EXHIBIT 10.1
LIMITED WAIVER TO CREDIT AGREEMENT
THIS LIMITED WAIVER TO CREDIT AGREEMENT (this "Waiver") is entered into
as of May 20, 2002 among LA PETITE ACADEMY, INC., a Delaware corporation (the
"Borrower"), LPA HOLDING CORP., a Delaware corporation ("Holdings"), and the
Lenders party hereto. 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 and the Lenders entered into that
certain 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, 2001;
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 exists under the Credit Agreement as a
result of the failure of the Borrower to comply with the terms of Sections 6.13
and 6.15 of the Credit Agreement for the third fiscal quarter which ended
nearest to March 31, 2002 (the "Existing Defaults");
WHEREAS, the Borrower has requested that the Lenders waive the Existing
Defaults;
WHEREAS, the Required Lenders are willing to provide a limited waiver
of the Existing Defaults for the period of time from the date hereof through and
including August 15, 2002 (the "Waiver Period"), based upon and subject to the
terms and conditions specified in this Waiver; and
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 follows:
SECTION 1
WAIVER
(a) The Borrower acknowledges the existence and continuation of the
Existing Defaults. The Required Lenders hereby waive the Existing Defaults for,
and only for, the Waiver Period. From and after the end of the Waiver Period,
the waiver set forth herein shall be of no further force and effect and the
Administrative Agent and the Lenders shall be entitled to
exercise any and all rights and remedies available under the Loan Documents and
applicable law with respect to the Existing 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 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 during the Waiver Period, and shall
not obligate the Lenders to waive any Default or Event of Default (including,
without limitation, any waiver of the Existing Defaults following the end of the
Waiver Period) other than the Existing Defaults, now existing or hereafter
arising.
(d) The Borrower shall pay a waiver fee (the "Waiver Fee") to each
Lender who duly executes and delivers this Waiver on or before 5:00 p.m. Eastern
Daylight Time, on May 28, 2002. The Waiver Fee shall be equal to one-eighth of
one percent (0.125%) of such Lender's respective aggregate Commitments and shall
be paid by the Borrower to the Administrative Agent (for distribution to such
Lender) as soon as practicable but in no event later than one business day
following the date that such Lender's signature to this Waiver is delivered to
the Borrower. Notwithstanding anything to the contrary contained herein, no
Waiver Fee shall be payable to any Lender unless this Waiver shall be deemed
effective in accordance with Section 2.1 hereof.
SECTION 2
MISCELLANEOUS
2.1 Effectiveness. This Waiver be effective upon receipt by the
Administrative Agent of counterparts of this Waiver executed by each of the Loan
Parties and the Required Lenders. Notwithstanding anything to the contrary
contained herein, this Waiver shall be void ab initio upon the failure of the
Borrower to pay the Waiver Fee or the Expense Reimbursement (as defined below)
in accordance with the terms hereof.
2.2 Ratification of Credit Agreement and Other Loan Documents. The
Credit Agreement and the other applicable Loan Documents are hereby ratified and
confirmed and are in full force and effect.
2.3 Authority/Enforceability. Each party hereto represents and
warrants that (a) it has taken all necessary action to authorize the execution,
delivery, and performance of this Waiver; (b) this Waiver 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
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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); and (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 Waiver.
2.4 Representation and Warranties. Borrower and Holdings represent and
warrant to the Lenders that (a) the representations and warranties of 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 in all material respects as of the date hereof,
except, in each case, for those representations and warranties that specifically
relate to an earlier date; (b) except for the Existing Defaults, no event has
occurred and is continuing which constitutes a Default or an Event of Default;
(c) the Security Documents create a valid security interest in, and Lien upon,
the Collateral; and (d) Holdings has received proceeds from the Equity
Commitments equal to at least $10,750,000 (in the aggregate) on or prior to May
14, 2002, and such proceeds have been contributed by Holdings to the Borrower
for use as working capital and general corporate purposes.
2.5 Expenses. The Borrower shall reimburse (the "Expense
Reimbursement") the Administrative Agent for all legal fees incurred by the
Administrative Agent and Highland Capital Management, L.P. in connection with
the Credit Agreement (including this Waiver). The Expense Reimbursement shall be
paid by the Borrower to the Administrative Agent (or directly to the
Administrative Agent's counsel) as soon as practicable but in no event later
than one business day following receipt by the Borrower of an invoice for such
legal fees.
2.6 Counterparts/Telecopy. This Waiver 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.
2.7 GOVERNING LAW. THIS WAIVER 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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Signature Page
Limited Waiver to Credit Agreement
La Petite Academy, Inc.
IN WITNESS WHEREOF, the parties hereto have caused this Limited Waiver
to Credit Agreement 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/ Michael L. Goldberg
-------------------------------------
Name: Michael L. Goldberg
Title: Vice President & Chief Financial
Officer
HOLDINGS: LPA HOLDING CORP.
By: /s/ Michael L. Goldberg
-------------------------------------
Name: Michael L. Goldberg
Title: Vice President & Chief Financial
Officer
Signature Page
Limited Waiver to Credit Agreement
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
Waiver 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/ Michael L. Goldberg
-------------------------------------
Name: Michael L. Goldberg
Title: Vice President & Chief Financial
Officer
LPA SERVICES, INC.
By: /s/ Michael L. Goldberg
-------------------------------------
Name: Michael L. Goldberg
Title: Vice President & Chief Financial
Officer
BRIGHT START, INC.
By: /s/ Michael L. Goldberg
-------------------------------------
Name: Michael L. Goldberg
Title: Vice President & Chief Financial
Officer
Signature Page
Limited Waiver to Credit Agreement
La Petite Academy, Inc.
[LENDERS:](1) U.S. BANK NATIONAL ASSOCIATION
(formerly Mercantile Bank), as
Administrative Agent and a Lender
By: /s/ Jason Nadler
-------------------------------------
Name: Jason Nadler
Title: Assistant Vice President
- ----------------------
(1) NAMES OF THE CURRENT LENDERS TO BE CONFIRMED.
Signature Page
Limited Waiver to Credit Agreement
La Petite Academy, Inc.
JPMORGAN CHASE BANK (formerly The Chase
Manhattan Bank)
By:
-------------------------------------
Name:
Title:
Signature Page
Limited Waiver to Credit Agreement
La Petite Academy, Inc.
ML CBO IV CAYMAN
By: Highland Capital Management, L.P.,
as Collateral Manager
By: /s/ Mark K. Okada
-------------------------------------
Name: Mark K. Okada
Title: Executive Vice President
Signature Page
Limited Waiver to Credit Agreement
La Petite Academy, Inc.
HIGHLAND LEGACY, LTD
By: Highland Capital Management, L.P.,
as Collateral Manager
By: /s/ Mark K. Okada
-------------------------------------
Name: Mark K. Okada
Title: Executive Vice President
Signature Page
Limited Waiver to Credit Agreement
La Petite Academy, Inc.
PAMCO CAYMAN LTD
By: Highland Capital Management, L.P.,
as Collateral Manager
By: /s/ Mark K. Okada
-------------------------------------
Name: Mark K. Okada
Title: Executive Vice President
Signature Page
Limited Waiver to Credit Agreement
La Petite Academy, Inc.
KZH HIGHLAND-2 LLC
By: /s/ Susan Lee
-------------------------------------
Name: Susan Lee
Title: Authorized Agent
Signature Page
Limited Waiver to Credit Agreement
La Petite Academy, Inc.
SRV - HIGHLAND, INC.
By: /s/ Ann E. Morris
-------------------------------------
Name: Ann E. Morris
Title: Assistant Vice President
Signature Page
Limited Waiver to Credit Agreement
La Petite Academy, Inc.
BANK OF AMERICA, N.A.
(formerly NationsBank, N.A.)
By: /s/ Therese Fontaine
-------------------------------------
Name: Therese Fontaine
Title: Managing Director