PLEDGE AGREEMENT
PLEDGE AGREEMENT, dated as of ________ __, 1997, made by
__________________ (the "Executive") in favor of KINDERCARE LEARNING CENTERS,
Inc., a Delaware corporation (the "Company").
W I T N E S S E T H:
WHEREAS, pursuant to the Management Stockholder's Agreement by and
between the Company and the Executive (as amended, supplemented or otherwise
modified from time to time, the "Management Stockholder's Agreement"), the
Company has agreed to make a loan (the "Loan") to the Executive for the
acquisition of Purchase Stock (as defined in the Management Stockholder's
Agreement), to be evidenced by a note substantially in the form of Exhibit A
hereto (the "Note");
WHEREAS, the Executive will be the legal and beneficial owner of the
shares of Pledged Stock (as hereinafter defined) issued by the Company; and
WHEREAS, it is a condition precedent to the obligation of the Company
to make the Loan to the Executive that the Executive shall have executed and
delivered this Pledge Agreement to the Company.
NOW, THEREFORE, in consideration of the premises and to induce the
Company to make the Loan, the Executive hereby agrees with the Company, as
follows:
1. Defined Terms. (a) Unless otherwise defined herein, terms defined
in the Management Stockholder's Agreement or the Note, as the case may be, and
used herein shall have the meanings assigned to them in the Management
Stockholder's Agreement and the Note, respectively.
(b) The following terms shall have the following meanings:
"Agreement": this Pledge Agreement, as the same may be amended,
modified or otherwise supplemented from time to time.
"Code": the Uniform Commercial Code from time to time in effect in the
State of Delaware.
"Collateral": the Pledged Stock and all Proceeds.
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"Collateral Account": any account established to hold money Proceeds,
maintained under the sole dominion and control of the Company.
"Default": any event that is or with the passage of time or the giving
of notice or both would be an Event of Default under the Note.
"Lien": with respect to the Collateral, any mortgage, deed of trust,
lien, pledge, hypothecation, encumbrance, charge of security interest in, on or
of such Collateral.
"Obligations": the collective reference to the unpaid principal of and
interest on the Note (including, without limitation, interest accruing at the
then applicable rate provided in the Note after the maturity of the Loan and
interest accruing at the then applicable rate provided in the Note after the
filing of any petition in bankruptcy, or the commencement of any insolvency,
reorganization or like proceeding, relating to the Executive, whether or not a
claim for post-filing or post-petition interest is allowed in such proceeding),
whether direct or indirect, absolute or contingent, due or to become due, or now
existing or hereafter incurred, which may arise under, out of, or in connection
with the Note and this Agreement or any other document made, delivered or given
in connection therewith, in each case whether on account of principal, interest,
costs, expenses or otherwise.
"Person": any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, unincorporated organization, government
or any agency or political subdivision thereof or any other entity.
"Pledged Stock": the shares of capital stock listed on Schedule 1
hereto, together with all stock certificates received upon exercise of any such
options or rights of any nature whatsoever that may be issued or granted by the
Company to the Executive while this Agreement is in effect.
"Proceeds": all "proceeds" as such term is defined in Section 9-306(1)
of the Uniform Commercial Code in effect in the State of Delaware on the date
hereof and, in any event, shall include, without limitation, all dividends or
other income from the Pledged Stock, collections thereon or distributions with
respect thereto.
"Securities Act": the Securities Act of 1933, as amended.
(c) The words "hereof," "herein" and "hereunder" and words of similar
import when used in this Agreement shall refer to this Agreement as a whole and
not to any particular provision of this
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Agreement, and section and paragraph references are to this Agreement unless
otherwise specified.
(d) The meanings given to terms defined herein shall be equally
applicable to both the singular and plural forms of such terms.
2. Pledge; Grant of Security Interest. The Executive hereby delivers
to the Company all the Pledged Stock and hereby grants to the Company a first
security interest in the Collateral, as collateral security for the prompt and
complete payment and performance when due (whether at the stated maturity, by
acceleration or otherwise) of the Obligations.
3. Stock Powers. Concurrently with the delivery to the Company of each
certificate representing one or more shares of Pledged Stock to the Company, the
Executive shall deliver an undated stock power covering such certificate, duly
executed in blank by the Executive with, if the Company so requests, signature
guaranteed.
4. Covenants. The Executive covenants and agrees with the Company
that, from and after the date of this Agreement until this Agreement is
terminated and the security interests created hereby are released:
(a) If the Executive shall (i) as a result of its ownership of the
Pledged Stock, become entitled to receive or shall receive any stock certificate
(including, without limitation, any certificate representing a stock dividend or
a distribution in connection with any reclassification, increase or reduction of
capital or any certificate issued in connection with any reorganization), option
or rights, whether in addition to, in substitution of, as a conversion of, or in
exchange for any shares of the Pledged Stock, or otherwise in respect thereof or
(ii) acquire ownership of shares of Common Stock upon the exercise of stock
options, the Executive shall accept the same as the agent of the Company, hold
the same in trust for the Company, and deliver the same forthwith to the Company
in the exact form received, duly indorsed by the Executive to the Company, if
required, together with an undated stock power covering such certificate duly
executed in blank by the Executive and with, if the Company so requests,
signature guaranteed, to be held by the Company, subject to the terms hereof, as
additional collateral security for the Obligations.
(b) Without the prior written consent of the Company, the Executive
will not (1) sell, assign, transfer, exchange, or otherwise dispose of, or grant
any option with respect to, the Collateral; provided, however, that a transfer
made in compliance with the federal securities laws to a trust or custodianship,
the
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beneficiaries of which may include only the Executive, the Executive's spouse or
the Executive's lineal descendants, will be permitted so long as such transfer
is made expressly subject to this Pledge Agreement and that the transferee
agrees in writing to be bound by the terms and conditions hereof; provided,
further, that this clause 4(b)(1) shall not restrict the sale of the Collateral
if (i) such sale is made pursuant to the terms of the Management Stockholder's
Agreement between the Executive and the Company dated as of __________ __, 199_
and (ii) the proceeds from such sale are used solely to pay accrued interest on
and repay the principal of the Note; provided, further, that such proceeds need
not be used solely to pay accrued interest on and repay the principal of the
Note if such proceeds exceed the sum of any accrued interest on and the
principal of the Note and such accrued interest on and the principal of the Note
are paid in full from the proceeds of such sale, (2) create, incur or permit to
exist any Lien or option in favor of, or any claim of any Person with respect
to, any of the Collateral, or any interest therein, except for the security
interests created by this Agreement or (3) enter into any agreement or
undertaking restricting the right or ability of the Executive or the Company to
sell, assign or transfer any of the Collateral.
(c) The Executive shall maintain the security interest created by this
Agreement as a first, perfected security interest and shall defend such security
interest against claims and demands of all Persons whomsoever. At any time and
from time to time, upon the written request of the Company, and at the sole
expense of the Executive, the Executive will promptly and duly execute and
deliver such further instruments and documents and take such further actions as
the Company may reasonably request for the purposes of obtaining or preserving
the full benefits of this Agreement and of the rights and powers herein granted.
If any amount payable under or in connection with any of the Collateral shall be
or become evidenced by any promissory note, other instrument or chattel paper,
such note, instrument or chattel paper shall be immediately delivered to the
Company, duly endorsed in a manner satisfactory to the Company, to be held as
Collateral pursuant to this Agreement.
(d) The Executive shall pay, and save the Company harmless from, any
and all liabilities with respect to, or resulting from any delay in paying, any
and all stamp, excise, sales or other taxes which may be payable or determined
to be payable with respect to any of the Collateral or in connection with any of
the transactions contemplated by this Agreement.
5. Cash Dividends; Voting Rights. Unless an Event of Default shall
have occurred and be continuing and the Company shall have given notice to the
Executive of the Company's intent to exercise its corresponding rights pursuant
to Section 6 below,
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the Executive shall be permitted to receive all cash dividends paid in respect
of the Pledged Stock and to exercise all voting and corporate rights with
respect to the Pledged Stock.
6. Rights of the Company. If an Event of Default shall occur and be
continuing and the Company shall give notice of its intent to exercise such
rights to the Executive the Company shall have the right to receive any and all
cash dividends paid in respect of the Pledged Stock and make application thereof
to the Obligations in such order as the Company may determine.
7. Remedies. (a) If an Event of Default shall have occurred and be
continuing, at any time at the Company's election, the Company may apply all or
any part of Proceeds held in any Collateral Account in payment of the
Obligations in such order as the Company may elect.
(b) If an Event of Default shall have occurred and be continuing, the
Company may exercise, in addition to all other rights and remedies granted in
this Agreement and in any other instrument or agreement securing, evidencing or
relating to the Obligations, all rights and remedies of a secured party under
the Code. Without limiting the generality of the foregoing, the Company, without
demand of performance or other demand, presentment, protest, advertisement or
notice of any kind (except any notice required by law referred to below) to or
upon the Executive or any other Person (all and each of which demands, defenses,
advertisements and notices are hereby waived), may in such circumstances
forthwith collect, receive, appropriate and realize upon the Collateral, or any
part thereof, and/or may forthwith sell, assign, give option or options to
purchase or otherwise dispose of and deliver the Collateral or any part thereof
(or contract to do any of the foregoing), in one or more parcels at public or
private sale or sales, in the over-the-counter market, at any exchange, broker's
board or office of Company or elsewhere upon such terms and conditions as it may
deem advisable and at such prices as it may deem best, for cash or on credit or
for future delivery without assumption of any credit risk. The Company shall
have the right upon any such public sale or sales, and, to the extent permitted
by law, upon any such private sale or sales, to purchase the whole or any part
of the Collateral so sold, free of any right or equity of redemption in the
Executive, which right or equity is hereby waived or released. The Company shall
apply any Proceeds from time to time held by it and the net proceeds of any such
collection, recovery, receipt, appropriation, realization or sale, after
deducting all reasonable costs and expenses of every kind incurred in respect
thereof or incidental to the care or safekeeping of any of the Collateral or in
any way relating to the Collateral or the rights of the Company hereunder,
including, without limitation, reasonable attorneys' fees and disbursements
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of counsel to the Company, to the payment in whole or in part of the
Obligations, in such order as the Company may elect, and only after such
application and after the payment by the Company of any other amount required by
any provision of law, including, without limitation, Section 9-504(1)(c) of the
Code, need the Company account for the surplus, if any, to the Executive. To the
extent permitted by applicable law, the Executive waives all claims, damages and
demands it may acquire against the Company arising out of the exercise by them
of any rights hereunder. If any notice of a proposed sale or other disposition
of Collateral shall be required by law, such notice shall be deemed reasonable
and proper if given at least 10 days before such sale or other disposition. The
Executive shall remain liable for any deficiency if the proceeds of any sale or
other disposition of Collateral are insufficient to pay the Obligations and the
reasonable fees and disbursements of any attorneys employed by the Company to
collect such deficiency.
8. Execution of Financing Statements. Pursuant to Section 9-402 of the
Code, the Executive authorizes the Company to file financing statements with
respect to the Collateral without the signature of the Executive in such form
and in such filing offices as the Company reasonably determines appropriate to
perfect the security interests of the Company under this Agreement. A carbon,
photographic or other reproduction of this Agreement shall be sufficient as a
financing statement for filing in any jurisdiction.
9. Notices. All notices, requests and demands to or upon the Company
or the Executive to be effective shall be in writing (or by telex, facsimile or
similar electronic transfer confirmed in writing) and shall be deemed to have
been duly given or made (1) when delivered by hand or (2) if given by mail, when
deposited in the mails by certified mail, return receipt requested, or (3) if by
telex, facsimile or similar electronic transfer, when sent and receipt has been
confirmed, addressed to the Company or the Executive at its address or
transmission number for notices provided in subsection 25 of the Management
Stockholder's Agreement. The Company and the Executive may change their
addresses and transmission numbers for notices by notice in the manner provided
in this Section.
10. Severability. Any provision of this Agreement which is prohibited
or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
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11. Amendments in Writing; No Waiver; Cumulative Remedies. (a) None of
the terms or provisions of this Agreement may be waived, amended, supplemented
or otherwise modified except by a written instrument executed by the Executive
and the Company, provided that any provision of this Agreement may be waived by
the Company in a letter or agreement executed by the Company or by telex or
facsimile transmission from the Company.
(b) The Company shall not by any act (except by a written instrument
pursuant to paragraph 11(a) hereof), delay, indulgence, omission or otherwise be
deemed to have waived any right or remedy hereunder or to have acquiesced in any
Default or Event of Default or in any breach of any of the terms and conditions
hereof. No failure to exercise, nor any delay in exercising, on the part of the
Company, any right, power or privilege hereunder shall operate as a waiver
thereof. No single or partial exercise of any right, power or privilege
hereunder shall preclude any other or further exercise thereof or the exercise
of any other right, power or privilege. A waiver by the Company of any right or
remedy hereunder on any one occasion shall not be construed as a bar to any
right or remedy which the Company would otherwise have on any future occasion.
(c) The rights and remedies herein provided are cumulative, may be
exercised singly or concurrently and are not exclusive of any other rights or
remedies provided by law.
12. Section Headings. The section headings used in this Agreement are
for convenience of reference only and are not to affect the construction hereof
or be taken into consideration in the interpretation hereof.
13. Successors and Assigns. This Agreement shall be binding upon the
successors and assigns of the Executive and shall inure to the benefit of the
Company and their successors and assigns.
14. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED
AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF DELAWARE.
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IN WITNESS WHEREOF, the undersigned has caused this Agreement to be
duly executed and delivered as of the date first above written.
[ ]
By ______________________________________
Title
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SCHEDULE 1
TO PLEDGE AGREEMENT
DESCRIPTION OF PLEDGED STOCK
1. Stock certificate No. [ ], representing [ ] shares of common
stock, per value $.01 per share, of KinderCare Learning Centers, Inc.
