EXHIBIT 10.3
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SECURITIES PURCHASE AGREEMENT
DATED AS OF NOVEMBER 14, 2001
AMONG
LPA HOLDING CORP.,
LPA INVESTMENT LLC
AND
THE OTHER PURCHASERS NAMED HEREIN
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SECURITIES PURCHASE AGREEMENT
dated as of November 14, 2001 (the
"Agreement"), among LPA HOLDING CORP., a
Delaware corporation (the
"Corporation"), LPA INVESTMENT LLC, a
Delaware limited liability company ("LPA
Investment") and the parties signatory
hereto (from time to time each an "Other
Purchaser" and, collectively the "Other
Purchasers"). Each Other Purchaser and
LPA Investment are referred to herein as
a "Purchaser" and collectively referred
to as the "Purchasers".
WHEREAS, the Corporation desires to sell to the Purchasers and
the Purchasers desire to purchase from the Corporation (the "Purchase"), (i)
shares of Series B Convertible Redeemable Participating Preferred Stock, $0.01
par value (the "Series B Preferred Stock") of the Corporation, with the
designations, preferences and rights set forth in the Certificate of
Designations (as hereinafter defined) and (ii) warrants to purchase shares of
Class A Common Stock, $0.01 par value, of the Corporation (the "Class A Common
Stock"), in the form attached hereto as Exhibit A (the "New Warrants").
WHEREAS, promptly after each Closing (as defined herein), the
Corporation shall use the proceeds from the Purchase for general working capital
purposes.
NOW THEREFORE, in consideration of the mutual promises herein
made, and in consideration of the representations, warranties, and covenants
herein contained, the Corporation and the Purchasers hereby agree as set forth
below.
ARTICLE I
FILING; ISSUANCE AND RESERVATION;
SALE OF THE SECURITIES
1. FILING OF AMENDMENT TO THE RESTATED CERTIFICATE OF INCORPORATION.
Immediately prior to the execution and delivery of this Agreement, the
Corporation shall have filed with the Secretary of State of the State of
Delaware a Certificate of Amendment with respect to the Corporation's
Certificate of Incorporation, in the form attached hereto as Exhibit B (the
"Certificate of Amendment"), which amendment shall increase the authorized
capital stock of the Corporation to 15,000,000 shares and shall increase the
total number of shares designated Preferred Stock from 45,000 to 6,945,000.
2. FILING OF AMENDMENT TO THE CERTIFICATE OF DESIGNATIONS.
Immediately prior to the execution and delivery of this Agreement, the
Corporation shall have filed with the Secretary of State of the State of
Delaware a Certificate of Designations (as defined herein) in the form attached
hereto as Exhibit C.
3. AUTHORIZATION OF ISSUANCE AND SALE OF SECURITIES AND RESERVATION OF
SHARES.
Subject to the terms and conditions hereof, the Corporation has
authorized (i) the issuance and sale to the Purchasers of the Series B Preferred
Stock at each Closing, (ii) the issuance and sale to the Purchasers of the New
Warrants at the Initial Closings, and (iii) the reservation of an aggregate of
7,462,000 shares of Class A Common Stock for issuance upon the conversion of the
Series B Preferred Stock and the exercise of the New Warrants (such shares
collectively, the "Reserved Shares").
4. PURCHASE AND SALE OF THE SECURITIES.
(a) On the date LPA Investment executes and delivers this Agreement
(the "First Closing"), on the terms and subject to the conditions contained
herein, the Corporation shall issue, sell and deliver to LPA Investment, and LPA
Investment shall purchase from the Corporation, 1,572,078 shares of Series B
Preferred Stock and New Warrants to purchase 452,343 shares of Class A Common
Stock.
(b) Promptly after the expiration of the offer period as set forth in
the Preemptive Notice and on the terms and subject to the conditions contained
herein, the Corporation shall issue, sell and deliver to each Other Purchaser
that executes and delivers this Agreement, and such Purchaser shall purchase
from the Corporation (the "Second Closing," and together with the First Closing,
the "Initial Closings"), (i) a number of shares of Series B Preferred Stock
equal to the product of (A) 1,954,922 (the "Initial Share Number") multiplied by
(B) such Other Purchaser's Proportional Percentage and (ii) a number of New
Warrants equal to the product of (A) the New Warrant Number multiplied by (B)
such Other Purchaser's Proportional Percentage.
(c) At the Second Closing, on the terms and subject to the conditions
contained herein, the Corporation shall issue, sell and deliver to LPA
Investment and LPA Investment shall purchase from the Corporation (i) a number
of shares of Series B Preferred Stock equal to (A) the Initial Share Number less
(B) the number of shares of Series B Preferred Stock purchased pursuant to
Section 1.4(a) and Section 1.4(b) above and (ii) a number of New Warrants equal
to the New Warrant Number less the number of New Warrants issued pursuant to
Section 1.4(a) and Section 1.4(b) above.
(d) All shares of Series B Preferred Stock and New Warrants purchased
at an Initial Closing shall be purchased (x) free and clear of any liens,
claims, charges and encumbrances whatsoever and with no restrictions on the
voting rights thereof (in each case other than pursuant to the Transaction
Documents and the Related Documents) and other incidents of record and
beneficial ownership pertaining thereto, and (y) against receipt by the
Corporation from each such Purchaser, the amount of funds equal to the product
of the Per Share Purchase Price multiplied by the number of shares of Series B
Preferred Stock being purchased by such Purchaser at the applicable Initial
Closing.
(e) Any payments made by any Purchaser pursuant to this Section 1.4
shall be in immediately available funds to an account designated by the
Corporation.
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ARTICLE II
CLOSINGS
1. INITIAL CLOSINGS.
(f) The First Closing shall take place simultaneously with the
execution and delivery of this Agreement by LPA Investment. The Second Closing
shall take place within 10 business days after the expiration of the offer
period as set forth in the Preemptive Notice.
(g) At each Initial Closing, the Corporation shall deliver to each
Purchaser:
(i) one or more stock certificates registered in the name of
such Purchaser, representing, in the aggregate, the number of shares of
Series B Preferred Stock purchased by such Purchaser;
(ii) one or more warrant certificates registered in the name
of such Purchaser, representing, in the aggregate, the number of New
Warrants issued to such Purchaser pursuant to Section 1.4;
(iii) a certificate of the secretary of the Corporation dated
as of the date of the First Closing, certifying (A) that true and
complete copies of the Corporation's Fundamental Documents, including
certified copies of the Certificate of Amendment and the Certificate of
Designations, as in effect on the date hereof, are attached to such
certificate, (B) as to the incumbency and genuineness of the signatures
of each officer of the Corporation executing any of the Transaction
Documents; and (C) the genuineness of the resolutions of the Board of
Directors of the Corporation authorizing the execution, delivery and
performance of the Transaction Documents to which the Corporation is a
party and the consummation of the transactions contemplated thereby;
(iv) a certificate of good standing from the Secretary of
State of the State of Delaware and any other state in which the
Corporation is qualified to do business, each such certificate to be
dated as close as is practicable to the date of Closing, and in any
case, not more than ten business days prior to the date of the First
Closing;
(h) At each Initial Closing, each Purchaser shall deliver to the
Corporation the purchase price for the Securities being purchased by such
Purchaser hereunder.
2. ADDITIONAL CLOSINGS.
(i) The Corporation shall have the right to require:
(i) each Other Purchaser to purchase from time to time an
additional number of shares of Series B Preferred Stock in an amount
equal to such Other Purchaser's Proportional Percentage of the
Additional Share Number (the "Other Purchaser Additional Share
Number"); and
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(ii) LPA Investment to purchase from time to time an
additional number of shares of Series B Preferred Stock in an amount
equal to the Additional Share Number less the Other Purchaser
Additional Share Number.
Each closing of the sale and purchase of shares of Series B
Preferred Stock pursuant to this Section 2.2(a) is referred to herein as an
"Additional Closing,"; together with the Initial Closings and each Additional
Closing are referred to herein as the "Closings," (and each, a "Closing"), and
the dates of the Closings are each referred to as a "Closing Date".
(j) The holders of a majority of the outstanding Class A Common
Shares may require the Corporation, at any time and from time to time prior to
May 15, 2002, to exercise its rights under Section 2.2(a) above by delivery of a
notice to such effect at least 10 business days before any proposed Additional
Closing.
(k) The Corporation shall consummate one or more Additional Closings
from time to time such that, prior to May 15, 2002, after giving effect to all
Closings, the Corporation shall have received gross proceeds in respect of the
Series B Preferred Stock and New Warrants in an amount equal to $15 million.
(l) Each of the Purchaser's and the Corporation's obligations
pursuant to Section 2.2(a) above is subject to the following conditions:
(i) At least 5 business days prior to any proposed Additional
Closing, the Corporation shall provide written notice to the Purchasers
of the Corporation's intent to hold an Additional Closing, such notice
to include (a) the date of the proposed Additional Closing, and (b) the
number of Additional Shares to be purchased by each Purchaser and sold
by the Corporation at such Additional Closing (the aggregate number of
Additional Shares to be purchased and sold at such Additional Closing,
the "Additional Share Number").
(ii) Subject to the terms and conditions hereof, at each
Additional Closing, the Corporation shall issue and deliver to each
Purchaser one or more stock certificates representing the Additional
Shares purchased by such Purchaser at such Additional Closing.
(iii) As payment for the Additional Shares issued at such
Additional Closing, each Purchaser shall deliver to the Corporation an
amount equal to the number of Additional Shares received by such
Purchaser multiplied by the Per Share Purchase Price. Such amount shall
be delivered in immediately available funds to an account designated by
the Corporation.
(iv) The Additional Share Number shall not be less than (i)
$1,000,000 divided by (ii) the Per Share Purchase Price.
(m) The obligations of the Purchasers to purchase Additional Shares
pursuant to Section 2.2(a) above shall terminate at the earlier of (i) such time
as the Corporation shall have issued, at the Initial Closings and Additional
Closings, an aggregate number of shares of Series B Preferred Stock equal to the
New Series B Preferred Stock Number for not less than the Per
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Share Purchase Price and (ii) such time as the sum of the (A) gross proceeds
received by the Corporation pursuant to the Closings plus (B) the amount paid by
▇.▇. ▇▇▇▇▇▇ Partners (23A SBIC), LLC to the Lenders (as defined in the Credit
Agreement) pursuant to the Guarantee dated as of the date hereof, between ▇.▇.
▇▇▇▇▇▇ Partners (23A SBIC), LLC, and Bank of America, N.A., collectively equals
$15,000,000.
(n) In the event that the Corporation requests, pursuant to this
Section 2.2, that the Purchasers purchase their respective Proportional
Percentage of Additional Shares at any time and a Purchaser (a "Defaulting
Purchaser") fails to purchase its respective Proportional Percentage of such
shares at the applicable Additional Closing, in addition to any other rights
that the Corporation may have at Law or equity, the Corporation may elect to
exercise any or all of the following remedies, which shall be automatically
effective, without consideration, upon delivery of a Default Notice:
(i) the Defaulting Purchaser shall agree to vote all shares of
Series B Preferred Stock and all shares of Common Stock held by such
Defaulting Purchaser in the same proportion as the other holders of
Series B Preferred Stock and Common Stock, respectively, vote such
shares and hereby grants an irrevocable proxy to the Corporation to
vote such shares in such manner at any meeting of stockholders or by
any action by written consent of stockholders, subject to delivery of
such Default Notice (it being understood that such irrevocable proxy is
coupled with an interest);
(ii) the Defaulting Purchaser shall forfeit all New Warrants
held by such Defaulting Purchaser and/or the shares of Class A Common
Stock issued upon the exercise thereof;
(iii) the Defaulting Purchaser shall forfeit all shares of
Class A Common Stock issued or issuable upon conversion of the Series B
Preferred Stock to the extent that such shares have been issued as a
result of the anti-dilution provisions set forth in Section 6(d) of the
Certificate of Designations;
(iv) the Defaulting Purchaser, at the election of the
Corporation, as indicated in the Default Notice, either (A) shall
forfeit all shares of Common Stock issued or issuable upon conversion
of shares of Series B Preferred Stock held or previously held by such
Purchaser or (B) shall convert all shares of Series B Preferred Stock
held by such Defaulting Purchaser into shares of Class A Common Stock;
and/or
(v) the Defaulting Purchaser shall forfeit the right to
receive any amounts in respect of each share of Series B Preferred
Stock held by such Defaulting Purchaser on the occurrence of a
Liquidity Event (as defined in the Certificate of Designations) in
excess of the Per Share Purchase Price.
If the Corporation elects to exercise its rights under this
Section 2.2(f), it shall deliver a written notice (the "Default
Notice") to the Defaulting Purchaser within 120 days after the date of
the applicable Additional Closing, which shall specify which of the
foregoing remedies the Corporation elects to exercise. Upon delivery of
the Default Notice, the Corporation shall be authorized to cancel on
its books the New Warrants,
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share certificates(s) or other documents or instruments representing
any securities forfeited pursuant to this Section 2.2(f), record on its
books the conversion of any shares of Series B Preferred Stock pursuant
to this Section 2.2(f) and/or vote any shares of Series B Preferred
Stock and/or Common Stock pursuant to the proxy granted pursuant to
this Section 2.2(f). Each Purchaser (including all Defaulting
Purchasers) hereby agrees to take all actions requested by the
Corporation to give effect to the foregoing provisions of this Section
2.2(f), including, but not limited to, executing any documents or
instruments and approving amendments to the organizational documents of
the Corporation.
Without the requirement to deliver a Default Notice, no
Defaulting Purchaser shall have the right to participate in any
Additional Closings and such Defaulting Purchaser's Proportional
Percentage of Additional Shares shall equal zero.
Notwithstanding anything to the contrary set forth in this
Agreement, if no Other Purchasers execute and deliver this Agreement
prior to the expiration of the offer period set forth in the Preemptive
Notice, this Section 2.2(f) shall be null and void and without effect.
(o) All shares of Series B Preferred Stock and New Warrants
purchased at an Additional Closing shall be purchased (x) free and clear of any
liens, claims, charges and encumbrances whatsoever and with no restrictions on
the voting rights thereof (in each case other than pursuant to the Transaction
Documents and the Related Documents) and other incidents of record and
beneficial ownership pertaining thereto, and (y) against receipt by the
Corporation from each such Purchaser, the amount of funds equal to the product
of the Per Share Purchase Price multiplied by the number of shares of Series B
Preferred Stock being purchased by such Purchaser at the applicable Additional
Closing.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE CORPORATION
As a material inducement to the Purchasers to enter into and perform
their respective obligations under this Agreement, the Corporation represents
and warrants to each Purchaser as set forth below:
1. ORGANIZATION; GOOD STANDING; QUALIFICATION AND POWER.
Each of the Corporation and its Subsidiaries is duly organized, validly
existing and in good standing under the Laws of its jurisdiction of formation,
has all requisite power to own, lease and operate its Assets and to carry on its
business as presently being conducted, and is qualified to do business and in
good standing in every jurisdiction in which the failure to so qualify or be in
good standing, individually or in the aggregate, could have a Material Adverse
Effect on the Corporation and its Subsidiaries taken as a whole, as applicable.
Each of the Corporation and its Subsidiaries has delivered to each Purchaser
true and complete copies of its Fundamental Documents as amended and in effect
on the date hereof.
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2. AUTHORIZATION.
The Corporation has all requisite power and authority to execute and
deliver each Transaction Document to which it is a party and any and all
instruments necessary or appropriate in order to effectuate fully the terms and
conditions of each such Transaction Document and all related transactions and to
perform its obligations under each such Transaction Document. Each Transaction
Document to which the Corporation is a party has been duly authorized by all
necessary action (corporate or otherwise) on the part of the Corporation, and
each Transaction Document to which the Corporation is a party has been duly
executed and delivered by the Corporation and constitutes the valid and legally
binding obligation of the Corporation enforceable in accordance with its terms
and conditions.
The authorization, issuance, sale and delivery of the Series B
Preferred Stock and the New Warrants pursuant to the Closings and the
reservation of the Reserved Shares have been duly authorized by all requisite
action of the Corporation's Board of Directors and stockholders. As of (i) each
Closing, the Series B Preferred Stock and New Warrants issued at such Closing
and (ii) the date of their issuance, the Conversion Shares, will be validly
issued and outstanding, fully paid and nonassessable, with no personal liability
attaching to the ownership thereof, free and clear of any Liens whatsoever and
with no restrictions on the voting rights thereof and other incidents of record
and beneficial ownership pertaining thereto, in each case other than pursuant to
the Transaction Documents and the Related Documents.
3. NON-CONTRAVENTION.
The execution, delivery and performance by the Corporation of the
Transaction Documents, the consummation of the transactions contemplated thereby
and compliance with the provisions thereof, including the issuance, sale and
delivery of the Series B Preferred Stock and the New Warrants, have not and
shall not, and the issuance and delivery of the Conversion Shares shall not, (a)
violate any Law to which the Corporation, its Subsidiaries or any of their
respective Assets is subject, (b) violate any provision of the Fundamental
Documents of the Corporation or any of its Subsidiaries, (c) except with respect
to stockholder approvals and certain provisions of the Credit Agreement for
which waivers (the "Credit Waivers") shall have been obtained by the Corporation
prior to each Closing, conflict with, result in a breach of, constitute a
default under, result in the acceleration of, create in any party the right to
accelerate, terminate, modify, or cancel, or require any notice under any
Contract to which the Corporation or any of its Subsidiaries is a party or by
which any of the Assets of the Corporation or any of its Subsidiaries is bound
or (d) result in the imposition of any Lien upon any of the Assets of the
Corporation or any of its Subsidiaries. Other than state blue sky securities
filings, the Credit Waivers, and stockholder approvals, neither the Corporation
nor any of its Subsidiaries has been or is required to give any notice to, make
any filing with, or obtain any authorization, consent or approval of any
Governmental Entity or any other Person for the valid authorization,
reservation, issuance and delivery of the Series B Preferred Stock, the New
Warrants or any other Transaction Documents, for the valid authorization,
issuance and delivery of the Conversion Shares, or the valid authorization and
reservation of the Reserved Shares.
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4. CAPITALIZATION OF THE CORPORATION AND ITS SUBSIDIARIES.
(p) Immediately after the First Closing, the authorized capital stock
of the Corporation shall consist of:
(i) a number of shares of Preferred Stock, $.01 par value (the
"Preferred Stock") as follows: (A) 45,000 shares designated as Series A
Redeemable Preferred Stock, all of which will be issued and
outstanding, fully paid and nonassessable, with no liability attaching
to the ownership thereof and (B) a number of shares designated as
Series B Convertible Redeemable Participating Preferred Stock equal to
the New Series B Preferred Stock Number, (i) of which 1,572,078 will be
issued and outstanding, fully paid and nonassessable, with no liability
attaching to the ownership thereof, and (ii) the remainder of which
will be reserved for issuance upon the Second Closing and the
Additional Closings; and
(ii) 15,000,000 shares of Common Stock, $.01 par value (the
"Common Stock"), consisting of (A) 14,980,000 shares of Class A Common
Stock, of which (i) 584,965 shares will be issued and outstanding,
fully paid and nonassessable, (ii) 237,613 shares will be reserved for
issuance upon the exercise of the options, (iii) 626,634 shares will be
reserved for issuance upon the exercise of the Warrants, (iv) 20,000
shares will be reserved for issuance upon the conversion of the Class B
Common Stock, $.01 par value (the "Class B Common Stock"), and (v)
6,900,000 shares will be reserved for issuance upon the conversion of
the Series B Preferred Stock; and (B) 20,000 shares of Class B Common
Stock, of which 20,000 shares will be issued and outstanding, fully
paid and non-assessable.
(q) Except as set forth in Section 3.4(a) or as otherwise contemplated
by the Transaction Documents, there are, and immediately after each Initial
Closing there will be, no (i) outstanding warrants, options, agreements,
convertible securities or other commitments or instruments pursuant to which the
Corporation or any of its Subsidiaries is or may become obligated to issue or
sell any shares of its capital stock or other securities or (ii) preemptive or
similar rights to purchase or otherwise acquire shares of the capital stock or
other securities of the Corporation or any of its Subsidiaries pursuant to any
provision of Law, such Person's Fundamental Documents or any Contract to which
such Person, or to the best knowledge of the Corporation, any stockholder
thereof is a party; and, except as contemplated by the Transaction Documents and
the Related Documents, there is, and, immediately after each Initial Closing
there shall be, no Lien (such as a right of first refusal, right of first offer,
proxy, voting trust, voting agreement, etc.) with respect to the sale or voting
of shares of capital or securities of the Corporation or, except with respect to
the Liens granted in connection with the transactions contemplated by the Credit
Agreement, any of its Subsidiaries (whether outstanding or issuable).
(r) All shares of the capital stock and other securities issued by the
Corporation and each of its Subsidiaries have been issued in transactions in
accordance with applicable state and federal laws and regulations governing the
sale and purchase of securities.
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5. EQUITY INVESTMENTS.
The Corporation owns, and as of each Initial Closing shall own, all of
the issued and outstanding capital stock of La Petite Academy, Inc., a Delaware
corporation, LPA Services, Inc., a Delaware corporation, and Bright Start, Inc.,
a Minnesota corporation. Except as set forth in the immediately preceding
sentence, each of the Corporation and its Subsidiaries do not own, directly or
indirectly, any capital stock, partnership interest or joint venture interest
in, or any security issued by, any other Person.
6. OFFERING EXEMPTION.
Based in part upon the accuracy of the representations of each
Purchaser in Article IV, the offering, sale and issuance of the Series B
Preferred Stock and the New Warrants have been, are, and will be, exempt from
registration under the Securities Act, and such offering, sale and issuance is
also exempt from registration under applicable state securities and "blue sky"
laws. The Corporation and its Subsidiaries have made all requisite filings and
have taken or will take all action necessary to be taken to comply with such
state securities or "blue sky" laws.
7. BROKERS.
The Corporation has not retained any investment banker, broker or
finder in connection with the purchase of the Series B Preferred Stock and the
New Warrants.
8. DISCLOSURE.
This Agreement, including the Schedules or Exhibits attached hereto,
does not contain any untrue statements of a material fact or omit any material
facts necessary to make the statements contained herein, in light of the
circumstances in which they were made, not misleading as of the date hereof.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF EACH PURCHASER
As a material inducement to the Corporation to enter into and
perform its obligations under this Agreement, each Purchaser, severally and not
jointly, represents and warrants to the Corporation as set forth below:
1. POWER AND AUTHORITY.
Such Purchaser has full power and authority to execute and deliver this
Agreement. The execution and delivery by such Purchaser of this Agreement and
the performance of the obligations of such Purchaser contained herein have been
duly authorized by all requisite action on the part of such Purchaser. This
Agreement has been duly executed and delivered by such Purchaser and constitutes
a legal, valid and binding obligation of such Purchaser, enforceable against
such Purchaser in accordance with its terms, subject to applicable bankruptcy,
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insolvency, reorganization, fraudulent conveyance, moratorium or other similar
Laws now or hereafter in effect relating to creditors' rights and subject to
general principles of equity.
2. NO CONFLICT.
The execution and delivery by such Purchaser of this Agreement, such
Purchaser's consummation of the transactions contemplated hereby and such
Purchaser's compliance with the provisions hereof, will not (i) violate any
provision of any document or other instrument governing its creation or
operation, including any amendments thereto, (ii) violate, conflict with or
constitute (with notice or lapse of time or both) a default under, or give rise
to any right of termination, cancellation or acceleration, under, or result in
the creation of any encumbrance upon such Purchaser's properties or assets
pursuant to, the terms, conditions or provisions of any note, bond, lease,
mortgage, indenture, license, agreement or other instrument or obligation to
which such Purchaser is a party or by which such Purchaser or any of such
Purchaser's properties or assets are bound, or (iii) violate any provision of
Law applicable to such Purchaser or any of such Purchaser's properties or
assets.
3. NO CONSENT OR APPROVAL REQUIRED.
No permit, authorization, consent or approval of or by, or notification
of or filing with, any Person is required to be made or obtained by such
Purchaser in connection with such Purchaser's valid authorization, execution,
delivery and performance of this Agreement, other than those permits,
authorizations, consents, approvals, notifications or filings that have been or
will timely be obtained or made, as the case may be.
4. INVESTMENT REPRESENTATIONS.
(s) Such Purchaser, either individually or in conjunction with its
Purchaser Representative (as defined in Rule 501 of the Securities Act), has
such knowledge and experience in financial and business matters that he or it is
capable of utilizing the information made available to such Purchaser, to
evaluate the merits and risks of an investment in the Corporation and to make an
informed investment decision with respect thereto. Such Purchaser is aware that
the investment in the Securities is highly speculative. Such Purchaser is able,
without impairing such Purchaser's financial condition, to hold the Securities
for an indefinite period of time and to suffer a complete loss of his or its
investment.
(t) Such Purchaser understands and acknowledges that the offering of
the Securities have not been considered or approved by any governmental or other
entity.
(u) Such Purchaser recognizes that an investment in the Corporation
involves certain risks, and has taken full cognizance of the risk factors
related to the Securities. Such Purchaser has had the opportunity to consult
with his or its professional, tax and legal advisors with respect to the
federal, state, local and foreign income tax consequences of such Purchaser's
participation as a holder of the Securities.
(v) Such Purchaser understands that there is no public market for
the Securities and that the transferability of the Securities is restricted.
Such Purchaser will not transfer the Securities acquired by him or it hereunder,
except in compliance with this Agreement.
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(w) The Securities issued to such Purchaser were issued for such
Purchaser's own account, for investment purposes only and were not acquired with
a view towards resale or further distribution. Such Purchaser understands that
the Securities have not been registered for sale under the Securities Act or
registered or qualified under any applicable state securities Laws and that the
Securities issued to such Purchaser cannot be offered for sale or sold by such
Purchaser or anyone acting for such Purchaser's account or on such Purchaser's
behalf without the registration of the Securities, as applicable, and/or the
fulfillment of other regulatory requirements.
(x) Such Purchaser further understands that, with respect to the
Securities, the exemption from registration afforded by Rule 144 (the provisions
of which are known to such Purchaser) promulgated under the Securities Act
depends on the satisfaction of various conditions, and that, if applicable, Rule
144 may only afford the basis for sales of such Purchaser's Note only in limited
amounts.
(y) Such Purchaser has not and none of its officers, directors or
employees (or any Affiliate of the foregoing) employed any broker or finder or
incurred any liability for any brokerage fees, commissions or finders' fees in
connection with the transactions contemplated hereby and such Purchaser will not
have any liability for any brokerage fees, commissions or finders' fees in
connection with the transactions contemplated hereby.
(z) Such Purchaser further understands that the Corporation is
entering into this Agreement with such Purchaser in reliance upon such
Purchaser's representations to the Corporation contained in this Section 4.4.
ARTICLE V
ADDITIONAL AGREEMENTS
1. COVENANTS OF THE CORPORATION.
(aa) The Corporation hereby agrees that LPA Investment may rely on
the Corporation's covenant in Article VI of the Stockholders' Agreement
concerning Small Business Administration issues as if such Stockholders'
Agreement had been executed on the date hereof.
(bb) Prior to or on the date of the First Closing, the Corporation
shall use commercially reasonable efforts to obtain Credit Waivers under the
Credit Agreement for the transactions contemplated by this Agreement and the
Transaction Documents.
2. CONSENTS OF EACH PURCHASER.
(cc) Each Purchaser hereby agrees to and does consent, in its
capacity as a holder of Common Stock and/or a holder of Preferred Stock, as
applicable, to the filing of the Certificate of Amendment and the Certificate of
Designations with the Secretary of State of the State of Delaware in the forms
attached hereto as Exhibits B and C respectively.
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(dd) LPA Investment hereby waives the notice provisions contained in
Section 4(l) of the May 1998 Warrant and December 1999 Warrant with respect to
the transactions contemplated hereunder.
3. SURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS, ETC.
All representations and warranties hereunder shall survive each Initial
Closing. Except as otherwise provided herein, all of the Transaction Documents
and the Related Documents shall survive indefinitely until, by their respective
terms, they are no longer operative.
4. INDEMNIFICATION.
(ee) In addition to all rights and remedies available to the
Purchasers at law or in equity, the Corporation shall indemnify the Purchasers
and, to the extent any Purchaser expressly agrees in writing with a transferee
who acquires the Series B Preferred Stock, the New Warrants or Conversion Shares
from such Purchaser, such transferee and each of their respective Affiliates,
stockholders, officers, directors, employees, agents, representatives,
successors and permitted assigns (collectively, the "Indemnified Parties") and
save and hold each of them harmless against and pay on behalf of or reimburse
such party as and when incurred for any loss (including, without limitation,
diminutions in value), liability, demand, claim, action, cause of action, cost,
damage, deficiency, tax, penalty, fine or expense, whether or not arising out of
any claims by or on behalf of any third party, including interest, penalties,
reasonable attorneys' fees and expenses and all reasonable amounts paid in
investigation, defense or settlement of any of the foregoing (collectively,
"Losses") which any such party may suffer, sustain or become subject to, as a
result of, in connection with, relating or incidental to or by virtue of:
(i) any misrepresentation or breach of a representation or
warranty on the part of the Corporation under Article III;
(ii) without duplication of Section 5.4(a)(i), any
misrepresentation in or omission from any of the representations or
warranties contained in the Transaction Documents, or any of the
Exhibits and Schedules attached thereto, or any of the certificates or
other documents furnished to a Purchaser by the Corporation and
contemplated by the Transaction Documents;
(iii) any nonfulfillment or breach of any covenant or
agreement on the part of the Corporation under the Transaction
Documents; or
(iv) any claim (whenever made) resulting from or caused by any
transaction, status, event, condition, occurrence or situation relating
to, arising out of or in connection with (A) the status of, or conduct
of the business and affairs of, the Corporation and its Subsidiaries,
(B) the execution, delivery and performance of this Agreement and the
other Transaction Documents and the related documents and agreements
contemplated hereby and thereby or (C) any actions taken by or omitted
to be taken by any of the Indemnified Parties in connection with this
Agreement and the other Transaction Documents or the related documents
and agreements contemplated hereby and thereby.
12
(ff) Notwithstanding the foregoing, upon judicial determination, which
is final and no longer appealable, that the act or omission giving rise to the
indemnification pursuant to clause (iv) of Section 5.4(a) resulted primarily out
of or was based primarily upon the Indemnified Party's gross negligence, fraud
or willful misconduct (unless such action was based upon the Indemnified Party's
reliance in good faith upon any of the representations, warranties, covenants or
promises made by the Corporation herein) by the Indemnified Party, the
Corporation shall not be responsible for any Losses sought to be indemnified in
connection therewith, and the Corporation shall be entitled to recover from the
Indemnified Party all amounts previously paid in full or partial satisfaction of
such indemnity, together with all costs and expenses of the Corporation
reasonably incurred in effecting such recovery, if any.
(gg) All indemnification rights hereunder shall survive the execution
and delivery of the Transaction Documents and the consummation of the
transactions contemplated herein and therein indefinitely, regardless of any
investigation, inquiry or examination made for or on behalf of, or any knowledge
of such Purchaser and/or any of the other Indemnified Parties or the acceptance
by such Purchaser of any certificate or opinion.
(hh) If for any reason the indemnity provided for in this Section 5.4
is unavailable to any Indemnified Party or is insufficient to hold each such
Indemnified Party harmless from all such Losses arising with respect to the
transactions contemplated by the Documents, then the Corporation and the
Indemnified Party shall each contribute to the amount paid or payable by such
Loss in such proportion as is appropriate to reflect not only the relative
benefits received by the Corporation on the one hand and such Indemnified Party
on the other but also the relative fault of the Corporation and the Indemnified
Party as well as any relevant equitable considerations. In addition, the
Corporation agrees to reimburse any Indemnified Party upon demand for all
reasonable expenses (including legal counsel fees) incurred by such Indemnified
Party or any such other person in connection with investigating, preparing or
defending any such action or claim. The indemnity, contribution and expense
reimbursement obligations that the Corporation has under this Section 5.4 shall
be in addition to any liability that the Corporation may otherwise have. The
Corporation further agrees that the indemnification and reimbursement
commitments set forth in this Agreement shall apply whether or not the
Indemnified Party is a formal party to any such lawsuits, claims or other
proceedings.
(ii) Any indemnification of the Purchaser or any other Indemnified
Party by the Corporation pursuant to this Section 5.4 shall be effected by wire
transfer of immediately available funds from the Corporation to an account
designated by the Purchaser or such other Indemnified Party within 15 days after
the determination thereof.
(jj) By executing this Agreement, the Corporation (a) agrees that no
Indemnified Party shall have any liability to the Corporation or its
Subsidiaries pursuant to this Agreement, the Transaction Documents or the
transactions contemplated hereby or thereby (the "Covered Conduct") except to
the extent that a court of competent jurisdiction shall have determined by final
judgment, no longer subject to appeal, that the losses resulting from such
Covered Conduct primarily resulted from such Indemnified Party's willful
misconduct, fraud or gross negligence, (b) agrees that it will not make under
any circumstances, nor will it allow its Subsidiaries to make under any
circumstances, any claim against any Indemnified Party for any special, indirect
or consequential damages in respect of any breach or wrongful conduct (whether
the claim
13
therefore is based on contract, tort or duty imposed by law) in connection with,
arising out of or in any way related to, the transactions contemplated by and
the relationship established by this Agreement, the Transaction Documents, the
Related Documents or the transactions contemplated hereby or thereby, or any
act, omission or event occurring in connection therewith, and (c) waives,
releases and agrees not to ▇▇▇ upon, and it agrees to cause its Subsidiaries not
to ▇▇▇ upon, any such claim for any such damages, whether or not accrued and
whether or not known or suspected to exist in any such party's favor.
(kk) This Section 5.4 shall not apply to any Purchaser who breaches its
respective obligations under Section 2.2.
ARTICLE VI
SECURITIES LAW COMPLIANCE; LEGENDS
1. RESTRICTION ON TRANSFER.
Subject to having received the prior consent of the Board of Directors
of the Corporation and such transferee agreeing to be bound by a confidentiality
agreement reasonably acceptable to the Corporation, no Purchaser shall Transfer
the Securities except in compliance with the conditions specified in this
Article VI.
2. RESTRICTIVE LEGENDS.
(ll) Each certificate for the Securities shall (unless otherwise
provided by the provisions of Section 6.4 but subject to Section 6.2(c)) be
stamped or otherwise imprinted with a legend in substantially the following
terms:
"THE REGISTERED HOLDER HEREOF HAS REPRESENTED TO THE ISSUER OF THE
SHARES REPRESENTED HEREBY THAT IT HAS ACQUIRED SUCH SECURITIES FOR
INVESTMENT PURPOSES AND NOT FOR DISTRIBUTION. ACCORDINGLY, SUCH
SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, OR ANY STATE SECURITIES OR BLUE SKY LAWS, AND MAY
NOT BE SOLD, TRANSFERRED, PLEDGED OR HYPOTHECATED UNLESS
SUBSEQUENTLY REGISTERED THEREUNDER OR AN EXEMPTION FROM REGISTRATION
THEREUNDER IS AVAILABLE.
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO THE
TERMS OF THE SECURITIES PURCHASE AGREEMENT DATED NOVEMBER 14, 2001,
AS AMENDED, MODIFIED OR RESTATED FROM TIME TO TIME, AMONG THE ISSUER
(THE "CORPORATION") AND THE OTHER PARTIES THERETO. THE TERMS OF SUCH
AGREEMENT INCLUDE, AMONG OTHER OBLIGATIONS, EQUITY COMMITMENT
14
OBLIGATIONS. FAILURE TO SATISFY SUCH OBLIGATIONS COULD SUBJECT THE
HOLDER OF SUCH SECURITIES TO CERTAIN NEGATIVE EVENTS MORE FULLY
DESCRIBED IN SUCH AGREEMENT. COPIES OF SUCH AGREEMENT WILL BE FURNISHED
TO THE HOLDER HEREOF WITHOUT CHARGE UPON WRITTEN REQUEST OF THE
CORPORATION."
(mm) In addition to the above, any Conversion Shares issued by the
Corporation shall be subject to the terms of the Stockholders Agreement,
including, without limitation, the legending requirements set forth in Section
7.5 thereof.
(nn) Notwithstanding anything to the contrary set forth in Section 6.3,
the second legend set forth in Section 6.2(a) shall be printed on all Securities
until such time as the obligations of the Purchasers in Sections 2.2 are no
longer in effect.
3. NOTICE OF TRANSFER.
The holder of any Securities, by its acceptance or purchase thereof,
agrees, prior to any Transfer of any such Securities (except pursuant to an
effective registration statement), to give written notice to the Corporation of
such holder's intention to effect such transfer and agrees to comply in all
other respects with the provisions of this Article VI. Each such notice shall
describe the manner and circumstances of the proposed Transfer and, unless
waived by the Corporation, shall be accompanied by the written opinion,
addressed to the Corporation, of counsel for the holder of such Securities
(which counsel shall be reasonably satisfactory to the Corporation), stating
that in the opinion of such counsel (which opinion shall be reasonably
satisfactory to the Corporation) such proposed Transfer does not involve a
transaction requiring registration or qualification of such Securities under the
Securities Act or the securities laws of any state of the United States. Subject
to complying with the other applicable provisions hereof, such holder of
Securities shall be entitled to consummate such Transfer in accordance with the
terms of the notice delivered by it to the Corporation if the Corporation does
not object (on the basis that such transfer violates the provisions of this
Article VI) to such transfer within five days after the delivery of such notice.
Each certificate or other instrument evidencing the securities issued upon the
transfer of any Securities (and each certificate or other instrument evidencing
any untransferred balance of such securities) shall bear the legend set forth in
Section 6.2 unless (i) in such opinion of such counsel registration of future
transfer is not required by the applicable provisions of the Securities Act or
the securities laws of any state of the United States or (ii) the Corporation
shall have waived the requirement of such legend.
4. REMOVAL OF LEGENDS, ETC.
Notwithstanding the foregoing provisions of this Article VI, the
restrictions imposed by Sections 6.1, 6.2(a), and 6.3 upon the transferability
of any Securities shall cease and terminate when (i) any such Securities are
sold or otherwise disposed of in accordance with the intended method of
disposition by the seller or sellers thereof set forth in a registration
statement or are sold or otherwise disposed of in a transaction contemplated by
Section 6.3 which does not require that the securities transferred bear the
legend set forth in Section 6.2(a), or (ii) the holder of such Securities has
met the requirement of transfer of such Securities pursuant to
15
subparagraph (k) of Rule 144 of the Securities Act. Whenever the restrictions
imposed by Sections 6.1, 6.2(a) and 6.3 shall terminate, as herein provided, the
holder of any Securities shall be entitled to receive from the Corporation,
without expense, a new certificate not bearing the restrictive legend set forth
in Section 6.2(a) and not containing any other reference to the restrictions
imposed by Sections 6.1, 6.2(a) and 6.3.
ARTICLE VII
MISCELLANEOUS
1. NO THIRD PARTY BENEFICIARIES.
Except as expressly provided herein, this Agreement shall not confer
any rights or remedies upon any Person other than the parties hereto and their
respective successors and permitted assigns, personal representatives, heirs and
estates, as the case may be.
2. ENTIRE AGREEMENT.
This Agreement, the Transaction Documents and the Related Documents
constitute the entire agreement among the parties hereto and supersede any prior
understandings, agreements or representations by or among the parties hereto,
written or oral, with respect to the Securities issued hereunder.
3. SUCCESSORS AND ASSIGNS.
This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and permitted assigns. No party
hereto may assign either this Agreement or any of its rights, interests, or
obligations hereunder without the prior written approval of the other party
hereto; provided, however, that each Purchaser may assign any of its rights
under any of the Transaction Documents and Related Documents to (i) any
Affiliate of the Purchaser, (ii) any Person who shall acquire substantially all
of the Assets of the Purchaser or a majority in voting power of the capital
stock of the Purchaser (whether pursuant to a merger, consolidation, stock sale
or otherwise), (iii) any lender of the Purchaser (or any agent therefor) for
security purposes and the assignment thereof by any such lender or agent to any
purchaser in connection with the exercise by any such lender or agent of all of
its rights and remedies as a secured creditor with respect thereto and (iv) any
Person to whom the Purchaser shall transfer any Securities in accordance with
the terms of the Transaction Documents and Related Documents; provided that no
such assignment shall relieve such Purchaser of its obligations hereunder and
any transferee shall agree in writing to be bound by this Agreement as a
Purchaser.
4. COUNTERPARTS.
This Agreement may be executed in one or more counterparts, each of
which shall be deemed an original but all of which together shall constitute one
and the same instrument. Facsimile execution and delivery of this Agreement is
legal, valid and binding for all purposes. Without limiting the foregoing, the
parties acknowledge and agree that Other Purchasers will
16
execute and deliver a counterpart to this Agreement between the date hereof and
the expiration of the offer period as set forth in the Preemptive Notice.
5. NOTICES.
(oo) All notices, requests, demands, claims, and other
communications hereunder shall be in writing and shall be deemed to have been
duly given if delivered personally, telecopied, sent by nationally recognized
overnight courier or mailed by registered or certified mail (return receipt
requested), postage prepaid, to the parties at the following addresses (or at
such other address for a party as shall be specified by like notice):
(i) If to the Corporation, to:
LPA Holding Corp.
c/o La Petite Academy, Inc.
14 Corporate ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Chief Executive Officer
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇'▇▇▇▇▇▇▇▇ LLP
▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
(ii) If to LPA Investment, to:
LPA Investment LLC
c/o ▇.▇. ▇▇▇▇▇▇ Partners, LLC
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: Official Notices Clerk
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇'▇▇▇▇▇▇▇▇ LLP
▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
(iii) If to any Other Purchaser, to the address set forth on the
signature page to this Agreement.
(pp) All such notices and other communications shall be deemed to have
been given and received (i) in the case of personal delivery, on the date of
such delivery, (ii) in the case of delivery by facsimile, on the date of such
delivery, (iii) in the case of delivery by nationally recognized overnight
courier with guaranteed next day delivery, on the first business day following
dispatch and (iv) in the case of mailing, on the fifth business day following
such mailing.
6. GOVERNING LAW.
THIS AGREEMENT WILL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
DOMESTIC LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO ANY CHOICE OF
LAW OR CONFLICTING PROVISION OR RULE (WHETHER OF THE STATE OF NEW YORK, OR ANY
OTHER JURISDICTION) THAT WOULD CAUSE THE LAWS OF ANY JURISDICTION OTHER THAN THE
STATE OF NEW YORK TO BE APPLIED. 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.
7. AMENDMENTS AND WAIVERS.
No amendment to or waiver of any provision of this Agreement shall be
valid unless the same shall be in writing and signed by both the Corporation and
the Purchasers representing a majority of the outstanding Series B Preferred
Stock (on an as-converted basis) (the "Majority Holders"). No waiver by any
party hereto of any default, misrepresentation, or breach of warranty or
covenant hereunder, whether intentional or not, shall be deemed to extend to any
prior or subsequent default, misrepresentation, or breach of warranty or
covenant hereunder or affect in any way any rights arising by virtue of any
prior or subsequent such occurrence.
8. CONFIDENTIALITY; PUBLICITY.
The Corporation shall not issue any press release or other public
announcement with respect to the Transaction Documents or the transactions
contemplated hereby without the prior written consent of the Majority Holders.
No Purchaser shall issue any press release or other public announcement with
respect to the Transaction Documents or the transactions contemplated hereby
without the prior written consent of the Corporation. Each party hereto agrees
to keep confidential the transactions contemplated hereby, the terms and
conditions of the
18
Transaction Documents, the Related Documents and all information related
thereto or provided hereunder, except to the extent (i) necessary to consummate
the transactions contemplated hereby or (ii) as may be required by Law.
9. CERTAIN DEFINITIONS.
"Additional Closing" shall have the meaning set forth in
Section 2.2(a).
"Additional Shares" means shares of Series B Preferred Stock
to be purchased at any Additional Closing.
"Additional Share Number" shall have the meaning set forth in
Section 2.2(d)(i).
"Affiliate" means, with respect to any Person, any of (a) a
director, officer or stockholder holding 5% or more of the capital stock (on a
fully diluted basis) of such Person, (b) a spouse, parent, sibling or descendant
of such Person (or a spouse, parent, sibling or descendant of any director or
officer of such Person) and (c) any other Person that, directly or indirectly
through one or more intermediaries, controls, or is controlled by, or is under
common control with, another Person. The term "control" includes, without
limitation, the possession, directly or indirectly, of the power to direct the
management and policies of a Person, whether through the ownership of voting
securities, by contract or otherwise.
"Agreement" shall have the meaning set forth in the caption of
this Agreement.
"Agreement and Plan of Merger" means the Agreement and Plan of
Merger dated as of March 17, 1998 by and between the Purchaser and Vestar/LPA
Investment Corp., a Delaware corporation, as it may be amended from time to
time.
"Assets" means, with respect to any Person, all of the assets,
rights, interests and other properties, real, personal and mixed, tangible and
intangible, owned by such Person.
"Certificate of Amendment" shall have the meaning set forth in
Section 1.1.
"Certificate of Designations" means the Certificate of
Designations, Preferences and Rights of Series B Convertible Redeemable
Participating Preferred Stock of the Corporation.
"Class A Common Stock" shall have the meaning set forth in the
preamble to this Agreement.
"Class B Common Stock" shall have the meaning set forth in
Section 3.4(a).
"Closing" shall have the meaning set forth in Section 2.2.
"Closing Date" shall have the meaning set forth in Section
2.2.
"Common Stock" shall have the meaning set forth in Section
3.4(a).
19
"Contract" means any agreement, contract, license, commitment,
lease, indenture or evidence of indebtedness to which the Corporation or any of
its Subsidiaries is bound or by which the Assets of the Corporation or any of
its Subsidiaries are bound.
"Conversion Shares" means the Reserved Shares issued upon the
conversion of the Series B Preferred Stock and the exercise of the New Warrants,
collectively.
"Covered Conduct" shall have the meaning set forth in Section
5.4(f).
"Credit Agreement" means the Credit Agreement dated as of May
11, 1998, as amended, modified or restated from time to time, among the
Corporation, La Petite Academy, Inc., NationsBank, N.A., The Chase Manhattan
Bank and the Lenders named therein.
"Credit Waivers" shall have the meaning set forth in Section
3.3.
"December ▇▇▇▇ ▇▇▇▇▇▇▇" means the warrant for 22,051 shares of
Class A Common Stock issued to LPA Investment on December 15, 1999.
"Default Notice" shall have the meaning set forth in Section
2.2(f).
"Defaulting Purchaser" shall have the meaning set forth in
Section 2.2(f).
"First Closing" shall have the meaning set forth in Section
1.4(a).
"Fundamental Documents" means the documents by which any
Person (other than an individual) establishes its legal existence or which
govern its internal affairs. For example, the "Fundamental Documents" of a
corporation would be its charter, including any certificates of designations
filed with the applicable Secretary of State, and by-laws.
"GAAP" means U.S. generally accepted accounting principles.
"Governmental Entity" means any court, administrative agency
or commission or other governmental authority or instrumentality, domestic or
foreign, Federal, state or local.
"Indemnified Parties" shall have the meaning set forth in
Section 5.4(a).
"Initial Closing" shall have the meaning set forth in Section
1.4(b).
"Initial Share Number" shall have the meaning set forth in
Section 1.4(b).
"Law" means any constitution, law, statute, treaty, rule,
directive, requirement or regulation or Orders of any Governmental Entity.
"Lien" means any security interest, pledge, bailment (in the
nature of a pledge or for purposes of security), mortgage, deed of trust, the
grant of a power to confess judgment, conditional sale or title retention
agreement (including any lease in the nature thereof), charge, encumbrance,
easement, reservation, restriction, cloud, right of first refusal or first
offer, option, or other similar arrangement or interest in real or personal
property.
20
"Losses" shall have the meaning set forth in Section 5.4(a).
"Majority Holders" shall have the meaning set forth in Section
7.7.
"Material Adverse Effect" means, with respect to any Person, a
material adverse effect on the business, operations, Assets, condition
(financial or otherwise), operating results, liabilities or prospects of such
Person and its Subsidiaries, if any, taken as a whole.
"May ▇▇▇▇ ▇▇▇▇▇▇▇" means the warrant for 42,180 shares of
Class A Common Stock issued to the LPA Investment on May 11, 1998.
"New Series B Preferred Stock Number" means 6,900,000.
"New Warrant Number" means 562,500.
"New Warrants" shall have the meaning set forth in the
preamble to this Agreement.
"Orders" means judgments, writs, decrees, injunctions, orders,
compliance agreements or settlement agreements of or with any Governmental
Entity or arbitrator.
"Other Purchaser Additional Share Number" shall have the
meaning set forth in Section 2.2.
"Per Share Purchase Price" means an amount equal to $2.174.
"Person" shall be construed broadly and shall include an
individual, a partnership, a corporation, a limited liability corporation, an
association, a joint stock corporation, a trust, a joint venture, an
unincorporated organization, or a Governmental Entity (or any department,
agency, or political subdivision thereof).
"Preemptive Notice" means the notice dated the date
immediately preceding the date hereof from the Corporation to the Stockholders
of the Corporation.
"Preferred Stock" shall have the meaning set forth in Section
3.4(a)(i).
"Proceeding" means any action, suit, proceeding, complaint,
charge, hearing, inquiry or investigation before or by a Governmental Entity or
an arbitrator.
"Proportional Percentage" means the quotient obtained by
dividing (i) the number of shares of Series B Preferred Stock which such Other
Purchaser commits to purchase pursuant to the terms and conditions of the
Preemptive Notice executed by such Other Purchaser (which shall not be greater
than such Other Purchaser's Common Stock Percentage (as defined in the
Stockholders Agreement) as of the date hereof) by (ii) the New Series B
Preferred Stock Number.
21
"Registration Rights Agreement" means the Registration Rights
Agreement dated as of the May 11, 1998, as amended, among the Corporation, LPA
Investment and the other Shareholders of the Corporation signatory thereto.
"Related Documents" means the Stockholders' Agreement and the
Registration Rights Agreement.
"Reserved Shares" shall have the meaning set forth in Section
1.3.
"SBA Sideletter" means the letter from the Corporation to LPA
Investment regarding the Corporations compliance with regulations promulgated
under the Small Business Investment Act of 1958.
"Second Closing" shall have the meaning set forth in Section
1.4(b).
"Securities" means (i) the Series B Preferred Stock, (ii) the
Conversion Shares, and (iii) the New Warrants, collectively.
"Securities Act" means the Securities Act of 1933, as amended.
"Series B Preferred Stock" shall have the meaning set forth in
the preamble to this Agreement.
"Stockholders' Agreement" means the Stockholders' Agreement
dated as of May 11, 1998, as amended, among the Corporation, LPA Investment and
the other parties thereto.
"Subsidiary" means any corporation with respect to which a
specified Person (or a Subsidiary thereof) has the power to vote or direct the
voting of sufficient securities to elect a majority of the directors.
"Transaction Documents" means (i) this Agreement, (ii) the
Certificate of Designations, (iii) the New Warrants and (iv) the SBA Sideletter.
"Transfer" shall be construed broadly and shall include any
transfer (whether voluntary, involuntary or by operation of law) of securities
or any interest therein, including without limitation, by way of issuance, sale,
participation, pledge, gift, bequeath, intestate transfer, distribution,
liquidation, merger or consolidation.
"Warrants" means the May 1998 Warrant, the December 1999
Warrant and the New Warrants collectively.
10. INCORPORATION OF SCHEDULES AND EXHIBITS.
The Schedules and Exhibits identified in this Agreement are
incorporated herein by reference and made a part hereof.
22
11. CONSTRUCTION.
Where specific language is used to clarify by example a general
statement contained herein, such specific language shall not be deemed to
modify, limit or restrict in any manner the construction of the general
statement to which it relates. The language used in this Agreement shall be
deemed to be the language chosen by the parties hereto to express their mutual
intent, and no rule of strict construction shall be applied against any party.
12. INTERPRETATION.
Accounting terms used but not otherwise defined herein shall have the
meanings given to them under GAAP. As used in this Agreement (including all
Schedules, Exhibits, Annexes and amendments hereto), the masculine, feminine and
neuter gender and the singular or plural number shall be deemed to include the
others whenever the context so requires. References to Articles and Sections
refer to articles and sections of this Agreement. Similarly, references to
Schedules, Exhibits and Annexes refer to schedules, exhibits and annexes,
respectively, attached to this Agreement. Unless the content requires otherwise,
words such as "hereby," "herein," "hereinafter," "hereof," "hereto," "hereunder"
and words of like import refer to this Agreement. The article and section
headings contained in this Agreement are inserted for convenience only and shall
not affect in any way the meaning or interpretation of this Agreement.
13. INDEPENDENCE OF COVENANTS AND REPRESENTATIONS AND WARRANTIES.
All covenants hereunder shall be given independent effect so that if a
certain action or condition constitutes a default under a certain covenant, the
fact that such action or condition is permitted by another covenant shall not
affect the occurrence of such default, unless expressly permitted under an
exception to such initial covenant. In addition, all representations and
warranties hereunder shall be given independent effect so that if a particular
representation or warranty proves to be incorrect or is breached, the fact that
another representation or warranty concerning the same or similar subject matter
is correct or is not breached will not affect the incorrectness of or a breach
of a representation and warranty hereunder.
14. REMEDIES.
The parties hereto shall each have and retain all other rights and
remedies existing in their favor at Law or equity, including, without
limitation, any actions for specific performance and/or injunctive or other
equitable relief (including, without limitation, the remedy of rescission) to
enforce or prevent any violations of the provisions of this Agreement. Without
limiting the generality of the foregoing, the Corporation hereby agrees that in
the event the Corporation fails to convey any number of Securities to any
Purchaser in accordance with the provisions of this Agreement, such Purchaser's
remedy at law may be inadequate. In such event, such Purchaser shall have the
right, in addition to all other rights and remedies it may have, to specific
performance of the obligations of the Corporation to convey such number of
Securities.
15. 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
23
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.
16. WAIVER OF JURY TRIAL.
EACH OF THE PARTIES HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY
JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO
THIS AGREEMENT OR ANY OTHER DOCUMENT.
* * * * *
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IN WITNESS WHEREOF, the parties have executed this Securities
Purchase Agreement as of the date first above written.
LPA HOLDING CORP.
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
-----------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Secretary and Chief Financial Officer
LPA INVESTMENT LLC
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
-----------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Managing Director
25
SIGNATURE PAGE TO SECURITIES PURCHASE AGREEMENT
(FOR OTHER PURCHASERS)
SIGNATURE OF PURCHASER: _____________________________
NAME OF PURCHASER: ___________________________________
TITLE (IF APPLICABLE): ______________
ADDRESS: __________________ _____________________ ___________
(NO. & STREET) (CITY, STATE) (ZIP CODE)
TELEPHONE NO.: (___) _____ - _________
FACSIMILE NO.: (___) _____ - _________