STOCKHOLDER'S AGREEMENT
This Stockholder's Agreement (this "Agreement") is entered into as of
February 14, 1997 between KINDERCARE LEARNING CENTERS, INC., a Delaware
corporation (the "Company"), and Xxxxx X. Xxxxxxx (the "Purchaser") (the Company
and the Purchaser being hereinafter collectively referred to as the "Parties").
RECITALS
KCLC Acquisition Corp., a Delaware corporation ("KCLC"), was recently
incorporated and merged with and into the Company (the "Merger") pursuant to an
Agreement and Plan of Merger, dated as of October 3, 1996 and as amended as of
December 27, 1996, between KCLC and the Company (the "Merger Agreement"). In
connection with the Merger, the Company proposes to sell shares of its Common
Stock, par value $.01 per share (the "Common Stock"), to Purchaser.
The Company has agreed to sell, and the Purchaser has agreed to buy,
157,895 shares of Common Stock (the "Purchase Stock") to Purchaser for $19 per
share of Common Stock for an aggregate purchase price of $3 million (such amount
referred to herein as the "Initial Equity"). In addition, the Company will grant
to Purchaser an option or options to purchase 421,053 shares of Common Stock
("Options") at an exercise price of $19 per share of Common Stock pursuant to
the terms of a Stock Purchase and Option Plan (the "Option Plan") and a
Non-Qualified Stock Option Agreement (the "Non-Qualified Stock Option
Agreement").
AGREEMENT
To implement the foregoing and in consideration of the mutual
agreements contained herein, the Parties agree as follows:
1. Purchase of Stock.
(a) On or about February 14, 1997 (the "Purchase Date"), the Company
will deliver to the Purchaser two certificates representing in the aggregate the
shares of Purchase Stock described above. The first certificate shall represent
52,632 shares of Common Stock (or $1 million of the Initial Equity) and shall be
referred to herein as the "Side-by-Side Equity" and the second certificate shall
represent 105,263 shares of Common Stock (or $2 million of the Initial Equity)
and shall, together with all shares of Common Stock issued upon the exercise of
Options, be referred to herein as shall the "Promote Equity."
2
2. Purchaser's Representations, Warranties and Agreements.
(a) The Purchaser hereby represents and warrants that he is acquiring
the Purchase Stock and, at the time of exercise, the Common Stock issuable upon
exercise of the Options (collectively, the "Stock") for investment for his own
account and not with a view to, or for resale in connection with, the
distribution or other disposition thereof. The Purchaser agrees and acknowledges
that he will not, directly or indirectly, offer, transfer, sell, assign, pledge,
hypothecate or otherwise dispose of any shares of the Stock unless (A) such
transfer, sale, assignment, pledge, hypothecation or other disposition complies
with Section 3 of this Agreement and (B) the transfer, sale, assignment, pledge,
hypothecation or other disposition is in compliance with the Securities Act of
1933, as amended, or the rules and regulations in effect thereunder (the "Act").
Notwithstanding the foregoing, the Company acknowledges and agrees that any of
the following transfers are deemed to be in compliance with the Act and this
Agreement and no opinion of counsel is required in connection therewith: (w) a
transfer made pursuant to Section 4, 5 or 6 hereof, (x) a transfer upon the
death of the Purchaser to his executors, administrators, testamentary trustees,
legatees or beneficiaries (the "Purchaser's Estate") or a transfer to the
executors, administrators, testamentary trustees, legatees or beneficiaries of a
person who has become a holder of Stock in accordance with the terms of this
Agreement, provided that it is expressly understood that any such transferee
shall be bound by the provisions of this Agreement, (y) a transfer made after
the Purchase Date in compliance with the federal securities laws to a trust or
custodianship the beneficiaries of which may include only the Purchaser, his
spouse or his lineal descendants (a "Purchaser's Trust") or a transfer made
after the third anniversary of the Purchase Date to such a trust by a person who
has become a holder of Stock in accordance with the terms of this Agreement,
provided that such transfer is made expressly subject to this Agreement and that
the transferee agrees in writing to be bound by the terms and conditions hereof,
and (z) a transfer made after the Purchase Date in compliance with the federal
securities laws to a limited partnership the sole general partner of which shall
be the Purchaser and the only limited partners of which are and will be his
spouse and his lineal descendants (a "Purchaser's L.P."), provided that such
transfer is made expressly subject to this Agreement and that the transferee
agrees in writing to be bound by the terms and conditions hereof.
(b) In addition to any legends required by the Act or applicable state
securities laws, the certificates representing the Stock shall bear the
following legend:
"THE SHARES REPRESENTED BY THIS CERTIFICATE MAY NOT BE
TRANSFERRED, SOLD, ASSIGNED, PLEDGED, HYPOTHECATED OR
OTHERWISE DISPOSED OF UNLESS SUCH
3
TRANSFER, SALE, ASSIGNMENT, PLEDGE, HYPOTHECATION OR OTHER
DISPOSITION COMPLIES WITH THE PROVISIONS OF THE
STOCKHOLDER'S AGREEMENT DATED AS OF FEBRUARY 14, 1997,
BETWEEN KINDERCARE LEARNING CENTERS, INC. (THE "COMPANY")
AND THE PURCHASER NAMED ON THE FACE HEREOF (A COPY OF WHICH
IS ON FILE WITH THE SECRETARY OF THE COMPANY)."
(c) The Purchaser acknowledges that he has been advised that (i) Rule
144 promulgated under the Act is not currently available with respect to the
Stock, and the Company has made no covenant to make such Rule available (except
as provided in Section 9(b) hereof), (ii) when and if shares of the Stock may be
disposed of without registration in reliance on Rule 144, such disposition can
be made only in limited amounts in accordance with the terms and conditions of
such Rule, (iii) if the Rule 144 exemption is not available, public sale without
registration will require compliance with Regulation A or some other exemption
under the Act, (iv) a restrictive legend in the form heretofore set forth shall
be placed on the certificates representing the Stock and (v) a notation shall be
made in the appropriate records of the Company indicating that the Stock is
subject to restriction on transfer and, an appropriate stop transfer
restrictions will be issued to the Company's transfer agent with respect to the
Stock.
(d) If any shares of the Stock are to be disposed of in accordance
with Rule 144 under the Act or otherwise, the Purchaser shall promptly notify
the Company of such intended disposition and shall deliver to the Company at or
prior to the time of such disposition such documentation as the Company may
reasonably request in connection with such sale and, in the case of a
disposition pursuant to Rule 144, shall deliver to the Company an executed copy
of any notice on Form 144 required to be filed with the Securities and Exchange
Commission.
(e) The Purchaser agrees that, if any shares of the capital stock of
the Company are offered to the public pursuant to an effective registration
statement under the Act (other than registration of securities issued under an
employee plan), the Purchaser will not effect any public sale or distribution of
any shares of the Stock not covered by such registration statement within 7 days
prior to, or within 180 days after, the effective date of such registration
statement (or such shorter period as may be agreed among the Company's officers,
directors, principal stockholders and the underwriters), unless otherwise agreed
to in writing by the Company.
(f) The Purchaser represents and warrants that he has been given the
opportunity to obtain any additional information or documents and to ask
questions and receive answers about such documents, the Company and the business
and prospects of the Company which he deems necessary to evaluate the merits and
risks related to his investment in the Stock and to verify the
4
information received as indicated in this Section 2(f), and he has relied solely
on such information.
(g) Purchaser understands that it is not anticipated that there will
be any public market for the Stock, the Stock must be held indefinitely and the
Purchaser must continue to bear the economic risk of the investment in the
Stock. The Purchaser further represents and warrants that (i) his financial
condition is such that he can afford to bear the economic risk of holding the
Stock for an indefinite period of time and has adequate means for providing for
his current needs and personal contingencies, (ii) he can afford to suffer a
complete loss of his investment in the Stock, (iii) all information which he has
provided to the Company concerning himself and his financial position is correct
and complete as of the date of this Agreement, (iv) he has received and read the
Prospectus relating to the Stock and understands and has taken cognizance of all
risk factors related to the purchase of the Stock and (v) his knowledge and
experience in financial and business matters are such that he is capable of
evaluating the merits and risks of his purchase of the Stock as contemplated by
this Agreement.
3. Restriction on Transfer.
Except for transfers permitted by clauses (w), (x), (y) and (z) of
Section 2(a) or a sale of shares of Stock pursuant to an effective registration
statement under the Act filed by the Company or pursuant to the Sale
Participation Agreement (as defined below), the Purchaser agrees that he will
not transfer, sell, assign, pledge, hypothecate or otherwise dispose of any
shares of the Stock at any time until the earlier of (i) the fifth anniversary
of the Purchase Date and (ii)(a) in the case of the Side-by-Side Equity, the
earlier of (x) the date on which the Purchaser is no longer employed by the
Company and (y) the date that Kohlberg Kravis Xxxxxxx & Co., L.P. ("KKR") or its
affiliates (as defined in Section 12b-2 of the Securities Exchange Act of 1934,
as amended) ("KKR Affiliates", and together with KKR, the "KKR Entities") sell
any shares of the Common Stock; provided, however, that with respect to this
clause (y) the transfer restrictions shall lapse only with respect to the number
of Side-by-Side Equity shares equal to (A) the product of (I) 52,632 and (II) a
fraction the numerator of which is the number of shares of the Common Stock
being sold by the KKR Entities and the denominator of which is 7,828,947 less
(B) the number of Side-by-Side Equity shares, if any, for which transfer
restrictions previously lapsed and (b) in the case of the Promote Equity, the
date that the KKR Entities beneficially own less than 50% of the outstanding
shares of Common Stock and the KKR Entities sell, or have sold, any of their
shares of Common Stock; provided, however, that the transfer restrictions shall
lapse only with respect to the number of Promote Equity shares equal to (A) the
product of (I) the number of Promote Equity shares originally held by Purchaser
on the Purchase Date plus the number of shares of Promote Equity subject to
exercisable Options held
5
by Purchaser and (II) a fraction the numerator of which is the number of shares
of the Common Stock being sold or having been previously sold by the KKR
Entities and the denominator of which is 7,828,947 less (B) the number of
Promote Equity shares, if any, for which transfer restrictions previously
lapsed. No transfer of any such shares in violation hereof shall be made or
recorded on the books of the Company and any such transfer shall be void and of
no effect. In determining the number of shares of Stock which may be transferred
pursuant to this Section 3, appropriate adjustments shall be made for any stock
dividends, splits, combinations or recapitalizations.
4. Right of First Refusal.
If at any time prior to a Public Offering (as defined below), the
Purchaser is permitted to transfer shares of Stock pursuant to Sections 2 and 3
("Unrestricted Shares") and the Purchaser (i) receives a bona fide offer (the
"Offer") to purchase any or all of such Unrestricted Shares from a third party
(the "Offeror") which the Purchaser wishes to accept or (ii) if the Purchaser
wishes to sell any or all of his Unrestricted Shares in the open market at the
Market Price Per Share on the date of sale ("Proposed Market Sale"), the
Purchaser shall cause the Offer or Proposed Market Sale to be reduced to writing
and shall notify the Company in writing of his wish to accept the Offer or
consummate the Proposed Market Sale, as the case may be. The Purchaser's notice
shall constitute an irrevocable offer to sell such Unrestricted Shares to the
Company (in the manner set forth below) at a purchase price (i) in the case of
an Offer, equal to the price contained in, and on the same terms and conditions
of, the Offer, and shall be accompanied by a true copy of the Offer (which shall
identify the Offeror) and (ii) in the case of a Proposed Market Sale, equal to
the Market Price Per Share on the date of purchase. At any time within 30 days
after the date of the receipt by the Company of the Purchaser's notice, the
Company shall have the right and option to purchase, or to arrange for a third
party to purchase, all of the Unrestricted Shares covered by the Offer or the
Proposed Market Sale either (i) at the same price and on the same terms and
conditions as the Offer or the Proposed Market Sale or (ii) if the Offer
includes any consideration other than cash, then at the sole option of the
Company, at the equivalent all cash price, determined in good faith by the
Company's Board of Directors, by delivering a certified bank check or checks in
the appropriate amount to the Purchaser at the principal office of the Company
against delivery of certificates or other instruments representing the
Unrestricted Shares so purchased, appropriately endorsed by the Purchaser. If at
the end of such 30-day period, the Company has not tendered the purchase price
for such Unrestricted Shares in the manner set forth above, the Purchaser may
during the succeeding 60-day period sell not less than all of the Unrestricted
Shares covered by the Purchaser's notice in the case of an Offer to the Offeror
at a price and on terms no less favorable to the Purchaser than those contained
in the Offer and
6
in the case of a Proposed Market Sale at the Market Price Per Share at the time
of sale. Promptly after such sale, the Purchaser shall notify the Company of the
consummation thereof and shall furnish such evidence of the completion and time
of completion of such sale and of the terms thereof as may reasonably be
requested by the Company. If, at the end of 60 days following the expiration of
the 30-day period for the Company to purchase the Stock, the Purchaser has not
completed the sale of such shares of the Stock as aforesaid, all the
restrictions on sale contained in this Section shall again be in effect with
respect to such Unrestricted Shares.
5. Purchaser's Resale of Stock and Options to the Company Upon The
Purchaser's Death or Disability.
(a) Except as otherwise provided herein, if at any time prior to
February 14, 2002 or, after February 14, 2002, until the consummation of a
Public Offering, (i) the Purchaser is still in the employ of the Company and
(ii) the Purchaser either dies or becomes permanently disabled, then the
Purchaser, the Purchaser's Estate, a Purchaser's Trust or a Purchaser's L.P., as
the case may be, shall have the right, for six months following the date of
death or permanent disability, to (A) sell to the Company, and the Company shall
be required to purchase, on one occasion, all or any portion of the shares of
Stock then held by the Purchaser, the Purchaser's Trust, the Purchaser's L.P.
and/or the Purchaser's Estate, as the case may be, at the Section 5 Repurchase
Price, as determined in accordance with Section 7, and (B) require the Company
to pay, on the same occasion, to the Purchaser the Purchaser's Trust, the
Purchaser's L.P. and/or the Purchaser's Estate, as the case may be, an
additional amount equal to the Option Excess Price determined on the basis of a
Section 5 Repurchase Price as provided in Section 8 with respect to the
termination of outstanding Options held by the Purchaser. The Purchaser, the
Purchaser's Estate, the Purchaser's Trust and/or the Purchaser's L.P., as the
case may be, shall send written notice to the Company of its intention to sell
shares of Stock and to terminate such Options in exchange for the payment
referred to in the preceding sentence (the "Redemption Notice"). The completion
of the purchase shall take place at the principal office of the Company on the
tenth business day after the giving of the Redemption Notice. The Section 5
Repurchase Price and any payment with respect to the Options as described above
shall be paid by delivery to the Purchaser, the Purchaser's Estate, the
Purchaser's Trust and/or the Purchaser's L.P., as the case may be, of a
certified bank check or checks in the appropriate amount payable to the order of
the Purchaser, the Purchaser's Estate, the Purchaser's Trust and/or the
Purchaser's L.P., as the case may be, against delivery of certificates or other
instruments representing the Stock so purchased and appropriate documents
cancelling the Options so terminated, each appropriately endorsed or executed by
the Purchaser, the Purchaser's Estate, the Purchaser's Trust and/or the
Purchaser's L.P., or his or its duly authorized representative. For purposes of
this Agreement,
7
Purchaser shall be deemed to have a "permanent disability" when the majority of
the Board of Directors of the Company shall, in good faith, determines that
Purchaser is unable to engage in the activities required by Purchaser's position
by reason of any medically-determined physical or mental impairment which can be
expected to result in death or which has lasted or can reasonably be expected to
last for a continuous period of not less than 12 months.
(b) Notwithstanding anything in Section 5(a) to the contrary and
subject to Section 11, the Company shall not be obligated to repurchase any of
the Stock or the Options from the Purchaser, the Purchaser's Estate, the
Purchaser's Trust and/or the Purchaser's L.P., as the case may be, if such
repurchase would result in (x) a default or an event of default on the part of
the Company or any subsidiary of the Company under any loan, guarantee or other
agreement under which the Company or any subsidiary of the Company has borrowed
money or (y) a violation under any applicable provision of the Delaware General
Corporation Law (or if the Company reincorporates, the corporation law of that
state) (such occurrence being a "Blocking Event"), but only if, and so long as,
the Company makes its reasonable best efforts to cure such Blocking Event or, in
the case of an agreement, modify the agreement to permit such repurchase. The
Company's obligation to repurchase any of the Stock or Options as set forth in
Section 5(a) shall be suspended until the first business day which is 5 calendar
days after all of the foregoing Blocking Events have ceased to exist (the
"Repurchase Eligibility Date"); provided, however, that (i) the number of shares
of Stock subject to repurchase under Section 5(a) at the time of delivery of
Redemption Notice shall be that number of shares of Stock, and (ii) the number
of Exercisable Option Shares (as defined in Section 8) for purposes of
calculating the Option Excess Price payable after the termination of all
Blocking Events shall be the number of Exercisable Option Shares, held by the
Purchaser, the Purchaser's Estate, a Purchaser's Trust or a Purchaser's L.P., as
the case may be, at the time of delivery of a Redemption Notice in accordance
with Section 5(a) hereof; provided, further, that the Repurchase Calculation
Date shall be determined in accordance with Section 7 as of the Repurchase
Eligibility Date (unless the Section 5 Repurchase Price would be greater if the
Repurchase Calculation Date had been determined as if no Blocking Event had
occurred in which case, solely for purposes of this proviso, the Repurchase
Calculation Date shall be determined as if no Blocking Event had occurred). All
Options exercisable as of the date of a Redemption Notice shall continue to be
exercisable until the repurchase pursuant to such Redemption Notice.
(c) Notwithstanding any other provision of this Section 5 to the
contrary and subject to Section 11, the Purchaser, the Purchaser's Estate, the
Purchaser's Trust or the Purchaser's L.P., as the case may be, shall have the
right to withdraw any Redemption Notice which has been pending for 60 or
8
more days and which has remained unsatisfied because of the
provisions of Section 5(b).
6. The Company's Option to Repurchase Stock and Options of
Purchaser.
(a) If, prior to February 14, 2002, (i) the Purchaser's active
employment with the Company is either (A) terminated by the Purchaser without
Good Reason or (B) terminated by the Company for Cause, (ii) a Purchaser's Trust
or a Purchaser's L.P. fails to comply with the requirements set forth in Section
2(a)(y) or (z), as applicable, or (iii) the Purchaser shall effect a transfer of
any of the Stock other than as permitted in this Agreement, the Company shall
have the right to purchase all, but not less than all, of the shares of the
Stock then held by the Purchaser, the Purchaser's Estate, a Purchaser's Trust or
a Purchaser's L.P. at the applicable Section 6(a) Repurchase Price determined in
accordance with Section 7 hereof. In the event of the Purchaser's resignation
without Good Reason, all unexercisable Options shall terminate without any
payment. In the event of Purchaser's termination by the Company for Cause, all
Options shall terminate without any payment.
(b) If, prior to February 14, 2002, the Purchaser's active employment
with the Company is terminated by the Purchaser with Good Reason or terminated
by the Company without Cause, the Company shall have the right to purchase all,
but not less than all, of the shares of the Stock then held by the Purchaser,
the Purchaser's Estate, a Purchaser's Trust or a Purchaser's L.P. at the
applicable Section 6(b) Repurchase Price determined in accordance with Section 7
hereof.
(c) If, prior to February 14, 2002, the Purchaser either dies or
becomes permanently disabled and on the date of such death or permanent
disability the Purchaser was still in the employ of the Company or, if the
Purchaser had retired from the Company's employment and the date of such
retirement was after February 14, 2000, the Company shall have the right to
purchase all, but not less than all, of the shares of the Stock then held by the
Purchaser, the Purchaser's Estate, a Purchaser's Trust or a Purchaser's L.P.,
provided, however, that the Repurchase Price shall be the Section 5 Repurchase
Price and provided, further that if the purchase right provided the Company
under this Section 6(c) arises after February 14, 1999 by reason of the
Purchaser's death, such purchase right may not be exercised by the Company until
February 14, 2002.
(d) The circumstances under which the Company may elect to require the
repurchase of the shares of Stock pursuant to Sections 6(a), (b) and (c) are
hereinafter collectively referred to "Call Events." The Company shall have a
period of 75 days from the date of a Call Event (or in the case of a Call Event
governed by the second proviso of Section 6(c), 75 days after February 14, 2002)
in which to give notice in writing to
9
the Purchaser of the exercise of such election ("Call Notice"). In the event
that the Company exercises its right to repurchase shares of the Stock pursuant
to this Section 6, the Company shall also pay the Purchaser an amount equal to
the Option Excess Price determined on the basis of the Section 6(a) Repurchase
Price, the Section 6(b) Repurchase Price or the Section 5 Repurchase Price, as
the case may be, as applicable to Promote Equity, as provided in Section 8, with
respect to the termination of outstanding Options held by the Purchaser.
(e) The completion of the purchases pursuant to the foregoing shall
take place at the principal office of the Company on the tenth business day
after the giving of notice of the exercise of the option to purchase. The
Section 5 Repurchase Price, the Section 6(a) Repurchase Price and the Section
6(b) Repurchase Price, as the case may be, and any payment with respect to the
Options as described above shall be paid by delivery to the applicable seller of
a certified bank check or checks in the appropriate amount payable to the order
of such seller against delivery of certificates or other instruments
representing the Stock so purchased and appropriate documents cancelling the
Options so terminated, appropriately endorsed or executed by the Purchaser, the
Purchaser's Estate, the Purchaser's Trust, the Purchaser's L.P. or his or their
authorized representatives.
(f) Notwithstanding any other provision of this Section 6 to the
contrary and subject to Section 11, if there exists and is continuing any
Blocking Event, the Company shall delay the repurchase of any of the Stock or
the Options (pursuant to a Call Notice timely given in accordance with Section
6(a), 6(b) or 6(c) hereof) from the Purchaser, the Purchaser's Estate, the
Purchaser's Trust or the Purchaser's L.P., as the case may be, until the
Repurchase Eligibility Date; provided, however, that (i) the number of shares of
Stock subject to repurchase under this Section 6 at the time of the delivery of
the Call Notice shall be that number of shares of Stock subject to repurchase
after the termination of all Blocking Events and (ii) the number of Exercisable
Option Shares for purposes of calculating the Option Excess Price payable after
the termination of all Blocking Events shall be the number of Exercisable Option
Shares held by the Purchaser, the Purchaser's Estate, a Purchaser's Trust and/or
a Purchaser's L.P., as the case may be, at the time of delivery of a Call Notice
in accordance with Section 6(a), 6(b) or 6(c) hereof; provided, further, that
the Repurchase Calculation Date shall be determined in accordance with Section 7
based on the Repurchase Eligibility Date (unless the applicable Repurchase Price
would be greater if the Repurchase Calculation Date had been determined as if no
Blocking Event had occurred, in which case, solely for purposes of this proviso,
the Repurchase Calculation Date shall be determined as if no Blocking Event had
occurred). All Options exercisable as of the date of a Call Notice shall
continue to be exercisable until the repurchase pursuant to such Call Notice.
10
(g) For purposes of this Agreement the following definitions shall
apply: "Cause" shall mean (i) the Purchaser's willful and continued failure to
perform Purchaser's duties with respect to the Company or its subsidiaries which
continues beyond ten days after a written demand for substantial performance is
delivered to Purchaser by the Company and which could reasonably result in
demonstrable and substantial injury to the Company or (ii) misconduct by
Purchaser (x) involving dishonesty or breach of trust in connection with
Purchaser's employment, (y) which would be a reasonable basis for an indictment
of Purchaser for a felony or for a misdemeanor involving moral turpitude, or (z)
which results in demonstrable and substantial injury to the Company; and "Good
Reason" shall mean, without the Purchaser's consent, (i) a reduction in
Purchaser's base salary, other than a reduction which is part of a general
salary reduction program affecting senior executives of the Company, (ii) a
substantial reduction in Purchaser's duties and responsibilities or change in
his title as the Chairman and Chief Executive Officer of the Company reporting
directly to the Board of Directors of the parent Company (not a subsidiary),
(iii) any relocation of the headquarters of the Company or (iv) the elimination
or reduction of Purchaser's eligibility to participate in the Company's benefit
programs that is inconsistent with the eligibility of similarly situated
employees of the Company to participate therein.
7. Determination of Repurchase Price.
(a) The Section 5 Repurchase Price, the Section 6(a) Repurchase Price
and the Section 6(b) Repurchase Price are hereinafter collectively referred to
as the "Repurchase Price." The Repurchase Price shall be calculated on the basis
of the unaudited financial statements of the Company or the Market Price Per
Share (as defined in Section 7(g)) as of the last day of the month preceding the
later of (i) the month in which the event giving rise to the repurchase occurs
and (ii) the month in which the Repurchase Eligibility Date occurs (hereinafter
called the "Repurchase Calculation Date"). The event giving rise to the
repurchase shall be the death, permanent disability, retirement or termination
of employment, as the case may be, of the Purchaser, not the giving of any
notice required pursuant to Section 5 or 6.
(b) The Section 5 Repurchase Price shall be a per share Repurchase
Price equal to (i) prior to a Public Offering, the greater of (x) $19 and (y)
$19 plus the increase, if any, in Book Value Per Share (as defined in Section
7(e)) from the Purchase Date through the Repurchase Calculation Date or (ii)
after a Public Offering, the Market Price Per Share.
(c) The Section 6(a) Repurchase Price shall be a per share Repurchase
Price equal (i) in the case of Side-by-Side Equity, to (x) prior to a Public
Offering, $19 minus any decrease
11
in Book Value Per Share or plus any increase in Book Value Per Share from the
Purchase Date through the Repurchase Calculation Date or (y) after a Public
Offering, the Market Price Per Share and (ii) in the case of Promote Equity, (x)
prior to a Public Offering, (A) $19 less the decrease in Book Value Per Share
from the Purchase Date through the Repurchase Calculation Date, if such Book
Value Per Share has decreased, (B) $19 plus the product of (I) the Unrestricted
Percentage (as defined below) and (II) the increase in the Book Value Per Share
from the Purchase Date through the Repurchase Calculation Date, if such Book
Value Per Share has increased or (C) $19, if such Book Value Per Share has
neither decreased nor increased and (y) after a Public Offering, (A) the Market
Price Per Share, if the Market Price Per Share is $19 or less or (B) $19 plus
the product of (I) the Unrestricted Percentage and (II) the Market Price Per
Share less $19, if the Market Price Per Share is greater than $19.
(d) The Section 6(b) Repurchase Price shall be a per share Repurchase
Price equal (i) in the case of the Side-by-Side Equity, to (x) after a Public
Offering, the Market Price Per Share or (y) prior to a Public Offering, an
amount determined as follows: (x) if such event occurs prior to February 14,
1999, to the greater of (A) $19 and (B) $19 plus the increase, if any, in Book
Value Per Share from the Purchase Date through the Repurchase Calculation Date
and (y) if such event occurs on or after February 14, 1999, $19 minus any
decrease in Book Value Per Share or plus any increase in Book Value Per Share
from the Purchase Date through the Repurchase Calculation Date and (ii) in the
case of Promote Equity, to (x) prior to a public offering, $19 minus any
decrease in Book Value Per Share or plus any increase in Book Value Per Share
from the Purchase Date through the Repurchase Calculation Date or (y) after a
Public Offering, the Market Price Per Share).
(e) For purposes of this Agreement the "Unrestricted Percentage" shall
be determined as follows:
Repurchase Calculation Date Percentage
--------------------------- ----------
Purchase Date through and including the 0%
first anniversary of the Purchase Date
After the first anniversary of the Purchase 20%
Date through and including the second
anniversary of the Purchase Date
After the second anniversary of the 40%
Purchase Date through and including the
third anniversary of the Purchase Date
After the third anniversary of the Purchase 60%
Date through and including the fourth
anniversary of the Purchase Date
12
After the fourth anniversary of the 80%
Purchase Date through and including the
fifth anniversary of the Purchase Date
After the fifth anniversary of the Purchase 100%
Date
(f) For purposes of this Agreement, "Book Value Per Share" shall mean
book value per share based on generally accepted accounting principles
consistently applied excluding accounting charges, costs and expenses incurred
within 12 months after the Closing related to (i) the separation or severance of
headquarters' personnel, (ii) recruiting and hiring, (iii) the Merger and (iv)
the restructuring of the Company, including all costs related to the moving of
the headquarters of the Company to Portland, Oregon and the closing of the
Company's former headquarters in Montgomery, Alabama, and also excluding, in the
Board of Directors discretion, any extraordinary or unusual charges or credits
such as one time write-offs of goodwill or similar events.
(g) As used herein the term "Public Offering" shall mean the sale of
shares of Common Stock to the public subsequent to the date hereof pursuant to a
registration statement under the Act which has been declared effective by the
Securities and Exchange Commission (other than a registration statement on Form
S-8) which results in 15% or more of the outstanding shares of the Common Stock
being issued or sold to the public; provided, however, that if shares held both
immediately following the Closing Date and such registered public offering by
stockholders unaffiliated with the KKR Entities and management constitute less
than 5% of the outstanding shares of the Common Stock immediately after such
registered public offering, the "15%" above shall be changed to "20%".
(h) As used herein the term "Market Price Per Share" shall mean either
(i) the price per share equal to the average of the last sale price of the
Common Stock on the Repurchase Calculation Date on each national securities
exchange on which the Common Stock may at the time be listed or (ii) if there
shall have been no sales on any of such exchanges on the Repurchase Calculation
Date, the average of the closing bid and asked prices on each such exchange at
the end of the Repurchase Calculation Date or (iii) if there is no such bid and
asked price on the Repurchase Calculation Date, the average of the closing bid
and asked prices on each such exchange on the next preceding date when such bid
and asked price occurred or (iv) if the Common Stock shall not be so listed, the
closing sales price as reported by the NASDAQ National Market System ("NASDAQ")
at the end of the Repurchase Calculation Date or (v) if there shall have been no
sales reported by NASDAQ on the Repurchase Calculation Date, the closing bid and
asked prices reported by NASDAQ at the end of the Repurchase Calculation Date or
(vi) if there is no such bid and asked price on the Repurchase Calculation Date,
the average
13
closing sales price as reported by the National Association of Securities
Dealers, Inc. in the "pink sheets" for the 15-day period immediately preceding
the Repurchase Calculation Date, or (vii) if no such sales occurred within such
15-day period, the Book Value Per Share.
(i) In determining the Repurchase Price, appropriate adjustments shall
be made for any future issuances of rights to acquire and securities convertible
into Common Stock and any stock dividends, splits, combinations,
recapitalizations or any other adjustment in the number of shares of outstanding
shares of Common Stock.
8. Stock Issued to Purchaser Upon Exercise of Stock Options;
Termination of Options.
(a) The Company may from time to time grant to the Purchaser, in
addition to the Options, options under the Option Plan to purchase shares of
Common Stock at $19 per share or at a different option exercise price. The terms
"Stock" and "Promote Equity" as used in this Agreement shall include all shares
of Common Stock of the Company purchased by the Purchaser pursuant to this
Agreement and issued to the Purchaser by the Company upon exercise of the
Options and of any other stock options held by the Purchaser.
(b) All outstanding Options granted to the Purchaser under the Option
Plan or otherwise, whether or not then exercisable, will be automatically
terminated upon the payment by the Company to the Purchaser, pursuant to the
provisions of Sections 5 or 6 of this Agreement, of an amount equal to the
Option Excess Price. If the Option Excess Price is zero or a negative number,
all outstanding stock options granted to the Purchaser under the Option Plan or
otherwise, whether or not then exercisable, shall be automatically terminated
upon the repurchase of Stock as provided in Sections 5 or 6. The Option Excess
Price is the excess, if any, of the Section 5 Repurchase Price, the Section 6(a)
Repurchase Price or the Section 6(b) Repurchase Price, depending on which
Repurchase Price is being used to repurchase the remainder of the Stock, over
the Option Price (as defined in the Option Plan) multiplied by the number of
Exercisable Option Shares. For purposes hereof, "Exercisable Option Shares"
shall mean the shares of Common Stock which, at the time of determination of the
Option Excess Price, could be purchased by the Purchaser upon exercise of his
outstanding options.
9. The Company's Representations and Warranties.
(a) The Company represents and warrants to the Purchaser that (i) this
Agreement has been duly authorized, executed and delivered by the Company and
(ii) the Stock, when issued and delivered in accordance with the terms hereof,
will be duly and validly issued, fully paid and nonassessable.
14
(b) If the Company shall have engaged in a Public Offering, (i) the
Company shall use reasonable efforts to register the Options and the Stock to be
acquired on exercise thereof on a Form S-8 Registration Statement or any
successor to Form S-8 to the extent that such registration is then available
with respect to such Options and Stock and (ii) the Company will file the
reports required to be filed by it under the Act and the Exchange Act and the
rules and regulations adopted by the Securities and Exchange Commission ("SEC")
thereunder, to the extent required from time to time to enable the Purchaser to
sell shares of Stock without registration under the Act within the limitations
of the exemptions provided by (A) Rule 144 under the Act, as such Rule may be
amended from time to time, or (B) any similar rule or regulation hereafter
adopted by the SEC. Notwithstanding anything contained in this Section 9(b), the
Company may deregister under Section 12 of the Exchange Act if it is then
permitted to do so pursuant to the Exchange Act and the rules and regulations
thereunder. Nothing in this Section 9(b) shall be deemed to limit in any manner
the restrictions on sales of Stock contained in this Agreement.
10. "Piggyback" Registration Rights.
(a) Until the later of the consummation of a Public Offering and the
fifth anniversary of the Purchase Date, the Purchaser (i) hereby agrees to be
bound by all of the terms, conditions and obligations of the Registration Rights
Agreement dated as of February 13, 1997, among the Company (as successor by
Merger to KCLC Acquisition Corp.) and certain of the KKR Entities (the
"Registration Rights Agreement") and (ii) subject to the limitations set forth
in this Section 10, shall have the right under the Registration Rights Agreement
to participate in offerings that would result in a Public Offering ratably with
the KKR Entities (except that the Purchaser will not have demand registration
rights, but shall have the right to participate ratably with the KKR Entities
parties thereto in any demand registration by the KKR Entities); provided,
however, that the Purchaser shall not be bound by any amendments to the
Registration Rights Agreement unless Purchaser consents thereto. Notwithstanding
anything to the contrary contained in the Registration Rights Agreement, the
Purchaser's rights and obligations under the Registration Rights Agreement shall
be subject to the limitations and additional obligations set forth in this
Section 10. All shares of Stock purchased by the Purchaser pursuant to this
Agreement and held by the Purchaser, the Purchaser's Trust, the Purchaser's L.P.
or the Purchaser's Estate, including shares purchased upon the exercise of
Options, shall be deemed to be Registrable Securities as defined in the
Registration Rights Agreement.
(b) The Company will promptly notify the Purchaser in writing (a
"Notice") of any proposed registration (a "Proposed Registration"). If within 15
days of the receipt by the Purchaser of such Notice, the Company receives from
the
15
Purchaser, the Purchaser's Trust, the Purchaser's L.P. or the Purchaser's Estate
a written request (a "Request") to register shares of Stock held by the
Purchaser, the Purchaser's Estate, the Purchaser's Trust or the Purchaser's L.P.
(which Request will be irrevocable unless otherwise mutually agreed to in
writing by the Purchaser and the Company), shares of Stock will be so registered
as provided in this Section 10; provided, however, that for each such
registration statement only one Request, which shall be executed by the
Purchaser, the Purchaser's Trust, the Purchaser's L.P. or the Purchaser's
Estate, as the case may be, may be submitted for all Registrable Securities held
by the Purchaser, the Purchaser's Estate, the Purchaser's Trust and the
Purchaser's L.P.
(c) The maximum number of shares of Stock which will be registered
pursuant to a Request will be the lowest of (i) the number of shares of Stock
then held by the Purchaser (which for purposes of this subparagraph (c) shall
include shares held by the Purchaser's Estate, a Purchaser's Trust or a
Purchaser's L.P.), including all shares of Stock which the Purchaser is then
entitled to acquire under an unexercised Option to the extent then exercisable
or (ii) the maximum number of shares of Stock which the Company can register in
the Proposed Registration without adverse effect on the offering in the view of
the managing underwriters (reduced pro rata with all Other Purchasers) as more
fully described in subsection (d) of this Section 10 or (iii) the maximum number
of shares which the Purchaser (pro rata based upon the aggregate number of
shares of Common Stock the Purchaser and all Other Purchasers have requested be
registered) and all Other Purchasers are permitted to register under the
Registration Rights Agreement.
(d) If a Proposed Registration involves an underwritten offering and
the managing underwriter advises the Company in writing that, in its opinion,
the number of shares of Stock requested to be included in the Proposed
Registration exceeds the number which can be sold in such offering, so as to be
likely to have an adverse effect on the price, timing or distribution of the
shares of Stock offered in such Public Offering as contemplated by the Company,
then the Company will include in the Proposed Registration (i) first, 100% of
the shares of Stock the Company proposes to sell and (ii) second, to the extent
of the number of shares of Stock requested to be included in such registration
which, in the opinion of such managing underwriter, can be sold without having
the adverse effect referred to above, the number of shares of Stock which the
"Holders" (as defined in the Registration Rights Agreement), including, without
limitation, the Purchaser and Other Purchasers have requested to be included in
the Proposed Registration, such amount to be allocated pro rata among all
requesting Holders on the basis of the relative number of shares of Stock then
held by each such Holder (provided that any shares thereby allocated to any such
Holder that exceed such Holder's request will be
16
reallocated among the remaining requesting Holders in like manner).
(e) Upon delivering a Request the Purchaser, the Purchaser's Estate,
Purchaser's Trust or Purchaser's L.P. (or his or their authorized
representative) will, if requested by the Company, execute and deliver a custody
agreement and power of attorney in form and substance satisfactory to the
Company with respect to the shares of Stock to be registered pursuant to this
Section 10 (a "Custody Agreement and Power of Attorney"). The Custody Agreement
and Power of Attorney will provide, among other things, that the Purchaser the
Purchaser's Estate, Purchaser's Trust or Purchaser's L.P. (or his or their
authorized representative) will deliver to and deposit in custody with the
custodian and attorney-in-fact named therein a certificate or certificates
representing such shares of Stock (duly endorsed in blank by the registered
owner or owners thereof or accompanied by duly executed stock powers in blank)
and irrevocably appoint said custodian and attorney-in-fact as the Purchaser's,
Purchaser's Estate's, Purchaser's Trust's or Purchaser's L.P.'s agent and
attorney-in-fact with full power and authority to act under the Custody
Agreement and Power of Attorney on its behalf with respect to the matters
specified therein.
(f) The Purchaser agrees that he will execute such other agreements as
the Company may reasonably request to further evidence the provision of this
Section 10.
11. Pro Rata Repurchases.
Notwithstanding anything to the contrary contained in Sections 5 or 6,
if at any time consummation of all purchases and payments to be made by the
Company with respect to the this Agreement and/or one of several agreements
("Other Purchasers' Agreements") which in the future will be entered into
between the Company and other individuals who are or will be key employees of
the Company ("Other Purchasers") would result in a Blocking Event, then the
Company shall (i) first make purchases from, and payments to, the Purchaser with
respect to his Side-by-Side Equity for the maximum number of shares of
Side-by-Side Equity without resulting in a Blocking Event and (ii) after all the
Purchasers' Side-by-Side Equity has been purchased and paid for, make purchases
from, and payments to, the Purchaser and Other Purchasers pro rata (on the basis
of the proportion of the number of shares of Stock and the number of Options the
Purchaser (with respect to the Purchasers' Promote Equity) and all Other
Purchasers have elected or are required to sell to the Company) for the maximum
number of shares of Stock and shall pay the Option Excess Price for the maximum
number of Options permitted without resulting in a Blocking Event. The maximum
number of shares of Stock and the maximum number of Options permitted to be
purchased or paid for by the Company at any time without resulting in a Blocking
Event shall be referred to herein as the "Maximum Repurchase Amount". The
provisions of Section 5(b) and
17
6(f) shall apply in their entirety to payments and repurchases with respect to
Options and shares of Stock which may not be made due to the limits imposed by
the Maximum Repurchase Amount under this Section 11. Until all of such Stock and
Options are purchased and paid for by the Company, the Purchaser and the Other
Purchasers whose Stock and Options are not purchased in accordance with this
Section 11 shall have priority, on the basis set forth in this Section 11, over
other purchases of Common Stock and Options by the Company pursuant to this
Agreement and Other Purchasers' Agreements, except that any purchase of the
Purchaser's Side-by-Side Equity by the Company pursuant to this Agreement shall
have a priority over all other purchases of Stock or Options to be made by the
Company under this Agreement or Other Purchasers' Agreements.
12. Rights to Negotiate Repurchase Price.
Nothing in this Agreement shall be deemed to restrict or prohibit the
Company from purchasing shares of Stock or Options from the Purchaser, at any
time, upon such terms and conditions, and for such price, as may be mutually
agreed upon between the Parties, whether or not at the time of such purchase
circumstances exist which specifically grant the Company the right to purchase,
or the Purchaser the right to sell, shares of Stock or the Company has the right
to pay, or the Purchaser has the right to receive, the Option Excess Price under
the terms of this Agreement.
13. Covenant Regarding 83(b) Election.
Except as the Company may otherwise agree in writing, the Purchaser
hereby covenants and agrees that he will make an election provided pursuant to
Treasury Regulation 1.83-2 with respect to the Stock, including without
limitation, the Stock to be acquired pursuant to Section 1 and the Stock to be
acquired upon each exercise of the Purchaser's Options; and Purchaser further
covenants and agrees that he will furnish the Company with copies of the forms
of election the Purchaser files within 30 days after the date hereof, and within
30 days after each exercise of Purchaser's Non-Qualified Options and with
evidence that each such election has been filed in a timely manner.
14. Notice of Change of Beneficiary.
Immediately prior to any transfer of Stock to a Purchaser's Trust or a
Purchaser's L.P., the Purchaser shall provide the Company with a copy of the
instruments creating the Purchaser's Trust or Purchaser's L.P., as the case may
be, and with the identity of the beneficiaries of the Purchaser's Trust or the
general and limited partners of the Purchaser's L.P., as the case may be. The
Purchaser shall notify the Company immediately prior to any change in the
identity of any
18
beneficiary of the Purchaser's Trust or any and limited partner of the
Purchaser's L.P., as the case may be.
15. Expiration of Certain Provisions.
The provisions contained in Sections 4, 5 and 6 of this Agreement and
the portion of any other provision of this Agreement which incorporates the
provisions of Sections 4, 5 and 6, shall terminate and be of no further force or
effect with respect to any shares of Stock sold by the Purchaser (i) pursuant to
an effective registration statement filed by the Company pursuant to Section 10
hereof or (ii) pursuant to the terms of the Sale Participation Agreement of even
date herewith, among the Purchaser, KKR Partners II, L.P. and KLC Associates,
L.P.
The rights and obligations of the parties hereto under Sections 3, 4,
5 and 6 hereof shall all terminate if a Change of Control occurs. A "Change of
Control" means (i) a sale of all or substantially all of the assets of the
Company (other than in connection with financing transactions, sale and
leaseback transactions or other similar transactions) to a Person who is not a
KKR Entity, (ii) a sale by KKR or any of its Affiliates resulting in more than
50% of the voting stock of the Company being held by a person or group that does
not include a KKR Entity or (iii) (a) a merger or consolidation of the Company
into another person which is not a KKR Entity or (b) any dilution of KKR's
beneficial ownership interest in the Company which results in the KKR Entities
owning less than a 50% of the outstanding shares of the Common Stock of the
Company; if and only if any such event described in either (iii) (a) and (b),
results in the inability of the KKR Entities to elect a majority of the Board of
Directors of the Company (or the resulting entity).
16. Recapitalizations, etc.
The provisions of this Agreement shall apply, to the full extent set
forth herein with respect to the Stock or the Options, to any and all shares of
capital stock of the Company or any capital stock, partnership units or any
other security evidencing ownership interests in any successor or assign of the
Company (whether by merger, consolidation, sale of assets or otherwise) which
may be issued in respect of, in exchange for, or substitution of the Stock or
the Options, by reason of any stock dividend, split, reverse split, combination,
recapitalization, liquidation, reclassification, merger, consolidation or
otherwise.
17. Purchaser's Employment by the Company.
Nothing contained in this Agreement or in any other agreement entered
into by the Company and the Purchaser contemporaneously with the execution of
this Agreement (i) obligates the Company or any subsidiary of the Company to
employ the Purchaser in any capacity whatsoever or (ii) prohibits or
19
restricts the Company (or any such subsidiary) from terminating the employment,
if any, of the Purchaser at any time or for any reason whatsoever, with or
without cause, and the Purchaser hereby acknowledges and agrees that neither the
Company nor any other person has made any representations or promises whatsoever
to the Purchaser concerning the Purchaser's employment or continued employment
by the Company.
18. State Securities Laws.
The Company hereby agrees to use its best efforts to comply with all
state securities or "blue sky" laws which might be applicable to the sale of the
Stock and the issuance of the Options to the Purchaser.
19. Binding Effect.
The provisions of this Agreement shall be binding upon and accrue to
the benefit of the parties hereto and their respective heirs, legal
representatives, successors and assigns. In the case of a transferee permitted
under Section 2(a) hereof, such transferee shall be deemed the Purchaser
hereunder; provided, however, that no transferee (including without limitation,
transferees referred to in Section 2(a) hereof) shall derive any rights under
this Agreement unless and until such transferee has delivered to the Company a
valid undertaking and becomes bound by the terms of this Agreement.
20. Amendment.
This Agreement may be amended only by a written instrument signed by
the Parties hereto.
21. Closing.
Except as otherwise provided herein, the closing of each purchase and
sale of shares of Stock and the payment of the Option Excess Price, if any,
pursuant to this Agreement shall take place at the principal office of the
Company on the tenth business day following delivery of the notice by either
Party to the other of its exercise of the right to purchase or sell such Stock
hereunder or to cause the payment of the Option Excess Price, if any.
22. Applicable Law.
The laws of the state of Delaware (or if the Company reincorporates in
another state, of that state) shall govern the interpretation, validity and
performance of the terms of this Agreement, regardless of the law that might be
applied under principles of conflicts of law. Any suit, action or proceeding
against the Purchaser, with respect to this Agreement, or any judgment entered
by any court in respect of any thereof, may be brought in any court of competent
jurisdiction in the State of
20
Delaware (or if the Company reincorporates in another state, in that state) or
the State in which the Company's headquarters is located, and the Purchaser
hereby submits to the non-exclusive jurisdiction of such courts for the purpose
of any such suit, action, proceeding or judgment. Nothing herein shall in any
way be deemed to limit the ability of the Company to serve any such writs,
process or summonses in any other manner permitted by applicable law or to
obtain jurisdiction over the Purchaser, in such other jurisdictions and in such
manner, as may be permitted by applicable law. The Purchaser hereby irrevocably
waives any objections which he may now or hereafter have to the laying of the
venue of any suit, action or proceeding arising out of or relating to this
Agreement brought in any court of competent jurisdiction in the State of
Delaware (or if the Company reincorporates in another state, in that state) or
the State in which the Company's headquarters is located, and hereby further
irrevocably waives any claim that any such suit, action or proceeding brought in
any such court has been brought in any inconvenient forum. No suit, action or
proceeding against the Company with respect to this Agreement may be brought in
any court, domestic or foreign, or before any similar domestic or foreign
authority other than in a court of competent jurisdiction in the State of
Delaware (or if the Company reincorporates in another state, in that state) or
the State in which the Company's headquarters is located, and the Purchaser
hereby irrevocably waives any right which he may otherwise have had to bring
such an action in any other court, domestic or foreign, or before any similar
domestic or foreign authority. The Company hereby submits to the jurisdiction of
such courts for the purpose of any such suit, action or proceeding.
23. Assignability of Certain Rights by the Company.
The Company shall have the right to assign any or all of its rights or
obligations to purchase shares of Stock pursuant to Sections 4, 5 and 6 hereof;
provided, however, that the Company shall remain obligated to perform its
obligations notwithstanding such assignment in the event that such assignee
fails to perform the obligations so assigned to it.
24. Miscellaneous.
In this Agreement (i) all references to "dollars" or "$" are to United
States dollars and (ii) the word "or" is not exclusive. If any provision of this
Agreement shall be declared illegal, void or unenforceable by any court of
competent jurisdiction, the other provisions shall not be affected, but shall
remain in full force and effect.
25. Notices.
All notices and other communications provided for herein shall be in
writing and shall be deemed to have been duly given if delivered by hand
(whether by overnight courier or
21
otherwise) or sent by registered or certified mail, return receipt requested,
postage prepaid, to the Party to whom it is directed:
(a) If to the Company, to it at the following address:
KinderCare Learning Centers, Inc.
000 X.X. Xxxxxxxxx
Xxxxx 0000
Xxxxxxxx, Xxxxxx 00000
Attn: General Counsel
with copies to:
Kohlberg Kravis Xxxxxxx & Co.
0 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxxx X. Xxxxxxx
and:
Xxxxxxx Xxxxxxx & Xxxxxxxx
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Attn: Xxxxx X. Xxxxxx, Esq.
(b) If to the Purchaser, to him at the address set forth below under
his signature;
or at such other address as either party shall have specified by
notice in writing to the other.
26. Confidential Information.
(a) Except as required by law or judicial process, the Purchaser will
not disclose or use at any time, any Confidential information (as defined below)
of which the Purchaser is or becomes aware, whether or not such information is
developed by him, except to the extent that such disclosure or use is directly
related to the Purchaser's performance of duties, if any, assigned to the
Purchaser by the Company. As used in this Agreement, the term "Confidential
Information" means information developed by or on behalf of the Company that is
not known to the public or within the industry and that is used, developed or
obtained by the Company or its subsidiaries in connection with its business,
including but not limited to (i) products or services, (ii) fees, costs and
pricing structures, (iii) designs, (iv) computer software, including operating
systems, applications and program listings, (v) flow charts, manuals and
documentation, (vi) data bases, (vii) accounting and business methods, (viii)
inventions, devices, new developments, methods and processes,
22
whether patentable or unpatentable and whether or not reduced to practice, (ix)
customers and clients and customer or client lists, (x) other copyrightable
works, (xi) all trade secrets and (xii) all similar and related information in
whatever form. Confidential Information will not include any information that
(a) is a matter of public knowledge through no fault of Purchaser, (b) is
disclosed by Purchaser with the Company's prior written consent to unrestricted
disclosure, (c) was known by Purchaser prior to the date hereof, (d) is
independently developed by Purchaser without using any Confidential Information
or (e) is lawfully obtained by Purchaser from any third party who did not obtain
the information directly from the Company or its representatives or agents. The
Purchaser acknowledges and agrees that all copyrights, works, inventions,
innovations, improvements, developments, patents, trademarks and all similar or
related information which relate to the actual or anticipated business of the
Company and its subsidiaries (including its predecessors) and conceived,
developed or made by the Purchaser while employed by the Company or its
subsidiaries belong to the Company. The Purchaser will perform all actions
reasonably requested by the Company to establish and confirm such ownership at
the Company's expense (including without limitation assignments, consents,
powers of attorney and other instruments).
(b) Because the Purchaser's services are unique and because the
Purchaser has had access to Confidential Information, the parties hereto agree
that money damages will be an inadequate remedy for any breach of this
Agreement. In the event a breach or threatened breach of this Agreement, the
Company or its successors or assigns may, in addition to other rights and
remedies existing in their favor, apply to any court of competent jurisdiction
for specific performance and/or injunctive relief in order to enforce, or
prevent any violations of, the provisions hereof (without the posting of a bond
or other security).
i
IN WITNESS WHEREOF, the Parties have executed this Agreement as of the
date first above written.
KINDERCARE LEARNING CENTERS, INC.
By XXXXXX X. XXXXXXXXXX
-----------------------------------
Name: Xxxxxx X. Xxxxxxxxxx
Title: Vice President, Human Resources
XXXXX X. XXXXXXX
--------------------------------------
XXXXX X. XXXXXXX
00000 XX Xxxxxxxxx Xxxx
--------------------------------------
Xxxxxxxx, XX 00000
--------------------------------------
