AMENDMENT NO. 8
TO CREDIT AGREEMENT
THIS AMENDMENT NO. 8 TO CREDIT AGREEMENT (this "Amendment") is entered
into as of April 13, 2005, among LA PETITE ACADEMY, INC., a Delaware corporation
(the "Borrower"); LPA HOLDING CORP., a Delaware corporation ("Holdings"); the
Lenders party hereto; HERITAGE BANK, SSB (the "Administrative Agent") as
Administrative Agent and as Resigning Issuing Bank (as defined below), and BANK
OF AMERICA, N.A., as Successor Issuing Bank (as defined below). 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; Amendment No. 4, dated as of February 5, 2002; Amendment No.
5 dated as of February 10, 2003; and Amendment No. 6, dated as of July 31, 2003;
and Amendment No. 7, dated as of November 30, 2004, and as otherwise amended or
modified from time to time, the "Credit Agreement"); 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.
SECTION 1
AMENDMENT TO CREDIT AGREEMENT
Effective as of the date hereof, the Credit Agreement is amended as
follows:
1.1 Notwithstanding the termination of all Swingline Loans under
Section 1.7 of Amendment No. 7 to Credit Agreement, the parties to this
Amendment hereby agree that the ability of the Swingline Lender to make
Swingline Loans is hereby reinstated in all respects under and pursuant to the
terms of the Credit Agreement, and any references to the Swingline Lender or to
the Swingline Loans in any Loan Document are, on and after the date hereof,
restored to such Loan Document in full force and effect.
1.2 The third sentence of SECTION 2.02(c) is amended and restated to
read as follows:
Each Swingline Loan shall be in an amount that is an integral
multiple of $100,000 and not less than $500,000.
1.3 SECTION 2.04(a)(i) of the Credit Agreement is amended and restated
to read as follows:
(i) the aggregate principal amount of outstanding Swingline
Loans exceeding $4,000,000, or
1.4 SECTION 2.04(b) of the Credit Agreement is amended and restated to
read as follows:
(b) To request a Swingline Loan, the Borrower shall notify the
Administrative Agent and the Swingline Lender of such request by
telephone (confirmed by telecopy), not later than 10:00 a.m., Dallas,
Texas time, on the day of a proposed Swingline Loan. Each such notice
shall be irrevocable and shall specify the requested date (which shall
be a Business Day) and amount of the requested Swingline Loan. The
Swingline Lender shall make each Swingline Loan available to the
Borrower by means of a credit to the general deposit account of the
Borrower with the Swingline Lender (or, in the case of a Swingline Loan
made to finance the reimbursement of an LC Disbursement as provided in
SECTION 2.06(e), by remittance to the Issuing Bank) by 3:00 p.m.,
Dallas, Texas time, on the requested date of such Swingline Loan.
1.5 SECTION 2.05(b) is amended to add the following language at the end
of such Section:
The Issuing Bank shall permit an issuance or renewal unless (A) the
Issuing Bank has determined that it would not be permitted, or would
have no obligation, at such time to issue such Letter of Credit in its
revised form (as extended) under the terms hereof, or (B) it has
received notice (which may be by telephone or in writing) on or before
the day that is five Business Days before the issuance or renewal (1)
from the Administrative Agent that the Required Lenders have elected
not to permit such extension or renewal or (2) from the Administrative
Agent, any Lender or the Borrower that one or more of the applicable
conditions specified in SECTION 4.02 is not then satisfied, and in each
such case directing the Issuing Bank not to permit such extension or
renewal, in each case at least one (1) Business Day prior to the
proposed issuance or renewal.
If the Borrower so requests in any applicable letter of credit
application, the Issuing Bank may, in its sole and absolute discretion,
agree to issue a Letter of Credit that has automatic extension
provisions (each, an "Auto-Extension Letter of Credit"); provided that
any such Auto-Extension Letter of Credit must permit the Issuing Bank
to prevent any such extension at least once in each twelve-month period
(commencing with the date of issuance of such Letter of Credit) by
giving prior notice to the beneficiary thereof not later than a day
(the "Non-Extension Notice Date") in each such twelve-
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month period to be agreed upon at the time such Letter of Credit is
issued. Unless otherwise directed by the Issuing Bank, the Borrower
shall not be required to make a specific request to the Issuing Bank
for any such extension. Once an Auto-Extension Letter of Credit has
been issued, the Lenders shall be deemed to have authorized (but may
not require) the Issuing Bank to permit the extension of such Letter of
Credit at any time to an expiry date not later than the LC Availability
Period; provided, however, that the Issuing Bank shall permit any such
extension unless (A) the Issuing Bank has determined that it would not
be permitted, or would have no obligation, at such time to issue such
Letter of Credit in its revised form (as extended) under the terms
hereof, or (B) it has received notice (which may be by telephone or in
writing) on or before the day that is five Business Days before the
Non-Extension Notice Date (1) from the Administrative Agent that the
Required Lenders have elected not to permit such extension or (2) from
the Administrative Agent, any Lender or the Borrower that one or more
of the applicable conditions specified in SECTION 4.02 is not then
satisfied, and in each such case directing the Issuing Bank not to
permit such extension, in each case at least one (1) Business Day prior
to the proposed issuance.
Notwithstanding the foregoing, the Issuing Bank shall not be
under any obligation to issue any Letter of Credit if:
(A) any order, judgment or decree of any Governmental
Authority or arbitrator shall by its terms purport to enjoin or
restrain the Issuing Bank from issuing such Letter of Credit, or any
law applicable to the Issuing Bank or any request or directive (whether
or not having the force of law) from any Governmental Authority with
jurisdiction over the Issuing Bank shall prohibit, or request that the
Issuing Bank refrain from, the issuance of letters of credit generally
or such Letter of Credit in particular or shall impose upon the Issuing
Bank with respect to such Letter of Credit any restriction, reserve or
capital requirement (for which the Issuing Bank is not otherwise
compensated hereunder) not in effect on the Effective Date, or shall
impose upon the Issuing Bank any unreimbursed loss, cost or expense
which was not applicable on the Effective Date and which the Issuing
Bank in good faith deems material to it;
(B) the issuance of such Letter of Credit would violate one or
more policies of the Issuing Bank;
(C) except as otherwise agreed by the Administrative Agent and
the Issuing Bank, such Letter of Credit is in an initial stated amount
less than, or $25,000, in the case of a standby Letter of Credit; or
(D) such Letter of Credit is to be denominated in a currency
other than Dollars.
1.6 SECTION 2.05(c) is amended and restated to read as follows:
(c) Expiration Date. Each Letter of Credit shall expire at or
prior to the close of business on the earlier of (i) the date one year
after the date of the issuance of such
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Letter of Credit (or, in the case of any renewal or extension thereof,
one year after such renewal or extension) and (ii) the last day of the
LC Availability Period; provided that any Letter of Credit may provide
for automatic renewal for successive twelve month periods (but no
renewal period may extend beyond the last day of the LC Availability
Period;
1.7 SECTION 2.05(j) is amended and restated to read as follows:
(j) Cash Collateralization. If (A) any Event of Default shall
occur and be continuing or (B) to the extent any Letter of Credit is or
may potentially be (after analysis of Letter of Credit extensions and
the Maturity Date of this Agreement) still outstanding five (5)
Business Days prior to the Maturity Date (notwithstanding the
prohibitions in this Agreement to the contrary), on the Business Day
that the Borrower receives notice from the Administrative Agent, the
Issuing Bank, or the Required Lenders (or, if the maturity of the Loans
has been accelerated, Revolving Lenders with LC Exposure representing
greater than 50% of the total LC Exposure) demanding the deposit of
cash collateral pursuant to this paragraph, the Borrower shall deposit
in an account with the Administrative Agent, in the name of the
Administrative Agent and for the benefit of the Lenders, an amount in
cash equal to 105% of the LC Exposure as of such date plus any accrued
and unpaid interest thereon, provided that the obligation to deposit
such cash collateral shall become effective immediately, and such
deposit shall become immediately due and payable, without demand or
other notice of any kind, upon the occurrence of any Event of Default
with respect to the Borrower described in clause (h) or (i) of Article
VII. Each such deposit shall be held by the Administrative Agent as
collateral for the payment and performance of the obligations of the
Borrower under this Agreement. The Administrative Agent shall have
exclusive dominion and control, including the exclusive right of
withdrawal, over such account. Other than any interest earned on the
investment of such deposits, which investments (if requested by the
Borrower) shall be made at the option and sole discretion of the
Administrative Agent and at the Borrower's risk and expense, such
deposits shall not bear interest. Interest or profits, if any, on such
investments shall accumulate in such account. Moneys in such account
shall be applied by the Administrative Agent to reimburse the Issuing
Bank for LC Disbursements for which it has not been reimbursed and, to
the extent not so applied, shall be held for the satisfaction of the
reimbursement obligations of the Borrower for the LC Exposure at such
time or, if the maturity of the Loans has been accelerated (but subject
to the consent of Revolving Lenders with LC Exposure representing
greater than 50% of the total LC Exposure), be applied to satisfy other
obligations of the Borrower under this Agreement. If the Borrower is
required to provide an amount of cash collateral hereunder as a result
of the occurrence of an Event of Default, such amount (to the extent
not applied as aforesaid) shall be returned to the Borrower within
three Business Days after all Events of Default have been cured or
waived.
1.8 SECTION 2.09(a)(III) is amended and restated to read as follows:
(iii) to the Swingline Lender the then unpaid principal amount of each
Swingline Loan on the earlier of the Maturity Date and a date that is no later
than fifteen Business Days after such
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Swingline Loan is made, provided that on each date that a Revolving Borrowing is
made, the Borrower shall repay all Swingline Loans then outstanding.
1.9 SECTION 2.12(b) shall be amended to replace "1/4 of 1%" with "1/2
of 1%".
SECTION 2
REPLACEMENT OF ISSUING BANK
2.1 Replacement. Heritage Bank, SSB, hereby agrees to be replaced as
Issuing Bank.
2.2 Appointment.
(a) The Administrative Agent agrees to replace Heritage Bank, SSB as
Issuing Bank ("Resigning Issuing Bank") with Bank of America, N.A. ("Successor
Issuing Bank"), under the Credit Agreement and the other Loan Documents.
(b) Notwithstanding the replacement of Successor Issuing Bank, in order
to minimize the administrative cost and expense associated with the transfer of
certain of the duties and responsibilities of Issuing Bank under the Credit
Agreement and other Loan Documents from Resigning Issuing Bank to Successor
Issuing Bank, the parties hereby agree as follows:
(i) Resigning Issuing Bank shall continue to be the issuer of the
existing Letters of Credit issued and outstanding on the date
hereof under the Credit Agreement as listed on Schedule 1
attached hereto (the "Existing Letters of Credit") until the
earlier to occur of (i) the expiry of the Existing Letters of
Credit or (ii) the date upon which Successor Issuing Bank has
issued replacement Letters of Credit therefor which have been
accepted by the beneficiary thereof (and such beneficiary has
returned the originals of the Existing Letters of Credit to
Resigning Issuing Bank. Resigning Issuing Bank shall provide
such reports and other information to Borrower, Successor
Issuing Bank, and the Lenders consistent with their respective
past practice for these activities. Resigning Issuing Bank
shall be entitled to all rights as Issuing Bank under the
Credit Agreement with respect to the Existing Letters of
Credit, including, without limitation, (x) reimbursement by
Borrower for draws under any such outstanding Existing Letters
of Credit issued by it, and (y) if not previously reimbursed
or repaid by Borrower, require each Lender to fund its
participation in such Existing Letter of Credit, all in
accordance with the applicable terms and provisions of the
Credit Agreement (with Resigning Issuing Bank being deemed to
be the "Issuing Bank" for such purposes).
(ii) All expenses and costs incurred by Resigning Issuing Bank in
connection with the Agreement or in the performance thereof,
whether now or in the future, including reasonable attorney
fees, shall, upon demand, be paid by Borrower or if not paid
by Borrower shall be paid by Administrative
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Agent on behalf of the Lenders, subject to Section 2.12 and 9.03 of the
Credit Agreement.
2.3 Consent. Borrower consents to such appointment of Successor Issuing
Bank as Issuing Bank.
2.4 Acceptance. Successor Issuing Bank accepts such appointment as
Issuing Bank.
2.5 Amendment.
(a) The Credit Agreement and each other applicable Loan Document is
deemed amended to reflect the appointment of Successor Issuing Bank as Issuing
Bank (except with regard to the Existing Letters of Credit), under the Credit
Agreement, and all references therein to Issuing Bank (except with regard to the
Existing Letters of Credit) shall be to Successor Issuing Bank.
(b) The applicable notice provisions in the Loan Documents are amended
by replacing the contact information for Issuing Bank, with the following:
Bank of America, N.A.
901 Main Street
66th Floor
Dallas, TX 75202
Attention: John W. Woodiel
Edna Mitchell
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 Required Lenders.
(b) Fees and Expenses.
(i) The payment by Borrower to Haynes and Boone, L.L.P., counsel
to Highland Capital Management, L.P., of all legal fees
incurred by such Persons in connection with the Credit
Agreement to the extent an invoice for such fees and expenses
is sent to the Borrower or its counsel prior to the date
hereof, or, to the extent not invoiced prior to the date
hereof, within 30 days following the date of such invoice.
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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
(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.
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(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.
(e) The execution and delivery of this Amendment and the
performance of the transactions contemplated hereby (i) 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; (ii) 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 (iii) 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.
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.
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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.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK.
SIGNATURE PAGES FOLLOW.]
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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/ Gary A. Graves
--------------------------------------
Name: Gary A. Graves
Title: Chief Executive Officer, President
HOLDINGS: LPA HOLDING CORP.
By: /s/ Gary A. Graves
--------------------------------------
Name: Gary A. Graves
Title: Chief Executive Officer, President
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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/ Gary A. Graves
--------------------------------------
Name: Gary A. Graves
Title: Chief Executive Officer, President
LPA SERVICES, INC.
By: /s/ Gary A. Graves
--------------------------------------
Name: Gary A. Graves
Title: Chief Executive Officer, President
BRIGHT START, INC.
By: /s/ Gary A. Graves
--------------------------------------
Name: Gary A. Graves
Title: Chief Executive Officer, President
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HERITAGE BANK, SSB
By: /s/ Davis Deadman
--------------------------------------
Name: Davis Deadman
------------------------------------
Title: CEO
-----------------------------------
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BANK OF AMERICA, N.A., as Issuing Bank
By: /s/ John W. Woodiel III
--------------------------------------
Name: John W. Woodiel III
------------------------------------
Title: Senior Vice President
-----------------------------------
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BANC OF AMERICA STRATEGIC SOLUTIONS, INC.
By: /s/ John W. Woodiel III
--------------------------------------
Name: John W. Woodiel III
------------------------------------
Title: Senior Vice President
-----------------------------------
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ML CBO IV (CAYMAN) LTD
By: Highland Capital Management, L.P.
as Collateral Manager
By: /s/ Mark Okada
--------------------------------------
Name: Mark Okada
------------------------------------
Title: Chief Investment Officer
-----------------------------------
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HIGHLAND LEGACY, LTD
By: Highland Capital Management, L.P.
as Collateral Manager
By: /s/ Mark Okada
--------------------------------------
Name: Mark Okada
------------------------------------
Title: Chief Investment Officer
-----------------------------------
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PAMCO CAYMAN LTD
By: Highland Capital Management, L.P.
as Collateral Manager
By: /s/ Mark Okada
--------------------------------------
Name: Mark Okada
------------------------------------
Title: Chief Investment Officer
-----------------------------------
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PAM CAPITAL FUNDING, L.P.
By: Highland Capital Management, L.P.
as Collateral Manager
By: /s/ Mark Okada
--------------------------------------
Name: Mark Okada
------------------------------------
Title: Chief Investment Officer
-----------------------------------
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HIGHLAND CRUSADER OFFSHORE PARTNERS, L.P.
By: Highland Capital Management, L.P.
as Collateral Manager
By: /s/ Mark Okada
--------------------------------------
Name: Mark Okada
------------------------------------
Title: Chief Investment Officer
-----------------------------------
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CALIFORNIA PUBLIC EMPLOYEES' RETIREMENT SYSTEM
By: Highland Capital Management, L.P.
as Authorized Representatives of the Board
By: /s/ Mark Okada
-----------------------------------------------
Name: Mark Okada
---------------------------------------------
Title: Chief Investment Officer
--------------------------------------------
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