FIRST AMENDMENT TO PARTICIPATION AGREEMENT
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FIRST AMENDMENT TO PARTICIPATION AGREEMENT, dated as of August 7, 2000
(this "Agreement"), to the Participation Agreement dated as of September 2, 1999
(The "Participation Agreement"), among KINDERCARE LEARNING CENTERS, INC., a
Delaware corporation (the "Lessee"); THE KINDERCARE REALTY TRUST 1999, a
Delaware business trust (the "Trust" or the "Lessor"); THE CHASE MANHATTAN BANK,
a New York banking corporation, as agent (in such capacity, the "Agent") for the
Lenders; SCOTIABANC INC., as an investor ("Scotiabanc" or an "Investor"); and
the Required Lenders.
Preliminary Statement
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WHEREAS, pursuant to the Participation Agreement, the parties thereto
agreed to participate in a transaction in which, among other things, (i) the
Lenders agreed to make certain loans to the Lessor pursuant to the Credit
Agreement dated as of September 2, 1999 among the Lessor, the Agent and the
Lenders; (ii) the Lessor agreed to use the proceeds of the Loans to acquire and
construct certain properties; and (iii) the Lessor agreed to lease such
properties to Lessee pursuant to the Lease.
WHEREAS, the Lessee has requested, and, upon this Amendment becoming
effective, the Lenders have agreed, that certain provisions of the Participation
Agreement be amended in the manner provided for in this Amendment;
NOW, THEREFORE, the parties hereto hereby agree as follows:
1. Defined Terms. (a) General. Terms defined in the Participation
Agreement and used herein shall, unless otherwise indicated, have the meanings
given to them in the Participation Agreement. Terms defined and used in this
Amendment shall have the meanings given to them in this Amendment.
(b) Addition of Definitions. The following defined terms are hereby
added to Annex A of the Participation Agreement in appropriate alphabetical
order:
"Non-Pool Property" shall mean each Property which is not a Pool
Property.
"Pool Properties" shall mean the Properties located at the
following addresses:
1. Center No. 1606, 0000 Xxxxxxx Xxxx, Xxxxxxx, Xxxxxxx
2. Center Xx. 0000,0-0 & 0-000, Xxxxxxxxx, Xxxxxxxxxx
0. Xxxxxx Xx. 0000, 425 Sumneytown Pike, North Wales, Pennsylvania
4. Center No. 1616, 00000 Xxxxxxx Xxxx Xxxx, Xxxxxxxxxx, Xxxxxxxx
5. Center Xx. 0000, 000-000 Xxxxxx Xxxx, Xxxxxxxx, Xxxxxxxxxxx
0. Center No. 1628, 355 Cumberland Parkway, Mechanicsburg,
Pennsylvania
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7. Center No. 1658, 0000 XX 00xx Xxxxxx, Xxxxxx, Xxxxxxxxxx
8. Center No. 1662, 000 Xxxxxx Xxxxxxx, Xxxxxx Xxxx, Xxxxxxxxx
9. Center No. 0000, Xxxxxxxx & Xxxxxxx Xxxx, Xxxxxxxxxx, Xxxxxxxx
10. Center No. 1690, 50-1050 Xxxxxx Xxxxxxx Parkway, Marietta,
Georgia
11. Center No. 1661, 303 & 000 Xxxxxxxx Xxxxxx, Xxxxx Xxxx,
Xxxxxxxxxxx
and the following properties, when they become Properties:
12. Center No. 1632, Xxxxx 000 & Xxxxxx Xxxx, Xxxxxxxxxxx, Xxx
Xxxxxxxxx
0. Amendment to Section 6.26(j). Section 6.20(j) of the
Participation Agreement is hereby deleted and the following inserted in its
place:
"(j) Appraisal. The Agent and the Investor shall have received an
Appraisal of each Property being acquired on such Property Closing Date and
such Appraisal or Appraisals shall show a value (i) for each Non-Pool
Property at least equal to 90.91% of the projected Project Costs for each
such Non-Pool Property and (ii) for the Pool Properties collectively at
least equal to 90.91 % of the projected Project Costs for such Pool
Properties collectively and shall otherwise be in form and substance
acceptable to each Lender and Investor and the Lessor, or, in the
alternative, (i) (1) if the Property has no Improvements or Improvements
which the Lessee intends to completely demolish, an appraisal of the Land
only, or (2) if the Property has Improvements which the Lessee intends to
renovate, an appraisal of the Land and Improvements, in either case ordered
by the Agent, prepared by a reputable independent appraiser reasonably
satisfactory to the Agent, which in the judgment of counsel to the Agent,
as of the applicable Property Closing Date, complies with all of the
provisions of the Financial Institutions Reform, Recovery and Enforcement
Act of 1989, as amended, the rules and regulations adopted pursuant
thereto, and all other applicable Legal Requirements, showing the value of
the Land at least equal to the amount requested or the Requisition with
respect to such Land and (ii) a valuation letter, ordered by the Agent,
prepared by a reputable independent appraiser reasonably satisfactory to
the Agent, of such Property as if improved in accordance with the Plans and
Specifications of such Property. The valuation letter shall state the
amount of the Projected Completion Value with respect to such Property and
an estimate of the value thereof at the end of the Term.
3. Amendment to Section 6.3(f). Section 6.3(f) of the Participation
Agreement is hereby deleted and the following inserted in its place:
"(a) Appraisal. The Agent and the Investor shall have received an
Appraisal of each Property being acquired on such Property Closing Date and
such Appraisal or Appraisals shall show a value (i) for each Non-Pool
Property at least equal to 90.91% of the projected Project Costs for each
such Non-Pool Property and (ii) for the Pool Properties collectively at
least equal to 90.91% of the projected Project Costs for such
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Pool Properties collectively and shall otherwise be in form and substance
acceptable to each Lender and the Required Investors.
4. Amendment to Section 7.2(h). Section 7.7(h) of the Participation
Agreement is hereby deleted and the following inserted in its place:
"(h) Projected Completion Value. The Property Cost of each Improvement
on each Non-Pool Property as established by Budget will not exceed an
amount equal to one hundred ten percent (110%) of the projected Completion
Value with respect to such Improvements. The Property Cost of Improvements
on all Pool Properties collectively as established by Budget will not
exceed an amount equal to one hundred ten percent (110%) of the Projected
Completion Value with respect to such Improvements on all such Pool
Properties, collectively."
5. Payment of Expenses. The Lessee agrees to pay or reimburse the
Agent for all of its out-of-pocket costs and expenses incurred in connection
with the Amendment, any other documents prepared in connection herewith and the
transactions contemplated hereby, including, without limitation, the reasonable
fees and disbursements of counsel to the Agent.
6. Reference to and Effect on the Operative Agreement; Limited
Effect. On and after the date hereof, each reference in the Participation
Agreement to "this Agreement", "hereunder", "hereof' or words of like import
referring to the Participation Agreement, and each reference in the other
Operative Agreements to "the Participation Agreement", "thereunder", "thereof'
or words of like import referring to the Participation Agreement, shall mean and
be a reference to the Participation Agreement as amended hereby. The execution,
delivery and effectiveness of this Amendment shall not, except as expressly
provided herein, operate as a waiver of any right, power or remedy of any Lender
or any Agent under any of the Operative Agreements, nor constitute a waiver of
any provisions of any of the Operative Agreements. Except as expressly amended
herein, all of the provisions and covenants of the Participation Agreement and
the other Operative Agreements are and shall continue to remain in full force
and effect in accordance with the terms thereof and are hereby in all respects
ratified and confirmed.
7. Counterparts. This Amendment may be executed by one or more of
the parties hereto in any number of separate counterparts (which may include
counterparts delivered by facsimile transmission) and all of said counterparts
taken together shall be deemed to constitute one and the same instrument. Any
executed counterpart delivered by facsimile transmission shall be effective as
for all purposes hereof.
8. GOVERNING LAW. THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF
THE PARTIES HERETO SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be duly executed and delivered by their respective proper and duly authorized
officers as of the day and year first above written.
KINDERCARE LEARNING CENTERS, INC.
By: /s/ XXXXXX XXXXXX
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Name: Xxxxxx Xxxxxx
Title: Vice President, Real Estate
THE KINDERCARE REALTY TRUST 1999
By: WILMINGTON TRUST COMPANY, not
in its individual capacity but
solely as Trustee
By: /s/ XXXXXX X. XXXX
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Name: Xxxxxx X. Xxxx
Title: Senior Financial Services
Officer
SCOTIABANC INC., as an Investor
By: /s/ X.X. XXXXX
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Name: X.X. Xxxxx
Title: Managing Director
Required Lenders:
THE CHASE MANHATTAN BANK, as Agent
and a Lender
By: /s/ XXXXXXX X. XXXXXX
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Name: Xxxxxxx X. Xxxxxx
Title: Vice President
CITICORP USA, INC.
By: /s/ XXXXXXX X. XXXXXXX
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Name: Xxxxxxx X. Xxxxxxx
Title: Managing Director/SCO
THE BANK OF NOVA SCOTIA
By: /s/ XXXXX X. XXXXX
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Name: Xxxxx X. Xxxxx
Title: Director
CREDIT SUISSE FIRST BOSTON
By: /s/ XXXXXX XXXX
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Name: Xxxxxx Xxxx
Title: Vice President
By: /s/ XXXXXX XXXXXX
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Name: Xxxxxx Xxxxxx
Title: Assistant Vice President
FIRSTRUST BANK
By: /s/ XXXX XXXXXX
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Name: Xxxx Xxxxxx
Title: VP
BANK OF AMERICA, N.A.
By: /s/ XXXXX X. LEADER
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Name: Xxxxx X. Leader
Title: Managing Director
