited to, the consultant to
be engaged pursuant to Section 5.17 hereof) and (ii) all fees, costs
and expenses associated with the New Equity Issuance, the Equity
Commitment and the 2003 Equity Commitment (including, but not limited
to, legal fees) ((i) and (ii) collectively referred to as the
"Amendment Expenses"); (f) proceeds received by Holdings, if any, from
time to time pursuant to the transactions contemplated by the 2003
Securities Purchase Agreement; and (g) non-cash expenses resulting from
the grant of stock options to any director, officer or employee of
Holdings, the Borrower or any Subsidiary pursuant to a written plan or
agreement, all as determined on a consolidated basis with respect to
Holdings, the Borrower and the Subsidiaries in accordance with GAAP.
(b) Consolidated Fixed Charges. The definition of "Consolidated
Fixed Charges" set forth in Section 1.01 of the Credit Agreement is amended and
restated in its entirety to read as follows:
"Consolidated Fixed Charges" means, with respect to any
period, the sum (without duplication) of (a) Consolidated Lease Expense
(excluding interest expense, if
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any, associated with Capital Lease Obligations) for such period plus
(b) Consolidated Interest Expense (excluding interest expense, if any,
incurred as a result of the incurrence of the Amendment Expenses) for
such period plus (c) scheduled principal payments of Indebtedness made
by the Borrower or any Subsidiary to any person other than the Borrower
or any wholly owned Subsidiary of the Borrower during such period plus
(d) cash dividends paid by Holdings during such period (less the amount
of any Indebtedness incurred by Holdings or any of its subsidiaries to
fund such dividends) on the Preferred Stock after the fifth anniversary
of the Effective Date as permitted under this Agreement.
(c) Consolidated Fixed Charge Coverage Ratio. The definition of
"Consolidated Fixed Charge Coverage Ratio" set forth in Section 1.01 of the
Credit Agreement is amended and restated in its entirety to read as follows:
"Consolidated Fixed Charge Coverage Ratio" means, with respect
to any period, the ratio of (a) Consolidated EBITDAR for such period
minus Capital Expenditures (excluding Capital Expenditures to the
extent financed by third parties) made during such period to (b)
Consolidated Fixed Charges for such period; provided that, for the
purpose of calculating this definition, (i) $15,000,000 shall be added
to EBITDAR for each of the fiscal quarters ending nearest to December
31, 2001, March 31, 2002, June 30, 2002 and September 30, 2002; and
(ii) $9,250,000 shall be added to EBITDAR for each of the fiscal
quarters ending nearest to December 31, 2002 and March 31, 2003.
(d) Interest Payment Date. The definition of "Interest Payment
Date" set forth in Section 1.01 of the Credit Agreement is amended and restated
in its entirety to read as follows:
"Interest Payment Date" means (a) with respect to any ABR Loan
(other than a Swingline Loan), the last day of each month, (b) with
respect to any Eurodollar Loan, the last day of the Interest Period
applicable to the Borrowing of which such Loan is a part and (c) with
respect to any Swingline Loan, the day that such Loan is required to be
repaid.
(e) Interest Period. The definition of "Interest Period" set forth
in Section 1.01 of the Credit Agreement is amended and restated in its entirety
to read as follows:
"Interest Period" means, with respect to any Eurodollar
Borrowing, the period commencing on the date of such Borrowing and
ending on the numerically corresponding day in the calendar month that
is one month thereafter, provided that (a) if any Interest Period would
end on a day other than a Business Day, such Interest Period shall be
extended to the next succeeding Business Day unless such next
succeeding Business Day would fall in the next calendar month, in which
case such Interest Period shall end on the next preceding Business Day
and (b) any Interest Period that commences on the last Business Day of
a calendar month (or on a day for which there is no numerically
corresponding day in the last calendar month of such Interest Period)
shall end on the last Business Day of the last calendar month of such
Interest Period. For purposes hereof, the date of a Borrowing initially
shall be the date on which
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such Borrowing is made and thereafter shall be the effective date of
the most recent conversion or continuation of such Borrowing.
(f) Maturity Date. The definition of "Maturity Date" set forth
in Section 1.01 of the Credit Agreement is amended and restated in its entirety
to read as follows:
"Maturity Date" means May 11, 2006.
(g) Prepayment Event. A new clause (c)(v) is added to the
definition of "Prepayment Event" set forth in Section 1.01 of the Credit
Agreement to read as follows:
or (v) any equity securities issued pursuant to the 2003
Equity Commitment from time to time or the contribution of any proceeds
thereof to the Borrower;
2.2 New Definitions. Section 1.01 of the Credit Agreement is
amended to add, in the appropriate alphabetical order, the following new
definitions:
"2003 Equity Commitment" means the commitment by one or more
stockholders of Holdings (including LPA Investment) to purchase equity
securities of Holdings in an aggregate amount up to $14,500,000
pursuant to the 2003 Securities Purchase Agreement and the other 2003
Transaction Documents.
"2003 Securities Purchase Agreement" means the Securities
Purchase Agreement dated as of February 10, 2003, among Holdings, LPA
Investment and the other signatories thereto from time to time.
"2003 Transaction Documents" has the meaning given to the term
"Transaction Documents" in the Securities Purchase Agreement.
"Amendment No. 4" means that certain Amendment No. 4 to Credit
Agreement dated as of February 5, 2002 among the Borrower, Holdings and
the Lenders party thereto.
"Amendment No. 5" means that certain Amendment No. 5 to Credit
Agreement and Waiver dated as of February 10, 2003 among the Borrower,
Holdings and the Lenders party thereto.
2.3 Amortization of Term Loans. Section 2.10(a) of the Credit
Agreement is amended and restated to read as follows:
(a) Subject to adjustment pursuant to paragraph (c) of this
Section, the Borrower shall repay Term Borrowings on the last day of
each month set forth below in the aggregate principal amount set forth
opposite such month:
Date Amount
---- ------
November 1998 $ 250,000
February 1999 $ 250,000
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Date Amount
---- ------
May 1999 $ 250,000
August 1999 $ 250,000
November 1999 $ 250,000
February 2000 $ 250,000
May 2000 $ 250,000
August 2000 $ 250,000
November 2000 $ 250,000
February 2001 $ 250,000
May 2001 $ 250,000
August 2001 $ 250,000
November 2001 $ 250,000
February 2002 $ 250,000
May 2002 $ 250,000
August 2002 $ 250,000
November 2002 $ 250,000
February 2003 $ 250,000
May 2003 $ 250,000
August 2003 $ 250,000
November 2003 $ 250,000
February 2004 $ 250,000
May 2004 $ 250,000
August 2004 $ 250,000
November 2004 $ 250,000
February 2005 $ 2,500,000
May 2005 $ 2,500,000
August 2005 $ 2,500,000
November 2005 $ 5,000,000
February 2006 $ 5,000,000
Maturity Date $ 16,250,000
2.4 Financial Statements and Other Information.
(a) Section 5.01(b) of the Credit Agreement is amended by
inserting the phrase "other than during the period commencing on February 10,
2003 and ending on April 15, 2003" after the phrase "of each fiscal year of
Holdings".
(b) Section 5.01(c) of the Credit Agreement is amended by
inserting the phrase "and other than during the period commencing on February
10, 2003 and ending March 15, 2003" after the phrase "other than the last day of
a fiscal quarter of Holdings".
(c) Section 5.01 of the Credit Agreement is amended by deleting
the period at the end of clause (h) and inserting the following new clauses
(i), (j), (k), (l) and (m) at the end thereof:
(i) commencing on March 15, 2003 and within 30 days after the
end of each of the four-week fiscal periods of Holdings thereafter, a
13 week forecast of cash flows of the Borrower;
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(j) any information required to be provided by Holdings and
the Borrower to the Lenders pursuant to the terms of Section 5.01(a)
and Sections 5.01(c) through 5.01(h) which has not been previously
provided to the Lenders (and which by the terms of such Sections should
have been previously provided to the Lenders) shall be delivered to the
Lenders on or before March 15, 2003;
(k) any information required to be provided by Holdings and
the Borrower to the Lenders pursuant to the terms of Section 5.01(b)
which has not been previously provided to the Lenders (and which by the
terms of such Section should have been previously provided to the
Lenders) shall be delivered to the Lenders on or before April 15, 2003;
(l) any information required to be provided by Holdings and
the Borrower to the Lenders pursuant to the terms of Sections 5.01(b)
and 5.01(c) during the period commencing on February 10, 2003 and
ending March 15, 2003 or April 15, 2003, as applicable, but for the
amendments set forth in Sections 2.4(a) and 2.4(b) of Amendment No. 5,
shall be delivered to the Lenders on or before April 15, 2003; and
(m) commencing February 14, 2003 and within 30 days after the
end of each the four-week fiscal periods of Holdings thereafter, a list
of all material assets acquired by any Loan Party during the
immediately preceding four-week fiscal period and required to be
disclosed to the Administrative Agent pursuant to Section 5.13(b),
certified by an executive officer or Financial Officer of the Borrower.
2.5 Compliance with Laws. Section 5.10 of the Credit Agreement is
amended by
(a) inserting the phrase "(other than during the period commencing
on February 10, 2003 and ending April 15, 2003 (solely with respect to the
obligations of Holdings and the Borrower to file reports and other materials
with the Securities and Exchange Commission on a timely basis only))" after the
phrase "any Governmental Authority applicable to it or its property"; and
(b) inserting the following sentence at the end of Section 5.10:
"Any reports and other materials required to be filed, on or before April 15,
2003, by Holdings and the Borrower with the Securities and Exchange Commission
pursuant to the rules and regulations of the Securities Exchange Commission
shall be filed on or before such date."
2.6 Equity Commitments. Section 5.16 of the Credit Agreement is
amended and restated in its entirety to read as follows:
SECTION 5.16. Holdings and the Borrower shall take such action
as is necessary to maintain the Equity Commitment and the 2003 Equity
Commitment and to keep the Securities Purchase Agreement and the 2003
Securities Purchase Agreement in full force and effect and enforce
their respective rights thereunder.
2.7 Consultant. A new Section 5.17 is added to the Credit
Agreement to read as follows:
SECTION 5.17. Engagement of Consultant.
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(a) On or prior to March 28, 2003, 2003, the Borrower shall
engage (the "Engagement") a financial consultant (the "Consultant") to
provide the Borrower with the services set forth in Schedule 5.17 (the
"Services"). The Consultant (including any replacement thereof) shall
be selected by the Borrower from the list of Persons provided by the
Administrative Agent. After completion of the Services and delivery to
the Administrative Agent of all reports and results received by the
Borrower from the Consultant in connection with the Services, the
Borrower shall be permitted to terminate the Engagement on the earlier
of (x) the date that Holdings satisfies its obligations under Sections
5.01(c) and 5.01(i) for three consecutive four-week fiscal periods
following February 10, 2003; (y) the date that the aggregate fees paid
by the Borrower to the Consultant (including any replacement thereof)
in connection with the Services exceeds the Consultant Fee Cap and (z)
such date as agreed to by the Administrative Agent. As used herein,
"Consultant Fee Cap" shall mean an amount jointly determined by the
Borrower and the Administrative Agent (each acting in good faith) to be
a reasonable estimate of the aggregate fees to be paid to the
Consultant to perform the Services. The Consultant Fee Cap shall be set
forth in a writing acknowledged by the Borrower and the Administrative
Agent within 10 days following the Engagement.
(b) Each assignment given by the Borrower to the Consultant
in connection with the performance of the Services must be approved by
the Administrative Agent. The Administrative Agent may request
additional assignments to be conducted by the Consultant, provided that
such assignments are within the scope of the Services and the Services
(as reasonably determined by the Administrative Agent) have not been
completed.
(c) The Borrower shall provide the Administrative Agent with
copies of the work product of the Consultant delivered to the Borrower
pursuant to the terms of the Engagement within five days following
receipt thereof by the Borrower. The Administrative Agent may
communicate with the Consultant at any time during the Engagement
without the consent of any Loan Party provided that one or more
representatives of the Borrower are entitled to participate in such
communications to the extent that such communications involve the scope
of the Services (including any new assignments thereof) or any
conclusions reached by the Consultant in connection with the Services.
The Borrower shall use commercially reasonable efforts to cause the
Consultant to complete the Services and deliver the work product
related thereto on a timely basis.
(d) All fees and expenses of the Consultant incurred in
connection with the Engagement shall be paid by the Borrower, and
neither the Administrative Agent nor any Lender shall have any
obligation to pay any fees or expenses of the Consultant for the
Services.
2.8 Indebtedness; Certain Equity Securities. Section 6.01(c)
of the Credit Agreement is amended and restated in its entirety to read as
follows:
(c) Neither Holdings nor the Borrower will, nor will it
permit any of its Subsidiaries to, issue any preferred stock (other
than (a) the currently outstanding
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preferred stock of Holdings and the preferred stock of Holdings, if
any, to be issued in connection with the New Equity Issuance, the
Equity Commitment and the 2003 Equity Commitment) and (b) any preferred
stock issued by Holdings which is not Disqualified Stock (as defined in
the Senior Unsecured Notes Indenture)) or become liable in respect of
any obligation (contingent or otherwise) to purchase, redeem, retire,
acquire or make any other payment in respect of any shares of capital
stock of Holdings, the Borrower or any Subsidiary or any option,
warrant or other right to acquire any such shares of capital stock.
2.9 Acquisitions. Section 6.04(a)(ii) of the Credit Agreement is
amended and restated in its entirety to read as follows:
(ii) with the prior written consent of all Lenders, Permitted
Acquisitions; provided that, notwithstanding the foregoing, Permitted
Acquisitions funded with equity of, or equity proceeds received by,
Holdings shall be permitted subject only to the consent of the Required
Lenders;
2.10 Sale and Lease-Back Transactions.
(a) Section 6.06(b)(i) of the Credit Agreement is amended by
deleting "$30,000,000" and in lieu thereof inserting the following
"$15,000,000".
(b) Section 6.06 of the Credit Agreement is amended by inserting
the following at the end of such section:
Notwithstanding clauses (a) and (b) in the foregoing sentence,
at no time shall the aggregate fair value of all Sale Leasebacks
completed during any fiscal year commencing after June 30, 2002 exceed
$5,000,000.
2.11 Restricted Payments; Certain Payments of Indebtedness. The
last sentence of Section 6.08(a) of the Credit Agreement is amended by deleting
clauses (ii) and (v) and in lieu thereof inserting the following "[Intentionally
Omitted.]".
2.12 Amendment of Material Documents. Section 6.11 of the Credit
Agreement is amended and restated in its entirety to read as follows:
SECTION 6.11. Amendment of Material Documents. Except for
amendments and modifications to the Certificate of Incorporation of
Holdings in connection with the New Equity Issuance, the Transaction
Documents and the 2003 Transaction Documents Holdings and the Borrower
will not, and will not permit any Subsidiary to, amend, modify or waive
any of its rights under (a) their respective certificates of
incorporation, by-laws or other organizational documents, (b) the
Management Agreement, (c) the Merger Agreement, (d) the Certificate of
Designations, (e) the Senior Unsecured Notes or the Senior Unsecured
Notes Indenture or (f) the Stockholders Agreement, in each case other
than amendments, modifications or waivers that would not reasonably be
expected to adversely affect the interests of the Lenders.
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2.13 Leverage Ratio. Section 6.13 of the Credit Agreement is
amended and restated in its entirety to read as follows:
SECTION 6.13. Leverage Ratio. The Borrower will not permit the
Leverage Ratio, as of the last day of any fiscal quarter ending closest
to the date set forth below, to be in excess of the ratio set forth
opposite such date:
Quarter Ending Closest To: Maximum Ratio
-------------------------- -------------
March 31, 2003 13.50 to 1.00
June 30, 2003 9.25 to 1.00
September 30, 2003 8.50 to 1.00
December 31, 2003 8.40 to 1.00
March 31, 2004 7.60 to 1.00
June 30, 2004 7.20 to 1.00
September 30, 2004 6.85 to 1.00
December 31, 2004 6.85 to 1.00
March 31, 2005 6.40 to 1.00
June 30, 2005 5.90 to 1.00
September 30, 2005 5.60 to 1.00
December 31, 2005 5.50 to 1.00
March 31, 2006 5.00 to 1.00
2.14 Consolidated Fixed Charge Coverage Ratio. Section 6.14 of the
Credit Agreement is amended and restated in its entirety to read as follows:
SECTION 6.14. Consolidated Fixed Charge Coverage Ratio.
(a) The Borrower will not permit the Consolidated Fixed
Charge Coverage Ratio for the four fiscal quarter period ending closest
to each date set forth below to be less than the ratio set forth
opposite such date:
Period: Minimum Ratio
------- -------------
March 31, 2003 1.00 to 1.00
June 30, 2003 1.00 to 1.00
September 30, 2003 1.05 to 1.00
December 31, 2003 1.05 to 1.00
March 31, 2004 1.05 to 1.00
June 30, 2004 1.10 to 1.00
September 30, 2004 1.10 to 1.00
December 31, 2004 1.10 to 1.00
March 31, 2005 1.10 to 1.00
June 30, 2005 1.10 to 1.00
September 30, 2005 1.10 to 1.00
December 31, 2005 1.10 to 1.00
March 31, 2006 1.10 to 1.00
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(b) Notwithstanding anything to the contrary contained
herein, the failure by the Borrower to satisfy its obligations in
Section 6.14(a) with respect to any fiscal quarter shall not constitute
a Default or an Event of Default if Holdings receives proceeds from the
2003 Equity Commitment equal to the applicable Shortfall (as defined in
the 2003 Securities Purchase Agreement) for such fiscal quarter in
accordance with the terms of the 2003 Securities Purchase Agreement
within 20 days following the date that such proceeds are required to be
paid to Holdings in accordance with the terms thereof.
2.15 Minimum Consolidated EBITDA. Section 6.15 of the Credit
Agreement is amended and restated in its entirety to read as follows:
SECTION 6.15. Minimum Consolidated EBITDA. The Borrower will
not permit Consolidated EBITDA for any period set forth below to be
less than the amount set forth below opposite such period:
Minimum
Consolidated
Period: EBITDA
------- ------------
For the three fiscal quarter
period ending closest to
March 31, 2003 $ 14,250,000
For the four fiscal quarter
period ending closest to
each date set forth below:
June 30, 2003 $ 21,000,000
September 30, 2003 $ 22,250,000
December 31, 2003 $ 23,750,000
March 31, 2004 $ 25,500,000
June 30, 2004 $ 25,750,000
September 30, 2004 $ 26,750,000
December 31, 2004 $ 27,750,000
March 31, 2005 $ 28,750,000
June 30, 2005 $ 29,500,000
September 30, 2005 $ 30,500,000
December 31, 2005 $ 31,500,000
March 31, 2006 $ 32,750,000
2.16 Equity Documents. Section 6.18 of the Credit Agreement is
amended and restated in its entirety to read as follows:
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SECTION 6.18 Equity Documents. Neither Holdings nor the
Borrower will permit the Securities Purchase Agreement or the 2003
Securities Purchase Agreement to be modified or amended without the
prior written consent of the Lenders.
2.17 Events of Default. Article VII of the Credit Agreement is
amended by adding new clauses (p), (q), (r), (s), (t), (u) and (v) to read as
follows:
(p) Holdings has not received proceeds from the 2003 Equity
Commitment, if any, in accordance with the terms of the 2003 Securities
Purchase Agreement within 20 days following the date that such proceeds
are required to be paid to Holdings in accordance with the terms
thereof;
(q) the Borrower shall fail to provide any information
required to be provided by Holdings and the Borrower to the Lenders
pursuant to the terms of Sections 5.01(j) and 5.01(l);
(r) the Borrower shall fail to provide any information
required to be provided by Holdings and the Borrower to the Lenders
pursuant to the terms of Sections 5.01(k) and 5.01(m);
(s) the Borrower shall fail to pay, on or before two
Business Days following receipt by the Borrower of an invoice for
payment (together with appropriate supporting information substantially
in the form of supporting documentation previously provided to the
Borrower), all out-of-pocket expenses incurred to date by the
Administrative Agent in connection with the negotiation, preparation,
execution and delivery of Amendment No. 5 and the other transactions
contemplated therein, including without limitation the reasonable legal
fees and expenses of Xxxxxx and Xxxxx, L.L.P.;
(t) the Borrower shall fail to engage, on or before March
28, 2003, the Consultant to provide the Services;
(u) the Borrower shall fail to provide the Administrative
Agent, on or before February 14, 2003, with a list of all owned real
property for which a Mortgage has not been previously granted pursuant
to the terms hereof, together with a complete legal description of such
real property and a copy of any deeds, surveys, title insurance
policies, title commitments, appraisals, environmental reviews
(including any Phase I assessments), and such other documents and
instruments, in each case, delivered to the Borrower in connection with
the acquisition of such real property; or
(v) Holdings, the Borrower, or any other Loan Party, as
applicable, shall fail to execute and deliver to the Collateral Agent,
within two Business Days following receipt of such document from the
Collateral Agent, a Mortgage and such other documents, financing
statements, agreements and instruments, that may be required under any
applicable law, or which the Collateral Agent or the Required Lenders
may reasonably request, to grant, preserve, protect or perfect a Lien
on the real property identified in clause (u) of Article VII.
2.18 Notices.
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(a) Section 9.01(b) is amended and restated in its entirety to
read as follows:
(b) if to the Administrative Agent, the Documentation Agent,
the Collateral Agent, the Swingline Bank or the Issuing Bank, to:
U.S. Bank National Association
SL-MO-T7CP
One US Bank Xxxxx
0xx & Xxxxxxxxxx Xxxxxxx
Xx. Xxxxx, XX 00000
Attention: Xxxxx X. Xxx
Facsimile (000) 000-0000;
(b) Sections 9.01(c) and (d) are amended and restated in their
entirety to read as follows:
(c) [Intentionally Omitted.]
(d) [Intentionally Omitted.]
2.19 Waivers; Amendments. New clauses (xi) and (xii) are added to
Section 9.02(b) of the Credit Agreement to read as follows:
(xi) waive an Event of Default under (A) Section 5.17 or (B) clauses
(p), (q) and (t) of Article VII, in each case, without the consent of each
Lender or (xii) amend or waive Section 6.08(b) without the consent of each
Lender.
2.20 Schedule 5.17. A new Schedule, in the form of Exhibit A
hereto, is added to the Credit Agreement.
2.21 Amendment No. 3. With effect as of November 14, 2001,
Sections 1.2(a)(i), (ii) and (iii) of Amendment No. 3 are hereby deleted in
their entirety.
SECTION 3
CONDITIONS PRECEDENT
This Amendment shall not be effective until the conditions set forth
below have been satisfied (or waived by the Lenders).
(a) Documentation. Receipt by the Administrative Agent of
counterparts of this Amendment executed by each of the Loan Parties and
the Lenders.
(b) Authority. Receipt by the Administrative Agent of a
certificate of the secretary of each of the Borrower, Holdings and the
Subsidiary Loan Parties dated as of the date hereof certifying as to
(i) resolutions duly adopted by the Board of Directors approving this
Amendment (and any Loan Documents to be executed in connection
herewith) and the transactions contemplated herein and authorizing the
execution,
13
delivery and performance hereof and thereof; (ii) its respective
certificate or articles of incorporation and by-laws; and (iii) the
incumbency of its officers executing this Amendment and any Loan
Documents to be executed in connection herewith on its behalf.
(c) Good Standing. Receipt by the Administrative Agent of
copies of certificates of good standing, existence or its equivalent
with respect to each Loan Party certified as of a recent date by the
appropriate Governmental Authority of the state or other jurisdiction
of its formation and the state of its chief executive office and
principal place of business.
(d) Fees and Expenses. (i) The payment by the Borrower of an
amendment fee to each Lender who duly executes and delivers this
Amendment on or before 12:00 p.m., Eastern Time, on February 11, 2003
of seventy-five basis points (0.75%) of its aggregate Commitments and
(ii) payment to Xxxxxx and Xxxxx, L.L.P., counsel to the Administrative
Agent and Highland Capital Management, L.P., of all legal fees incurred
by such Persons in connection with the Credit Agreement, including an
advance for anticipated expenses to be incurred in connection with
collateral matters, to the extent an invoice for such fees and expenses
is sent to the Borrower or its counsel prior to the date hereof.
(e) 2003 Transaction Documents. Holdings shall have entered
into documentation evidencing the 2003 Equity Commitment in an amount
equal to at least $14,500,000 in the aggregate, in form and substance
reasonably satisfactory to the Lenders. The Administrative Agent shall
have received a copy, certified by an officer of Holdings as true and
complete, of each 2003 Transaction Document as originally executed and
delivered, together with all exhibits and schedules thereto.
(f) Legal Opinion. Receipt by the Administrative Agent of an
opinion from O'Melveny & Xxxxx LLP, counsel to the Loan Parties,
relating to this Amendment and the transactions contemplated herein, in
form and substance satisfactory to the Administrative Agent.
(g) Perfection Certificate. Receipt by the Administrative
Agent of a perfection certificate, in the form of Exhibit B hereto,
completed by the Loan Parties.
SECTION 4
MISCELLANEOUS
4.1 Ratification of Loan Documents. The terms "Credit Agreement" and
"Agreement" as used in each of the Loan Documents shall hereafter mean the
Credit Agreement as amended by this Amendment. The Borrower and Holdings each
(a) ratifies and confirms all provisions of the Credit Agreement, as amended by
this Amendment, and the other Loan Documents; (b) ratifies and confirms that all
guaranties, assurances, and liens granted, conveyed, or assigned to Lender under
the Loan Documents are not released, reduced, or otherwise adversely affected by
this Amendment and continue to guarantee and secure full payment and performance
of its obligations under the Credit Agreement and the other Loan Documents; and
14
(c) agrees to perform such reasonable acts and duly authorize, execute,
acknowledge, deliver, file and record such additional documents, and
certificates as the Administrative Agent or Required Lenders may reasonably
request in order for the Lenders to create, perfect, preserve and protect those
guaranties, assurances and liens. Except to the extent amended hereby, all
terms, provisions and conditions of the Credit Agreement, the other Loan
Documents and all documents executed in connection therewith, shall continue in
full force and effect and shall remain enforceable and binding in accordance
with their respective terms.
4.2 Authority/Enforceability. Each of the Loan Parties, the
Administrative Agent and the Lenders party hereto represents and warrants as set
forth below.
(a) It has taken all necessary action to authorize the
execution, delivery and performance of this Amendment.
(b) This Amendment has been duly executed and delivered by
such Person and constitutes such Person's legal, valid and binding
obligations, enforceable in accordance with its terms, except as such
enforceability may be subject to (i) bankruptcy, insolvency,
reorganization, fraudulent conveyance or transfer, moratorium or
similar laws affecting creditors' rights generally and (ii) general
principles of equity (regardless of whether such enforceability is
considered in a proceeding at law or in equity).
(c) No material consent, approval, authorization or order
of, or filing, registration or qualification with, any court or
Governmental Authority or third party is required in connection with
the execution, delivery or performance by such Person of this
Amendment.
4.3 Representation and Warranties. Each of the Borrower and
Holdings represents and warrants to the Lenders as set forth below.
(a) The representations and warranties of the Borrower and
Holdings set forth in Article III of the Credit Agreement qualified as
to materiality are true and correct as of the date hereof and those not
so qualified are true and correct as of the date hereof in all material
respects, except, in each case, for those that specifically relate to
an earlier date.
(b) No event has occurred and is continuing which
constitutes a Default or an Event of Default (other than as
specifically waived hereby).
(c) The Security Documents create a valid security interest
in, and Lien upon, the Collateral.
(d) The Loan Documents, as amended hereby, are valid and
binding obligations of the Loan Parties, enforceable in accordance with
their respective terms, subject to applicable bankruptcy, insolvency,
reorganization, moratorium or other laws affecting creditors' rights
generally and subject to general principles of equity, regardless of
whether considered in a proceeding in equity or law.
15
(e) The execution and delivery of this Amendment and the
performance of the transactions contemplated hereby (a) do not require
any consent or approval of, registration or filing with, or any other
action by, any Governmental Authority, except such as have been
obtained or made and are in full force and effect or, if not obtained
or made, would not, individually or in the aggregate, be reasonably
likely to have a Material Adverse Effect; (b) will not violate any
applicable law or regulation or the charter, by-laws or other
organizational documents of Holdings, the Borrower or any of the
Subsidiaries or any order of any Governmental Authority, except, with
respect to any violation of applicable law or regulation or any order
of any Governmental Authority, to the extent any such violation would
not, individually or in the aggregate, be reasonably likely to have a
Material Adverse Effect; and (c) will not violate or result in a
default under any indenture, agreement or other instrument binding upon
Holdings, the Borrower or any of the Subsidiaries or its assets, or
give rise to a right thereunder to require any payment to be made by
Holdings, the Borrower or any of the Subsidiaries, except to the extent
any such violation, default or right would not, individually or in the
aggregate, be reasonably likely to have a Material Adverse Effect.
(f) The Net Proceeds obtained from the sale of the real
property identified on Schedule I hereto were used to fund expenditures
for other assets used in the same line of business or in a Related
Business prior to the date that was 18 months after the receipt of such
Net Proceeds. The information in Schedule I is true and correct.
4.4 General Release. In consideration of the Lenders entering into
this Amendment, the Loan Parties hereby release the Administrative Agent, the
Lenders, and the Administrative Agent's and the Lenders' respective officers,
employees, representatives, agents, counsel and directors from any and all
actions, causes of action, claims, demands, damages and liabilities of whatever
kind or nature, in law or in equity, now known or unknown, suspected or
unsuspected to the extent that any of the foregoing arises from any action or
failure to act under the Credit Agreement on or prior to the date hereof.
4.5 Counterparts/Telecopy. This Amendment may be executed in any
number of counterparts, each of which when so executed and delivered shall be an
original, but all of which shall constitute one and the same instrument.
Delivery of executed counterparts by telecopy shall be effective as an original
and shall constitute a representation that an original will be delivered if
requested.
4.6 Further Assurances. The Borrower agrees to promptly take such
action, upon the reasonable request of the Administrative Agent or the Required
Lenders, as is reasonably necessary to carry out the intent of this Amendment,
the Security Documents and the Loan Documents, including, but not limited to,
such actions as are necessary to ensure that the Lenders have a perfected
security interest in the Collateral subject to no Liens other than the Liens
permitted by Section 6.02 of the Credit Agreement.
4.7 GOVERNING LAW. THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS
OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
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17
Signature Page
Amendment No. 5 to Credit Agreement and Waiver
La Petite Academy, Inc.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed and delivered by their proper and duly authorized officers or
attorneys-in-fact as of the day and year first above written.
BORROWER: LA PETITE ACADEMY, INC.
By: /s/ Xxxx X. Xxxxxx
-------------------------
Name: Xxxx X. Xxxxxx
Title: President
HOLDINGS: LA PETITE ACADEMY, INC.
By: /s/ Xxxx X. Xxxxxx
-------------------------
Name: Xxxx X. Xxxxxx
Title: President
Signature Page
Amendment No. 5 to Credit Agreement and Waiver
La Petite Academy, Inc.
Each of the undersigned are unconditional guarantors of all obligations
of the Borrower under the Loan Documents and acknowledge and agree that (a) this
Amendment does not modify or waive any of its obligations under the Loan
Documents, including the Guarantee Agreements and (b) all Liens granted by it to
support its obligations remain in full force and effect.
LPA HOLDING CORP.
By: /s/ Xxxx X. Xxxxxx
------------------------
Name: Xxxx X. Xxxxxx
Title: President
LPA SERVICES, INC.
By: /s/ Xxxx X. Xxxxxx
------------------------
Name: Xxxx X. Xxxxxx
Title: President
BRIGHT START, INC.
By: /s/ Xxxx X. Xxxxxx
------------------------
Name: Xxxx X. Xxxxxx
Title: President
Signature Page
Amendment No. 5 to Credit Agreement and Waiver
La Petite Academy, Inc.
LENDERS: U.S. BANK NATIONAL ASSOCIATION
By: /s/ Xxxxx X. Xxx
--------------------------
Name: Xxxxx X. Xxx
Title: Vice President
Signature Page
Amendment No. 5 to Credit Agreement and Waiver
La Petite Academy, Inc.
BANK OF AMERICA, N.A. (formerly
NationsBank, N.A.)
By: /s/ Xxxxxxx Xxxxxxxx
--------------------------
Name: Xxxxxxx Xxxxxxxx
Title: Managing Director
Signature Page
Amendment No. 5 to Credit Agreement and Waiver
La Petite Academy, Inc.
JPMORGAN CHASE BANK (formerly The
Chase Manhattan Bank)
By: /s/ Xxxxx XxXxxxxx
--------------------------
Name: Xxxxx XxXxxxxx
Title: Vice President
Signature Page
Amendment No. 5 to Credit Agreement and Waiver
La Petite Academy, Inc.
ML CBO IV CAYMAN
By: Highland Capital Management, L.P.
as Collateral Manager
By: /s/ Xxxx Xxxxx
---------------------
Name: Xxxx Xxxxx
Title: Chief Investment Officer
Signature Page
Amendment No. 5 to Credit Agreement and Waiver
La Petite Academy, Inc.
HIGHLAND LEGACY, LTD
By: Highland Capital Management, L.P.
as Collateral Manager
By: /s/ Xxxx Xxxxx
---------------------
Name: Xxxx Xxxxx
Title: Chief Investment Officer
Signature Page
Amendment No. 5 to Credit Agreement and Waiver
La Petite Academy, Inc.
PAMCO CAYMAN LTD
By: Highland Capital Management, L.P.
as Collateral Manager
By: /s/ Xxxx Xxxxx
---------------------
Name: Xxxx Xxxxx
Title: Chief Investment Officer
Signature Page
Amendment No. 5 to Credit Agreement and Waiver
La Petite Academy, Inc.
KZH - HIGHLAND 2 LLC
By: /s/ Xxxxxx Xxxxx
-------------------
Name: Xxxxxx Xxxxx
Title: Authorized Agent
Signature Page
Amendment No. 5 to Credit Agreement and Waiver
La Petite Academy, Inc.
SRV - HIGHLAND, INC
By: /s/ Xxx X. Xxxxxx
---------------------
Name: Xxx X. Xxxxxx
Title: Asst Vice President
