Document:

Form 10-Q

 

Exhibit 10.1

ERIE INSURANCE COMPANY and

ERIE INSURANCE COMPANY OF NEW YORK

Erie, Pennsylvania

AGGREGATE EXCESS OF LOSS REINSURANCE

ADDENDUM NO. 2

Amendment to the REINSURANCE CONTRACT made the first day of January, 1998,
between ERIE INSURANCE EXCHANGE, by and through its Attorney-in-Fact, ERIE
INDEMNITY COMPANY, of Erie, Pennsylvania, (hereafter called the “REINSURER”),
and ERIE INSURANCE COMPANY and its wholly owned subsidiary ERIE INSURANCE
COMPANY OF NEW YORK, both of Erie, Pennsylvania (herein referred to collectively
(or individually as the context requires) as the “COMPANY”).

It is understood and agreed that, effective January 1, 2003, this Contract is
amended by the deletion of Article 12 and by substitution of the following
revised Article 12; and the addition of Articles 23 and 24 as follows:

ARTICLE 12 — Premium

The premium for this reinsurance shall be 1.29% of the subject Net Premiums
earned by the COMPANY during any Annual Period this Reinsurance Contract remains
in force, and shall be subject to a minimum premium of $2,043,000 for each
Annual Period.

The COMPANY shall pay to the REINSURER a deposit premium of $2,300,000 for each
Annual Period which shall be payable in equal installments of $1,150,000 each on
the first days of January and July during the period this Reinsurance Contract
remains in force. Final adjustment of the premium for each Annual Period
hereunder shall be made as soon as may be reasonably practicable after
expiration of that Annual Period.

ARTICLE 23 — Offset

The Company and the Reinsurer, each at its option, may offset any balance or
balances, whether on account of premiums, claims and losses, loss expenses or
salvages due from one party to the other under this Contract or under any other
reinsurance contract heretofore or hereafter entered into between the Company
and the Reinsurer, whether acting as assuming reinsurer or as ceding company;
provided, however, that in the event of the insolvency of a party hereto,
offsets shall only be allowed in accordance with applicable statutes and
regulations.

42

 

ARTICLE 24 — Terrorism Exclusion

Notwithstanding any provision to the contrary within this reinsurance agreement
or any endorsement thereto, it is agreed that this reinsurance agreement
excludes loss, damage, cost, or expense directly or indirectly caused by,
contributed to by, resulting from, or arising out of or in connection with any
act of terrorism, as defined herein, regardless of any other cause or event
contributing concurrently or in any other sequence to the loss.

An act of terrorism includes any act, or preparation in respect of action, or
threat of action designed to influence the government de jure or de facto of any
nation or any political division thereof, or in pursuit of political, religious,
ideological, or similar purposes to intimidate the public or a section of the
public of any nation by any person or group(s) of persons whether acting alone
or on behalf of or in connection with any organization(s) or government(s) de
jure or de facto, and which:

	 	(i)	 	involves violence against one or more persons; or
	 
	 	(ii)	 	involves damage to property; or
	 
	 	(iii)	 	endangers life other than that of the person committing the
action; or
	 
	 	(iv)	 	creates a risk to health or safety of the public or a section
of the public; or
	 
	 	(v)	 	is designed to interfere with or to disrupt an electronic
system.

This reinsurance agreement also excludes loss, damage, cost, or expense directly
or indirectly caused by, contributed to by, resulting from, or arising out of or
in connection with any action in controlling, preventing, suppressing,
retaliating against, or responding to any act of terrorism.

Notwithstanding the above and subject otherwise to the terms, conditions, and
limitations of this reinsurance agreement, in respect of any act of terrorism
not certified under the Terrorism Risk Insurance Act of 2002 (the Act) and any
loss from an act of terrorism outside the definition on “insured loss” under the
Act, this reinsurance agreement will pay actual loss or damage (but not related
cost or expense) caused by the act of terrorism provided such act is not
directly or indirectly caused by, contributed to by, resulting from, or arising
out of or in connection with biological, chemical, radioactive, or nuclear
pollution or contamination or explosion.

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All other terms and conditions remain as heretofore.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
by their duly authorized representatives.

In Erie, Pennsylvania, this 2nd day of April, 2003.

	 	 	 
	 	 	
ERIE INSURANCE COMPANY
	 
	ATTEST:	 	 
	 
	/s/ Jan Van Gorder, Secretary

	 	
/s/ Eugene C. Connell

	 
	 
	 	 	
ERIE INSURANCE COMPANY

OF NEW YORK
	 
	ATTEST:	 	 
	 
	/s/ Jan Van Gorder, Secretary

	 	
/s/ Philip A. Garcia

	 
	 
	 	 	
ERIE INSURANCE EXCHANGE, by

ERIE INDEMNITY COMPANY,

Attorney-in-Fact
	 
	ATTEST:	 	 
	 
	/s/ Pamela D. Carullo

	 	
/s/ M. S. Zavasky

44<PAGE>
                                                                    EXHIBIT 10.1

                    FIFTH LIMITED WAIVER TO CREDIT AGREEMENT

          THIS FIFTH LIMITED WAIVER TO CREDIT AGREEMENT (this "Waiver") is
entered into as of April 22, 2003, among LA PETITE ACADEMY, INC., a Delaware
corporation (the "Borrower"), LPA HOLDING CORP., a Delaware corporation
("Holdings"), and the Lenders party hereto. Capitalized terms used herein and
not otherwise defined shall have the meanings ascribed thereto in the Credit
Agreement (as defined below).

                                    RECITALS

          WHEREAS, the Borrower, Holdings and the Lenders entered into that
certain Credit Agreement, dated as of May 11, 1998 (as previously amended and
modified by Amendment No. 1, dated as of December 13, 1999; Amendment No. 2,
dated as of June 29, 2000; Amendment No. 3, dated as of November 14, 2001;
Amendment No. 4, dated as of February 5, 2002; Amendment No. 5, dated as of
February 10, 2003; and as otherwise amended or modified from time to time, the
"Credit Agreement");

          WHEREAS, Defaults exist under the Credit Agreement as a result of (a)
the failure of the Borrower to provide timely and correct financial and other
information to the Lenders pursuant to Sections 5.01(c), 5.01(j), 5.01(k),
5.01(l) and 5.01(m) and (b) the failure of the Borrower to file any reports and
other materials required to be filed by Holdings and the Borrower with the
Securities and Exchange Commission pursuant to the terms of Section 5.10 of the
Credit Agreement (the defaults in (a) and (b) are collectively referred to as,
the "Existing Defaults").

          WHEREAS, the Borrower has requested that the Lenders waive the
Existing Defaults;

          WHEREAS, the Lenders are willing to provide a limited waiver of the
Existing Defaults for the period of time from the date hereof through and
including May 31, 2003, (the "Waiver Period"), based upon and subject to the
terms and conditions specified in this Waiver; and

          NOW, THEREFORE, in consideration of the premises and the mutual
covenants contained herein, and for other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the parties hereto
agree as follows:

                                    SECTION 1

                                     WAIVER

          1.1 The Borrower acknowledges the existence and continuation of the
Existing Defaults. The Lenders hereby waive the Existing Defaults for, and only
for, the Waiver Period. From and after the end of the Waiver Period, the waiver
set forth herein shall be of no further force and effect and the Administrative
Agent and the Lenders shall be entitled to exercise any and all rights and
remedies available under the Loan Documents and applicable law with respect to
the Existing Defaults.

<PAGE>

          1.2 Except for the specific waiver set forth above, nothing contained
herein shall be deemed to constitute a waiver of (i) any rights or remedies the
Administrative Agent or any Lender may have under the Credit Agreement or any
other Loan Document or under applicable law or (ii) the Loan Parties' obligation
to comply fully with any duty, term, condition, obligation or covenant contained
in the Credit Agreement and the other Loan Documents not specifically waived.

          1.3 The specific waiver set forth herein is a one-time waiver and
shall be effective only in this specific instance during the Waiver Period, and
shall not obligate the Lenders to waive any Default or Event of Default
(including, without limitation, any waiver of the Existing Defaults following
the end of the Waiver Period) other than the Existing Defaults, now existing or
hereafter arising.

                                    SECTION 2

                                  MISCELLANEOUS

2.1 Effectiveness. This Waiver shall be effective upon (a) receipt by the
Administrative Agent of counterparts of this Waiver executed by each of the Loan
Parties and the Lenders, and (b) payment to Administrative Agent's counsel for
all legal fees incurred by the Administrative Agent and Highland Capital
Management, L.P. in connection with the Credit Agreement for which Borrower has
received an invoice at least one business day prior to the date of this Waiver.
Notwithstanding anything to the contrary contained herein, this Waiver shall be
void ab initio upon the failure of the Borrower to pay the Expense Reimbursement
(as defined below) in accordance with the terms hereof.

          2.2 Ratification of Credit Agreement and Other Loan Documents. The
Credit Agreement and the other applicable Loan Documents are hereby ratified and
confirmed and are in full force and effect.

          2.3 Authority/Enforceability. Each party hereto represents and
warrants that (a) it has taken all necessary action to authorize the execution,
delivery, and performance of this Waiver; (b) this Waiver has been duly executed
and delivered by such Person and constitutes such Person's legal, valid, and
binding obligations, enforceable in accordance with its terms, except as such
enforceability may be subject to (i) bankruptcy, insolvency, reorganization,
fraudulent conveyance or transfer, moratorium, or similar laws affecting
creditors' rights generally and (ii) general principles of equity (regardless of
whether such enforceability is considered in a proceeding at law or in equity);
and (c) no material consent, approval, authorization, or order of, or filing,
registration, or qualification with, any court or Governmental Authority or
third party is required in connection with the execution, delivery, or
performance by such Person of this Waiver.

          2.4 Representation and Warranties. Borrower and Holdings represent and
warrant to the Lenders that (a) the representations and warranties of Borrower
and Holdings set forth in Article III of the Credit Agreement qualified as to
materiality are true and correct as of the date hereof and those not so
qualified are true and correct in all material respects as of the date hereof,
except, in each case, for those representations and warranties that specifically
relate to an earlier date; (b) except for the Existing Defaults, no event has
occurred and is continuing which

                                       2
<PAGE>

constitutes a Default or an Event of Default; and (c) the Security Documents
create a valid security interest in, and Lien upon, the Collateral.

          2.5 Expenses. In addition to the legal fees described in Section 2.1,
the Borrower shall reimburse (the "Expense Reimbursement") the Administrative
Agent for all legal fees incurred by the Administrative Agent and Highland
Capital Management, L.P. in connection with the Credit Agreement (including this
Waiver). The Expense Reimbursement shall be paid by the Borrower to the
Administrative Agent (or directly to the Administrative Agent's counsel) as soon
as practicable but in no event later than one business day following receipt by
the Borrower of an invoice for such legal fees.

          2.6 Counterparts/Telecopy. This Waiver may be executed in any number
of counterparts, each of which when so executed and delivered shall be an
original, but all of which shall constitute one and the same instrument.
Delivery of executed counterparts by telecopy shall be effective as an original
and shall constitute a representation that an original will be delivered if
requested.

          2.7 GOVERNING LAW. THIS WAIVER AND THE RIGHTS AND OBLIGATIONS OF THE
PARTIES HEREUNDER SHALL BE GOVERNED BY AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.

                     [REMAINDER OF PAGE INTENTIONALLY BLANK.
                            SIGNATURE PAGES FOLLOW.]

                                       3
<PAGE>

                                 Signature Page
                    Fifth Limited Waiver to Credit Agreement
                             La Petite Academy, Inc.

          IN WITNESS WHEREOF, the parties hereto have caused this Fifth Limited
Waiver to Credit Agreement to be duly executed and delivered by their proper and
duly authorized officers or attorneys-in-fact as of the day and year first above
written.

BORROWER:                                      LA PETITE ACADEMY INC.

                                               By: /s/ Michael F. Czlonka
                                                  ------------------------------
                                                  Name:  Michael F. Czlonka
                                                  Title: Chief Financial Officer

HOLDINGS:                                      LPA HOLDING CORP.

                                               By: /s/ Michael F. Czlonka
                                                  ------------------------------
                                                  Name:  Michael F. Czlonka
                                                  Title: Chief Financial Officer

<PAGE>
                                 Signature Page
                    Fifth Limited Waiver to Credit Agreement
                             La Petite Academy, Inc.

         Each of the undersigned are unconditional guarantors of all obligations
of the Borrower under the Loan Documents and acknowledge and agree that (a) this
Waiver does not modify or waive any of its obligations under the Loan Documents,
including the Guarantee Agreements and (b) all Liens granted by it to support
its obligations remain in full force and effect.

                                               LPA HOLDING CORP.

                                               By: /s/ Michael F. Czlonka
                                                  ------------------------------
                                                  Name:  Michael F. Czlonka
                                                  Title: Chief Financial Officer

                                               LPA SERVICES, INC.

                                               By: /s/ Michael F. Czlonka
                                                  ------------------------------
                                                  Name:  Michael F. Czlonka
                                                  Title: Chief Financial Officer

                                               BRIGHT START, INC.

                                               By: /s/ Michael F. Czlonka
                                                  ------------------------------
                                                  Name:  Michael F. Czlonka
                                                  Title: Chief Financial Officer

<PAGE>
                                 Signature Page
                    Fifth Limited Waiver to Credit Agreement
                             La Petite Academy, Inc.

LENDERS:                                    U.S. BANK NATIONAL ASSOCIATION
                                            (formerly Mercantile Bank),
                                            as Administrative Agent and a Lender

                                            By:  /s/ David L. Orf
                                               ---------------------------------
                                               Name:  David L. Orf
                                               Title: Vice President

<PAGE>
                                 Signature Page
                    Fifth Limited Waiver to Credit Agreement
                             La Petite Academy, Inc.

                                            JPMORGAN CHASE BANK
                                            (formerly The Chase Manhattan Bank)

                                            By: /s/ M. Lister
                                               ---------------------------------
                                               Name:  Michael J. Lister
                                               Title: Vice President,
                                                      JP Morgan Chase Bank

<PAGE>
                                 Signature Page
                    Fifth Limited Waiver to Credit Agreement
                             La Petite Academy, Inc.

                                          ML CBO IV CAYMAN

                                          By: Highland Capital Management, L.P.,
                                              as Collateral Manager

                                          By: /s/ Todd Travers
                                             -----------------------------------
                                             Name:  Todd Travers
                                             Title: Senior Portfolio Manager

<PAGE>
                                 Signature Page
                    Fifth Limited Waiver to Credit Agreement
                             La Petite Academy, Inc.

                                          HIGHLAND LEGACY, LTD

                                          By: Highland Capital Management, L.P.,
                                              as Collateral Manager

                                          By: /s/ Todd Travers
                                             -----------------------------------
                                             Name:  Todd Travers
                                             Title: Senior Portfolio Manager

<PAGE>
                                 Signature Page
                    Fifth Limited Waiver to Credit Agreement
                             La Petite Academy, Inc.

                                          PAMCO CAYMAN LTD

                                          By: Highland Capital Management, L.P.,
                                              as Collateral Manager

                                          By: /s/ Todd Travers
                                             -----------------------------------
                                             Name:  Todd Travers
                                             Title: Senior Portfolio Manager

<PAGE>

                                 Signature Page
                    Fifth Limited Waiver to Credit Agreement
                             La Petite Academy, Inc.

                                          KZH HIGHLAND-2 LLC

                                          By: /s/ Susan Lee
                                             -----------------------------------
                                             Name:  Susan Lee
                                             Title: Authorized Agent

<PAGE>
                                 Signature Page
                    Fifth Limited Waiver to Credit Agreement
                             La Petite Academy, Inc.

                                          SRV - HIGHLAND, INC.

                                          By:
                                             -----------------------------------
                                             Name:  Ann E. Morris
                                             Title: Assistant Vice President

<PAGE>
                                 Signature Page
                    Fifth Limited Waiver to Credit Agreement
                             La Petite Academy, Inc.

                                          BANK OF AMERICA, N.A.
                                          (formerly NationsBank, N.A.)

                                          By: /s/ Therese Fontaine
                                             -----------------------------------
                                             Name:  Therese Fontaine
                                             Title: Managing Director

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