<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): DECEMBER 13, 1999
LPA HOLDING CORP.
(Exact name of registrant as specified in its charter)
See Table of Additional Registrants
DELAWARE 333-56239-01 43-1144353
(State or other jurisdiction of (Commission File Number) (I.R.S. Employer
incorporation or organization) Identification Number)
8717 WEST 110TH STREET, SUITE 300
OVERLAND PARK, KANSAS 66210
(913) 345-1250
(Address and Telephone Number of Registrant's Principal Executive Office)
ADDITIONAL REGISTRANTS
JURISDICTION OF COMMISSION IRS EMPLOYER
NAME INCORPORATION FILE NUMBER IDENTIFICATION NO.
- ------------------------- --------------- -------------- -----------------
La Petite Academy, Inc. Delaware 333-56239 43-1243221
LPA Services, Inc. Delaware 333-56239-02 74-2849053
Bright Start, Inc. Minnesota 333-56239-03 41-1694581
<PAGE> 2
ITEM 5. OTHER EVENTS
On December 13, 1999, LPA Holding Corp. ("Holdings") and La Petite
Academy, Inc. entered into Amendment No. 1, Consent and Waiver ("Amendment
No.1") to the Credit Agreement dated as of May 11, 1998 among LPA Holding Corp.,
La Petite Academy, Inc., Bank of America, N.A. (formerly known as NationsBank,
N.A.) as Administrative Agent, Documentation Agent and Collateral Agent for the
Lenders and The Chase Manhattan Bank as Syndication Agent.
On December 15, 1999, LPA Investment LLC, the owner of more than 50% of
the capital stock of Holdings, acquired an additional $15,000,000 of Holdings'
redeemable preferred stock and received warrants to purchase 3% of Holdings'
common stock on a fully diluted basis. In connection with the investment,
Holdings' Amended and Restated Certificate of Incorporation and the Certificate
of Designations governing Holdings' preferred stock have been amended.
On August 19, 1999, the Board of Directors of Holdings adopted the 1999
Stock Option Plan for Non-Director Employees (the "Option Plan"). In connection
with the election of certain directors, Holdings has amended the Option Plan and
its Stockholders Agreement.
Copies of the documents relating to the foregoing are attached as
Exhibits 3.1, 3.2, 10.1, 10.2, 10.3, 10.4 and 10.5, each of which is
incorporated herein by reference.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(c) Exhibits
Number Description of Exhibits
- ------ -----------------------
3.1 Certificate of Amendment of the Amended and Restated Certificate of
Incorporation of LPA Holding Corp., filed on December 13, 1999.
3.2 Certificate of Amendment of the Certificate of Designations,
Preferences and Rights of Series A Redeemable Preferred Stock of LPA
Holding Corp., filed on December 13, 1999.
10.1 Amendment No. 1 Consent and Waiver dated as of December 13, 1999, to
the Credit Agreement dated as of May 11, 1998 among LPA Holding Corp.,
La Petite Academy, Inc., Bank of America, N.A. (formerly known as
NationsBank, N.A.) as Administrative Agent, Documentation Agent and
Collateral Agent for the Lenders and The Chase Manhattan Bank as
Syndication Agent.
10.2 Warrant No. 1 dated as of December 15, 1999, issued by LPA Holding
Corp. to LPA Investment LLC.
<PAGE> 3
10.3 Amendment No. 1 and Consent dated as of April 8, 1999, among LPA
Holding Corp., Vestar/LPT Limited Partnership, LPA Investment LLC and
the management stockholders named therein, to the Stockholders
Agreement dated as of May 11, 1999, among LPA Holding Corp., Vestar/LPT
Limited Partnership, LPA Investment LLC and the management stockholders
named therein.
10.4 LPA Holding Corp. 1999 Stock Option Plan for Non-Employee Directors.
10.5 Amendment No. 1 to the LPA Holding Corp. 1999 Stock Option Plan for
Non-Employee Directors.
99.1 Press Release dated December 13, 1999.
<PAGE> 4
EXHIBIT INDEX
Exhibit
Number Description of Exhibits
- ------ -----------------------
3.1 Certificate of Amendment of the Amended and Restated Certificate of
Incorporation of LPA Holding Corp., filed on December 13, 1999.
3.2 Certificate of Amendment of the Certificate of Designations,
Preferences and Rights of Series A Redeemable Preferred Stock of LPA
Holding Corp., filed on December 13, 1999.
10.1 Amendment No. 1 Consent and Waiver dated as of December 13, 1999, to
the Credit Agreement dated as of May 11, 1998 among LPA Holding Corp.,
La Petite Academy, Inc., Bank of America, N.A. (formerly known as
NationsBank, N.A.) as Administrative Agent, Documentation Agent and
Collateral Agent for the Lenders and The Chase Manhattan Bank as
Syndication Agent.
10.2 Warrant No. 1 dated as of December 15, 1999, issued by LPA Holding
Corp. to LPA Investment LLC.
10.3 Amendment No. 1 and Consent dated as of April 8, 1999, among LPA
Holding Corp., Vestar/LPT Limited Partnership, LPA Investment LLC and
the management stockholders named therein, to the Stockholders
Agreement dated as of May 11, 1999, among LPA Holding Corp., Vestar/LPT
Limited Partnership, LPA Investment LLC and the management stockholders
named therein.
10.4 LPA Holding Corp. 1999 Stock Option Plan for Non-Employee Directors.
10.5 Amendment No. 1 to the LPA Holding Corp. 1999 Stock Option Plan for
Non-Employee Directors.
99.1 Press Release dated December 13, 1999.
<PAGE> 5
SIGNATURE
- --------------------------------------------------------------------------------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
LPA HOLDING CORP.
Dated December 20, 1999 /s/ Joan K. Singleton
------------------------------------------------
By: Joan K. Singleton
Senior Vice President, Chief Financial Officer
and duly authorized representative of the
registrant
<PAGE> 6
SIGNATURE
- --------------------------------------------------------------------------------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
LA PETITE ACADEMY, INC.
Dated December 20, 1999 /s/ Joan K. Singleton
------------------------------------------------
By: Joan K. Singleton
Senior Vice President, Chief Financial Officer
and duly authorized representative of the
registrant
<PAGE> 7
SIGNATURE
- --------------------------------------------------------------------------------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
LPA SERVICES, INC.
Dated December 20, 1999 /s/ Joan K. Singleton
------------------------------------------------
By: Joan K. Singleton
Senior Vice President, Chief Financial Officer
and duly authorized representative of the
registrant
<PAGE> 8
SIGNATURE
- --------------------------------------------------------------------------------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
BRIGHT START, INC.
Dated December 20, 1999 /s/ Joan K. Singleton
------------------------------------------------
By: Joan K. Singleton
Senior Vice President, Chief Financial Officer
and duly authorized representative of the
registrant
<PAGE> 1
EXHIBIT 3.1
CERTIFICATE OF AMENDMENT
OF THE
AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
OF
LPA HOLDING CORP.
LPA Holding Corp., a corporation organized and existing under the laws
of the State of Delaware (the "Corporation"), hereby certifies as follows:
A. The name of the Corporation is LPA Holding Corp. The corporation was
duly incorporated in the State of Delaware on April 1, 1993. The original name
of the corporation was VESTAR/LPA Investment Corp.
B. Pursuant to Sections 228 and 242 of the General Corporation Law of
Delaware, this Certificate of Amendment to the Amended and Restated Certificate
of Incorporation of the Corporation amends the provisions of the Amended and
Restated Certificate of Incorporation of the Corporation as follows:
Article Fourth is hereby amended by deleting the first sentence and
substituting the following language in lieu thereof:
"The total number of shares of all classes of stock which this
corporation shall have the authority to issue is 1,015,000, consisting of
950,000 shares of Class A Common Stock, $0.01 par value (hereinafter referred to
as "Class A Common Stock"), 20,000 shares of Class B Common Stock, $0.01 par
value (hereinafter referred to as "Class B Common Stock" and, collectively with
the Class A Common Stock, the "Common Stock") and 45,000 shares of Preferred
Stock, $0.01 par value (hereinafter referred to as the "Preferred Stock"), the
rights, preferences and limitations of which shall be determined by the Board of
Directors."
* * * *
1
<PAGE> 2
IN WITNESS WHEREOF, the undersigned duly authorized officer of LPA
Holding Corp. has executed this Certificate of Amendment to the Certificate of
Incorporation on behalf of LPA Holding Corp. on this 13th day of December, 1999.
By:
----------------------------
James R. Kahl
Chief Executive Officer and President
2
<PAGE> 1
EXHIBIT 3.2
CERTIFICATE OF AMENDMENT
OF
THE 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 laws
of the State of Delaware (the "Corporation"), hereby certifies as follows:
That, pursuant to authority conferred upon the Board of Directors of
the Corporation by the Amended and Restated Certificate of Incorporation of said
Corporation, as further amended, and pursuant to the provisions of Section 151
of the General Corporation Law of Delaware (the "DGCL"), the Board of Directors,
by Unanimous Written Consent in Lieu of a Meeting pursuant to Section 141(f) of
the DGCL, adopted a resolution amending the Certificate of Designations,
Preferences and Rights of Series A Redeemable Preferred Stock, which resolution
is as follows:
RESOLVED, that the Certificate of Designations, Preferences and Rights
of Series A Redeemable Preferred Stock (the "Certificate of Designations") be
amended as follows:
Section 1 shall be amended by deleting it in its entirety and
substituting the following language in lieu thereof:
"(a) This series shall consist of 45,000 preferred shares in the
Corporation and shall be designated the Series A Redeemable
Preferred Stock ("Redeemable Preferred Stock")."
* * * *
1
<PAGE> 2
IN WITNESS WHEREOF, the undersigned duly authorized officer of LPA
Holding Corp. has executed this Certificate of Amendment to the Certificate of
Designations on behalf of LPA Holding Corp. on this 13th day of December, 1999.
By:
-----------------------------------
James R. Kahl
Chief Executive Officer and President
2
<PAGE> 1
EXHIBIT 10.1
AMENDMENT NO. 1, CONSENT AND WAIVER dated as of December 13,
1999 (this "Amendment"), to the Credit Agreement dated as of May
11, 1998 (the "Credit Agreement"), among LA PETITE ACADEMY, INC.,
a Delaware corporation (the "Borrower"), LPA HOLDING CORP., a
Delaware corporation ("Holdings"), the Lenders party thereto,
BANK OF AMERICA, N.A. (formerly known as NationsBank, N.A.), as
Administrative Agent (in such capacity, the "Administrative
Agent"), Documentation Agent and Collateral Agent for the
Lenders, and THE CHASE MANHATTAN BANK, as Syndication Agent.
Unless otherwise defined herein, capitalized terms shall have the
meanings assigned to them in the Credit Agreement.
RECITALS
WHEREAS, pursuant to the Credit Agreement, the Lenders, the Issuing
Bank and the Administrative Agent have extended credit and agreed to extend
credit to the Borrower; and
WHEREAS, the Investor has agreed to contribute, directly or indirectly,
an aggregate amount of not less than $15,000,000 in cash (the "New Equity
Contribution") to Holdings in exchange for the issuance to the Investor of
additional shares of Preferred Stock (the "New Preferred Stock").
WHEREAS, Holdings and the Borrower have requested that (a) the Agents
provide their written consent to permit Holdings, the Borrower and the
Subsidiaries to change the determination of their fiscal year so that each
fiscal year of Holdings, the Borrower and the Subsidiaries will end on the first
Saturday of July (the "Fiscal Year Change") and (b) the Required Lenders (i)
waive compliance with Section 2.11(b) of the Credit Agreement in connection with
the New Equity Contribution, (ii) waive compliance with Section 6.11 of the
Credit Agreement in connection with the issuance of the New Preferred Stock and
(iii) waive compliance with Section 6.16 of the Credit Agreement to the extent
necessary to permit the Fiscal Year Change (each of the waivers described in the
preceding clauses (i) through (iii) being collectively called the "Limited
Waiver") and (c) the Required Lenders agree to amend the Credit Agreement as
provided herein; and
WHEREAS, the Agents are willing to consent to the Fiscal Year Change
and the Required Lenders are willing to provide the Limited Waiver and to amend
the Credit Agreement pursuant to the terms and subject to the conditions set
forth herein.
1
<PAGE> 2
AGREEMENT
NOW, THEREFORE, in consideration of the premises, the agreements,
provisions and covenants herein contained and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto hereby agree as follows:
SECTION 1. Consent to the Fiscal Year Change. The Agents hereby
consent to the Fiscal Year Change.
SECTION 2. Limited Waiver of Section 2.11(b) of the Credit Agreement.
The Required Lenders hereby waive compliance by Holdings and the Borrower with
Section 2.11(b) of the Credit Agreement with respect to, and solely with respect
to, the Net Proceeds received from the issuance of the New Preferred Stock
pursuant to the New Equity Contribution.
SECTION 3. Limited Waiver of Section 6.11 (Amendment of Material
Documents). The Required Lenders hereby waive compliance by Holdings and the
Borrower with Section 6.11 of the Credit Agreement to the extent, but only to
the extent, necessary to permit Holdings to amend its Certificate of
Designations to permit the issuance of the New Preferred Stock.
SECTION 4. Limited Waiver of Section 6.16 of the Credit Agreement
(Changes in Fiscal Periods). The Required Lenders hereby waive compliance by
Holdings, the Borrower and the Subsidiaries with the provisions of Section 6.16
of the Credit Agreement to the extent, but only to the extent necessary to
permit the Fiscal Year Change.
SECTION 5. Amendments to Section 1.01 (Defined Terms). (a) The
definition of the term "Applicable Rate" is hereby amended and restated in its
entirety to read as follows:
"Applicable Rate" means, for any day with respect to any ABR Loan
or Eurodollar Loan, or with respect to the commitment fees payable
hereunder, as the case may be, the applicable rate per annum set forth
below under the caption "ABR Spread", "Eurodollar Spread" or
"Commitment Fee Rate", as the case may be, based upon the Leverage
Ratio as of the relevant determination date, provided that until the
delivery to the Administrative Agent of Holdings' consolidated
financial statements for the first full fiscal quarter ending after the
Effective Date, the "Applicable Rate" shall be the applicable rate per
annum set forth below in Category 1:
2
<PAGE> 3
<TABLE>
<CAPTION>
================================================================================
ABR Eurodollar Commitment Fee
Leverage Ratio: Spread Spread Rate
--------------------------------------------------------------------------------
<S> <C> <C> <C>
Category 1
Greater than or equal to 2.50% 3.50% 0.500%
6.00 to 1.00
--------------------------------------------------------------------------------
Category 2
Greater than or equal to
5.25 to 1.00 and 2.25% 3.25% 0.500%
less than 6.00 to 1.00
--------------------------------------------------------------------------------
Category 3
Greater than or equal to
5.00 to 1.00 and 2.00% 3.00% 0.500%
less than 5.25 to 1.00
--------------------------------------------------------------------------------
Category 4
Greater than or equal to
4.25 to 1.00 and 1.75% 2.75% 0.500%
less than 5.00 to 1.00
--------------------------------------------------------------------------------
Category 5
Less than 4.25 to 1.00 1.50% 2.50% 0.375%
================================================================================
</TABLE>
For purposes of the foregoing, (a) the Leverage Ratio shall be
determined as of the end of each fiscal quarter of Holdings' fiscal
year based upon Holdings' consolidated financial statements delivered
pursuant to Section 5.01(a) or (b) and (b) each change in the
Applicable Rate resulting from a change in the Leverage Ratio shall be
effective during the period commencing on and including the date of
delivery to the Administrative Agent of such consolidated financial
statements indicating such change and ending on the date immediately
preceding the effective date of the next such change, provided that the
Leverage Ratio shall be deemed to be in Category 1 (i) at any time that
an Event of Default has occurred and is continuing or (ii) if the
Borrower fails to deliver the consolidated financial statements
required to be delivered by it pursuant to Section 5.01(a) or (b),
during the period from the expiration of the time for delivery thereof
until such consolidated financial statements are delivered.
(b) The definition of the term "Consolidated EBITDAR" is hereby amended
and restated in its entirety to read as follows:
"Consolidated EBITDAR" means, for any period, the sum of Adjusted
Consolidated EBITDA for such period and Consolidated Lease Expense for
such period.
3
<PAGE> 4
(c) The definition of the term "Leverage Ratio" is hereby amended and
restated in its entirety to read as follows:
"Leverage Ratio" means, with respect to any period, the ratio of
(a) Total Debt as of the last day of such period to (b) Adjusted
Consolidated EBITDA for the four-fiscal-quarter period ending on the
last day of such period, all determined on a consolidated basis in
accordance with GAAP.
(d) The definition of the term "Permitted Acquisition" is hereby
amended by inserting immediately before the period at the end thereof the
following:
; provided, further, that no acquisition or merger shall be a
Permitted Acquisition if such acquisition or merger closes or is
consummated during the Academy Freeze Period.
(e) Section 1.01 of the Credit Agreement is hereby further amended by
inserting in the appropriate alphabetical order therein the following:
"Academy Freeze Period" means the period commencing with the
First Amendment Effective Date and terminating on the last day of the
Borrower's second fiscal quarter of 2001.
"Adjusted Consolidated EBITDA" means, for any period,
Consolidated EBITDA for such period, plus for any period ending during
the period beginning with and including the second fiscal quarter of
2000 and ending with and including the second fiscal quarter of 2001,
the sum of (i) to the extent deducted from (and not added back to)
revenues in determining Consolidated EBITDA for such period, any
non-recurring charges associated with the closing of First Amendment
Effective Date Academies and (ii) $5,000,000.
"First Amendment Effective Date" means December 13, 1999.
"First Amendment Effective Date Academy" means any Academy owned,
leased or operated by the Borrower or any of its Subsidiaries on the
First Amendment Effective Date excluding Academies for which
construction is in progress or for which construction has been
completed but operation has not otherwise commenced as of the First
Amendment Effective Date.
SECTION 6. Amendment to Section 6.04 (Investments, Loans, Advances,
Guarantees and Acquisitions). Section 6.04 of the Credit Agreement is hereby
amended by inserting immediately following the word "investments" in clause (xv)
thereof, the following:
4
<PAGE> 5
(excluding, during the Academy Freeze Period, investments in any
Academy other than First Amendment Effective Date Academies)
SECTION 7. Amendment to Section 6.12 (Capital Expenditures). Section
6.12 of the Credit Agreement is hereby amended and restated in its entirety to
read as follows:
SECTION 6.12. Capital Expenditures. (a) The Borrower will not permit
the aggregate amount of Capital Expenditures made by the Borrower and the
Subsidiaries in any fiscal year to exceed the amount set forth below opposite
such year:
Fiscal Year Ending Amount
------------------ ------
1998 $15,000,000
1999 $17,000,000
2000 $15,000,000
2001 $15,000,000
2002 $22,000,000
2003 $26,000,000
2004 $26,000,000
2005 $25,000,000
(b) Notwithstanding the foregoing, (i) during the Academy Freeze
Period, the Borrower will not, and will not permit any of the
Subsidiaries to, make any Capital Expenditures in connection with any
Academy that is not a First Amendment Effective Date Academy and (ii)
in the event that the amount of Capital Expenditures permitted to be
made by the Borrower and its Subsidiaries pursuant to clause (a) in any
fiscal year is greater than the amount of Capital Expenditures made by
the Borrower and its Subsidiaries during such fiscal year, 75% of such
excess may be carried forward and utilized in the immediately
succeeding fiscal year (it being understood and agreed that (x) no
amount may be carried forward beyond the year immediately succeeding
the fiscal year in which it arose and (y) no portion of the
carry-forward amount available in any fiscal year may be used until the
entire amount of Capital Expenditures permitted to be made in such
fiscal year (without giving effect to such carry-forward amount) shall
have been made).
SECTION 8. Amendment to Section 6.13 (Leverage Ratio). Section 6.13
of the Credit Agreement is hereby amended and restated in its entirety to read
as follows:
SECTION 6.13. Leverage Ratio. The Borrower will not permit the Leverage
Ratio as of the end of any fiscal quarter ending during any period set forth
below to be in excess of the ratio set forth below opposite such period:
5
<PAGE> 6
<TABLE>
<CAPTION>
Period Ratio
------ ------
<S> <C>
During the first fiscal 6.25 to 1.00
quarter of 2000 (ending October 23, 1999)
During second and third fiscal 6.00 to 1.00
quarters of 2000 (ending, respectively,
January 15, 2000 and April 8, 2000)
During the fourth fiscal quarter of 2000 6.50 to 1.00
(ending July 1, 2000)
During the first fiscal quarter of 2001 6.75 to 1.00
(ending, October 21, 2000)
During the second fiscal quarter of 2001 6.50 to 1.00
(ending January 13, 2001)
During the third fiscal quarter of 2001 6.25 to 1.00
(ending April 7, 2001)
During the fourth fiscal quarter of 2001 5.50 to 1.00
(ending July 7, 2001)
During first and second fiscal quarters 5.25 to 1.00
of 2002 (ending, respectively, October 27,
2001 and January 19, 2002)
During third and fourth fiscal quarters 5.00 to 1.00
of 2002 (ending, respectively, April 13, 2002
and July 6, 2002)
During first and second fiscal quarters 4.75 to 1.00
of 2003 (ending, respectively,
October 26, 2002 and January 18, 2003)
During third and fourth fiscal quarters 4.50 to 1.00
of 2003 (ending, respectively, April 12, 2003
and July 5, 2003)
During first and second fiscal quarters 4.00 to 1.00
of 2004 (ending, respectively, October 25,
2003 and January 17, 2004)
</TABLE>
6
<PAGE> 7
<TABLE>
<S> <C>
During third and fourth fiscal quarters 3.75 to 1.00
of 2004 (ending, respectively, April 10, 2004
and July 3, 2004)
During first and second fiscal quarters 3.50 to 1.00
of 2005 (ending, respectively, October 23,
2004 and January 15, 2005)
During third fiscal quarter of 2005 3.00 to 1.00
(ending April 9, 2005) and thereafter
</TABLE>
SECTION 9. Amendment to Section 6.14 (Consolidated Fixed Charge
Coverage Ratio). Section 6.14 of the Credit Agreement is hereby amended and
restated in its entirety to read as follows:
SECTION 6.14. Consolidated Fixed Charge Coverage Ratio. The Borrower
will not permit the Consolidated Fixed Charge Coverage Ratio for any
four-fiscal-quarter period ending during any period set forth below to be less
than the ratio set forth below opposite such period:
<TABLE>
Period Ratio
------ -----
<S> <C>
From first fiscal quarter of 2000 1.00 to 1.00
(beginning July 4, 1999) through
fourth fiscal quarter of 2000
(ending July 1, 2000)
From first fiscal quarter of 2001 0.95 to 1.00
(beginning July 2, 2000) through
third fiscal quarter of 2001
(ending April 7, 2001)
Fourth fiscal quarter of 2001 1.00 to 1.00
(beginning April 8, 2001 and ending
July 7, 2001)
From first fiscal quarter of 2002 1.05 to 1.00
(beginning July 8, 2001) through
fourth fiscal quarter of 2003
(ending July 5, 2003)
From first fiscal quarter of 2004 1.10 to 1.00
(beginning July 6, 2003) and thereafter
</TABLE>
7
<PAGE> 8
SECTION 10. Amendment to Section 6.15 (Minimum Consolidated EBITDA).
Section 6.15 of the Credit Agreement is hereby amended and restated in its
entirety to read as follows:
SECTION 6.15. Minimum Adjusted Consolidated EBITDA. The Borrower will
not permit Adjusted Consolidated EBITDA for any four-fiscal-quarter period
ending during any period set forth below to be less than the ratio set forth
below opposite such period:
Period Amount
------ ------
From first fiscal quarter of 2000 $30,000,000
(beginning July 4, 1999) through
fourth fiscal quarter of 2000
(ending July 1, 2000)
First fiscal quarter of 2001 $28,000,000
(beginning July 2, 2000 and
ending October 21, 2000)
From second fiscal quarter of 2001 $31,000,000
(beginning October 22, 2000) through
third fiscal quarter of 2001
(ending April 7, 2001)
Fourth fiscal quarter of 2001 $33,000,000
(beginning April 8, 2001 and
ending July 7, 2001)
From first fiscal quarter of 2002 $35,000,000
(beginning July 8, 2001) through
fourth fiscal quarter of 2002
(ending July 6, 2002)
From first fiscal quarter of 2003 $37,000,000
(beginning July 7, 2002) through
fourth fiscal quarter of 2003
(ending July 5, 2003)
From first fiscal quarter of 2004 $41,000,000
(beginning July 6, 2003) through
fourth fiscal quarter of 2004
(ending July 3, 2004)
From first fiscal quarter of 2005 $45,000,000
(beginning July 4, 2004) and thereafter
8
<PAGE> 9
SECTION 11. Representations and Warranties. Each of Holdings and the
Borrower hereby represents and warrants to the Administrative Agent and each of
the Lenders that (a) this Amendment has been duly authorized, executed and
delivered on its behalf; (b) after giving effect to this Amendment, the
representations and warranties set forth in Article III of the Credit Agreement
are true and correct in all material respects with the same effect as if made on
the date hereof, except to the extent that such representations and warranties
expressly relate to an earlier date; and (c) after giving effect to this
Amendment no Default or Event of Default has occurred and is continuing.
SECTION 12. Effectiveness. This Amendment shall be deemed to be
effective as of the date first written above when (a) the Administrative Agent
(or its counsel) shall have received copies hereof that, when taken together,
bear the signatures of the Borrower, Holdings, each of the Agents and the
Required Lenders; (b) Holdings shall have received not less than $15,000,000 in
gross cash proceeds from the issuance of the New Preferred Stock and the entire
amount of such proceeds shall have been invested in the equity of the Borrower;
and (c) the Administrative Agent shall have received from the Borrower for the
account of each Lender that shall have executed and delivered a counterpart of
this Amendment to the Administrative Agent (or its counsel) by 5:00 p.m., New
York City time, on December 13, 1999, a fee equal to 0.25% of the sum of (i) the
aggregate unpaid principal amount of Term Loans made by such Lender as of
December 13, 1999 and (ii) such Lender's Revolving Commitment as in effect on
December 13, 1999.
SECTION 13. Effect of This Amendment. Except as expressly set forth
herein, this Amendment shall not by implication or otherwise limit, impair,
constitute a waiver of, or otherwise affect the rights and remedies of the
Lenders, the Agents or the Borrower under the Credit Agreement or any other Loan
Document, and shall not alter, modify, amend or in any way affect any of the
terms, conditions, obligations, covenants or agreements contained in the Credit
Agreement or any other Loan Document, all of which are ratified and affirmed in
all respects and shall continue in full force and effect as in existence on the
date hereof. Nothing herein shall be deemed to entitle the Borrower to a consent
to, or a waiver, amendment, modification or other change of, any of the terms,
conditions, obligations, covenants or agreements contained in the Credit
Agreement or any other Loan Document in similar or different circumstances.
After the date hereof, any reference to the Credit Agreement shall mean the
Credit Agreement as modified hereby. This Amendment shall constitute a Loan
Document for all purposes under the Credit Agreement.
SECTION 14. Counterparts. This Amendment may be executed in
counterparts, each of which shall constitute an original but all of which when
taken together shall constitute but one contract. Delivery of an executed
signature page of this Amendment by facsimile transmission shall be effective as
delivery of a manually executed counterpart hereof.
9
<PAGE> 10
SECTION 15. GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
SECTION 16. Expenses. The Borrower agrees to reimburse the
Administrative Agent for its out-of-pocket expenses in connection with this
Amendment, including the reasonable fees, charges and disbursements of Cravath,
Swaine & Moore, counsel for the Administrative Agent.
10
<PAGE> 11
IN WITNESS WHEREOF, each of the parties hereto has caused this
Amendment to be duly executed and delivered by its duly authorized officer as of
the date first above written.
LPA HOLDING CORP.,
By
-----------------------------
Name:
Title:
LA PETITE ACADEMY, INC.,
By
-----------------------------
Name:
Title:
BANK OF AMERICA, N.A. (formerly
NationsBank, N.A.), individually and in its
capacities as Administrative Agent,
Documentation Agent and Collateral Agent,
By
-----------------------------
Name:
Title:
THE CHASE MANHATTAN BANK,
individually and in its capacities as Issuing
Bank, Swingline Lender and Syndication
Agent,
By
-----------------------------
Name:
Title:
11
<PAGE> 12
SIGNATURE PAGE TO AMENDMENT NO. 1,
CONSENT AND WAIVER DATED AS OF
DECEMBER 13, 1999, TO THE CREDIT
AGREEMENT DATED AS OF MAY 11, 1998,
AMONG LA PETITE ACADEMY, INC., LPA
HOLDING CORP., THE LENDERS PARTY
THERETO, BANK OF AMERICA, N.A.
(F/K/A NATIONSBANK, N.A.), AS
ADMINISTRATIVE AGENT, DOCUMENTATION
AGENT and COLLATERAL AGENT and THE
CHASE MANHATTAN BANK, as SYNDICATION
AGENT
Name of Institution by
---------------------------------
Name:
Title:
12
<PAGE> 1
EXHIBIT 10.2
WARRANT
THE TRANSFER, SALE OR OTHER DISPOSITION OF THE SECURITIES REPRESENTED
BY THIS CERTIFICATE IS SUBJECT TO THE CONDITIONS SPECIFIED IN THE SECURITIES
PURCHASE AGREEMENT DATED AS OF DECEMBER 15, 1999 BY AND BETWEEN LPA HOLDING
CORP., A DELAWARE CORPORATION ("ISSUER") AND LPA INVESTMENT LLC, A DELAWARE
LIMITED LIABILITY COMPANY AND THE STOCKHOLDERS' AGREEMENT DATED AS OF MAY 11,
1998, AMONG THE ISSUER, THE HOLDER, AND THE OTHER SIGNATORIES THERETO, AS SUCH
AGREEMENTS MAY BE MODIFIED AND SUPPLEMENTED AND IN EFFECT FROM TIME TO TIME, AND
NO TRANSFER OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE SHALL BE VALID OR
EFFECTIVE UNTIL SUCH CONDITIONS HAVE BEEN FULFILLED. A COPY OF EACH SUCH
AGREEMENT IS ON FILE AND MAY BE INSPECTED AT THE PRINCIPAL EXECUTIVE OFFICE OF
THE ISSUER. THE HOLDER OF THIS CERTIFICATE, BY ACCEPTANCE OF THIS CERTIFICATE,
AGREES TO BE BOUND BY THE PROVISIONS OF SUCH AGREEMENTS.
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR
INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR APPLICABLE STATE SECURITIES LAWS. ACCORDINGLY, SUCH SECURITIES MAY
NOT BE OFFERED, SOLD, ASSIGNED, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED
OR DISPOSED OF EXCEPT IN COMPLIANCE WITH THE REGISTRATION OR QUALIFICATION
PROVISIONS OF APPLICABLE FEDERAL AND STATE SECURITIES LAWS OR APPLICABLE
EXEMPTIONS THEREFROM.
No. of Shares of Warrant No. W-2
Class A Common Stock: 22,051
December 15, 1999
WARRANT
TO PURCHASE CLASS A COMMON STOCK OF
LPA HOLDING CORP.
THIS IS TO CERTIFY THAT LPA Investment LLC, or its registered assigns,
is entitled to purchase in whole or in part from time to time from LPA Holding
Corp., a Delaware corporation (the "Issuer"), at any time on and after the
Effective Date (as hereinafter defined), but not later than 5:00 p.m., New York
time, on May 11, 2008 (the "Expiration Date"), 22,051 shares of Class A Common
Stock (as hereinafter defined) at a purchase price of $0.01 per share (the
"Exercise Price"), subject to the terms and conditions provided herein and in
the Purchase Agreement (as hereinafter defined). The number of shares of Class A
Common Stock for which
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<PAGE> 2
this Warrant shall be exercisable and the Exercise Price are subject to
adjustment from time to time as provided herein.
This Warrant is issued pursuant to the Securities Purchase Agreement
dated as of December 15, 1999 (as modified and supplemented and in effect from
time to time, the "Purchase Agreement") between the Issuer and LPA Investment
LLC.
Certain Definitions.
Each capitalized term used herein without definition shall have the
meaning assigned thereto (or incorporated by reference) in the Purchase
Agreement and in the Exhibits thereto.
As used herein, the following terms shall have the following meanings
(all terms defined in this Section 1 or in other provisions of this Warrant
in the singular to have the same meanings when used in the plural and vice
versa):
"Affiliate" means, with respect to any specified Person, any other
Person that, directly or indirectly, controls, is under common control with, or
is owned or controlled by, such specified Person. For purposes of this
definition,
"control" means, with respect to any specified Person, the power
to direct the management or policies of the specified Person through
the ownership of voting securities, by contract, voting agreement or
otherwise, and
the terms "controlling", "control with" and "controlled by", etc.
shall have meanings correlative to the foregoing.
"Appraisal Procedure", if applicable, shall mean the following
procedure to determine the fair market value, as to any security, for purposes
of the definition of "Current Market Price" or the fair market value, as to any
other property (in either case, the "valuation amount"). The valuation amount
shall be determined in good faith jointly by the Board and the Majority Holders;
provided, however, that if such parties are not able to agree on the valuation
amount within a reasonable period of time (not to exceed twenty (20) days) the
valuation amount shall be determined by an investment banking firm of national
recognition, which firm shall be reasonably acceptable to the Board and the
Majority Holders. If the Board and the Majority Holders are unable to agree upon
an acceptable investment banking firm within ten (10) days after the date either
party proposed that one be selected, the investment banking firm will be
selected by an arbitrator located in New York City, New York, selected by the
American Arbitration Association (or if such organization ceases to exist, the
arbitrator shall be chosen by a court of competent jurisdiction). The arbitrator
shall select the investment banking firm (within ten (10) days of his
appointment) from a list, jointly prepared by the Board and the Majority
Holders, of not more than six investment banking firms of national standing in
the United States, of which no more than three may be named by the Board and no
more than three may be named by the Majority Holders. The arbitrator may
consider, within the ten-day period allotted, arguments from the parties
regarding which investment banking firm to choose, but the selection by the
arbitrator shall be made in its sole discretion from the list of six. The Board
and the Majority
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<PAGE> 3
Holders shall submit to the investment banking firm their respective
determinations of the valuation amount, and any supporting arguments and other
data as they may desire, within ten (10) days of the appointment of the
investment banking firm, and the investment banking firm shall as soon as
practicable thereafter make its own determination of the valuation amount. The
final valuation amount for purposes hereof shall be the average of the two
valuation amounts closest together, as determined by the investment banking
firm, from among the valuation amounts submitted by the Issuer and the Majority
Holders and the valuation amount calculated by the investment banking firm. The
determination of the final valuation amount by such investment banking firm
shall be final and binding upon the parties. The party that submits the
valuation amount that is not used by the investment banking firm to calculate
the final valuation amount shall pay the fees and expenses of the investment
banking firm and arbitrator (if any) used to determine the valuation amount. If
required by any such investment banking firm or arbitrator, the Issuer shall
execute a retainer and engagement letter containing reasonable terms and
conditions, including, without limitation, customary provisions concerning the
rights of indemnification and contribution by the Issuer in favor of such
investment banking firm or arbitrator and its officers, directors, partners,
employees, agents and Affiliates.
"Board" shall mean the Board of Directors of the Issuer.
"Business Day" shall mean any day other than a Saturday, a Sunday or a
day on which commercial banks are authorized or required to close in New York
City, New York or Kansas City, Kansas.
"Class A Common Stock" shall mean the Issuer's Class A Common Stock,
$.01 par value per share.
"Class B Common Stock" shall mean the Issuer's Class A Common Stock,
$.01 par value per share.
"Common Stock" shall mean the Class A Common Stock and the Class B Common
Stock.
"Current Market Price" shall mean, as to any security, the average of
the closing prices of such security's sales on all domestic securities exchanges
on which such security may at the time be listed, or, if there have been no
sales on any such exchange on any day, the average of the highest bid and lowest
asked prices on all such exchanges at the end of such day, or, if on any day
such security is not so listed, the average of the representative bid and asked
prices quoted in the NASDAQ System as of 4:00 P.M., New York City time, on such
day, or, if on any day such security is not quoted in the NASDAQ System, the
average of the highest bid and lowest asked prices on such day in the domestic
over-the-counter market as reported by the National Quotation Bureau,
Incorporated, or any similar or successor organization (and in each such case
(i) averaged over a period of 21 days consisting of the day immediately
preceding the day as of which "Current Market Price" is being determined and the
20 consecutive Business Days prior to such immediately preceding day and (ii)
excluding any trades that are not bona fide, arm's length transactions). If at
any time such security is not listed on any domestic securities exchange or
quoted in the NASDAQ System or the domestic over-the-counter market, the
"Current Market Price" of such security shall be the fair market value thereof
as determined in accordance with the
3
<PAGE> 4
Appraisal Procedure, using an appropriate valuation method, assuming an
arms-length sale to an independent party. In determining the fair market value
of any class or series of Common Stock, a sale of all of the issued and
outstanding Common Stock of the Issuer will be assumed, without giving regard to
the lack of liquidity of such stock due to any restrictions (contractual or
otherwise) applicable thereto or any discount for minority interests and
assuming the conversion or exchange of all securities then outstanding that are
convertible into or exchangeable for Common Stock and the exercise of all rights
and warrants (including the Warrants) then outstanding and exercisable to
purchase shares of such stock or securities convertible into or exchangeable for
shares of such stock; provided, however that such assumption will not include
those securities, rights and warrants convertible into Common Stock where the
conversion, exchange or exercise price per share is greater than the fair market
value; provided, further, however, that fair market value shall be determined
with regard to the relative priority of each class or series of Common Stock (if
more than one class or series exists.)
"Effective Date" shall mean the date set forth on the first page of
this Warrant.
"Exercise Notice" shall have the meaning assigned to such term in
Section 2(a)(i) hereof.
"Exercise Price" shall have the meaning assigned to such term in the
first paragraph of this Warrant.
"Expiration Date" shall have the meaning assigned to such term in the
first paragraph of this Warrant.
"Holder" shall mean the registered holder of this Warrant.
"include" and "including" shall be construed as if followed by the
phrase ", without being limited to,".
"Issuer" shall have the meaning assigned to such term in the first
paragraph of this Warrant.
"Majority Holders" shall mean those Warrant Holders holding Warrants
representing the right to purchase a majority of the Warrant Stock issuable upon
exercise of all Warrants then issued and outstanding and held by all Warrant
Holders; provided, further, that for purposes of determining the Put Price and
for purposes of the Appraisal Procedure referred to in Section 6, "Majority
Holders" shall mean those Warrant Holders holding (or having the right to
receive) Warrant Stock representing a majority of the total amount of Warrant
Stock.
"NASDAQ System" shall mean the National Association of Securities
Dealers Automated Quotation System.
"Person" shall be construed broadly and shall include any natural
person, company, partnership, joint venture, corporation, limited liability
company, business trust, unincorporated organization or Governmental Authority.
4
<PAGE> 5
"Purchase Agreement" shall have the meaning assigned to such term in
the second paragraph of this Warrant.
"Put Price" shall mean the aggregate of the Current Market Prices for
the shares of Class A Common Stock and other securities included in Warrant
Stock; provided, however, that if at the time of determination of the Put Price,
Warrant Stock shall consist in any part of property other than Class A Common
Stock and other securities, the Put Price shall include a cash amount per share
of Warrant Stock equal to that portion of the fair market value (determined in
accordance with the Appraisal Procedure) of such property allocable to each
share of Warrant Stock.
"Securities Act" shall mean the Securities Act of 1933, as amended, and
the rules and regulations promulgated thereunder.
"Senior Indebtedness" 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
Warrant, if the original principal amount exceeded $5 million and (iv) all
refinancings or modifications of the Indebtedness described in clauses (i)
through (iii) above; provided, however, that neither the Corporation nor its
Subsidiaries shall incur any Indebtedness that contains restrictions on the
payment of the Put Price that are more restrictive than the Indebtedness
existing on the date hereof.
"Stockholders Agreement" shall mean the Stockholders Agreement dated as
of May 11, 1998 among the Issuer, the Holder and the other signatories thereto,
as modified and supplemented and in effect from time to time.
"Warrant" shall mean this Warrant originally issued by the Issuer
pursuant to the Purchase Agreement and all warrants issued upon transfer,
division, or combination of, or in substitution for, this Warrant. All Warrants
shall be substantially in the form of Exhibit A attached to the Purchase
Agreement except that the Warrants need not bear the legends appearing on the
first page of this Warrant from and after such time as the restrictions set
forth therein no longer apply.
"Warrant Holder" shall mean any Person who acquires Warrants or Warrant
Stock pursuant to the provisions of the Purchase Agreement or any Warrant,
including any transferees of Warrants or Warrant Stock.
"Warrant Stock" shall mean (a) all shares of Class A Common Stock
issued or issuable from time to time upon exercise of this Warrant, (b) all
other securities or other property issued or issuable upon any such exercise and
(c) any securities distributed with respect to the securities referred to in the
preceding clauses (a) and (b): provided, however, that the term "Warrant Stock"
shall not include shares of Class A Common Stock or other securities following
the time such shares or other securities have been sold in a public offering
registered under the Securities Act or sold under Rule 144 promulgated
thereunder. As used in this Warrant, the phrase "Warrant Stock then held" shall
mean Warrant Stock held at the time of determination by
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<PAGE> 6
the Holder, and shall include Warrant Stock issuable upon exercise of any
Warrants held at the time of determination by such Holder.
Exercise of Warrant.
On and after the Effective Date and until 5:00 p.m., New York
City time, on the Expiration Date, the Holder may exercise this
Warrant, on one or more occasions, on any Business Day, in whole or in
part, by delivering to the Issuer, at its office maintained for such
purpose pursuant to Section 6(a) hereof,
a written notice of the Holder's election to exercise
this Warrant, which notice shall be substantially in the form of
Annex A attached hereto and shall be properly completed (the
"Exercise Notice"),
payment of the Exercise Price (payable as set forth in
Section 2(b) below) for the Warrant Stock as to which this
Warrant is being exercised, and
this Warrant. Except to the extent necessary to cause the
number of shares of Class A Common Stock deliverable as provided
in Section 2(b) to be a whole number of shares, this Warrant
shall be exercisable in part only for a whole number of shares.
At the option of the Holder, the Exercise Price shall be payable
in cash or by certified or official bank check payable to
the order of the Issuer; or
by delivery of this Warrant to the Issuer for
cancellation in accordance with the further provisions of this
Section 2(b). In exchange for the portion of this Warrant that is
being exercised at such time, the Holder shall receive the number
of shares of Class A Common Stock determined by multiplying (A)
the number of shares of Class A Common Stock for which this
Warrant is being exercised at such time by (B) a fraction, (1)
the numerator of which shall be the difference between (x)
Current Market Price per share of Class A Common Stock at such
time and (y) the Exercise Price per share of Class A Common
Stock, and (2) the denominator of which shall be the Current
Market Price per share of Class A Common Stock at such time. The
Issuer shall issue a new Warrant for the portion, if any, of this
Warrant not being exercised as provided in Section 2(f).
Subject to the provisions of Section 2(d), upon receipt of an
Exercise Notice, the aggregate Exercise Price payable and this Warrant,
the Issuer shall, as promptly as practicable and in any event within
five (5) Business Days thereafter, issue one or more stock certificates
representing the aggregate number of shares of Class A Common Stock to
which the Holder is entitled and transfer to the Holder of this Warrant
appropriate evidence of ownership of other securities or property
(including any cash) to which the Holder is entitled, in such
denominations, and registered or otherwise placed in, or payable to the
order of, such name or names, as may be directed in writing by the
Holder, and shall
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<PAGE> 7
deliver such stock certificates, evidence of ownership and any other
securities or property (including any cash) to the person or persons
entitled to receive the same, together with an amount in cash in lieu
of any fraction of a share (or fractional interest in any other
security), as hereinafter provided. The Issuer shall pay all expenses
in connection with, and any and all documentary, stamp or similar issue
or transfer taxes of the United States or any state thereof payable in
respect of, the issue or delivery of the Warrant Stock upon exercise of
this Warrant. However, the Issuer shall not be required to pay any tax
or other charge imposed in connection with any assignment or transfer
involved in the issue of any certificate or other evidence of ownership
of Warrant Stock.
The Holder's election to exercise this Warrant may, in the sole
discretion of the Holder, be conditioned upon, and in such event, the
exercise shall be subject in all respects to, the consummation of a
sale of the Issuer, the public offering of any class of the Issuer's
Common Stock registered under the Securities Act or other similar
transaction involving the Issuer, as specified in the Exercise Notice.
If any exercise of this Warrant is so conditioned, then, subject to
delivery of the items required by Section 2(c), the Issuer shall
deliver the certificates and other evidence of ownership of other
securities or other property in such manner as the Holder shall direct
as required in connection with the consummation of the transaction upon
which the exercise is conditioned. At any time that the Holder shall
give notice to the Issuer that such transaction has been abandoned or
the Holder has withdrawn from participation in such transaction, the
Issuer shall return the items delivered pursuant to Section 2(c) and
the Holder's election to exercise this Warrant shall be deemed
rescinded.
The stock certificate or certificates or other evidence of
ownership of Warrant Stock to be delivered pursuant to Section 2(c)
hereof shall be deemed to have been issued, and the Holder or any other
Person so designated to be named therein shall, to the extent permitted
by law, be deemed to have become a holder of record of the Warrant
Stock represented thereby, including having the right to vote any
voting securities included therein or to consent or to receive notice
as a shareholder, as of the date on which the last of the Exercise
Notice, payment of the Exercise Price and this Warrant is received by
the Issuer as aforesaid, (subject, in the case of any exercise to which
Section 2(d) applies, to the consummation of the transaction upon which
such exercise is conditioned) notwithstanding that the transfer books
of the Company shall then be closed or that such certificates or other
evidence of ownership shall not then actually have been delivered to
the Holder.
If this Warrant shall have been exercised only in part, the
Issuer shall, at the time of delivery of the certificate or
certificates or other evidence of ownership of Warrant Stock, execute
and deliver to the Holder, without charge, a new Warrant evidencing the
rights of the Holder to purchase the unpurchased Warrant Stock called
for by this Warrant, which new Warrant shall in all other respects be
identical to this Warrant, except for any legend hereon to the extent
no longer required pursuant to the Purchase Agreement or the
Stockholders Agreement.
The Issuer shall not be required to issue any fractional share of
Class A Common Stock (or fractional interest in any other security)
upon exercise of this Warrant.
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<PAGE> 8
As to any fraction of a share (or fractional interest in any other
security) that the Holder would otherwise be entitled to receive upon
such exercise, the Issuer shall pay a cash adjustment in respect of
such fraction in an amount equal to the same fraction of the Current
Market Price per share of Class A Common Stock (and/or other security)
on the date of exercise; provided, however, that in the event that the
Issuer undertakes a reduction in the number of shares of Class A Common
Stock or other securities outstanding, it shall be required to issue
fractional shares or fractional interests in such other securities to
the Holder if the Holder exercises all (but not part) of this Warrant,
unless the Holder shall have consented in writing to such reduction and
provided the Issuer with a written waiver of its right to receive
fractional shares or interests in accordance with this paragraph. If
the Holder shall exercise more than one Warrant in the same
transaction, any payment in respect of fractional shares (or other
fractional interests) shall be based on the final fraction resulting
from aggregating all such exercises.
The Issuer hereby agrees at all times to keep reserved for
issuance and delivery upon exercise of this Warrant such number of its
authorized but unissued shares (or treasury shares) of Class A Common
Stock or other securities of the Issuer from time to time issuable upon
exercise of this Warrant as will be sufficient to permit the exercise
in full of this Warrant. All such shares and other securities shall be
duly authorized and, when issued upon exercise of this Warrant in
accordance with the terms hereof, shall be validly issued, fully paid
and non-assessable, free and clear of all liens, security interests,
charges and other encumbrances or restrictions on sale (except to the
extent of any applicable provisions set forth in the Purchase Agreement
or Stockholders' Agreement) and free and clear of all preemptive or
similar rights.
If the issuance of any shares of Class A Common Stock or other
securities required to be reserved for purposes of the exercise of this
Warrant requires the registration with, or approval of, any
governmental authority or requires listing on any national securities
exchange or national market system before such shares or other
securities may be so issued, the Issuer shall at its expense use its
best efforts to cause such shares to be duly registered, approved or
listed, as the case may be, so that such shares or other securities may
be issued in accordance with the terms hereof; provided, however, that
this provision shall not obligate the Issuer to register such shares or
other securities under the Securities Act or qualify them under state
securities or blue sky laws.
Transfer, Division and Combination.
This Warrant and all rights hereunder are assignable and
transferable (subject to any restrictive legends hereon), at any time
in whole or in part, without the consent of the Issuer, to any Person
or Persons, upon surrender of this Warrant to the Issuer, together with
a written assignment of this Warrant substantially in the form of Annex
B attached hereto, duly executed by the Holder hereof or such Holder's
agent or attorney. Upon such surrender, the Issuer shall, without
charge, execute and deliver a new Warrant or Warrants in the name of
the assignee or assignees (and, if the Holder's entire interest is not
being assigned, in the name of the Holder), and in the denominations
specified in such instrument of assignment, and this Warrant shall
promptly be canceled.
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<PAGE> 9
This Warrant may be exchanged for, or combined with, other
Warrants upon presentation of this Warrant and any other Warrants with
which this Warrant is to be combined to the Issuer, together with a
written notice specifying the denominations in which a new Warrant or
Warrants are to be issued, signed by the Holder. The Issuer shall
execute and deliver a new Warrant or Warrants to the Holder in exchange
for the Warrant or Warrants to be divided or combined in accordance
with such notice.
The Issuer shall maintain books for the registration and transfer
of the Warrants, and shall allow each Warrant Holder to inspect such
books at such reasonable times as such holder shall request.
Adjustments.
Dividends and Distributions. If at any time the Issuer shall pay
any dividend or make any other distribution to holders of its Class A
Common Stock of any cash, evidence of indebtedness or other property
(including any rights or warrants to purchase any securities of the
Issuer) of any nature whatsoever (other than as contemplated by
subsections (b), (c)(i)(A) and (d)(i)(A) of this Section 4), the Issuer
shall at the same time pay or distribute to the Holder (whether or not
the Holder exercises this Warrant) the cash, evidence of indebtedness
or other property the Holder would have been entitled to receive if
such Holder had exercised this Warrant immediately prior to the record
date for such dividend or distribution.
Subdivisions and Combinations. If at any time the Issuer shall
take a record of the holders of its Common Stock for the
purpose of entitling them to receive a dividend or other
distribution of Common Stock;
subdivide, split or reclassify its outstanding shares of
Common Stock into a larger number of shares of Common Stock; or
combine its outstanding shares of Common Stock into a
smaller number of shares of Common Stock;
then immediately after the occurrence of any such event (A) the number of shares
of Class A Common Stock issuable upon exercise of this Warrant shall be adjusted
so as to equal the number of shares of Class A Common Stock the Holder would
have held immediately after the occurrence of such event (in the case of an
event referred to in clause (i), after giving effect to such dividend or
distribution) if the Holder had exercised this Warrant immediately prior to the
occurrence of such event and (B) the Exercise Price shall be adjusted to be
equal to (x) the Exercise Price immediately prior to the occurrence of such
event multiplied by (y) a fraction (1) the numerator of which is the number of
shares of Class A Common Stock issuable upon exercise of this Warrant
immediately prior to the adjustment in clause (A) and (2) the denominator of
which is the number of shares of Class A Common Stock issuable upon exercise of
this Warrant immediately after the adjustment in clause (A).
Issuance of Common Stock. If at any time the Issuer
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<PAGE> 10
shall (A) take a record of the holders of any class or series of
its Common Stock for the purpose of entitling them to subscribe for or
purchase shares of any class or series of Common Stock or (B) otherwise
sell or issue any shares of any class or series of Common Stock and
the consideration per share of Common Stock of such class or
series paid or to be paid upon such subscription, purchase, sale or
issuance is less than the Current Market Price per share of Common
Stock of such class or series immediately before such record date or
immediately before the date of such sale or issuance, as the case may
be, then the number of shares of Class A Common Stock issuable upon
exercise of this Warrant shall be adjusted to be that number determined
by multiplying (x) the number of shares of Class A Common Stock
issuable upon exercise of this Warrant immediately prior to such record
date or sale or issuance date, as the case may be, by (y) a fraction
(not to be less than one) (i) the numerator of which shall be equal to
the sum, for all classes and series of Common Stock, of the products of
(A) the number of shares of Common Stock of each such class or series
outstanding (determined on a fully-diluted basis) after giving effect
to such subscription, purchase, sale or issuance (and assuming all such
subscription or purchase offers are exercised) and (B) the Current
Market Price per share of Common Stock of each such class or series
determined immediately before such record date or sale or issuance
date, as the case may be, and (ii) the denominator of which shall be
equal to the sum of (A) the sum, for all classes and series of Common
Stock, of the products of (1) the number of shares of Common Stock of
each such class or series outstanding (determined on a fully-diluted
basis) immediately before such record date or sale or issuance date, as
the case may be, and (2) the Current Market Price per share of Common
Stock of each such class or series determined immediately before such
record date or sale or issuance date, as the case may be, and (B) the
aggregate consideration received or to be received by the Issuer for
the total number of shares of Common Stock of each such class or series
to be subscribed for or purchased, sold or issued. Simultaneously with
the adjustment in the preceding sentence, the Exercise Price shall be
adjusted to be equal to (x) the Exercise Price immediately prior to the
occurrence of such event multiplied by (y) a fraction (1) the numerator
of which is the number of shares of Class A Common Stock issuable upon
exercise of this Warrant immediately prior to the adjustment in the
preceding sentence and (2) the denominator of which is the number of
shares of Class A Common Stock issuable upon exercise of this Warrant
immediately after the adjustment in the preceding sentence.
Issuance of Convertible Securities or Options. If at any time (i) the
Issuer shall (A) take a record of the holders of any class or series of its
Common Stock for the purpose of entitling them to subscribe for or purchase
options to purchase or rights to subscribe for shares of any class or series of
Common Stock, securities directly or indirectly convertible into or exchangeable
for shares of any class or series of Common Stock ("Convertible Securities") or
options or rights with respect to Convertible Securities (options or rights with
respect to Common Stock or Convertible Securities being referred
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<PAGE> 11
to as "Options") or (B) otherwise issue or sell any Options or Convertible
Securities and (ii) the consideration per share paid or to be paid for the
Common Stock of such class or series deliverable upon exercise of such Options
and/or conversion or exchange of such Convertible Securities (determined by
dividing (x) the total amount received or receivable by the Issuer in
consideration of the subscription, purchase, sale or issuance of such Options or
Convertible Securities plus any amount payable to the Issuer upon such exercise
and/or conversion or exchange, by (y) the total maximum number of shares of
Common Stock of such class or series necessary to effect the exercise and/or
conversion or exchange of all such Options or Convertible Securities) shall be
less than the Current Market Price per share of Common Stock of such class or
series on such record date or sale or issuance date, as the case may be, then
the number of shares of Class A Common Stock issuable upon exercise of this
Warrant shall be adjusted to be that number determined by multiplying the number
of shares of Class A Common Stock issuable upon exercise of this Warrant
immediately prior to such date by a fraction (not to be less than one) (i) the
numerator of which shall be equal to the sum, for all classes and series of
Common Stock, of the products of (A) the total maximum number of shares of
Common Stock of each such class or series outstanding (determined on a fully
diluted basis) after giving effect to the assumed exercise and/or conversion of
all such Options or Convertible Securities and (B) the Current Market Price per
share of Common Stock of each such class or series determined immediately before
such record date or sale or issuance date, as the case may be, and (ii) the
denominator of which shall be equal to the sum of (A) sum, for all classes and
series of Common Stock, of the products of (1) the number of shares of Common
Stock of each such class or series outstanding (determined on a fully-diluted
basis) immediately before such record date or sale or issuance date, as the case
may be, and (2) the Current Market Price per share of the Common Stock of each
such class or series determined immediately before such record date or sale or
issuance date, as the case may be, and (B) the aggregate consideration for which
Common Stock of each such class or series is deliverable upon exercise and/or
conversion or exchange for such Options or Convertible Securities.
Simultaneously with the adjustment in the preceding sentence, the Exercise Price
shall be adjusted to be equal to (x) the Exercise Price immediately prior to the
occurrence of such event multiplied by (y) a fraction (1) the numerator of which
is the number of shares of Class A Common Stock issuable upon exercise of this
Warrant immediately prior to the adjustment in the preceding sentence and (2)
the denominator of which is the number of shares of Class A Common Stock
issuable upon exercise of this Warrant immediately after the adjustment in the
preceding sentence.
Issuance of Other Securities, Rights or Options. If at any time
the Issuer issues or sells any of its securities ("Other
Securities") other than any class or series of Common Stock,
Convertible Securities or Options and
the consideration per share (or other similar unit) of such Other
Securities paid upon such sale or issuance is less than the Current
Market Price of such share (or other similar unit) of such Other
Securities on the date of such sale or issuance, then the number of
shares of Class A Common Stock issuable upon exercise of this Warrant
shall be adjusted to be that number determined by multiplying the
number
11
<PAGE> 12
of shares of Class A Common Stock issuable upon exercise of this
Warrant immediately prior to such sale or issuance date by a fraction
(not to be less than one) (i) the numerator of which shall be equal to
the sum of the products of (A) the number of shares of Common Stock of
each such class or series outstanding (determined on a fully-diluted
basis) immediately prior to such date and (B) the Current Market Price
per share of each such class or series of Common Stock determined
immediately before such date and (ii) the denominator of which shall be
an amount equal to (A) the product referred to in the immediately
preceding clause (i) above minus (B) the amount by which (1) the
aggregate Current Market Price of the total number of such Other
Securities sold or issued exceeds (2) the aggregate consideration
received by the Issuer for the total number of such Other Securities
sold or issued. Simultaneously with the adjustment in the preceding
sentence, the Exercise Price shall be adjusted to be equal to (x) the
Exercise Price immediately prior to the occurrence of such event
multiplied by (y) a fraction (1) the numerator of which is the number
of shares of Class A Common Stock issuable upon exercise of this
Warrant immediately prior to the adjustment in the preceding sentence
and (2) the denominator of which is the number of shares of Class A
Common Stock issuable upon exercise of this Warrant immediately after
the adjustment in the preceding sentence.
Superseding Adjustment. If, at any time after any adjustment in the
number of shares of Class A Common Stock issuable upon exercise of this
Warrant shall have been made on the basis of the issuance of any Options or
Convertible Securities:
any such Options shall expire prior to exercise or the right to
convert or exchange any such Convertible Securities shall terminate
prior to conversion or exchange; or
the consideration per share for which shares of Common Stock are
issuable pursuant to the terms of such Options or Convertible
Securities shall be increased or decreased;
then such previous adjustment shall be rescinded and annulled (without affecting
any other adjustments resulting from any other events). Thereupon, a
recomputation shall be made of the adjustment in the number of shares of Class A
Common Stock issuable upon exercise of this Warrant on the basis of
treating the number of shares of Common Stock, if any,
theretofore actually issued or issuable pursuant to the previous
exercise, conversion or exchange of such Options or Convertible
Securities as having been issued on the date or dates of such
exercise and/or conversion or exchange and for the consideration
actually received and receivable therefor, and
treating any such Options or Convertible Securities that
then remain outstanding as having been granted or issued
immediately after the time of such increase or decrease for the
consideration per share for which
12
<PAGE> 13
shares of Common Stock are issuable upon exercise and/or
conversion or exchange of such Options or Convertible Securities,
which new adjustment shall supersede the previous adjustment so rescinded and
annulled. For purposes of the computation of such new adjustment, the Current
Market Price shall be deemed to be the Current Market Price used in computing
the previous adjustment.
Other Provisions Applicable to Adjustments under this Section. The
following provisions shall be applicable to the making of adjustments of
the number of shares of Class A Common Stock issuable upon exercise of this
Warrant:
The sale or other disposition of any issued shares of Common
Stock owned or held by or for the account of the Issuer shall be deemed
to be an issuance thereof for purposes of this Section.
In computing adjustments under this Section, fractional interests
in Common Stock shall be taken into account to the nearest
one-thousandth of a share.
If the Issuer shall take a record of the holders of its Common
Stock for the purpose of entitling them to receive a dividend or
distribution or subscription or purchase rights and shall, thereafter
and before the payment of such dividend or distribution or the granting
of such subscription or purchase rights, legally abandon its plan to
pay or deliver such dividend, distribution, subscription or purchase
rights, then thereafter no adjustment shall be required by reason of
the taking of such record and any such adjustment previously made in
respect thereof shall be rescinded and annulled.
Aggregate consideration for purposes of Sections 4(c), 4(d) and
4(e) shall be determined as follows: In case any Common Stock, Options,
Convertible Securities or Other Securities shall be issued or sold, or
be exercisable, convertible or exchangeable for cash, the consideration
received therefor shall be deemed to be the amount payable to the
Issuer therefor, after deduction therefrom of any expenses incurred or
any underwriting commissions or concessions or discounts or, in the
case of a private placement thereof, finders' fees or commissions paid
or allowed by the Issuer in connection therewith. In case any such
Common Stock, Options, Convertible Securities or Other Securities shall
be issued or sold, or be exercisable, convertible or exchangeable for a
consideration other than cash payable to the Issuer, the consideration
received therefor shall be deemed to be the fair market value of such
consideration (as determined in accordance with the Appraisal
Procedure), after deduction therefrom of any expenses incurred or any
underwriting commissions or concessions or discounts paid or allowed by
the Issuer in connection therewith. In case any such Common Stock,
Options, Convertible Securities or Other Securities shall be issued or
sold, or be exercisable, convertible or exchangeable in connection with
any merger of another corporation into the Issuer, the amount of
consideration therefor shall be deemed to be the fair market value (as
determined in accordance with the Appraisal Procedure) of such
13
<PAGE> 14
portion of the assets of such merged corporation as the Board shall
reasonably determine (such determination to be reasonably acceptable to
the Majority Holders) in good faith to be attributable to such options,
rights or securities.
Merger, Consolidation or Disposition of Assets. If the Issuer shall
merge, consolidate or effect a share exchange with another entity, or shall
sell, transfer or otherwise dispose of all or substantially all of its
assets to another entity and pursuant to the terms of such merger,
consolidation, share exchange or disposition of assets, cash, shares of
Common Stock or other securities of the successor or acquiring entity, or
property of any nature is to be received by or distributed to the holders
of Common Stock of the Issuer, then the Holder shall be entitled to receive
in respect of the Warrant Stock issuable upon exercise of this Warrant, the
amount of cash, shares of Common Stock, other securities or other property
that it would have been entitled to receive if such Holder had exercised
this Warrant in full immediately prior to the occurrence of such merger,
consolidation, share exchange or disposition of assets. In the case of any
such merger, consolidation, share exchange or disposition of assets, the
successor or acquiring entity (and any Affiliate thereof issuing
securities) shall expressly assume the due and punctual observance and
performance of each and every covenant and condition of this Warrant to be
performed and observed by the Issuer and all of the obligations and
liabilities hereunder, subject to such modifications as may be deemed
appropriate (as determined by resolution of the Board and reasonably
acceptable to the Majority Holders) in order to provide for adjustments of
the Warrant Stock issuable upon exercise of this Warrant that shall be as
nearly equivalent as practicable to the adjustments provided for in this
Section 4. The foregoing provisions shall similarly apply to successive
mergers, consolidations, share exchanges and dispositions of assets.
Capital Reorganization or Capital Reclassification. If the Issuer
shall effect any capital reorganization or any reclassification of its
capital stock (other than a change in par value or from par value to no par
value or from no par value to par value or as a result of a stock dividend
or subdivision, split-up or combination of shares), then in each case the
Issuer shall cause effective provision to be made so that this Warrant
shall be exercisable for the kind and number of shares of stock, other
securities, cash or other property to which a holder of the Warrant Stock
deliverable upon exercise of this Warrant would have been entitled upon
such reorganization or reclassification and any such provision shall
include adjustments in respect of such stock, securities or other property
that shall be as nearly equivalent as may be practicable to the adjustments
provided for in this Section 4 with respect to this Warrant.
Other Action Affecting Common Stock. If at any time or from time to
time the Issuer shall take any action affecting its Common Stock, other
than any action described in this Section 4, then, unless such action will
not have an adverse effect upon the Holder's rights, the number of shares
of Warrant Stock issuable upon exercise of this Warrant and exercise price
therefore shall be adjusted in such manner and at such time as the Board
shall in good faith determine (such determination to be reasonably
acceptable to the Majority Holders) to be equitable in the circumstances,
but no such adjustment shall
14
<PAGE> 15
decrease the number of shares of Warrant Stock issuable upon exercise of
this Warrant or increase the exercise price therefore.
Notice of Adjustments. Whenever the number of shares of Warrant
Stock issuable upon exercise of this Warrant shall be adjusted pursuant to
this Agreement, the Issuer shall forthwith obtain a certificate signed by a
firm of independent accountants of recognized national standing selected by
the Issuer setting forth, in reasonable detail, the event requiring the
adjustment, the method by which such adjustment was calculated and
specifying the number of shares of Warrant Stock issuable upon exercise of
this Warrant after giving effect to such adjustment. The Issuer shall
promptly cause a signed copy of such certificate to be delivered to the
Holder. The Issuer shall keep at its office maintained for purposes of
Section 6(a) hereof copies of all such certificates and cause the same to
be available for inspection at said office during normal business hours by
the Holder or any prospective purchaser of a Warrant designated by the
registered Holder hereof.
Notice of Certain Corporate Action. If the Issuer shall propose
to pay any dividend to the holders of its Common Stock or to make
any other distribution to the holders of its Common Stock;
to offer to the holders of its Common Stock rights to subscribe
for or to purchase any additional shares of Common Stock or any Options
or Convertible Securities;
to effect any reorganization or reclassification of its Common
Stock;
to otherwise issue any Common Stock, Options, Convertible
Securities or Other Securities;
to effect any other capital reorganization;
to effect any consolidation, merger or share exchange or any
sale, transfer or other disposition of all or substantially all of its
assets; or
to effect the liquidation, dissolution or winding up of the
Issuer,
then, in each such case, the Issuer shall give to the Holder a notice of
such proposed action, which shall specify the date on which a record is to
be taken for the purposes of such dividend, distribution or rights offer,
or the date on which such reclassification, issuance, reorganization,
consolidation, merger, share exchange, sale, transfer, disposition,
liquidation, dissolution or winding up is to take place and the date of
participation therein by the holders of Common Stock, if any such date is
to be fixed, and shall also set forth such facts with respect thereto as
shall be reasonably necessary to indicate the effect of such action on the
Common Stock, and the number of shares of Warrant Stock that are issuable
upon exercise of this Warrant after giving effect to any adjustment that
will be required as a result of such action. Such notice shall be so given
in the case of any action
15
<PAGE> 16
covered by clause (i) or (ii) above at least 20 days prior to the record
date for determining holders of the Common Stock for purposes of such
action, and in the case of any other such action, at least 20 days prior to
the date of the taking of such proposed action. Failure to give any such
notice or any defect therein shall not affect the validity of the
proceedings, actions or events described in clauses (i) through (vii)
hereof.
No Impairment. The Issuer will not, by amendment of its Certificate
of Incorporation or through any reorganization, transfer of assets,
consolidation, merger, dissolution, issue or sale of securities or any
other voluntary action, avoid or seek to avoid the observance or
performance of any of the terms to be observed or performed hereunder by
the Issuer, but will at all times in good faith assist in the carrying out
of all the provisions of this Section 4 and in the taking of all such
action as may be necessary or appropriate in order to protect the exercise
rights of the Holder against impairment.
Miscellaneous. The computations of all amounts under this Section 4
shall be made assuming all other anti-dilution or similar adjustments to be
made to the terms of all other securities resulting from the transaction
causing an adjustment pursuant to this Section 4 have previously been made
so as to maintain the relative economic interest of this Warrant vis a vis
all other securities issued by the Issuer.
Par Value. The Issuer shall take or cause to be taken such steps as
shall be necessary to ensure that the par value per share of Class A Common
Stock is at all times less than or equal to the Exercise Price.
Minimum Adjustment of Exercise Price. No adjustment of the Exercise
Price shall be made in an amount of less than 10% of the Exercise Price in
effect at the time of such adjustment is otherwise required to be made, but
any such lesser adjustment shall be carried forward and shall be made at
the time and together with the next subsequent adjustment which, together
with any adjustments so carried forward, shall amount to not less than 10%
of such Exercise Price.
Excluded Transactions. Notwithstanding anything to the contrary in
this Warrant, no adjustment or notification will be required pursuant to
this Section 4 in connection with (i) any issuance of any securities to
management pursuant to a Management Employee Stock Option Plan (as such
term is defined in the Stockholders Agreement), including issuances of
Options or Common Stock, or the exercise thereof, (ii) the issuance of
Common Stock, pursuant to the Rollover Options (as such term is defined in
the Agreement and Plan of Merger), or (iii) any issuance of Options, or
warrants to financing sources as "equity kickers".
Put Rights.
At any time on or after May 11, 2005, the Majority Holders shall
notify the Issuer in writing (the "Put Notice") of their desire to cause
the Issuer to repurchase all or any part of the Warrant Stock then held by
such Majority Holders, then the Majority Holders shall have the right to
require the Issuer to repurchase shares of Warrant Stock then held by such
Holders (the "Put") at a price per share equal to the Put Price (less, in
16
<PAGE> 17
the case of the repurchase of this Warrant, the Exercise Price for each
share of Warrant Stock issuable pursuant to such Warrant). Upon delivery of
the Put Notice, the Issuer shall give notice to all Warrant Holders, and
the Holder shall have the right to participate in such Put by so notifying
the Issuer (a "Participation Notice") within twenty (20) days (the
"Participation Period") after receipt of such notice.
The Majority Holders may withdraw their exercise of any Put rights
hereunder, notwithstanding delivery of a Put Notice, at any time on or
prior to the tenth Business Day after the determination of the Put Price
applicable to such exercise of such rights.
Promptly following the expiration of any Participation Period (or
upon delivery of a Put Notice, if there is only one Warrant Holder at the
time of such delivery), the Put Price shall be determined as of the date of
the Put Notice. Within thirty (30) Business Days following such
determination, the Issuer shall purchase, and the Warrant Holders who are
participating in the Put shall sell, the Warrant Stock specified in the Put
Notice and all Participation Notices at a mutually agreeable time and place
(the "Put Closing").
Any obligations on the part of the Issuer to pay the Put Price shall
be subject to the Issuer's obligations to comply with the covenants set
forth in its agreements with the holders of its Senior Indebtedness
(including any limitations on dividends or distributions by Subsidiaries)
and payment of any Put Price payable may be deferred in order to maintain
the Issuer's compliance with such covenants but shall, in any event, be
paid as soon as permissible. The Issuer shall, at the Holder's request, use
reasonable efforts to obtain the consent of the holders of its Senior
Indebtedness or to refinance its obligations under the Senior Indebtedness
in order to be permitted, and to obtain the necessary financing, to satisfy
its obligations under this Section 5. If the Issuer shall not be permitted,
or shall not have funds legally available in the amount necessary, to
purchase all shares of Warrant Stock with respect to which the Put has been
exercised, then the Warrant Stock with respect to which the Warrant Holders
have exercised the Put shall be repurchased on a pro rata basis, to the
extent permissible, in accordance with the amount of Warrant Stock then
held by each Warrant Holder; provided, however, that any Warrant Holder who
is not able to include the full amount of Warrant Stock requested to be
included in the Put shall have the right, at any time prior to the later of
(x) five (5) Business Days following notice to such Warrant Holder of the
amount of Warrant Stock it will be able to include and (y) five (5)
Business Days prior to the Put Closing, to withdraw its exercise of Put
rights with respect to all or part of the Warrant Stock as to which such
Put rights were exercised. Unless so withdrawn, any Put not satisfied in
full pursuant to the terms of this Section 5 shall remain an obligation of
the Issuer until such time as such satisfaction shall have occurred.
At the Put Closing, the Holder shall, if it is participating in the
Put, deliver to the Issuer such Holder's Warrant Stock to the extent
subject to the Put and the Issuer shall deliver to such Holder an amount
equal to the aggregate Put Price for all such Warrant Stock (less, in the
case of the repurchase of this Warrant, the aggregate Exercise Price
payable hereunder), by cashier's or certified check of a creditworthy bank
(reasonably acceptable to the Holder) payable to such Holder or, at the
option of the Holder, by wire transfer of immediately available funds to an
account designated by such Holder. In
17
<PAGE> 18
addition, if applicable, at the Put Closing, the Issuer shall deliver to
the Holder a new Warrant representing the rights to subscribe for and
purchase any remaining Warrant Stock.
Except pursuant to any Rollover Options (as such term is defined in
the Agreement and Plan of Merger) or options granted under any Management
Stock Option Plan (as such terms defined in the Stockholders Agreement),
the Issuer shall not grant any other rights to holders of its capital stock
similar to the Put that are exercisable prior to the time at which the Put
may be exercised or that are not expressly subordinated, in form and
substance reasonably acceptable to the Holder, to the rights of the Warrant
Holders pursuant to the Put. Except as otherwise contemplated by this
Section 5, the Issuer shall not (and shall not permit any subsidiary to)
enter into any contract or other consensual arrangement that by its terms
restricts the Issuer's ability to fulfill its obligations regarding the
Put.
Miscellaneous.
Office of Issuer. So long as this Warrant remains outstanding, the
Issuer shall maintain an office in the continental United States where the
Warrants may be presented for exercise, transfer, division or combination
as provided in this Warrant. Such office shall be at 14 Corporate Woods,
8717 West 110th Street, Suite 300, Overland Park, KS 66210, unless and
until the Issuer shall designate and maintain some other office for such
purposes and give notice thereof to the Holder.
Notices Generally. Any notices and other communications pursuant to
the provisions hereof shall be sent in accordance with the provisions of
Section 7.5 of the Purchase Agreement.
Governing Law. This Warrant shall be governed by and construed in
accordance with the laws of the State of New York without regard to its
conflicts of laws rules. The Issuer agrees that it may be served with
process in the State of New York and any action for breach of this Warrant
may be prosecuted against it in the courts of such State or any Federal
court located in such State.
Limitation of Liability. Except as otherwise provided herein, this
Warrant does not entitle the Holder to any voting rights or other rights of
a shareholder of the Issuer, as a shareholder. No provision hereof, in the
absence of affirmative action by the Holder to purchase shares of Class A
Common Stock, and no mere enumeration herein of the rights or privileges of
the Holder, shall give rise to any liability of the Holder for the Exercise
Price or as a shareholder of the Issuer, whether such liability is asserted
by the Issuer, by any creditor of the Issuer or any other Person.
Loss or Destruction of Warrant. Upon receipt by the Issuer of
evidence satisfactory to it (in the exercise of its reasonable discretion)
of the loss, theft, destruction or mutilation of this Warrant and (in the
case of loss, theft or destruction), if requested by the Issuer, of
reasonably satisfactory indemnification (if the Holder is a financial
institution or an Affiliate thereof, its own agreement being satisfactory),
or (in the case of mutilation)
18
<PAGE> 19
upon surrender and cancellation of this Warrant, the Issuer shall, without
charge, execute and deliver a new Warrant exercisable for the same amount
of Warrant Stock.
Amendments and Waivers. Any provision of this Warrant may be amended
or waived if, and only if, such amendment or waiver is in writing and
signed, in the case of an amendment, by the Issuer and the Majority Holders
(provided than no amendment that treats a particular Holder in a
non-ratable, discriminatory fashion shall be effective against such Holder
without its consent) and, in the case of a waiver, by the party against
whom the waiver is to be effective. No failure or delay by either party in
exercising any right, power or privilege hereunder shall operate as a
waiver thereof nor shall any single or partial exercise thereof preclude
any other or further exercise thereof or the exercise of any other right,
power or privilege. The rights and remedies herein provided shall be
cumulative and not exclusive of any rights or remedies provided by law.
* * * * *
19
<PAGE> 20
IN WITNESS WHEREOF, the Issuer has caused this Warrant to be executed
by its duly authorized officers and the Warrant to be dated as of the date first
set forth above.
LPA HOLDING CORP.
By:
-----------------------------------------
James Kahl
Chief Executive Officer and President
20
<PAGE> 21
ANNEX A TO WARRANT
FORM OF EXERCISE NOTICE
(To be executed by the registered holder hereof)
The undersigned registered owner of this Warrant exercises this Warrant
for the purchase of ________ shares of Class A Common Stock of LPA Holding
Corp., a Delaware corporation, and herewith makes payment therefor of
$__________ (such payment being made [check one] (x) [ ] in cash or by certified
or official bank check or (y) [ ] by acceptance of a reduced number of shares of
Class A Common Stock upon cancellation of this Warrant as provided in Section
2(b) of this Warrant, all on the terms and conditions specified in this Warrant,
and requests that
certificates and/or other instruments covering such shares of
Class A Common Stock be issued in accordance with the instructions
given below and
if such shares of Class A Common Stock shall not include all of
the shares of Class A Common Stock to which the Holder is entitled
under this Warrant, that a new Warrant for the unpurchased balance of
the shares of Class A Common Stock issuable hereunder be delivered to
the undersigned. References in this Exercise Notice to "Class A Common
Stock" shall include other securities or other property to the extent
included in Warrant Stock.
The undersigned agrees that the shares to be issued upon exercise of
this Warrant may not be offered, sold, assigned, pledged, hypothecated or
otherwise transferred or disposed of except under circumstances that will not
result in a violation of the Securities Act of 1933, as amended, and applicable
provisions of state securities laws.
[This Exercise Notice is being delivered contingent upon the consummation of
[describe transaction] as contemplated by Section 2(d) of this Warrant].*
Dated:
---------------------
----------------------------------
(Signature of Registered Holder)**
Instructions for issuance and
registration of shares of
Class A Common Stock:
- ----------------------------- Social Security or Other
Name of Registered Holder Identifying Number:
(please print) -------------------
- -----------------------------
* Include if applicable.
** The signature must correspond with the name as written upon the face of the
attached Warrant in every particular, without alteration.
1
<PAGE> 22
Please deliver certificate to
the following address:
- --------------------------------------
Street
- --------------------------------------
City, State and Zip Code
2
<PAGE> 23
ANNEX B TO WARRANT
FORM OF ASSIGNMENT
(To be executed by the registered holder hereof)
FOR VALUE RECEIVED the undersigned registered owner of this Warrant
hereby sells, assigns and transfers unto the assignee named below all the rights
of the undersigned under this Warrant with respect to the number of shares of
Class A Common Stock covered thereby set forth below to:
Number of
Shares of
Class A
Name of Assignee Address Common
Stock
and hereby irrevocably constitutes and appoints _______________ as agent and
attorney-in-fact to transfer such portion of said Warrant on the books of the
within-named corporation, with full power of substitution in the premises.
References in this Exercise Notice to "Class A Common Stock" shall
include other securities or other property to the extent included in Warrant
Stock.
Dated:
-----------------------------
-------------------------------------
(Signature of Registered Holder)*
- -------------------------
* The signature must correspond with the name as written upon the face of the
attached Warrant in every particular, without alteration.
3
<PAGE> 24
--------------------------------
Name of Registered Holder
(Please Print)
4
<PAGE> 1
EXHIBIT 10.3
------------
AMENDMENT NO. 1 AND
CONSENT dated as of April 8, 1999
(this "Amendment"), among LPA HOLDING
CORP., a Delaware corporation (the
"Corporation"), VESTAR/LPT LIMITED
PARTNERSHIP, a Delaware limited
partnership ("Vestar"), LPA
INVESTMENT LLC, a Delaware limited
liability company ("LPA Investment")
and the management stockholders
listed herein (the "Management
Stockholders"), to the STOCKHOLDERS
AGREEMENT (the "Original Agreement"
and, as amended, this "Agreement"),
dated as of May 11, 1998, among the
Corporation, Vestar, LPA Investment
and the management stockholders
listed therein. Capitalized terms
used but not defined herein shall
have the meanings ascribed to them in
the Original Agreement.
In consideration of the premises and the mutual benefits to be derived
from this Amendment and the covenants, agreements and conditions hereinafter set
forth, the parties hereto hereby agree as follows:
ARTICLE I
AMENDMENT
1.1 AMENDMENT OF ARTICLE I
(a) The following definitions are deleted in their entirety and
replaced with the following definitions:
"Independent Director": has the meaning ascribed to it in Section
2.2(d).
"Management Director": has the meaning ascribed to it in
Section 2.2(c).
1.2 AMENDMENT OF ARTICLE II
(b) The first sentence of Section 2.1 of the Stockholders Agreement
is hereby deleted in its entirety and replaced with the following language:
"Each Stockholder shall, from time to time, take such action in its
capacity as a stockholder of the Corporation, including the voting of the
Shares owned or controlled by such Stockholder, as may be necessary, to
cause the Corporation to be managed by a Board consisting of between five
and eight Directors, as such number is designated from time to time by the
Requisite LPA Investment Stockholders, or such larger number of directors
as may be designated by the Requisite Stockholders."
1
<PAGE> 2
(c) Section 2.2(d) of the Stockholders Agreement is hereby deleted in
its entirety and replaced with the following language:
"if the Board consists of more than five persons, at least two of the
remaining Directors shall be an individual who is not an employee,
director, officer or Affiliate of the Corporation or any Stockholder
thereof (the "Independent Director") to be mutually selected by the
Requisite LPA Investment Stockholders and the Requisite Management
Stockholders."
1.3 WAIVER AND CONSENT
(a) The parties hereto acknowledge that the Board of Directors of the
Corporation (the "Board") has been increased from five directors to eight
directors. By signing below, the parties hereto consent to such increase in
the size of the Board and waive any resultant violations of Sections 2.1
and 2.2 of the Stockholders Agreement.
ARTICLE II
MISCELLANEOUS PROVISIONS
2.1 AGREEMENT.
Except as modified by this Amendment, the Original Agreement shall remain
in full force and effect, enforceable in accordance with its terms. This
Amendment is not a consent to any waiver or modification of any other terms or
conditions of the Agreement or any of the instruments or documents referred to
in the Agreement and shall not prejudice any right or rights which the parties
thereto may now or hereafter have under or in connection with the Agreement or
any of the instruments or documents referred to therein.
2.2 COUNTERPARTS.
This Amendment may be executed in any number of counterparts, and each such
counterpart shall be deemed to be an original instrument, but all such
counterparts together shall constitute one agreement.
2.3 GOVERNING LAW.
This Amendment shall be governed and construed in accordance with the laws
of the State of Delaware.
* * *
2
<PAGE> 3
IN WITNESS WHEREOF, the parties hereto have executed this Amendment No.
1 and Consent as of the date first written above.
LPA HOLDING CORP.
By:
--------------------------
Name:
Title:
LPA INVESTMENT LLC
By:
--------------------------
Name:
Title:
VESTAR/LPT LIMITED PARTNERSHIP
By:
--------------------------
Name:
Title:
--------------------------
James R. Kahl
--------------------------
Rebecca Perry
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David J. Anglewicz
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Susan Stanton
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EXHIBIT 10.4
LPA HOLDING CORP.
1999 STOCK OPTION PLAN FOR NON-EMPLOYEE DIRECTORS
1. PURPOSE OF THE PLAN.
The purpose of the LPA HOLDING CORP. 1999 STOCK OPTION PLAN FOR
NON-EMPLOYEE DIRECTORS (the "Plan") is to attract and retain the services of
experienced and knowledgeable independent directors of LPA Holding Corp. (the
"Company"), for the benefit of the Company and its stockholders and to provide
additional incentive for such directors to continue to work for the best
interests of the Company and its stockholders through continuing ownership of
its Class A Common Stock, par value $.01 per share.
2. DEFINITIONS.
As used in this Plan, the following capitalized terms shall have the
meanings set forth below:
"AFFILIATE" means, with respect to any Person, any other Person that is
controlled by, controlling or under common control with, such Person.
Notwithstanding anything to the contrary contained herein, with respect to the
Company, the term "Affiliate" shall include LPA Investment LLC and each of its
members and each Person in which LPA Investment LLC or such members hold or have
the right to acquire, collectively, more than 25% of the voting Equity
Interests.
"BOARD" has the meaning set forth in Section 3.
"CAPITAL STOCK" means any and all shares, interests, participation or
other equivalents (however designated) of corporate stock, including all
Common Stock and preferred stock.
"CHANGE-IN-CONTROL" means the occurrence of one or more of the
following:
a sale to any Person (or group of related Persons) other than an
Affiliate or Affiliates of the Company of all or substantially all of the
assets of the Company or of La Petite Academy, Inc.;
a sale by the Company of Capital Stock (whether by merger or
otherwise), if any such sale is made to a Person (or group of related
Persons) other than an Affiliate or Affiliates of the Company, which Person
or Persons, after giving effect to such sale, will own more than 50% of the
outstanding Capital Stock of the Company or
a sale by the stockholders of the Company of Capital Stock, if any such
sale is made to a Person (or group of related Persons) other than an
Affiliate or Affiliates of the Company, which Person or Persons, after
giving effect to such sale, will own more than 50% of the outstanding
Capital Stock of the Company.
"COMMON STOCK" means the Class A Common Stock and the Class B Common
Stock, par value $.01, of the Company.
"COMPANY" has the meaning set forth in Section 1.
"DRAG-ALONG GRANTEES" has the meaning set forth in Section 10(a).
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"EFFECTIVE DATE" has the meaning set forth in Section 15(a).
"EQUITY INTEREST" means (a) with respect to a corporation, any and all
Capital Stock or warrants, options or other rights to acquire Capital Stock (but
excluding any debt security which is convertible into, or exchangeable for,
Capital Stock) and (b) with respect to a partnership, limited liability company
or similar Person, any and all units, interests, rights to purchase, warrants,
options or other equivalents of, or other ownership interests in, any such
Person.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
"EXPIRATION DATE" has the meaning set forth in Section 7(a).
"FAIR MARKET VALUE" means the fair value of Shares or other property on
the date of any determination as reasonably determined in good faith by the
Board after taking into consideration all factors which it deems appropriate,
including, without limitation, in respect of Shares, recent sale and offer
prices of the Shares in private transactions negotiated at arms' length.
"NOTICE" has the meaning set forth in Section 12(b).
"OPTION" has the meaning set forth in Section 4(c).
"OPTION AGREEMENT" has the meaning set forth in Section 4(c).
"OPTION PRICE" has the meaning set forth in Section 5(a).
"OPTIONED SHARES" has the meaning set forth in Section 12(b).
"OPTIONEE" has the meaning set forth in Section 4(b).
"PERSON" is to be construed in the broadest sense and means and
includes any natural person, company, limited liability company, partnership,
joint venture, corporation, business trust, or unincorporated organization or
any national, federal, state, municipal, local, territorial, foreign or other
government or any department, commission, board, bureau, agency, regulatory
authority or instrumentality thereof, or any court, judicial, administrative or
arbitral body or public or private tribunal.
"PRO RATA PORTION" has the meaning set forth in Section 11(a).
"RECAPITALIZATION" has the meaning set forth in Section 13(a).
"REPURCHASE RIGHT" has the meaning set forth in Section 9(a).
"SEC" means the Securities and Exchange Commission.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SHARES" means shares of Class A Common Stock, $.01 par value per share
of the Company.
"TAG-ALONG GRANTORS" has the meaning set forth in Section 11(a).
"TRANSFER" means, with respect to any security (including any Option),
a sale, transfer, assignment, encumbrance, pledge or other disposition of such
security either voluntarily or involuntarily and with or without consideration
(including, without limitation, by way of foreclosure or other acquisition by
any lender with respect to any shares pledged to such lender by an Optionee).
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"VESTED OPTION" means an Option which has vested in accordance with
this Agreement, or pursuant to an Option Agreement, as the case may be.
3. ADMINISTRATION OF THE PLAN.
The Plan shall be administered by the Board of Directors of the Company
(the "Board"). The Board shall have the power to construe the Plan, to determine
all questions arising thereunder and to adopt and amend such rules and
regulations for the administration of the Plan as it may deem desirable.
4. GRANT OF OPTIONS; SHARES SUBJECT TO THIS PLAN.
Grant. Each Optionee who is a director of the Company on the Effective
Date shall automatically be granted an Option to acquire 500 Shares under
the Plan. The Board may, from time to time, grant additional Options to any
Optionee.
Eligibility. Each director of the Company who is not, and has not been
during the immediately preceding 12-month period, an officer or employee of
the Company or any subsidiary of the Company (an "Optionee") shall
automatically be a participant in the Plan; provided that no Person
employed by CB Capital Investors, L.P., CB Capital Investors, Inc. or any
of their respective Affiliates may be an Optionee under this Plan.
Option Agreements. Each option to purchase Shares (an "Option") shall
be evidenced by a written agreement (an "Option Agreement"), in
substantially the form of Exhibit A hereto, with such changes thereto as
are consistent with this Plan as the Board shall deem appropriate. Each
Option Agreement shall be executed by the Company and the Optionee.
Notwithstanding any other provision of this Plan to the contrary, the Board
may, in its discretion, provide that, with respect to any Option, the terms
of the Option Agreement evidencing such Option shall control any conflicts
between provisions of this Plan and provisions of such Option Agreement.
Date of Grant. The date of grant of an Option under this Plan shall be
the date as of which the Board approves the grant.
Number of Shares. Subject to any equitable adjustments for
Recapitalizations pursuant to Section 13 and subject to the vesting
provisions set forth herein, each Option shall be exercisable for one
Share. Subject to any equitable adjustments for Recapitalizations pursuant
to Section 13, the number of Shares subject at any one time to Options
granted under this Plan, and the number of Shares theretofore issued and
delivered pursuant to the exercise of Options granted under this Plan,
shall be 10,000 Shares. If and to the extent that Options granted under
this Plan terminate, expire or are canceled without having been fully
exercised, new Options may be granted under this Plan with respect to the
Shares covered by the unexercised portion of such terminated, expired or
canceled Options.
Character of Shares. The Shares issuable upon exercise of Options
granted under this Plan shall be (i) authorized but unissued Shares, (ii)
Shares held in the Company's treasury or (iii) a combination of the
foregoing.
5. OPTION PRICE.
The exercise price (the "Option Price") for each Share subject to an
Option shall be the Fair Market Value of a Share covered by the Option on
the date on which such Option is granted (the "Pricing Date").
Repricing of Options. Subsequent to the date of grant of any Option,
the Board may (i) in its sole discretion, establish a new Option Price for
such Option so as to decrease the Option Price of such
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Option or (ii) with the consent of the Optionee, establish a new Option
Price for such Option so as to increase the Option Price of such Option.
6. EXERCISABILITY AND VESTING OF OPTIONS.
One-forty eighth of the Options shall become Vested Options on the last
day of each month following the date of grant if the Optionee is a director
of the Company on such date.
All Options shall become Vested Options immediately prior to a
Change-in-Control if the Optionee is a director of the Company on such
date.
Notwithstanding anything to the contrary contained in this Plan, each
Option shall cease vesting as of the time that an Optionee ceases to serve
as a director of the Company and no Option which is not a Vested Option as
of such time shall become a Vested Option thereafter. All decisions by the
Board with respect to any calculations pursuant to this Section (absent
manifest error) shall be final and binding on all Optionees.
7. AUTOMATIC TERMINATION OF OPTION.
Each Option granted under this Plan shall automatically terminate and
shall become null and void and be of no further force or effect upon the first
of the following to occur (the "Expiration Date"):
the tenth anniversary on which such Option is granted;
if an Optionee ceases to be a director of the Company other than
due to death or disability, the sixtieth day following the date of such
termination; and
if an Optionee ceases to be a director of the Company due to the
death or disability of the Optionee, six months after the date of such
death or disability.
8. REGISTRATION ON FORM S-8.
On or prior to the first anniversary of a public offering by the Company of
Capital Stock, the Company will file or cause to be filed, and will use
commercially reasonable efforts to cause to be effective, a registration
statement on Form S-8 with respect to the sale of Shares purchased upon the
exercise of Options; provided that the Company may delay such filing on one or
more occasions for up to 180 days if the Company determines that the filing of a
Form S-8 would require disclosure that the Company deems advisable to defer.
9. REPURCHASE OF SHARES.
If an Optionee ceases to be a director of the Company for any reason,
the Company shall have the right, but not the obligation, to repurchase
each Vested Option (or portion thereof) and each Share owned by such
Optionee (the "Repurchase Right") beginning on the day the Optionee ceases
to be a director of the Company.
The Repurchase Right may be exercised by delivery of a notice of
exercise to the Optionee, at the address of such Optionee set forth in the
Company's records, specifying the number of Vested Options and Shares to be
repurchased.
The repurchase price for Vested Options and Shares shall be the Fair
Market Value thereof.
The Company shall have the right to assign its Repurchase Rights to any
Affiliate of the Company.
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10. DRAG-ALONG RIGHT.
If, prior to the consummation of a Qualified Public Offering, (i)
stockholders of the Company holding more than 50% of the outstanding
shares of Common Stock (assuming all Options are exercised) (the
"Drag-Along Grantees") enter into an agreement with any Person or
Persons, to Transfer (pursuant to a merger or otherwise) all shares of
Common Stock then held by such Drag-Along Grantees, the Drag-Along
Grantees shall be entitled, at their option, to require each Optionee to
sell all Shares held by such Optionee (together with all Options then
outstanding and held by such Optionee), by providing such Optionee with
notice at least fifteen days prior to consummation of the proposed
transaction, setting forth in reasonable detail the material terms and
conditions of the proposed transaction or offering, and the price per
share at which such Optionee shall be required to sell all of his or her
Shares (which price per share shall be equal to the same price per share
that the Drag-Along Grantees shall receive pursuant to the proposed
transaction) and/or Options.
Immediately prior to the closing of the proposed transaction (notice
of the date, place and time of which shall be designated by the Company
and provided to such Optionee in writing at least five business days
prior thereto), if requested by the Drag-Along Grantees, such Optionee
shall exercise all Vested Options. To the extent that Vested Options are
not exercised, such Optionee shall be entitled to receive the
consideration that would have been received had the Option been
exercised less the Option Price in respect of all such Vested Options.
At such closing, the Optionee shall deliver certificates evidencing all
Shares then held by such Optionee, duly endorsed for transfer to the
proposed transferee, against the purchase price therefor and all Option
Agreements to which the Optionee is a party. Such Shares and Options
shall be delivered free and clear of all liens, charges, encumbrances
and other security interests. None of the Drag-Along Grantees nor the
Company shall have any liability or obligation to deliver the purchase
price payable pursuant to this Section, except to the extent that any
such Drag-Along Grantees or the Company receive the consideration
thereof from the proposed purchaser. All consideration payable pursuant
to this Section shall be payable in the same form as the consideration
received by the Drag-Along Grantees.
The Drag-Along Optionees shall have the right to assign its rights
pursuant to this Section to the Company or any Affiliate of the Company.
The rights granted pursuant to this Section shall terminate upon
consummation of a Qualified Public Offering.
11. TAG-ALONG RIGHT
If stockholders of the Company holding more than 50% of the
outstanding shares of Common Stock (assuming all Options are exercised)
(the "Tag-Along Grantors") enter into an agreement with any Person or
Persons to Transfer Shares (pursuant to a merger or otherwise)
representing more than 25% of the outstanding shares of Common Stock,
then each Optionee shall have the right to include a Pro Rata Portion of
Shares owned by such Optionee in the proposed transaction by providing a
notice of exercise to the Company at any time on or before five business
days following the last day that a Drag-Along Notice may be given. The
term "Pro Rata Portion" means the total number of Shares held by such
Optionee multiplied by a fraction, the numerator of which is the total
number of shares of Common Stock proposed to be disposed of by the
Tag-Along Grantors in the proposed transaction and the denominator of
which is the total number of shares of Common Stock outstanding on a
fully-diluted basis.
At the closing of the proposed transaction (notice of the date, place
and time of which shall be designated by the Company and provided to
each such Optionee in writing at least five business days prior
thereto), such Optionee shall deliver certificates evidencing the Pro
Rata Portion of the Shares owned by such Optionee, duly endorsed for
transfer to the proposed purchaser, against delivery of the purchase
price therefor. Such Shares shall be delivered free and clear of all
liens, charges, encumbrances and other security interests. None of the
Tag-Along Grantors or the Company shall have any liability or
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obligation to deliver the purchase price payable pursuant to this
Section, except to the extent that any such Tag-Along Grantors or the
Company receive the consideration thereof from the proposed purchaser.
All consideration payable pursuant to this Section shall be payable in
the same form as the consideration received by the Tag-Along Grantors.
The rights granted pursuant to this Section shall terminate upon
consummation of a public offering of Shares that is registered under the
Securities Act.
12. PROCEDURE FOR EXERCISE.
Payment. At the time an Option is granted under this Plan, the Board
shall, in its discretion, specify one or more of the following forms of
payment which may be used by an Optionee upon exercise of his Option:
cash or personal or certified check payable to the Company in an
amount equal to the aggregate Option Price of the Shares with
respect to which the Option is being exercised and the
aforementioned form of payment shall be the only form available on
or after a Qualified Public Offering;
stock certificates (in negotiable form) representing Shares
having a Fair Market Value on the date of exercise equal to the
aggregate Option Price of the Shares with respect to which the
Option is being exercised;
Vested Options, valued for such purposes at the Fair Market Value
per share of Class A Common Stock on the date of exercise, net of
the Option Price for each such Share; or
a combination of the methods set forth in clauses (i), (ii) and
(iii) above.
Notice. An Optionee (or other person, as provided in Section 14(c))
may exercise a Vested Option granted under this Plan in whole or in part
(but for the purchase of whole Shares only), as provided in the Option
Agreement evidencing his Option, by delivering a written notice (the
"Notice") to the Secretary of the Company. The Notice shall include:
a statement that the Optionee elects to exercise the Vested
Option;
the number of Shares with respect to which the Vested Option is
being exercised (the "Optioned Shares");
the method of payment for the Optioned Shares (which method must
be available to the Optionee under the terms of his or her Option
Agreement);
the date upon which the Optionee desires to consummate the
purchase (which date must be prior to the termination of such
Option);
a copy of any election filed by the Optionee pursuant to Section
83(b) of the Code; and
such further provisions consistent with this Plan as the Board
may from time to time require.
The exercise date of a Vested Option shall be the date on which the Company
receives the Notice from the Optionee.
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Issuance of Certificates. The Company shall issue a stock certificate
in the name of the Optionee (or such other person exercising the Option
in accordance with the provisions of the Plan) for the Shares purchased
upon exercise of an Option as soon as practicable after receipt of the
Notice and payment of the aggregate Option Price for such Shares.
Neither the Optionee nor any person exercising a Vested Option in
accordance with the provisions of the Plan shall have any privileges as
a stockholder of the Company with respect to any Shares of stock subject
to an Option granted under this Plan until the date of issuance of a
stock certificate pursuant to this Section 12(c).
13. ADJUSTMENTS.
Changes in Capital Structure. If the Class A Common Stock is changed
by reason of a stock split, reverse stock split or stock combination,
stock dividend or distribution, or recapitalization, or converted into
or exchanged for other securities as a result of a merger, consolidation
or reorganization (each such event being a "Recapitalization"), the
Board shall make such adjustments in the number and class of shares of
stock available under this Plan as shall be necessary to preserve to an
Optionee rights substantially proportionate to his or her rights
existing immediately prior to such transaction or event (but subject to
the limitations and restrictions on such rights), including, without
limitation, a corresponding adjustment changing the number and class of
shares allocated to, and the Option Price of, each Option or portion
thereof outstanding at the time of such change and the number of shares
that vest pursuant to this Plan.
Special Rules. The following rules shall apply in connection with
Section 13(a) above:
no adjustment shall be made for cash dividends or the issuance to
stockholders of rights to subscribe for additional Shares; and
any adjustments referred to in Section 13(a) shall be made by the
Board in its sole and absolute discretion, and shall be conclusive
and binding on all persons holding any Options granted under this
Plan.
14. RESTRICTIONS ON OPTIONS AND OPTIONED SHARES.
No Options shall be granted under this Plan, and no Shares shall be
issued and delivered upon the exercise of Options granted under this
Plan, unless and until the Company and/or the Optionee shall have
complied with all applicable Federal or state registration, listing
and/or qualification requirements and all other requirements of law or
of any regulatory agencies having jurisdiction.
The Board in its sole and absolute discretion may, as a condition to
the exercise of any Vested Option granted under this Plan, require an
Optionee (i) to represent in writing that the Shares received upon
exercise of a Vested Option are being acquired for investment and not
with a view to distribution and (ii) to make such other representations
and warranties as are reasonably deemed appropriate by the Company to
satisfy the requirements of applicable law, including, without
limitation, an applicable private placement exemption of the Securities
Act as determined by the Board. Stock certificates representing Shares
acquired upon the exercise of Options that have not been registered
under the Securities Act shall, if required by the Board, bear the
following legend and such additional legends as may be required by the
Option Agreement evidencing a particular Option:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT").
THE SHARES HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE PLEDGED,
HYPOTHECATED, SOLD OR TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT FOR
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THE SHARES UNDER THE SECURITIES ACT OR AN OPINION OF COUNSEL TO THE
ISSUER HEREOF THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT."
No Option granted under this Plan may be Transferred by the Optionee,
except by will or by the laws of descent and distribution. An Option may
be exercised during the lifetime of the Optionee only by the Optionee.
If an Optionee dies, his or her Vested Options shall thereafter be
exercisable, during the period specified in Section 7(c) or the
applicable Option Agreement (as the case may be), by his or her
executors or administrators to the full extent (but only to such extent)
to which such Options were exercisable by the Optionee at the time of
his or her death.
No Share issued upon the exercise of an Option may be Transferred
except (i) as otherwise provided by this Plan, (ii) by will, (iii) by
the laws of descent and distribution or (iv) to the Company or any
Affiliate of the Company.
15. EFFECTIVE DATE; TERMINATION AND AMENDMENT OF PLAN.
The effective date (the "Effective Date") of this Plan shall be the
date which is the later of (i) the date on which the Plan is approved by
the stockholders of the Company and (ii) the date on which the initial
public offering of the Common Stock is consummated.
Unless sooner terminated as herein provided, the Plan shall terminate
ten years from the Effective Date. The Board may at any time terminate
the Plan or make such modification or amendment thereof as it deems
advisable; provided, however, that the Plan may not be amended more than
once every six months, other than to comport with changes in the
Internal Revenue Code of 1986, as amended, the Employee Retirement
Income Security Act of 1974, as amended, or the rules thereunder; and
provided further, however, that, except as provided in Section 13, the
Board may not, without the approval of the stockholders of the Company,
increase the maximum aggregate number of shares for which Options may be
granted under the Plan or the number of Shares for which an Option may
be granted to any Optionee. Termination or any modification or amendment
of the Plan shall not, without the consent of an Optionee, affect his or
her rights under an Option previously granted to him or her.
16. WITHHOLDING TAXES.
Whenever under this Plan, Shares are to be delivered to an Optionee,
the Company shall be entitled to require as a condition of delivery that the
Optionee remit or, in appropriate cases, agree to remit when due, an amount
sufficient to satisfy all current or estimated future Federal, state and local
withholding taxes and employment taxes relating thereto.
17. MISCELLANEOUS.
Inconsistent Provisions. Each Option granted under this Plan may
contain such other terms and conditions not inconsistent with this Plan
as may be determined by the Board, in its sole and absolute discretion.
Number and Gender. With respect to words used in this Plan, the
singular form shall include the plural form, the masculine gender shall
include the feminine gender, and vice-versa, as the context requires.
Captions. The use of captions in this Plan is for convenience. The
captions are not intended to provide substantive rights.
Amendment of Plan. This Plan may be modified or amended in any
respect by the Board.
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Governing Law. All questions concerning the construction,
interpretation and validity of this Plan and the instruments evidencing
the Options granted hereunder shall be governed by and construed and
enforced in accordance with the domestic laws of the State of New York,
without giving effect to any choice or conflict of law provision or rule
(whether in the State of New York or any other jurisdiction) that would
cause the application of the laws of any jurisdiction other than the
State of New York. In furtherance of the foregoing, the internal law of
the State of New York will control the interpretation and construction
of this Plan, even if under such jurisdiction's choice of law or
conflict of law analysis, the substantive law of some other jurisdiction
would ordinarily apply.
Exchange Act Compliance. The Company will use its commercially
reasonable efforts to cause the exemption from Section 16 of the
Exchange Act afforded by Rule 16b-3 to be available at the time the
Company has a class of equity securities registered under Section 12 of
the Exchange Act.
No Evidence of Continued Service on Board. Nothing contained in this
Plan or in any Option Agreement shall confer upon any Optionee any right
with respect to the continuation of his or her service as a director of
the Company or any of its Affiliates or interfere in any way with the
right of the stockholders of the Company or any such Affiliate at any
time to terminate such service or to increase or decrease the
compensation of the Optionee from the rate in existence at the time of
the grant of an Option, if any.
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EXHIBIT A
---------
STOCK OPTION AGREEMENT dated as of
the date set forth on the signature page
hereto, between LPA HOLDING CORP., a
Delaware corporation (the "Company"), and
the optionee set forth on the signature
page hereto (the "Optionee").
The Company, whether acting through its Board of Directors (the "Board") has
granted to the Optionee, effective as of the date of this Agreement, an option
under the LPA HOLDING CORP. 1999 STOCK OPTION PLAN FOR NON-EMPLOYEE DIRECTORS
(the "Plan") to purchase up to the number of shares of the Class A Common Stock,
$.01 par value, of the Company (the "Class A Common Stock") set forth on the
signature page hereto, on the terms and subject to the conditions set forth in
this Agreement and the Plan.
NOW, THEREFORE, in consideration of the premises and of the mutual agreements
contained in this Agreement, the parties hereto agree as follows:
1. THE PLAN.
The terms and provisions of the Plan are hereby incorporated into this Agreement
as if set forth herein in their entirety. In the event of a conflict between any
provision of this Agreement and the Plan, the provisions of this Agreement shall
control. A copy of the Plan is attached hereto as EXHIBIT A. Capitalized terms
used herein and not otherwise defined shall have the meanings ascribed thereto
in the Plan.
2. OPTION; OPTION PRICE.
On the terms and subject to the conditions of this Agreement, the Optionee is
hereby granted an Option (collectively, the "Option") to purchase Shares at the
Option Price set forth on the signature page hereto.
3. TERM.
The term of the Option (the "Option Term") shall commence on the date hereof and
expire on the tenth anniversary of the date hereof, unless the Option shall have
sooner been terminated in accordance with the terms of the Plan or this
Agreement.
4. RESTRICTION ON TRANSFER.
The Option may not be Transferred, pledged, assigned, hypothecated or otherwise
disposed of in any way by the Optionee and may be exercised during the lifetime
of the Optionee only by the Optionee or in accordance with the provisions of the
Plan. The Option shall not be subject to execution, attachment or similar
process. Any attempted Transfer of the Option contrary to the provisions hereof,
and the levy of any execution, attachment or similar process upon the Option,
shall be null and void and without effect.
5. OPTIONEE'S ROLE AS A DIRECTOR.
Nothing in the Option shall confer upon the Optionee any right to continue to
serve on the Corporation's Board of Directors.
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6. NOTICES.
All notices, claims, certificates, requests, demands and other communications
hereunder shall be in writing and shall be deemed to have been duly given and
delivered if personally delivered or if sent by nationally-recognized overnight
courier guaranteeing next day delivery, by telecopy, or by registered or
certified mail, return receipt requested and postage prepaid, addressed as
follows:
if to the Company, to it at:
LPA Holding Corp.
c/o La Petite Academy, Inc.
14 Corporate Woods
8717 West 110th Street
Suite 300
Overland Park, KS 66201
Attention: President
Telecopier: (913) 345-9601
Telephone: (913) 345-1250
with a copy to:
LPA Investment LLC
c/o Chase Capital Partners
380 Madison Avenue, 12th Floor
Attention: Stephen Murray
Telecopier: (212) 622-3101
Telephone: (212) 622-3100
and a copy to:
O'Sullivan Graev & Karabell, LLP
30 Rockefeller Plaza
41st Floor
New York, NY 10112
Attention: John J. Suydam
Telecopier: (212) 728-5950
Telephone: (212) 408-2400 and
if to the Optionee, to him at his address
set forth in the Company's records.
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or to such other address as the party to whom notice is to be given may have
furnished to the other party in writing in accordance herewith. Any such notice
or communication shall be deemed to have been received (i) in the case of
personal delivery, on the date of such delivery (or if such date is not a
business day, on the next business after the date sent), (ii) in the case of
nationally-recognized overnight courier, on the next business day after the date
sent, (iii) in the case of telecopy transmission, when received (or if not sent
on a business day, on the next business day after the date sent), and (iv) in
the case of mailing, on the third business day following that on which the piece
of mail containing such communication is posted.
7. WAIVER OF BREACH.
The waiver by either party of a breach of any provision of this Agreement must
be in writing and shall not operate or be construed as a waiver of any other or
subsequent breach.
8. OPTIONEE'S UNDERTAKING.
The Optionee hereby agrees to take whatever additional actions and execute
whatever additional documents the Company may in its reasonable judgment deem
necessary or advisable in order to carry out or effect one or more of the
obligations or restrictions imposed on the Optionee pursuant to the express
provisions of this Agreement and the Plan.
9. MODIFICATION OF RIGHTS.
Anything contained in this Agreement or the Plan to the contrary
notwithstanding, no provision of this Agreement may be modified or amended
without the prior written consent of the Company and the Optionee, and no
interpretation, modification, amendment or termination of any provision of the
Plan that would adversely affect the rights of the Optionee under or with
respect to the Plan or this Agreement shall be effective as to the Optionee
without the Optionee's prior written consent.
10. GOVERNING LAW.
All questions concerning the construction, interpretation and validity of this
Agreement shall be governed by and construed and enforced in accordance with the
domestic laws of the State of New York, without giving effect to any choice or
conflict of law provision or rule (whether in the State of New York or any other
jurisdiction) that would cause the application of the laws of any jurisdiction
other than the State of New York. In furtherance of the foregoing, the internal
law of the State of New York will control the interpretation and construction of
this Agreement, even if under such jurisdiction's choice of law or conflict of
law analysis, the substantive law of some other jurisdiction would ordinarily
apply.
11. COUNTERPARTS.
This Agreement may be executed in one or more counterparts, and each such
counterpart shall be deemed to be an original, but all such counterparts
together shall constitute but one agreement.
12. ENTIRE AGREEMENT.
This Agreement and the Plan (and the other writings referred to herein)
constitute the entire agreement between the parties with respect to the subject
matter hereof and thereof and supersede all prior written or oral negotiations,
commitments, representations and agreements with respect thereto.
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13. SEVERABILITY.
It is the desire and intent of the parties hereto that the provisions of this
Agreement be enforced to the fullest extent permissible under the laws and
public policies applied in each jurisdiction in which enforcement is sought.
Accordingly, if any particular provision of this Agreement shall be adjudicated
by a court of competent jurisdiction to be invalid, prohibited or unenforceable
for any reason, such provision, as to such jurisdiction, shall be ineffective,
without invalidating the remaining provisions of this Agreement or affecting the
validity or enforceability of this Agreement or affecting the validity or
enforceability of such provision in any other jurisdiction. Notwithstanding the
foregoing, if such provision could be more narrowly drawn so as not to be
invalid, prohibited or unenforceable in such jurisdiction, it shall, as to such
jurisdiction, be so narrowly drawn, without invalidating the remaining
provisions of this Agreement or affecting the validity or enforceability of such
provision in any other jurisdiction.
* * * *
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date first written below.
LPA HOLDING CORP.
By:
---------------------------
Name: James R. Kahl
Title: Chairman of the Board
CEO/President
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OPTIONEE'S SIGNATURE
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OPTIONEE'S NAME (PRINT)
------------------------------
OPTIONEE'S SOCIAL SECURITY NUMBER
Number of Shares
Subject to Options:
------------
Option Price:
============
Date:
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EXHIBIT 10.5
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LPA HOLDING CORP.
AMENDMENT NO. 1 TO
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1999 STOCK OPTION PLAN FOR NON-EMPLOYEE DIRECTORS
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(the "Plan")
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1.1 AMENDMENT
(a) Section 4(b) of the Plan is hereby amended by deleting the proviso
after the semicolon and replacing it with the following language:
"provided that no Person employed by CB Capital Investors, L.P., CB
Capital Investors, Inc. or any of their respective partners or
stockholders may be an Optionee under this Plan."
1.2 MISCELLANEOUS PROVISIONS
(a) Except as modified by this Amendment, the Plan shall remain in full
force and effect, enforceable in accordance with its terms. This Amendment is
not a consent to any waiver or modification of any other terms or conditions of
the Agreement or any of the instruments or documents referred to in the Plan and
shall not prejudice any right or rights which the parties thereunder may now or
hereafter have under or in connection with the Plan or any of the instruments or
documents referred to therein.
(b) This Amendment shall be governed and construed in accordance with the
laws of the State of New York
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EXHIBIT 99.1
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LA PETITE ANNOUNCES EQUITY INVESTMENT AND CREDIT FACILITY AMENDMENTS
OVERLAND PARK, KS - December 13, 1999 - La Petite Academy announced today that
Chase Capital Partners would invest an additional $15 million in equity, the
proceeds to be used to reduce borrowings under the revolving credit facility
that was drawn in connection with the Bright Start acquisition. The investment,
to be made through LPA Investment LLC, will be in the form of additional
pay-in-kind preferred stock of LPA Holding Corp. LPA Investment LLC is the
principal stockholder of LPA Holding Corp., which is the parent of La Petite
Academy. In connection with this investment, LPA Investment LLC also will
receive warrants to purchase [3%] of the common stock of LPA Holding Corp. on a
fully diluted basis.
La Petite Academy also announced today that it had obtained the consent of its
bank lenders to an amendment of its credit facility to, among other things,
amend the financial covenants to reflect the company's current and projected
operating plans.
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