LIMITED GUARANTEE
Exhibit
(b)(3)
Execution Version
LIMITED GUARANTEE, dated as of January 14, 2008 (this “Limited Guarantee”), by Xxxx
Capital Fund X, L.P. (the “Guarantor”) in favor of Bright Horizons Family Solutions, Inc.
(the “Guaranteed Party”).
1. GUARANTEE. To induce the Guaranteed Party to enter into an Agreement and Plan of
Merger, dated as of the date hereof (as amended, amended and restated, supplemented or otherwise
modified from time to time, the “Merger Agreement”; capitalized terms used but not defined
herein shall have the meanings given to such terms in the Merger Agreement) by and between Swingset
Holdings Corp. (including any assignee thereof or successor thereto, the “Parent”),
Swingset Acquisition Corp., a Delaware corporation and wholly-owned subsidiary of the Parent (the
“Merger Sub”, and collectively with Parent, the “Purchaser”) and the Guaranteed
Party, pursuant to which Merger Sub will merge with and into the Guaranteed Party, the Guarantor,
intending to be legally bound, hereby absolutely, irrevocably and unconditionally guarantees to the
Guaranteed Party, the due and punctual performance and discharge of the payment obligations of
Parent and Merger Sub under the Merger Agreement (the “Obligations”), provided that in no
event shall the Guarantor’s aggregate liability under this Limited Guarantee exceed US$66,000,000
(the “Cap”), it being understood that this Limited Guarantee may not be enforced against
the Guarantor without giving effect to the Cap. All payments hereunder shall be made in lawful
money of the United States, in immediately available funds. The Guarantor promises and undertakes
to make all payments hereunder free and clear of any deduction, offset, defense, claim or
counterclaim of any kind.
If the Parent or the Merger Sub fails to discharge its Obligations when due, then all of the
Guarantor’s liabilities to Guaranteed Party hereunder in respect of the Obligations shall, at the
Guaranteed Party’s option, become immediately due and payable and the Guaranteed Party may at any
time and from time to time, at the Guaranteed Party’s option, and so long as the Parent or the
Merger Sub has failed to perform its Obligations, take any and all actions available hereunder or
under applicable Law to collect the Guarantor’s liabilities hereunder in respect of the Obligations
subject to the Cap.
In furtherance of the foregoing the Guarantor acknowledges that its liability hereunder shall
extend to the full amount of the Obligations (subject to the Cap), and that the Guaranteed Party
may, in its sole discretion, bring and prosecute a separate action or actions against the Guarantor
for the full amount of the Obligations (subject to the Cap), regardless of whether action is
brought against the Parent or Merger Sub or whether the Parent or Merger Sub is joined in any such
action or actions.
2. NATURE OF GUARANTEE. The Guarantor’s liability hereunder is absolute,
unconditional, irrevocable and continuing irrespective of (i) any lack of validity or
enforceability of the Merger Agreement and any other agreement or instrument referred to herein, or
(ii) any modification, amendment or waiver of or any consent to departure from the Merger Agreement
that may be agreed to by the Parent or Merger Sub. Without limiting the foregoing, the Guaranteed
Party shall not be obligated to file any claim relating to the Obligations in the event that the
Parent or Merger Sub becomes subject to a bankruptcy, reorganization or similar proceeding, and the
failure of the Guaranteed Party to so file shall not affect the Guarantor’s
obligations hereunder. In the event that any payment to the Guaranteed Party in respect of
the Obligations is rescinded or must otherwise be returned for any reason whatsoever, the Guarantor
shall remain liable hereunder with respect to the Obligations as if such payment had not been made.
This Limited Guarantee is an unconditional and continuing guarantee of payment and not of
collection.
3. CHANGES IN OBLIGATIONS, CERTAIN WAIVERS. The Guarantor agrees that the Guaranteed
Party may, in its sole discretion, at any time and from time to time, without notice to or further
consent of the Guarantor, extend the time of payment of the Obligations, and may also make any
agreement with the Parent or Merger Sub for the extension, renewal, payment, compromise, discharge
or release thereof, in whole or in part, or for any modification of any agreement between the
Guaranteed Party and the Parent or Merger Sub, without in any way impairing or affecting the
Guarantor’s obligations under this Limited Guarantee. The Guarantor agrees that its obligations
hereunder shall not be released or discharged, in whole or in part, or otherwise affected by (a)
the failure or delay on the part of the Guaranteed Party to assert any claim or demand or to
enforce any right or remedy against the Parent or Merger Sub; (b) any change in the time, place or
manner of payment of the Obligations or any rescission, waiver, compromise, consolidation or other
amendment or modification of any of the terms or provisions of the Merger Agreement or any other
agreement evidencing, securing or otherwise executed in connection with the Obligations; (c) the
addition, substitution or release of any entity or other Person interested in the transactions
contemplated by the Merger Agreement; (d) any change in the corporate existence, structure or
ownership of the Parent, Merger Sub or any other Person interested in the transactions contemplated
by the Merger Agreement and all suretyship defenses generally (other than fraud or willful
misconduct by the Guaranteed Party or any of its Subsidiaries, defenses to the payment of the
Obligations that are available to the Parent or Merger Sub under the Merger Agreement, or breach by
the Guaranteed Party of this Limited Guarantee); (e) any insolvency, bankruptcy, reorganization or
other similar proceeding affecting Parent, Merger Sub or any other Person interested in the
transactions contemplated by the Merger Agreement; (f) the existence of any claim, set-off or other
right which the Guarantor may have at any time against the Parent or Merger Sub or the Guaranteed
Party, whether in connection with the Obligations or otherwise; or (g) the adequacy of any means
the Guaranteed Party may have of obtaining payment related to the Obligations. To the fullest
extent permitted by applicable Law, the Guarantor hereby expressly waives any and all rights or
defenses arising by reason of any applicable Law which would otherwise require any election of
remedies by the Guaranteed Party. The Guarantor waives promptness, diligence, notice of the
acceptance of this Limited Guarantee and of the Obligations, presentment, demand for payment,
notice of non-performance, default, dishonor and protest, notice of any Obligations incurred and
all other notices of any kind (other than notices to the Parent or Merger Sub pursuant to the
Merger Agreement), all defenses which may be available by virtue of any valuation, stay, moratorium
law or other similar law now or hereafter in effect or any right to require the marshalling of
assets of the Parent or Merger Sub. The Guarantor acknowledges that it will receive substantial
direct and indirect benefits from the transactions contemplated by the Merger Agreement and that
the waivers set forth in this Limited Guarantee are knowingly made in contemplation of such
benefits. The Guaranteed Party hereby covenants and agrees that it shall not, and shall cause its
respective affiliates not to, institute any proceeding or bring any other claim arising under, or
in connection with, the Merger Agreement or the transactions contemplated thereby, against the
Guarantor or any of the Guarantor’s former, current or future
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equity holders, controlling persons, directors, officers, employees, agents, affiliates,
members, managers, general or limited partners, or assignees, or against any former, current or
future equity holders, controlling persons, directors, officers, employees, agents, affiliates,
members, managers, general or limited partners, or assignees of any of the foregoing (other than
the Parent and Merger Sub) except for claims against the Guarantor under this Limited Guarantee
seeking to enforce this Limited Guarantee against the Guarantor. The Guarantor hereby covenants
and agrees that it shall not institute, and shall cause its respective affiliates not to institute,
any proceeding asserting that this Limited Guarantee is illegal, invalid or unenforceable in
accordance with its terms.
The Guarantor hereby unconditionally waives any rights that it may now have or hereafter
acquire against the Parent or Merger Sub that arise from the existence, payment, performance, or
enforcement of the Guarantor’s obligations under or in respect of this Limited Guarantee or any
other agreement in connection therewith, including, without limitation, any right of subrogation,
reimbursement, exoneration, contribution or indemnification and any right to participate in any
claim or remedy of the Guaranteed Party against the Parent or Merger Sub, whether or not such
claim, remedy or right arises in equity or under contract, statute or common law, including,
without limitation, the right to take or receive from the Parent or Merger Sub , directly or
indirectly, in cash or other property or by set-off or in any other manner, payment or security on
account of such claim, remedy or right, and the Guarantor shall not exercise any such rights unless
and until all amounts payable under this Limited Guarantee shall have been paid in full in
immediately available funds. If any amount shall be paid to the Guarantor in violation of the
immediately preceding sentence at any time prior to the payment in full in immediately available
funds of all amounts payable under this Limited Guarantee, such amount shall be received and held
in trust for the benefit of the Guaranteed Party, shall be segregated from other property and funds
of the Guarantor and shall forthwith be paid or delivered to the Guaranteed Party in the same form
as so received (with any necessary endorsement or assignment) to be credited and applied to the
amounts payable by the Guarantor under this Limited Guarantee. Notwithstanding anything to the
contrary contained in this Limited Guarantee or otherwise, the Guaranteed Party hereby agrees that
to the extent Parent or Merger Sub is relieved of any of its obligations under the Merger
Agreement, the Guarantor shall be similarly relieved of its corresponding obligations under this
Limited Guarantee.
4. NO WAIVER; CUMULATIVE RIGHTS. No failure on the part of the Guaranteed Party to
exercise, and no delay in exercising, any right, remedy or power hereunder shall operate as a
waiver thereof; nor shall any single or partial exercise by the Guaranteed Party of any right,
remedy or power hereunder preclude any other or future exercise of any right, remedy or power
hereunder. Each and every right, remedy and power hereby granted to the Guaranteed Party or
allowed it by applicable Law or other agreement shall be cumulative and not exclusive of any other,
and may be exercised by the Guaranteed Party at any time or from time to time. The Guaranteed
Party shall not have any obligation to proceed at any time or in any manner against, or exhaust any
or all of the Guaranteed Party’s rights against, the Parent, Merger Sub or any other Person liable
for any portion of the Obligations prior to proceeding against the Guarantor.
5. REPRESENTATIONS AND WARRANTIES. The Guarantor hereby represents and warrants that:
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(a) the execution, delivery and performance of this Limited Guarantee have been duly
authorized by all necessary action and do not contravene any provision of the Guarantor’s
charter, partnership agreement, operating agreement or similar organizational documents or
any applicable Law or contractual restriction binding on the Guarantor or its assets;
(b) all consents, approvals, authorizations, permits of, filings with and notifications
to, any Governmental Authority necessary for the due execution, delivery and performance of
this Limited Guarantee by the Guarantor have been obtained or made and all conditions
thereof have been duly complied with, and no other action by, and no notice to or filing
with, any Governmental Authority is required in connection with the execution, delivery or
performance of this Limited Guarantee;
(c) this Limited Guarantee constitutes a legal, valid and binding obligation of the
Guarantor enforceable against the Guarantor in accordance with its terms; and
(d) the Guarantor has the financial capacity to pay and perform its obligations under
this Limited Guarantee, and all funds necessary for the Guarantor to fulfill its obligations
under this Limited Guarantee shall be available to the Guarantor for so long as this Limited
Guarantee shall remain in effect in accordance with Section 8 hereof.
6. NO ASSIGNMENT. Neither the Guarantor nor the Guaranteed Party may assign or
delegate their rights, interests or obligations hereunder to any other Person (except by operation
of law) without the prior written consent of the other party hereto; provided,
however, the Guarantor can assign its rights, interests and obligations hereunder, without
the prior written consent of the Guaranteed Party, to any controlled affiliated Person;
provided, further, that no such assignment shall relieve the Guarantor of its
obligations hereunder.
7. NOTICES. All notices, requests, claims, demands and other communications hereunder
shall be given (and shall be deemed to have been duly received if given) by hand delivery in
writing or by facsimile transmission with confirmation of receipt, as follows:
if to Xxxx Capital Fund X, L.P.:
Xxxx Capital Fund X, L.P
000 Xxxxxxxxxx Xxxxxx
Xxxxxx, XX 00000
Facsimile: (000) 000-0000
Attn.: Xxxxxx Xxxxxx and Jordan Hitch
000 Xxxxxxxxxx Xxxxxx
Xxxxxx, XX 00000
Facsimile: (000) 000-0000
Attn.: Xxxxxx Xxxxxx and Jordan Hitch
with a copy (which shall not constitute notice) to:
Ropes & Xxxx LLP
Xxx Xxxxxxxxxxxxx Xxxxx
Xxxxxx, XX 00000
Facsimile: (000) 000-0000
Attn: X. Xxxxxxx Xxxxxxxxx
Xxxxxxx X. Xxxxxxx
Xxx Xxxxxxxxxxxxx Xxxxx
Xxxxxx, XX 00000
Facsimile: (000) 000-0000
Attn: X. Xxxxxxx Xxxxxxxxx
Xxxxxxx X. Xxxxxxx
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If to the Guaranteed Party, as provided in the Merger Agreement.
8. CONTINUING GUARANTEE. This Limited Guarantee may not be revoked or terminated and
shall remain in full force and effect and shall be binding on the Guarantor, its successors and
assigns until the Obligations and all amounts payable under this Limited Guarantee have been
indefeasibly paid in full. Notwithstanding the foregoing, this Limited Guarantee shall terminate
and the Guarantor shall have no further obligation under this Limited Guarantee as of the earliest
of (i) the Effective Time, (ii) the date the Merger Agreement is terminated in accordance with its
terms (other than termination by the Parent pursuant to Sections 8.01(b) (but only in circumstances
where the Guaranteed Party has the right to terminate pursuant to Section 8.01(g)) or by the
Guaranteed Party pursuant to 8.01(g) or 8.01(i)), and (iii) if the Merger Agreement is terminated
by the Parent in accordance with Sections 8.01(b) (but only in circumstances where the Guaranteed
Party has the right to terminate pursuant to Section 8.01(g)) or by the Guaranteed Party pursuant
to 8.01(g) or 8.01(i) and (x) no claim has been presented hereunder, the six month anniversary of
such termination or (y) a claim has been presented hereunder, the later of the six month
anniversary of such termination and the date such claim is resolved. Notwithstanding the
foregoing, in the event that the Guaranteed Party or any of its affiliates asserts in any
litigation or other proceeding that the provisions of Section 1 hereof limiting the Guarantor’s
liability to the Cap or the provisions of this Section 8 or Section 9 hereof are illegal, invalid
or unenforceable in whole or in part, asserts that the Guarantor is liable in excess of or to a
greater extent than the Cap, or asserts any theory of liability against the Guarantor or any
Non-Recourse Party (as defined below) with respect to the transactions contemplated by the Merger
Agreement other than liability of the Guarantor under this Limited Guarantee (as limited by the
provisions of Section 1 hereof), then (i) the obligations of the Guarantor under this Limited
Guarantee shall terminate ab initio and be null and void, (ii) if the Guarantor has previously made
any payments under this Limited Guarantee, it shall be entitled to recover such payments, and (iii)
neither the Guarantor nor any Non-Recourse Party (as defined below) shall have any liability to the
Guaranteed Party with respect to the transactions contemplated by the Merger Agreement or under
this Limited Guarantee.
9. NO RECOURSE. The Guaranteed Party acknowledges that the sole asset of the Parent
is the stock of Merger Sub and that the sole asset of Merger Sub is US$1,000, and that no
additional funds are expected to be contributed to the Parent or Merger Sub unless and until the
closing pursuant to Section 1.02 of the Merger Agreement. Notwithstanding anything that may be
expressed or implied in this Limited Guarantee or any document or instrument delivered in
connection herewith or otherwise, and notwithstanding the fact that the Guarantor may be a
partnership, by its acceptance of the benefits of this Limited Guarantee, the Guaranteed Party
acknowledges and agrees that no Person other than the Guarantor and the Guaranteed Party have any
obligations hereunder and that no recourse shall be had hereunder or under any document or
instrument delivered in connection herewith, or for any claim based on, in respect of, or by reason
of, such obligations or their creation, against, and no personal liability shall attach to, the
former, current and future equity holders, controlling persons, directors, officers, employees,
agents, affiliates, members, managers, general or limited partners, or assignees of the Guarantor
or the Purchaser or any former, current or future equity holder, controlling person, director,
officer, employee, agent, affiliate, member, manager, general or limited partner, or assignee of
any of the foregoing (collectively, but not including the Parent or Merger Sub, each a
“Non-
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Recourse Party”), through the Parent or Merger Sub or otherwise, whether by or through
attempted piercing of the corporate veil, by or through a claim by or on behalf of the Guaranteed
Party, the Parent or Merger Sub against any Non-Recourse Party, by the enforcement of any
assessment, by any legal or equitable proceeding, by virtue of any applicable Law, or otherwise,
except in the case of any breach by Guarantor of any of its representations or warranties under
this Limited Guarantee such that Guarantor is unable to perform and for its rights against the
Guarantor under this Limited Guarantee or enforcement of such rights against the Guarantor.
Recourse against the Guarantor pursuant to this Limited Guarantee shall be the sole and exclusive
remedy of the Guaranteed Party and all of its affiliates against the Guarantor and the Non-Recourse
Parties in respect of any liabilities or obligations arising under, or in connection with, the
Merger Agreement or the transactions contemplated thereby.
10. GOVERNING LAW; JURISDICTION. This Limited Guaranty, the rights of the parties and
all actions arising in whole or part under or in connection herewith will be governed by and
construed in accordance with the laws of the State of New York.
Each party to this Limited Guaranty, by its execution hereof, (i) hereby irrevocably submits
to the exclusive jurisdiction of the state courts of the State of New York or the United States
District Court located in the Southern District of the State of New York for the purpose of any
action between the parties arising in whole or in part under or in connection with this Limited
Guaranty, (ii) hereby waives to the extent not prohibited by applicable law, and agrees not to
assert, by way of motion, as a defense or otherwise, in any such action, any claim that it is not
subject personally to the jurisdiction of the above-named courts, that its property is exempt or
immune from attachment or execution, that any such action brought in one of the above-named courts
should be dismissed on grounds of forum non conveniens, should be transferred or removed to any
court other than one of the above-named courts, or should be stayed by reason of the pendency of
some other proceeding in any other court other than one of the above-named courts, or that this
Limited Guaranty or the subject matter hereof may not be enforced in or by such court and (iii)
hereby agrees not to commence any such action other than before one of the above-named courts.
Notwithstanding the previous sentence, a party may commence any action in a court other than the
above-named courts solely for the purpose of enforcing an order or judgment issued by one of the
above-named courts.
Each party agrees that for any action between the parties arising in whole or in part under or
in connection with this Limited Guaranty, such party will bring actions only in the Borough of
Manhattan. Each party further waives any claim and will not assert that venue should properly lie
in any other location within the selected jurisdiction.
Each party hereto agrees that notice or the service of process in any action, suit or
proceeding arising out of or relating to this Limited Guarantee shall be properly served or
delivered if delivered in the manner contemplated by Section 7 hereof.
11. WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO HEREBY WAIVES TO THE FULLEST
EXTENT PERMITTED BY APPLICABLE LAW ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY WITH RESPECT TO ANY
LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH
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THIS LIMITED GUARANTEE OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREBY.
12. COUNTERPARTS. This Limited Guarantee may be executed in one or more counterparts,
and by the different parties hereto in separate counterparts, each of which when executed shall be
deemed to be an original but all of which taken together shall constitute one and the same
agreement.
13. MISCELLANEOUS.
(a) This Limited Guaranty constitutes the entire agreement of the parties hereto with
respect to the subject matter hereof and supersedes any and all prior discussions,
negotiations, proposals, undertakings, understandings and agreements, whether written or
oral, among Guarantor or any of its affiliates, on the one hand, and the Guaranteed Party or
any of its affiliates, on the other hand. No modification or waiver of any provision hereof
shall be enforceable unless approved by the Guaranteed Party and the Guarantor in writing.
(b) Any term or provision of this Limited Guaranty that is invalid or unenforceable in
any situation in any jurisdiction will not affect the validity or enforceability of the
remaining terms and provisions hereof or the validity or enforceability of the offending
term or provision in any other situation or in any other jurisdiction; provided, however,
that this Limited Guaranty may not be enforced without giving effect to the limitation of
the amount payable hereunder to the Cap provided in Section 1 hereof and to the provisions
of Sections 8 and 9 hereof. No party hereto shall assert, and each party shall cause its
respective affiliates not to assert, that this Limited Guaranty or any part hereof is
invalid, illegal or unenforceable.
(c) The descriptive headings herein are inserted for convenience of reference only and
are not intended to be part of or to affect the meaning or interpretation of this Limited
Guarantee.
(d) All parties acknowledge that each party and its counsel have reviewed this Limited
Guarantee and that any rule of construction to the effect that any ambiguities are to be
resolved against the drafting party shall not be employed in the interpretation of this
Limited Guarantee.
[Remainder of page intentionally left blank.]
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IN WITNESS WHEREOF, the Guarantor has caused this Limited Guarantee to be executed and
delivered as of the date first written above by its officer thereunto duly authorized.
| XXXX CAPITAL FUND X, L.P. | ||||
| By: | XXXX CAPITAL PARTNERS X, L.P., its General Partner | |||
| By: | XXXX CAPITAL INVESTORS, LLC, its General Partner | |||
| By: | /s/ Xxxxxx Xxxxxx | |||
| Name: | Xxxxxx Xxxxxx | |||
| Title: | A Duly Authorized Representative | |||
[Limited Guarantee Signature Page]
IN WITNESS WHEREOF, the Guaranteed Party has caused this Limited Guarantee to be executed and
delivered as of the date first written above by its officer thereunto duly authorized.
| BRIGHT HORIZONS FAMILY SOLUTIONS, INC. |
||||
| By: | /s/ Xxxxx X. Xxxxx | |||
| Name: | Xxxxx X. Xxxxx | |||
| Title: | Chief Executive Officer | |||
[Limited Guarantee Signature Page]
