CERTIFICATE OF DESIGNATIONS,
PREFERENCES AND RIGHTS
OF
SERIES A REDEEMABLE PREFERRED STOCK
OF
LPA HOLDING CORP.
* * * *
LPA HOLDING CORP., a corporation organized and existing
under the General Corporation Law of the State of Delaware.
DOES HEREBY CERTIFY.
That, pursuant to authority conferred upon the Board of
Directors by the Certificate of Incorporation of said Corporation, and
pursuant to the provisions of Section 151 of Title 8 of the Delaware Code of
1953, said Board of Directors, at a meeting duly held on May 11, 1998, adopted
a resolution providing for the issuance of a series of 30,000 shares of Series
A Redeemable Preferred Stock (as herein defined), which resolution is as
follows:
RESOLVED, that a series of Preferred Stock in LPA Holding
Corp., a Delaware corporation (the "Corporation"), having the rights,
preferences, privileges and restrictions, and the number of shares
constituting such series and the designation of such series set forth below,
is hereby authorized by the Board of Directors of the Corporation pursuant to
authority given by the Corporation's Certificate of Incorporation, as amended.
1. Number and Designation.
(a) This series shall consist of 30,000 preferred shares in
the Corporation and shall be designated the Series A Redeemable
Preferred Stock ("Redeemable Preferred Stock").
2. Dividends.
(a) During the Initial Dividend Period, dividends shall accrue
at the Applicable Dividend Rate on the sum of the Original Cost of a
share of Redeemable Preferred Stock plus all accumulated and unpaid
dividends thereon since the most recently preceding Preferred
Dividend Payment Date. Any dividends which accrue pursuant to this
Section 2(a) and which are not paid on the Preferred Dividend Payment
Date shall be classified as "accumulated dividends" and shall remain
"accumulated and unpaid dividends" until paid or otherwise canceled
pursuant to this Certificate. Such dividends shall accrue at the
Applicable Dividend Rate regardless of whether the Board of Directors
has declared a
dividend payment or whether there are any profits, surplus or other
funds of the Corporation legally available for such dividends.
(b) During the Subsequent Dividend Period, the holders of the
outstanding shares of Redeemable Preferred Stock shall be entitled to
receive, when, as and if declared by the Board of Directors, out of
funds legally available therefor, cash dividends which shall accrue
at the Applicable Dividend Rate on the sum of the Original Cost of a
share of Redeemable Preferred Stock plus all accumulated and unpaid
dividends thereon since the most recently preceding Preferred
Dividend Payment Date, payable on each of December 31 and June 30
(each, the "Preferred Dividend Payment Date"), the first such
Preferred Dividend Payment Date for which dividends are payable in
cash being December 31, 2005. Such dividends shall accrue at the
Applicable Dividend Rate regardless of whether the Board of Directors
of the Corporation has declared a dividend payment or whether there
are any profits, surplus or other funds of the Corporation legally
available for dividends; provided, however that such dividend
payments are subject to any restrictions set forth in the agreements
with the holders of Senior Debt of the Corporation or its
Subsidiaries (including any limitations on dividends or distributions
by Subsidiaries.) Any dividends which accrue pursuant to this Section
2(b) and which are not paid on the Preferred Dividend Payment Date
shall be classified as "accumulated dividends" and shall remain
"accumulated and unpaid dividends" until paid or otherwise canceled
pursuant to this Certificate. All payments due under this Section
2(b) to any holder of shares of Redeemable Preferred Stock shall be
made to the nearest cent.
(c) The dividends payable with respect to the Redeemable
Preferred Stock on each Preferred Dividend Payment Date pursuant to
Section 2(b) shall be paid to the holders of shares of the Redeemable
Preferred Stock as they appear on the stock records of the
Corporation on such date (the "Preferred Record Date") as shall be
fixed by the Board of Directors, which Preferred Record Date shall
not be more than 60 days prior to the applicable Preferred Dividend
Payment Date and shall not precede the date upon which the resolution
fixing such Preferred Record Date is adopted.
(d) No dividend or distribution shall be paid to the holders
of any class of Redeemable Preferred Stock pursuant to Section 2(b)
in any form of consideration other than cash unless the holders of a
majority of the shares of such class of Redeemable Preferred Stock,
at the time of the distribution, approve such distribution (including
the valuation of the consideration being distributed).
(e) Subject to the restrictions set forth in Section 8(b), so
long as any shares of the Redeemable Preferred Stock are outstanding,
the Corporation shall not pay or declare or set apart for payment any
dividend or make any other distribution or other payment on or with
respect to the Common Stock or any class or series of stock of the
Corporation ranking on a parity with or junior to the Redeemable
Preferred Stock with respect to dividends or redeem, repurchase or
otherwise acquire any such stock unless the Corporation has paid, or
at the same time pays, all unpaid dividends on the Redeemable
Preferred Stock pursuant to this Section 2 that have accrued since
the beginning of the Subsequent Dividend Period.
(f) Except as otherwise provided herein, if at any time the
Corporation pays less than the total amount of dividends then accrued
with respect to the Redeemable Preferred Stock, such payment shall be
distributed ratably among the holders of the such class of Redeemable
Preferred Stock based upon the number of shares of such class of
Redeemable Preferred Stock then held by each holder.
3. Liquidity Event.
Upon a Liquidity Event, after payment or provision for
payment in cash or cash equivalents of the debts and other liabilities of the
Corporation, the holders of Redeemable Preferred Stock shall be entitled to
receive, out of the remaining assets of the Corporation available for
distribution to its stockholders, with respect to each share of Redeemable
Preferred Stock, an amount equal to the Liquidation Amount of such share
before any distribution shall be made to the holders of the Common Stock or
any other class of capital stock of the Corporation ranking junior to the
Redeemable Preferred Stock. If upon any Liquidity Event the assets of the
Corporation available for distribution to its stockholders shall be
insufficient to pay the holders of Redeemable Preferred Stock the full
Liquidation Amount to which they shall be entitled, the holders of Redeemable
Preferred Stock shall share in any distribution of assets pro rata in
accordance with the total Liquidation Amount that each such holder would have
received had there been such sufficient assets.
4. Mandatory Redemption.
Subject to the Corporation having funds legally available
for such purpose, the Corporation shall redeem all of the shares of the
Redeemable Preferred Stock then outstanding on the Mandatory Redemption Date.
The per share redemption price at which shares of the Redeemable Preferred
Stock are to be redeemed pursuant to this Section 4 shall be equal to the
Liquidation Amount (the "Mandatory Redemption Price"). If the funds of the
Corporation legally available for redemption of shares of Redeemable Preferred
Stock shall be insufficient to permit the payment of the Mandatory Redemption
Price required to be paid pursuant to this Section 4, then the holders of
Redeemable Preferred Stock shall share in any legally available funds ratably
in any such redemption based on the respective number of Redeemable Preferred
Stock that each holder thereof holds and the Corporation shall redeem the
remaining shares to have been redeemed as soon as practicable after the
Corporation has funds legally available therefor.
5. Change of Control
(a) Upon the occurrence of a Change of Control, the
Corporation shall be obligated to make an offer to purchase (the
"Change of Control Offer") the outstanding Redeemable Preferred Stock
at a purchase price equal to 101% of the original cost thereof plus,
without duplication, an amount in cash equal to all accumulated and
unpaid dividends thereon (including an amount in cash equal to a
prorated dividend for the period from the immediately preceding
Preferred Dividend Payment Date to the Change of Control Payment
Date) (such applicable purchase price being hereinafter referred to
as
the "Change of Control Purchase Price") in accordance with the
procedures set forth in this Section 5.
(b) Within 90 days of the occurrence of a Change of Control,
the Corporation shall (i) cause a notice of the Change of Control
Offer to be sent at least once to the Dow Jones News Service or
similar business news service in the United States and (ii) send by
first-class mail, postage prepaid, to each holder of Redeemable
Preferred Stock, at the address appearing in the register maintained
by or on behalf of the Corporation, a notice stating:
(i) that the Change of Control Offer is being made
pursuant to this Section 5 and that all Redeemable Preferred
Stock validly tendered will be accepted for payment;
(ii) the Change of Control Purchase Price and the
purchase date (which shall be a business day not earlier than
30 days nor later than 60 days from the date such notice is
mailed (the "Change of Control Payment Date"));
(iii) that any Redeemable Preferred Stock not validly
tendered will continue to accumulate dividends;
(iv) that, unless the Corporation defaults in the
payment of the Change of Control Purchase Price, any
Redeemable Preferred Stock accepted for payment pursuant to
the Change of Control Offer shall cease to accumulate
dividends after the Change of Control Payment Date;
(v) that holders accepting the offer to have their
Redeemable Preferred Stock purchased pursuant to a Change of
Control Offer will be required to surrender their certificates
representing Redeemable Preferred Stock to the Corporation at
the address specified in the notice prior to the close of
business on the business day preceding the Change of Control
Payment Date;
(vi) that holders will be entitled to withdraw their
acceptance if the Corporation receives, not later than the
close of business on the third business day preceding the
Change of Control Payment Date, a telegram, telex, facsimile
transmission or letter setting forth the name of the holder,
the number of shares of Redeemable Preferred Stock delivered
for purchase, and a statement that such holder is
withdrawing his election to have such Redeemable Preferred
Stock purchased;
(vii) that holders whose Redeemable Preferred Stock is
being purchased only in part will be issued new certificates
representing the number of shares of Redeemable Preferred
Stock equal to the unpurchased portion of the certificates
surrendered; and
(viii) any other procedures that a holder must follow to
accept a Change of Control Offer or effect withdrawal of such
acceptance.
(c) The Corporation will comply with any securities laws and
regulations, to the extent such laws and regulations, to the extent
such laws and regulations are applicable to the redemption of the
Redeemable Preferred Stock in connection with a Change of Control
Offer. Without limiting the foregoing, in the event that a Change of
Control occurs and the holders of Redeemable Preferred Stock exercise
their right to require the Corporation to purchase Redeemable
Preferred Stock, if such purchase constitutes a "tender offer" for
purposes of Rule 14e-1 under the Exchange Act at that time, the
Corporation will comply with the requirements of Rule 14e-1 as then
in effect with respect to such repurchase.
(d) On the Change of Control Payment Date, the Corporation
shall, to the extent lawful, (i) accept for payment the number of
shares of Redeemable Preferred Stock validly tendered pursuant to the
Change of Control Offer and (ii) promptly mail to each holder of
shares so accepted the Change of Control Purchase Price therefor and
execute and issue a new Redeemable Preferred Stock certificate
representing the number of shares of Redeemable Preferred Stock equal
to any unpurchased shares represented by a certificate surrendered.
Unless the Corporation defaults in the payment for the shares of
Redeemable Preferred Stock validly tendered pursuant to the Change of
Control Offer, dividends shall cease to accrue with respect to the
shares of Redeemable Preferred Stock so tendered and all rights of
holders of such tendered shares shall terminate, except for the right
to receive payment therefor, on the Change of Control Payment Date.
(e) If any Senior Debt of the Corporation or its Subsidiaries
would prevent the Corporation from making a Change of Control Offer
or paying the Change of Control Purchase Price (including any
limitations on dividends or distributions by Subsidiaries), then,
upon a Change of Control, prior to the mailing of the notice to
holders described in Section 5(b) above, but in any event within 30
days following any Change of Control, the Corporation shall, to the
extent required to permit the repurchase of Redeemable Preferred
Stock pursuant to this Section 5, be required to (i) cause the
borrowers thereunder to repay in full all obligations under such
Senior Debt or (ii) cause such borrowers to obtain the requisite
consent from the holders of such Senior Debt to permit the repurchase
of the Redeemable Preferred Stock as described above. Until the
requirements of the immediately preceding sentence are satisfied, the
Corporation shall not make, and shall not be required to make, any
Change of Control Offer.
(f) (i) If the Corporation has issued any outstanding
Preferred Stock (other than the Redeemable Preferred Stock), and the
Corporation is required to make a Change of Control Offer or to make
a distribution with respect to such Preferred Stock (other than the
Redeemable Preferred Stock) in the event of a Change of Control, the
Corporation shall not consummate any such offer or distribution with
respect to such Preferred Stock (other than the Redeemable Preferred
Stock) until such time as the Corporation shall have paid the Change
of Control Purchase Price in full to the holders of Redeemable
Preferred Stock that have validly accepted the Corporation's Change
of Control Offer and shall otherwise have consummated the Change of
Control Offer made to holders of the Redeemable Preferred Stock and
(ii) the Corporation will not issue Preferred Stock with change of
control provisions requiring the payment of such Preferred Stock
prior to the
payment of the Redeemable Preferred Stock in the event
of a Change of Control under this Section 5.
(g) The Corporation will not be required to make a Change of
Control Offer upon a Change of Control if a third party makes such
Change of Control Offer contemporaneously with or upon a Change of
Control in the manner, at the times and otherwise in compliance with
the requirements of this Section 5 and purchases all Redeemable
Preferred Stock validly tendered and not withdrawn under such Change
of Control Offer.
6. Asset Sales
(a) Upon the consummation of an Asset Sale, the Corporation
shall apply, or cause a Subsidiary to apply, the Net Cash
Proceeds relating to such Asset Sale within eighteen months
after receipt thereof either (i) to prepay any Senior Debt,
(ii) to make an investment in properties and assets that
replace the properties and assets that were the subject of such
Asset Sale or in properties and assets that will be used in the
business of the Corporation and its Subsidiaries as existing on
the Original Issuance Date or in businesses the same, similar
or reasonably related thereto ("Replacement Assets"), or (iii)
a combination of prepayment and investment permitted by the
foregoing clauses (i) and (ii). On the 1st business day of the
nineteenth month after receipt of such Net Cash Proceeds after
an Asset Sale or such earlier date, if any, as the Board of
Directors of
the Corporation or of such Subsidiary determines not to apply the Net
Cash Proceeds relating to such Asset Sale as set forth in clauses
(i), (ii) and (iii) above (each, a "Net Proceeds Offer Trigger
Date"), such aggregate amount of Net Cash Proceeds which have
not been applied on or before such Net Proceeds Trigger Date as
permitted in clauses (i), (ii) or (iii) above (each a "Net Proceeds
Offer Amount") shall be applied by the Corporation or such Subsidiary
to make an offer to purchase (the "Net Proceeds Offer") on a date (the
"Net Proceeds Offer Payment Date") not less than 30 nor more than 60
days following the applicable Net Proceeds Offer Trigger Date, from
all holders of Redeemable Preferred Stock, the maximum amount of
Redeemable Preferred Stock that can be purchased with the Net
Proceeds Offer Amount at a price equal to the sum of (x) 101% of the
Liquidation Amount as of the most recently preceding Preferred
Dividend Payment Date of the Redeemable Preferred Stock to be
purchased, plus (y) accrued and unpaid dividends thereon, if any, to
the date of purchase (the "Net Proceeds Purchase Price"); provided,
however, that if at any time any non-cash consideration
received by the Corporation or any Subsidiary of the Corporation, as
the case may be, in connection with any Asset Sale is converted into or
sold or otherwise disposed of for cash (other than interest received
with respect to any such non-cash consideration), then such
conversion or disposition shall be deemed to constitute an Asset Sale
hereunder and the Net Cash Proceeds thereof shall be applied in
accordance with this covenant. The Corporation may defer the Net
Proceeds until there is an aggregate unutilized Net Proceeds Offer
Amount equal to or in excess of $10 million resulting from one or
more Asset Sales (at which time, the entire unutilized Net Proceeds
Offer Amount, and not just the amount in excess of $10 million, shall
be applied as required pursuant to this paragraph).
Notwithstanding the foregoing, the Corporation may redeem
pursuant to Section 7 the maximum amount of Redeemable Preferred Stock that
may be redeemed with the Net Proceeds Offer Amount. If the Corporation elects
to so redeem, it shall have no obligation to make a Net Cash Proceeds Offer.
If holders of Redeemable Preferred Stock accept the Net
Proceeds Offer with respect to Redeemable Preferred Stock having a Liquidation
Amount as of the most recently Preferred Dividend Payment Date in excess of
the Net Proceed Offer Amount, then such holders shall share ratably (or as
close thereto as possible to permit the redemption of whole shares) in any
such purchase based on the respective number of shares of Redeemable Preferred
Stock that each such holder thereof holds; provided, however, that in all
events, the Corporation shall purchase whole shares.
(b) On the Net Proceeds Offer Trigger Date, the Corporation
shall (i) cause a notice of the Net Proceeds Offer to be sent at
least once to the Dow Jones News Service or similar business news
service in the United States and (ii) send by first-class mail,
postage prepaid, to each holder of Redeemable Preferred Stock, at the
address appearing in the register maintained by the Transfer Agent, a
notice stating:
(i) that the Net Proceeds Offer is being made pursuant
to this Section 6 and that all Redeemable Preferred Stock
validly tendered will be accepted for payment;
(ii) the Net Proceeds Purchase Price and the purchase
date (which shall be a business day not earlier than 30 days
nor later than 60 days from the date such notice is mailed
(the "Net Proceeds Payment Date"));
(iii) that any Redeemable Preferred Stock not validly
tendered will continue to accumulate dividends;
(iv) that, unless the Corporation defaults in the
payment of the Net Proceeds Purchase Price, any Redeemable
Preferred Stock accepted for payment pursuant to the Net
Proceeds Offer shall cease to accumulate dividends after the
Net Proceeds Payment Date;
(v) that holders accepting the offer to have their
Redeemable Preferred Stock purchased pursuant to a Net
Proceeds Offer will be required to surrender their
certificates representing Redeemable Preferred Stock to the
Corporation at the address specified in the notice prior to
the close of business on the business day preceding the Net
Proceeds Payment Date;
(vi) that holders will be entitled to withdraw their
acceptance if the Corporation receives, not later than the
close of business on the third business day preceding the Net
Proceeds Payment Date, a telegram, telex, facsimile
transmission or letter setting forth the name of the holder,
the number of shares of Redeemable Preferred Stock delivered
for purchase, and a statement that such holder is withdrawing
his election to have such Redeemable Preferred Stock
purchased;
(vii) that holders whose Redeemable Preferred Stock is
being purchased only in part will be issued new certificates
representing the number of shares of Redeemable Preferred
Stock equal to the unpurchased portion of the certificates
surrendered; and
(viii) any other procedures that a holder must follow
to accept a Net Proceeds Offer or effect withdrawal of such
acceptance.
(c) The Corporation will comply with any securities laws and
regulations, to the extent such laws and regulations, to the extent
such laws and regulations are applicable to the redemption of the
Redeemable Preferred Stock in connection with a Net Proceeds Offer.
Without limiting the foregoing, in the event that an Asset Sale
occurs and the holders of Redeemable Preferred Stock exercise their
right to require the Corporation to purchase Redeemable Preferred
Stock, if such purchase constitutes a "tender offer" for purposes of
Rule 14e-1 under the Exchange Act at that time, the Corporation will
comply with the requirements of Rule 14e-1 as then in effect with
respect to such repurchase.
(d) On the Net Proceeds Payment Date, the Corporation shall,
to the extent lawful, (i) accept for payment the number of shares of
Redeemable Preferred Stock validly tendered pursuant to the Net
Proceeds Offer and (ii) promptly mail to each holder of shares so
accepted the Net Proceeds Purchase Price therefor the execute and
issue a new Redeemable Preferred Stock certificate representing the
number of shares of Redeemable Preferred Stock equal to any
unpurchased shares represented by a certificate surrendered. Unless
the Corporation defaults in the payment for the shares of Redeemable
Preferred Stock validly tendered pursuant to the Net Proceeds Offer,
dividends shall cease to accumulate with respect to the shares of
Redeemable Preferred Stock so tendered and all rights of holders of
such tendered shares shall terminate, except for the right to receive
payment therefor, on the Net Proceeds Payment Date.
(e) Any obligation on the part of the Corporation to pay the
Net Proceeds Purchase Price shall be subject to the Corporation's and
its Subsidiaries' obligations to comply with the covenants set forth
in its agreements with the holders of its Senior Debt (including any
limitations on dividends or distributions by Subsidiaries) and
payments of any Net Proceeds Purchase Price payable may be deferred
in order to maintain the Corporation's compliance with such covenants
but shall, in any event, be paid as soon as permissable. Until the
requirements of the immediately preceding sentence are satisfied, the
Corporation shall not make, and shall not be required to make, any
Net Proceeds Offer.
(f) (i) If the Corporation has issued any outstanding
Preferred Stock (other than the Redeemable Preferred Stock), and the
Corporation is required to make a Net Proceeds Offer or to make a
distribution with respect to such Preferred Stock (other than the
Redeemable Preferred Stock) in the event of an Asset Sale, the
Corporation shall not consummate any such offer or distribution with
respect to such Preferred Stock (other than the Redeemable Preferred
Stock) until such time as the Corporation shall have paid the Net
Proceeds Offer Amount in full to the holders of Redeemable Preferred
Stock that have validly accepted the Corporation's Net Proceeds Offer
and shall otherwise have
consummated the Net Proceeds Offer made to holders of the Redeemable
Preferred Stock and (ii) the Corporation will not issue Preferred
Stock with asset sale provisions requiring the payment of such
Preferred Stock prior to the payment of the Redeemable Preferred
Stock in the event of an Asset Sale under this Section 6.
7. Redemption at Option of the Corporation. The
Corporation shall have the right to redeem, out of funds legally
available for such purpose, all or any portion of the shares of
Redeemable Preferred Stock then outstanding, as follows:
(i) from the Original Issuance Date to the first
anniversary of the Original Issuance Date, the holders of
shares of Redeemable Preferred Stock shall be entitled to
receive the sum of (x) 103% of the Liquidation Amount as of
the most recently preceding Preferred Dividend Payment Date
plus (y) all accrued and unpaid dividends accrued since such
Preferred Dividend Payment Date and unpaid thereon with
respect to each share of Redeemable Preferred Stock;
(ii) from the first anniversary of the Original Issuance
Date to the second anniversary of the Original Issuance Date,
the holders of shares of Redeemable Preferred Stock shall be
entitled to receive the sum of (x) 102% of the Liquidation
Amount as of the most recently preceding Preferred Dividend
Payment Date plus (y) all accrued and unpaid dividends since
such Preferred Dividend Payment Date and unpaid thereon with
respect to each share of Redeemable Preferred Stock;
(iii) from the second anniversary of the Original
Issuance Date to the third anniversary of the Original
Issuance Date, the holders of shares of Redeemable Preferred
Stock shall be entitled to receive the sum of (x) 101% of the
Liquidation Amount as of the most recent preceding Preferred
Dividend payment Date plus (y) all accrued and unpaid
dividends since such Preferred Dividend Payment Date and
unpaid thereon with respect to each share of Redeemable
Preferred Stock; and
(iv) thereafter, the holders of shares of
Redeemable Preferred Stock shall be entitled to receive the
Liquidation Amount with respect to each share of Redeemable
Preferred Stock.
If the Corporation redeems less than all of the outstanding
Redeemable Preferred Stock pursuant to this Section 7, then the
requisite holders of Redeemable Preferred Stock shall share ratably
(or as close thereto as possible in order to permit the redemption of
whole shares) in any such redemption based on the respective number
of shares of Redeemable Preferred Stock that each holder thereof
holds; provided, however, that in all events, the Corporation shall
redeem whole shares.
(b) On and after any redemption date pursuant to this Section
7 (unless default shall be made by the Corporation in the payment of
the applicable redemption price, in which event such rights shall be
exercisable until such default is cured), all rights in respect of
the shares of Redeemable Preferred Stock to be redeemed, except the
right to
receive the applicable redemption price, shall cease and terminate, and
such shares shall no longer be deemed to be outstanding, whether or not
the certificates representing such shares have been received by the
Corporation.
(c) Any communication or notice relating to redemption given
pursuant to this Section 7 shall be sent by first-class certified
mail, return receipt requested, postage prepaid, to the holders of
record of shares of Redeemable Preferred Stock, at their respective
addresses as the same shall appear on the books of the Corporation,
or to the Corporation at the address of its principal, or registered
office, as the case may be.
(d) At any time on or after any redemption date, the holders
of record of shares of Redeemable Preferred Stock being redeemed in
accordance with this Section 7 shall be entitled to receive the
applicable redemption price upon actual delivery to the Corporation or
its agents of the certificates representing the shares to be redeemed.
(e) Any redemption payments by the Corporation pursuant to
this Section 7 shall be paid in cash.
8. Voting Rights.
(a) The holders of the Redeemable Preferred Stock, except as
otherwise required under Delaware law or as set forth in the
paragraphs below, shall not be entitled or permitted to vote on any
matter required or permitted to be voted upon by the stockholders of
the Corporation.
(b) The Corporation shall not, and shall not permit any
Subsidiary to, without first obtaining the affirmative written
consent or approval of the Requisite Redeemable Preferred
Stockholders:
(i) in any manner authorize, create, designate, issue
or sell any class or series of capital stock of the
Corporation (including any shares of treasury stock) or
rights, options, warrants or other securities convertible
into or exercisable or exchangeable for capital stock or any
debt security which by its terms is convertible into or
exchangeable for any equity security or has any other equity
feature or any security that is a combination of debt and
equity, which, in each case, as to the payment of dividends,
distribution of assets or redemptions, including, without
limitation, distributions to be made upon a Liquidity Event,
is pari passu with or is senior to the Redeemable Preferred
Stock or which in any manner adversely affects the holders
of the Redeemable Preferred Stock (it being understood that
the Corporation shall be entitled to incur Indebtedness and
issue warrants to acquire Common Stock in connection with
any such incurrence of Indebtedness);
(ii) in any manner alter or change the terms,
designations, powers, preferences or relative,
participating, optional or other special rights, or the
qualifications, limitations or restrictions, of the
Redeemable Preferred Stock;
(iii) reclassify the shares of any class or series of
capital stock of the Corporation into shares of any class or
series of capital stock (A) ranking, either as to payment of
dividends, distributions of assets or redemptions,
including, without limitation, distributions to be made upon
a Liquidation, senior to or on a parity with such Redeemable
Preferred Stock, or (B) which in any manner adversely
affects the rights of the holders of such Redeemable
Preferred Stock in their capacity as such;
(iv) amend, alter or repeal any of the provisions of
(A) this Certificate of Designation, (B) the Certificate of
Incorporation of the Corporation (as amended or restated) or
(C) the By-laws of the Corporation, if such amendment,
alteration or repeal would have an adverse effect on the
rights, preferences or privileges of the holders of such
Redeemable Preferred Stock;
(v) permit any Subsidiary to issue any capital stock to
any Person other than the Corporation or a direct or
indirect wholly owned Subsidiary of the Corporation; or
(vi) other than with respect to the Redeemable Preferred
Stock, the Qualified Stock or as would not be prohibited by
Section 4.04 of the Notes Indenture, declare or pay any
dividend, or make any payment on account of, or set apart
assets for a sinking or other analogous fund for, the
purchase, redemption, defeasance, retirement or other
acquisition of, any shares of any class of capital stock of
the Corporation, or any warrants or options to purchase any
such capital stock, or make any other distribution in
respect thereof, either directly or indirectly, whether in
cash or property or in obligations of the Corporation.
9. Exchange.
(a) Requirements. The outstanding shares of Redeemable
Preferred Stock are exchangeable, in whole but not in part, at the
option of the Corporation, at any time on any Preferred Dividend
Payment Date for the Corporation's junior subordinated debentures
(the "Exchange Debentures"); provided, that any such exchange may
only be made if on or prior to the date of such exchange, (i) the
Corporation has paid (or is deemed to have paid) all accumulated
dividends on the Redeemable Preferred Stock which have accrued from
and after the Subsequent Dividend Period (including the dividends
payable on such Preferred Dividend Payment Date) and there shall be
no contractual impediment to such exchange on such Preferred Dividend
Payment Date; (ii) there shall be legally available funds sufficient
therefor; (iii) immediately after giving effect to such exchange, no
default or event of default under the Exchange Indenture or any other
material instrument governing Senior Debt outstanding at the time of
such exchange would be caused thereby; and (iv) the Exchange
Indenture has been qualified under the Trust Indenture Act, if such
qualification is required at the time of exchange. The exchange rate
shall be $1.00 principal amount of Exchange Debentures for each $1.00
of Liquidation Amount of Redeemable Preferred Stock. Exchange
Debentures shall be issued in principal amounts of $1,000 and
integral multiples thereof to the extent possible and, to the extent
necessary, in principal amounts less than $1,000, provided,
that the Corporation shall have the right, at its option, to pay cash
in an amount equal to the principal amount of that portion of any
Exchange Debenture that is not an integral multiple of $1,000 in lieu
of delivering an Exchange Debenture in a denomination of less than
$1,000.
(b) Procedure for Exchange. At least thirty (30) days and not
more than sixty (60) days prior to the date fixed for exchange,
written notice (the "Exchange Notice") shall be given by the
Corporation by first-class mail, postage prepaid, to each holder of
record on the Preferred Record Date immediately preceding such
Preferred Dividend Payment Date at such holder's address as the same
appears on the stock register maintained by the Transfer Agent,
provided, that no failure to give such notice nor any deficiency
therein shall affect the validity of the procedure for the exchange
of shares of Redeemable Preferred Stock to be exchanged. The Exchange
Notice shall state:
(i) the date fixed for exchange;
(ii) that the holder is to surrender to the Corporation,
in the manner and at the place or places designated, his
certificate or certificates representing all his shares of
Redeemable Preferred Stock to be exchanged;
(iii) that dividends on the shares of Redeemable
Preferred Stock to be exchanged shall cease to accumulate on
the Exchange Date whether or not certificates for shares of
Redeemable Preferred Stock are surrendered for exchange on
the Exchange Date unless the Corporation shall default in
the delivery of the Exchange Debentures; and
(iv) that interest on the Exchange Debentures shall
accrue from the Exchange Date whether or not certificates
for shares of Redeemable Preferred Stock are surrendered for
exchange on the Exchange Date.
(A) On or before the Exchange Date, each
holder of shares of Redeemable Preferred Stock
shall surrender the certificates representing
such shares of Redeemable Preferred Stock, in
the manner and at the place designated in the
Exchange Notice. The Corporation shall cause the
Exchange Indenture and the Exchange Debentures
to be executed on the Exchange Date and, upon
surrender in accordance with the Exchange Notice
of the certificates for the shares of Redeemable
Preferred Stock so exchanged, duly endorsed (or
otherwise in proper form for transfer, as
determined by the Corporation), such shares
shall be exchanged by the Corporation into
Exchange Debentures. The Corporation shall pay
interest on the Exchange Debentures at the rate
and on the dates specified therein from the
Exchange Date.
(B) If notice has been mailed as aforesaid,
and if before the Exchange Date specified in
such notice all Exchange Debentures necessary
for such exchange shall have been duly
executed by the Corporation and delivered to the
trustee under the Exchange Indenture with
irrevocable instructions to authenticate the
Exchange Debentures necessary for such exchange,
then the rights of the holders of Redeemable
Preferred Stock so exchanged as stockholders of
the Corporation shall cease (except the right to
receive Exchange Debentures (including Exchange
Debentures issued in exchange for shares of
Redeemable Preferred Stock issued on such
Preferred Dividend Payment Date), an amount in
cash equal to the amount of accumulated and
unpaid dividends to the Exchange Date and, if
the Corporation so elects, cash in lieu of any
Exchange Debenture not an integral multiple of
$1,000), and the Person or Persons entitled to
receive the Exchange Debentures issuable upon
exchange shall be treated for all purposes as
the registered holder or holders of such
Exchange Debentures as of the Exchange Date.
(v) No Exchange in Certain Cases. Notwithstanding the
foregoing provisions of this Section 9, the Corporation
shall not be entitled or required to exchange the Redeemable
Preferred Stock for Exchange Debentures if such exchange, or
any term or provision of the Exchange Indenture or the
Exchange Debentures, or the performance of the Corporation's
obligations under the Exchange Indenture or the Exchange
Debentures, shall materially violate or conflict with any
applicable law or agreement or instrument then binding on
the Corporation, including agreements with the holders of
the Senior Debt of the Corporation or its Subsidiaries, or
if, at the time of such exchange, the Corporation is
insolvent or it would be rendered insolvent by such
exchange.
10. Events of Non-Compliance.
(a) Each of the following shall constitute non-compliance
hereunder:
(i) the Corporation fails to pay in cash the dividends
or distributions required pursuant to Section 2(b) hereof
(regardless of whether such dividends are prohibited by
restrictions set forth in the agreements for Senior Debt)
and such failure to pay continues 10 days after notice of
such breach has been delivered by any holder of Redeemable
Preferred Stock, unless otherwise approved by the Requisite
Redeemable Preferred Stockholders;
(ii) a material breach of any of the representations,
warranties or covenants in any of the Related Documents that
continues 30 days after notice of such breach has been
delivered by any holder of Redeemable Preferred Stock;
(iii) the Corporation or any of its Subsidiaries shall
(A) voluntarily commence any proceeding or file any
petition seeking relief under Title 11 of the United
States Code or any other federal, state or foreign
bankruptcy, insolvency or similar law, (B) consent to
the institution of, or fail to controvert in a timely
and appropriate manner, any such proceeding or the
filing of any such petition,
(C) apply for or consent to the appointment of a receiver,
trustee, custodian, sequestrator or similar official for any
such Person or for any substantial part of its property or
assets, (D) file an answer admitting the material
allegations of a petition filed against it in any such
proceeding, (E) make a general assignment for the benefit of
creditors, (F) fail generally to pay its debts as they
become due or (G) take any corporate or stockholder action
in furtherance of any of the foregoing; or
(iv) an involuntary proceeding shall be commenced or an
involuntary petition shall be filed in a court of competent
jurisdiction seeking (A) relief in respect of the
Corporation or any of its Subsidiaries, or of any
substantial part of their respective property or assets,
under Title 11 of the United States Code or any other
federal, state or foreign bankruptcy, insolvency or similar
law, (B) the appointment of a receiver, trustee, custodian,
sequestrator or similar official for any such Person or for
any substantial part of its property or (C) the winding-up
or liquidation of any such Person, and such proceeding,
petition or order shall continue unstayed and in effect for
a period of 60 consecutive days.
(b) After the occurrence of and during the continuation of an
event of non-compliance pursuant to clauses (i) or (ii) of paragraph
(a) above, the Requested Redeemable Preferred Stockholders can declare
an Event of Non-Compliance. After the occurrence of and during the
continuation of an Event of Non-Compliance pursuant to clauses (iii)
and (iv) above, an Event of Non-Compliance shall occur automatically.
(c) Once an Event of Non-Compliance has occurred pursuant to
paragraph (b) above, the Applicable Dividend Rate automatically
increases from 12% per annum to 14% per annum.
11. Reissuance of Redeemable Preferred Stock.
Shares of Redeemable Preferred Stock that have been issued
and reacquired in any manner, including shares purchased or redeemed or
exchanged, shall (upon compliance with any applicable provisions of the laws
of Delaware) have the status of authorized and unissued shares of Preferred
Stock undesignated as to series and may be redesignated and reissued as part
of any series of Preferred Stock; provided, that any issuance of such shares
of Preferred Stock must be in compliance with the terms hereof.
12. Definitions.
As used herein, the following terms shall have the following
meanings:
"Affiliate" means, with respect to any Person, any other
Person that directly or indirectly, through one or more intermediaries,
controls, is controlled by, or is under common control with such Person. For
the purpose of the above definition, the term "control" (including, with
correlative meaning, the terms "controlling", "controlled by", and "under
common control with"), as used with respect to any Person, means the
possession, directly or indirectly, of the
power to direct or cause the direction of the management and policies of such
Person, whether through the ownership of voting securities, by contract or
otherwise.
"Applicable Dividend Rate" means 12% per annum; provided
however that the Applicable Dividend Rate may be increased to 14% from time to
time pursuant to Section 10.
"Asset Sale" means any sale, lease, sale-leaseback
transaction, transfer or other disposition (or series of related sales,
leases, transfers or dispositions) by the Corporation or any Subsidiary,
including any disposition by means of a merger, consolidation or similar
transaction (each referred to for the purposes of this definition as a
"disposition"), of (i) any shares of Capital Stock of any Subsidiary (other
than directors' qualifying shares or shares required by applicable law to be
held by a Person other than the Corporation or a Subsidiary), (ii) all or
substantially all the assets of any division or line of business of the
Corporation or any Subsidiary or (iii) any other assets of the Corporation or
any Subsidiary other than property or equipment that has become worn out,
obsolete, damaged or otherwise unsuitable for use in connection with the
business of the Corporation or any Subsidiary, as the case may be (other than,
in the case of (i), (ii) and (iii) above, a disposition by a Subsidiary to the
Corporation or by the Corporation or a Subsidiary to a Wholly Owned Subsidiary
and a disposition of assets with a fair market value of less than
$10,000,000).
"Board" shall mean the Board of Directors of the Corporation.
"Capital Stock" of any Person means any and all shares,
interests, rights to purchase, warrants, options, participations or other
equivalents of, or interests in (however designated), equity of such Person,
including any Preferred Stock, but excluding any debt securities convertible
into such equity.
"CCP" means Chase Capital Partners and its Affiliates.
"Change of Control" means the occurrence of any of the
following events (each a "Change of Control"):
(a) prior to the earlier to occur of (i) the first public
offering of Common Stock of the Corporation or (ii) the first public
offering of Common Stock of La Petite Academy, the Permitted Holders
cease to be the "beneficial owner" (as defined in Rules 13d-3 and
13d-5 under the Exchange Act), directly or indirectly, of a majority
in the aggregate of the total voting power of the Voting Stock of La
Petite Academy, whether as a result of issuance of securities of the
Corporation, any merger, consolidation, liquidation or dissolution of
the Corporation or La Petite Academy, any direct or indirect transfer
of securities by any Permitted Holder or otherwise (for the purposes
of this clause (a) and clause (b) below, the Permitted Holders shall
be deemed to beneficially own any Voting Stock of an entity (the
"specified entity") held by any other entity (the "parent entity") so
long as the Permitted Holders beneficially own (as so defined),
directly or indirectly, in the aggregate a majority of the voting
power of the Voting Stock of the parent entity);
(b) (i) any "person" (as such term is used in Sections 13(d)
and 14(d) of the Exchange Act), other than one or more Permitted
Holders, is or becomes the beneficial owner (as defined in clause (a)
above, except that for purposes of this clause (b) such
person shall be deemed to have "beneficial ownership" of all shares
that any such person has the right to acquire, whether such right is
exercisable immediately or only after the passage of time), directly
or indirectly, of more than 35% of the total voting power of the
Voting Stock of La Petite Academy and (ii) the Permitted Holders
"beneficially own" (as defined in clause (a) above), directly or
indirectly, in the aggregate a lesser percentage of the total voting
power of the Voting Stock of La Petite Academy than such other person
and do not have the right or ability by voting power, contract or
otherwise to elect or designate for election a majority of the Board
of Directors (for the purposes of this clause (b), such other person
shall be deemed to beneficially own any Voting Stock of a specified
entity held by a parent entity, if such other person is the
beneficial owner (as defined in this clause (b)), directly or
indirectly, of more than 35% of the voting power of the Voting Stock
of such parent entity and the Permitted Holders "beneficially own"
(as defined in clause (a) above), directly or indirectly, in the
aggregate a lesser percentage of the voting power of the Voting Stock
of such parent entity and do not have the right or ability by voting
power, contract or otherwise to elect or designate for election a
majority of the board of directors of such parent entity);
(c) during any period of two consecutive years, individuals
who at the beginning of such period constituted the Board of
Directors of the Corporation or La Petite Academy, as the case may
be, (together with any new directors whose election by such Board of
Directors or whose nomination for election by the shareholders of the
Corporation or La Petite Academy, as applicable, was approved (i) in
accordance with the Stockholders Agreement, (ii) by the Permitted
Holders or (iii) by a vote of 66 2/3% of the directors of the
Corporation or La Petite Academy, as applicable, then still in office
who were either directors at the beginning of such period or whose
election or nomination for election was previously so approved),
cease for any reason to constitute a majority of the Board of
Directors of the Corporation or La Petite Academy, as applicable,
then in office;
(d) the adoption of a plan relating to the liquidation or
dissolution of the Company or La Petite Academy; or
(e) the merger or consolidation of the Corporation or La
Petite Academy with or into another Person or the merger of another
Person with or into the Corporation or La Petite Academy, and, in the
case of any such merger or consolidation, the securities of the
Corporation or La Petite Academy, as the case may be, that are
outstanding immediately prior to such transaction and which represent
100% of the aggregate voting power of the Voting Stock of the
Corporation or La Petite Academy, as applicable, are changed into or
exchanged for cash, securities or property, unless pursuant to such
transaction such securities are changed into or exchanged for, in
addition to any other consideration, securities of the surviving
Person or transferee that represent, immediately after such
transaction, at least a majority of the aggregate voting power of the
Voting Stock of the surviving Person or transferee.
"Change of Control Offer" shall have the meaning set forth in
Section 5(a)
"Change of Control Payment Date" shall have the meaning set
forth in Section 5(b)(ii).
"Change of Control Purchase Price" shall have the meaning
set forth in Section 5(a).
"Common Stock" means (i) the Common Stock, par value $0.01,
of the Corporation, and (ii) any other class of capital stock of the
Corporation authorized after the Original Issuance Date that is entitled to at
least a fixed sum or percentage of par or stated value in respect to the
rights of the holders thereof to participate in dividends or in the
distribution of assets upon any liquidation, dissolution or winding up of the
Corporation.
"Credit Agreement" shall mean the Credit Agreement dated as
of May 11, 1998 the Corporation, La Petite Academy, The Chase Manhattan Bank
and NationsBank, N.A, as amended, supplemented or otherwise modified from time
to time.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Exchange Date" means the date, if any, on which such shares
of Redeemable Preferred Stock are exchanged by the Corporation for Exchange
Debentures.
"Exchange Debentures" mean the junior subordinated notes
with terms consistent with the terms of the Redeemable Preferred Stock,
including those terms set forth on Exhibit A attached hereto.
"Exchange Notice" shall have the meaning set forth in
Section 9.
"Indebtedness" of any Person means, without duplication, (a)
all obligations of such Person for borrowed money or with respect to deposits
or advances of any kind, (b) all obligations of such Person evidenced by (or
which customarily would be evidenced by) bonds, debentures, notes or similar
instruments, (c) all reimbursement obligations of such Person with respect to
letters of credit and similar instruments, (d) all obligations of such Person
under conditional sale or other title retention agreements relating to
property or assets purchased by such Person, (e) all obligations of such
Person incurred, issued or assumed as the deferred purchase price of property
or services other than accounts payable incurred and paid on terms customary
in the business of such Person (it being understood that the "deferred
purchase price" in connection with any purchase of property or assets shall
include only that portion of the purchase price which shall be deferred beyond
the date on which the purchase is actually consummated), (f) all obligations
secured by (or for which the holder of such Indebtedness has an existing
right, contingent or otherwise, to be secured by) any Lien on property owned
or acquired by such Person, whether or not the obligations secured thereby
have been assumed, (g) all obligations of such Person under forward sales,
futures, options and other similar hedging arrangements (including interest
rate hedging or protection agreements), (h) all obligations of such Person to
purchase or otherwise pay for merchandise, materials, supplies, services or
other property under an arrangement which provides that payment for such
merchandise, materials, supplies, services or other property shall be made
regardless of whether delivery of such merchandise, materials, supplies,
services or other property is ever made or tendered, (i) all
guaranties by such Person of obligations of others and (j) all capitalized
lease obligations of such Person.
"Exchange Indenture" shall mean an indenture to be prepared
by the Corporation at the time of the exchange of the Redeemable Preferred
Stock for junior subordination notes, such indenture to be in a form customary
for an indenture of its type and in a form reasonably acceptable to the
holders of the Requisite Redeemable Preferred Stockholders.
"Initial Dividend Period" means the period commencing on the
Original Issuance Date and terminating on the earliest to occur of (i) June
30, 2005, (ii) the Exchange Date and (iii) the Redemption Date.
"King Investor" means an entity a majority of the economic
interests of which are owned by CCP and a majority of the voting interests of
which are owned by (i) Robert E. King, his descendants or, in the event of the
death or incompetence of any of the foregoing individuals, such Person's
estate, executor, administrator, committee or other personal representative or
(ii) any other Person approved by CCP.
"La Petite Academy" means La Petite Academy, Inc., a Delaware
corporation.
"Lien" means any security interest, lien, pledge, claim,
charge, escrow, encumbrance, option, right of first offer, right of first
refusal, preemptive right, mortgage, indenture, security agreement or other
similar agreement, arrangement, contract, commitment, understanding or
obligation, whether written or oral and whether or not relating in any way to
credit or the borrowing of money.
"Liquidation" means any voluntary or involuntary
liquidation, dissolution or winding up of the affairs of the Corporation,
other than any dissolution, liquidation or winding up in connection with any
reincorporation of the Corporation in another jurisdiction.
"Liquidation Amount" means, as to each share of Redeemable
Preferred Stock, the Original Cost plus all accrued and unpaid dividends
payable with respect to such share of Redeemable Preferred Stock.
"Liquidity Event" means (i) any Liquidation or (ii) any sale
of all or substantially all of the Corporation's assets determined on a
consolidated basis.
"Management Group" means the group consisting of the
directors and executive officers of La Petite Academy.
"Mandatory Redemption Date" means May 11, 2008.
"Mandatory Redemption Price" has the meaning set forth in
Section 4.
"Merger Agreement" means the Agreement and Plan of Merger
dated as of March 17, 1998 between the Corporation and LPA Investment LLC, a
Delaware limited liability company.
"Net Cash Proceeds" shall mean with respect to any Asset
Sale, the proceeds in the form of cash including payments in respect of
deferred payment obligations when received in the form of cash received by the
Corporation or any of its Subsidiaries from such Asset Sale net of (a)
reasonable out-of-pocket expenses and fees relating to such Asset Sale
(including, without limitation, legal, accounting and investment banking fees
and sales commissions), (b) taxes paid or payable after taking into account
any reduction in consolidated tax liability due to available tax credits or
deductions and any tax sharing arrangements, (c) repayment of Indebtedness
that is required to be repaid in connection with such Asset Sale, (d)
appropriate amounts to be provided by the Corporation or any Subsidiary, as
the case may be, as a reserve, in accordance with generally accepted
accounting principles, consistently applied, against any liabilities
associated with such Asset Sale and retained by the Corporation or any
Subsidiary, as the case may be, after such Asset Sale, including, without
limitation, pension and other post-employment benefit liabilities, liabilities
related to environmental matters and liabilities under any indemnification
obligations associated with such Asset Sale and (e) a reasonable estimate of
the fees, expenses and commissions relating to the Corporation's compliance
with Section 6.
"Net Proceeds Offer" shall have the meaning set forth in
Section 6(a).
"Net Proceeds Payment Date" shall have the meaning set forth
in Section 6(b)(ii).
"Net Proceeds Purchase Price" shall have the meaning set
forth in Section 6(a).
"Notes Indenture" means the Indenture to be dated as of May
11, 1998, among the Corporation and the other signatories thereto.
"Original Cost" is $1,000 per share.
"Original Issuance Date" for the Redeemable Preferred Stock
means the date of original issuance of the first share of such Redeemable
Preferred Stock.
"Permitted Holders" means CCP, the Management Group, the
King Investor and any Person acting in the capacity of an underwriter in
connection with a public or private offering of the Corporation's or La Petite
Academy's Capital Stock.
"Person" shall be construed broadly and shall include,
without limitation, an individual, a partnership, an investment fund, a
limited liability corporation, a corporation, an association, a joint stock
corporation, a trust, a joint venture, an unincorporated organization and a
governmental entity or any department, agency or political subdivision
thereof.
"Preferred Dividend Payment Date" shall have the meaning set
forth in Section 2(b).
"Preferred Record Date" shall have the meaning set forth in
Section 2(c).
"Public Offering" means the sale in an underwritten public
offering registered under the Securities Act of 1933, as amended, of shares of
capital stock.
"Purchase Agreement" means the Securities Purchase Agreement
proposed to be entered into between the Corporation and LPA Investment LLC, a
Delaware limited liability company.
"Qualified Stock" means any Capital Stock issued pursuant to
(i) any Management Stock Option Plan (as such term is defined in the
Stockholders Agreement), (ii) the Rollover Options (as such term is defined in
the Merger Agreement) or (iii) the Warrant.
"Redemption Date" shall mean the earliest date on which
shares of Redeemable Preferred are redeemed pursuant to Sections 4, 5, and 6.
"Registration Rights Agreement" means the Preferred Stock
Registration Rights Agreement to be dated as of May 11, 1998 between the
Corporation and LPA Investment LLC, a Delaware limited liability company.
"Related Documents" shall mean the Certificate, the Purchase
Agreement, the Stockholders Agreement and the Registration Rights Agreement.
"Requisite Redeemable Preferred Stockholders" means, as of
any date of determination, the holders of at least 51% of the outstanding
shares of Redeemable Preferred Stock as of such date.
"Senior Debt" shall mean any (i) Indebtedness pursuant to
the Credit Agreement or any related documents governing, evidencing or
securing the same, (ii) Indebtedness pursuant to the Senior Notes and any
related documents governing, evidencing or securing the same, (iii) any other
Indebtedness of the Corporation or its Subsidiaries which is not expressly
subordinated to the Redeemable Preferred Stock or the Exchange Debentures, if
the original principal amount exceeded $5 million and (iv) all refinancings or
modifications of the Indebtedness described in clauses (i) - (iii) above;
provided, however, that neither Corporation nor its Subsidiaries shall incur
any Indebtedness that contains restrictions on the payment of dividends or the
repurchase of Redeemable Preferred Stock pursuant to Section 5 or Section 6
that are more materially restrictive than those contained in the Indebtedness
existing on the date hereof.
"Senior Notes" means the 10% Senior Notes due 2008, issued
jointly by the Corporation and La Petite Academy.
"Stockholders Agreement" means the Stockholders Agreement to
be dated as of May 11, 1998 among the Corporation and its Stockholders.
"Subsequent Dividend Period" means the period commencing on
July 1, 2005 and terminating on the earlier of (i) the redemption of such
shares of Redeemable Preferred Stock or (ii) the exchange of such shares of
Redeemable Preferred Stock for Exchange Debentures.
"Subsidiary" means any corporation of which the shares of
outstanding capital stock possessing the voting power (under ordinary
circumstances) in electing the board of directors are, at the time as of which
any determination is being made, owned by the Corporation either directly or
indirectly through Subsidiaries.
"Voting Stock" of a Person means all classes of Capital
Stock or other interests (including partnership interests) of such Person then
outstanding and normally entitled (without regard to the occurrence of any
contingency) to vote in the election of directors, managers or trustees
thereof.
"Warrant" means that warrant issued to LPA Investment LLC, a
Delaware limited liability company, to purchase shares of Class A Common Stock
of the Corporation.
IN WITNESS WHEREOF, the Corporation has caused this
Certificate to be duly executed by the President of the Corporation as of the
___th day of May, 1998.
------------------------
James R. Kahl
President