REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT, dated as of February 13, 1997, among
KCLC Acquisition Corp., a Delaware corporation (the "Company"), KLC Associates,
L.P., a Delaware limited partnership ("KLC"), and KKR Partners II, L.P., a
Delaware limited partnership ("KKR Partners" and, together with KLC, the "Common
Stock Partnerships").
RECITALS
Pursuant to an Agreement and Plan of Merger, dated as of October 3,
1996 and as amended as of December 27, 1996 (the "Merger Agreement"), among
KinderCare Learning Centers, Inc. ("KinderCare") and the Company, the Company
will be merged with and into KinderCare on February 13, 1997 (the "Merger"). As
a result of the Merger, each outstanding share of common stock, par value $.01
per share (the "Common Stock") of the Company, all 100 of which shares are owned
collectively by the Common Stock Partnerships, will be converted into (i) a
number of shares of common stock, par value $.01 per share, of KinderCare equal
to the quotient of (A) 7,828,947 divided by (B) the number of shares of Common
Stock outstanding immediately prior to the Effective Time. At the Effective
Time, KinderCare shall succeed by merger to all of the rights and obligations of
the Company, including those set forth herein, as well as to all of the other
property and assets of the Company.
Pursuant to a Stock Sale and Equity Contribution Agreement, dated as
of February 13, 1997 (the "Equity Contribution Agreement"), among the Company
and the Common Stock Partnerships, the Common Stock Partnerships made equity
contributions of $148.75 million in the aggregate to the Company. Upon the
merger of the Company with and into KinderCare, such $148.75 million will be
received by KinderCare as an equity contribution by the Common Stock
Partnerships.
AGREEMENT
1. Definitions. As used in this Agreement, the following capitalized
terms shall have the following respective meanings:
"Common Stock": the common stock, par value $.01 per share, of the
Company and its successors, including, without limitation, the common
stock of KinderCare into which the Common Stock may be converted by
Merger.
"Common Equivalent Securities": securities that are convertible into
or exchangeable or exercisable for Common Stock.
"Demand Party": (a) KLC, (b) KKR Partners or (c) any other Holder or
Holders, including, without limitation, any present or future general or
limited partner
of either Common Stock Partnership, or any general or limited partner or
member of any general or limited partner thereof, that may become an
assignee of such Common Stock Partnership's rights hereunder; provided
that to be a Demand Party under this clause (c), a Holder or Holders must
either individually or in aggregate with all other Holders with whom it is
acting together to demand registration own at least 1% of the total number
of Registrable Securities.
"Exchange Act": The Securities Exchange Act of 1934, as amended, or
any similar federal statute then in effect, and a reference to a
particular section thereof shall be deemed to include a reference to the
comparable section, if any, of any such similar federal statute.
"Holder": Each Common Stock Partnership and any other holder of
Registrable Securities (including any direct or indirect transferees of a
Common Stock Partnership) who agrees in writing to be bound by the
provisions of this Agreement.
"Person": Any individual, partnership, limited liability company,
joint venture, corporation, trust, unincorporated organization or
government or any department or agency thereof.
"Registrable Securities": Any Common Stock or Common Equivalent
Securities acquired by a Common Stock Partnership from the Company or any
affiliate of the Company, whether as a result of the Merger or upon the
conversion of any convertible security or otherwise, and any Common Stock
or Common Equivalent Securities which may be issued or distributed in
respect thereof by way of stock dividend or stock split or other
distribution, recapitalization or reclassification. As to any particular
Registrable Securities, once issued, such Registrable Securities shall
cease to be Registrable Securities when (i) a registration statement with
respect to the sale by the Holder of such securities shall have become
effective under the Securities Act (as defined below) and such securities
shall have been disposed of in accordance with such registration
statement, (ii) such securities shall have been distributed to the public
pursuant to Rule 144 (or any successor provision) under the Securities
Act, (iii) such securities shall have been otherwise transferred, new
certificates for such securities not bearing a legend restricting further
transfer shall have been delivered by the Company and subsequent
disposition of such securities shall not require registration or
qualification of such securities under the Securities Act or any state
securities or blue sky law then in force, or (iv) such securities shall
have ceased to be outstanding.
"Registration Expenses": Any and all expenses incident to
performance of or compliance with this Agreement, including, without
limitation, (i) all SEC (as defined below) and stock exchange or National
Association of Securities Dealers, Inc. (the "NASD") registration and
filing fees (including, if applicable, the fees and expenses of any
"qualified independent underwriter," as such term is defined in Schedule E
to the By-laws of the NASD, and of its counsel), (ii) all fees and
expenses of complying with securities or blue sky laws (including fees and
disbursements of counsel for the
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underwriters in connection with blue sky qualifications of the Registrable
Securities), (iii) all printing, messenger and delivery expenses, (iv) all
fees and expenses incurred in connection with the listing of the
Registrable Securities on any securities exchange pursuant to clause
(viii) of Section 4 and all rating agency fees, (v) the fees and
disbursements of counsel for the Company and of its independent public
accountants, including the expenses of any special audits and/or "cold
comfort" letters required by or incident to such performance and
compliance, (vi) the reasonable fees and disbursements of counsel selected
pursuant to Section 7 hereof by the Holders of the Registrable Securities
being registered to represent such Holders in connection with each such
registration, (vii) any fees and disbursements of underwriters customarily
paid by the issuers or sellers of securities, including liability
insurance if the Company so desires or if the underwriters so require, and
the reasonable fees and expenses of any special experts retained in
connection with the requested registration, but excluding underwriting
discounts and commissions and transfer taxes, if any, and (viii) other
reasonable out-of-pocket expenses of Holders (provided that such expenses
shall not include expenses of counsel other than those provided for in
clause (vi) above).
"Securities Act": The Securities Act of 1933, as amended, or any
similar federal statute then in effect, and a reference to a particular
section thereof shall be deemed to include a reference to the comparable
section, if any, of any such similar federal statute.
"SEC": The Securities and Exchange Commission or any other federal
agency at the time administering the Securities Act or the Exchange Act.
2. Incidental Registrations. (a) Right to Include Registrable
Securities. If the Company at any time after the date hereof proposes to
register its Common Stock or any Common Equivalent Securities under the
Securities Act (other than a registration on Form S-4 or S-8, or any successor
or other forms promulgated for similar purposes), whether or not for sale for
its own account, in a manner which would permit registration of Registrable
Securities for sale to the public under the Securities Act, it will, at each
such time, give prompt written notice to all Holders of Registrable Securities
of its intention to do so and of such Holders' rights under this Section 2. Upon
the written request of any such Holder made within 15 days after the receipt of
any such notice (which request shall specify the Registrable Securities intended
to be disposed of by such Holder), the Company will use its best efforts to
effect the registration under the Securities Act of all Registrable Securities
which the Company has been so requested to register by the Holders thereof, to
the extent requisite to permit the disposition of the Registrable Securities so
to be registered; provided that (i) if, at any time after giving written notice
of its intention to register any securities and prior to the effective date of
the registration statement filed in connection with such registration, the
Company shall determine for any reason not to proceed with the proposed
registration of the securities to be sold by it, the Company may, at its
election, give written notice of such determination to each Holder of
Registrable Securities and, thereupon, shall be relieved of its obligation to
register any Registrable Securities in connection with such registration (but
not from its obligation to pay the Registration Expenses in connection
therewith), and (ii) if such registration involves an underwritten offering, all
Holders of
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Registrable Securities requesting to be included in the Company's registration
must sell their Registrable Securities to the underwriters selected by the
Company on the same terms and conditions as apply to the Company, with such
differences, including any with respect to indemnification and liability
insurance, as may be customary or appropriate in combined primary and secondary
offerings. If a registration requested pursuant to this Section 2(a) involves an
underwritten public offering, any Holder of Registrable Securities requesting to
be included in such registration may elect, in writing prior to the effective
date of the registration statement filed in connection with such registration,
not to register such securities in connection with such registration. Nothing in
this Section 2(a) shall operate to limit the right of any Holder to (i) request
the registration of Common Stock issuable upon conversion, exercise or exchange
of Common Equivalent Securities held by such Holder notwithstanding the fact
that at the time of request such Holder holds only Common Equivalent Securities
or (ii) request the registration at one time of both Common Stock and Common
Equivalent Securities.
(b) Expenses. The Company will pay all Registration Expenses in
connection with each registration of Registrable Securities requested pursuant
to this Section 2.
(c) Priority in Incidental Registrations. If a registration pursuant
to this Section 2 involves an underwritten offering and the managing underwriter
advises the Company in writing that, in its opinion, the number of securities
requested to be included in such 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 securities offered in such offering as
contemplated by the Company (other than the Registrable Securities), then the
Company will include in such registration (i) first, 100% of the securities the
Company proposes to sell and (ii) second, to the extent of the number of
Registrable Securities 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 Registrable Securities which the Holders
have requested to be included in such registration, such amount to be allocated
pro rata among all requesting Holders on the basis of the relative number of
shares of Registrable Securities then held by each such Holder (provided that
any shares thereby allocated to any such Holder that exceed such Holder's
request will be reallocated among the remaining requesting Holders in like
manner).
3. Registration on Request. (a) Request by the Demand Party. At any
time, upon the written request of the Demand Party requesting that the Company
effect the registration under the Securities Act of all or part of such Demand
Party's Registrable Securities and specifying the amount and intended method of
disposition thereof, the Company will promptly give written notice of such
requested registration to all other Holders of such Registrable Securities, and
thereupon will, as expeditiously as possible, use its best efforts to effect the
registration under the Securities Act of:
(i) such Registrable Securities (including, if such request
relates to any Common Equivalent Securities, the shares of Common Stock
issuable upon such conversion, exercise or exchange) which the Company has
been so requested to register by the Demand Party; and
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(ii) all other Registrable Securities of the same class or series
as are to be registered at the request of a Demand Party and which the
Company has been requested to register by any other Holder thereof by
written request given to the Company within 15 days after the giving of
such written notice by the Company (which request shall specify the amount
of such Registrable Securities),
all to the extent necessary to permit the disposition (in accordance with the
intended method of distribution thereof as aforesaid) of the Registrable
Securities so to be registered; provided, that with respect to any Demand Party
other than a Common Stock Partnership, the Company shall not be obligated to
effect any registration of Registrable Securities under this Section 3(a) unless
such Demand Party requests that the Company register at least 1% of the total
number of Registrable Securities; and provided, further, that, unless Holders of
a majority of the shares of Registrable Securities held by Holders consent
thereto in writing, the Company shall not be obligated to file a registration
statement relating to any registration request under this Section 3(a) (x)
within a period of nine months after the effective date of any other
registration statement relating to any registration request under this Section
3(a) which was not effected on Form S-3 (or any successor or similar short-form
registration statement) or relating to any registration effected under Section
2, or (y) if with respect thereto the managing underwriter, the SEC, the
Securities Act or the rules and regulations thereunder, or the form on which the
registration statement is to be filed, would require the conduct of an audit
other than the regular audit conducted by the Company at the end of its fiscal
year, in which case the filing may be delayed until the completion of such
regular audit (unless the Holders of the Registrable Securities to be registered
agree to pay the expenses of the Company in connection with such an audit other
than the regular audit). Nothing in this Section 3 shall operate to limit the
right of any Holder to (i) request the registration of Common Stock issuable
upon conversion, exercise or exchange of Common Equivalent Securities held by
such Holder notwithstanding the fact that at the time of request such Holder
holds only Common Equivalent Securities or (ii) request the registration at one
time of both Common Stock Common Equivalent Securities.
(b) Registration Statement Form. If any registration
requested pursuant to this Section 3 which is proposed by the Company to be
effected by the filing of a registration statement on Form S-3 (or any successor
or similar short-form registration statement) shall be in connection with an
underwritten public offering, and if the managing underwriter shall advise the
Company in writing that, in its opinion, the use of another form of registration
statement is of material importance to the success of such proposed offering,
then such registration shall be effected on such other form.
(c) Expenses. The Company will pay all Registration Expenses in
connection with the first six (6) registrations of each class or series of
Registrable Securities pursuant to this Section 3 upon the written request of
any Demand Party, provided that, for purposes hereof, a request to register
Common Stock into which a Common Equivalent Security is convertible, exercisable
or exchangeable in conjunction with a registration of such Common Equivalent
Security shall be deemed to be one request for registration of a class or series
of Registrable Securities. All expenses for any subsequent registrations of
Registrable Securities pursuant to this Section 3 shall be paid pro rata by the
Company and all other Persons
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(including the Holders) participating in such registration on the basis of the
relative number of shares of Common Stock of each such person whose Registrable
Securities are included in such registration.
(d) Effective Registration Statement. A registration requested
pursuant to this Section 3 will not be deemed to have been effected unless it
has become effective and all of the Registrable Securities registered thereunder
have been sold; provided that if, within 180 days after it has become effective,
the offering of Registrable Securities pursuant to such registration is
interfered with by any stop order, injunction or other order or requirement of
the SEC or other governmental agency or court, such registration will be deemed
not to have been effected.
(e) Selection of Underwriters. If a requested registration pursuant
to this Section 3 involves an underwritten offering, the Holders of a majority
of the shares of Registrable Securities which are held by Holders and which the
Company has been requested to register shall have the right to select the
investment banker or bankers and managers to administer the offering; provided,
however, that such investment banker or bankers and managers shall be reasonably
satisfactory to the Company.
(f) Priority in Requested Registrations. If a requested registration
pursuant to this Section 3 involves an underwritten offering and the managing
underwriter advises the Company in writing that, in its opinion, the number of
securities requested to be included in such registration (including securities
of the Company which are not Registrable Securities) exceeds the number which
can be sold in such offering, the Company will include in such registration only
the Registrable Securities requested to be included in such registration. In the
event that the number of Registrable Securities requested to be included in such
registration exceeds the number which, in the opinion of such managing
underwriter, can be sold, the number of such Registrable Securities to be
included in such registration shall be allocated pro rata among all requesting
Holders on the basis of the relative number of shares of Registrable Securities
then held by each such Holder (provided that any shares thereby allocated to any
such Holder that exceed such Holder's request shall be reallocated among the
remaining requesting Holders in like manner). In the event that the number of
Registrable Securities requested to be included in such registration is less
than the number which, in the opinion of the managing underwriter, can be sold,
the Company may include in such registration the securities the Company proposes
to sell up to the number of securities that, in the opinion of the underwriter,
can be sold.
(g) Additional Rights. If the Company at any time grants to any
other holders of Common Stock any rights to request the Company to effect the
registration under the Securities Act of any such shares of Common Stock on
terms more favorable to such holders than the terms set forth in this Section 3,
the terms of this Section 3 shall be deemed amended or supplemented to the
extent necessary to provide the Holders such more favorable rights and benefits.
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4. Registration Procedures. If and whenever the Company is required
to use its best efforts to effect or cause the registration of any Registrable
Securities under the Securities Act as provided in this Agreement, the Company
will, as expeditiously as possible:
(i) prepare and, in any event within 120 days after the end of
the period within which a request for registration may be given to the
Company, file with the SEC a registration statement with respect to such
Registrable Securities and use its best efforts to cause such registration
statement to become effective, provided, however, that the Company may
discontinue any registration of its securities which is being effected
pursuant to Section 2 at any time prior to the effective date of the
registration statement relating thereto;
(ii) prepare and file with the SEC such amendments and
supplements to such registration statement and the prospectus used in
connection therewith as may be necessary to keep such registration
statement effective for a period not in excess of 270 days and to comply
with the provisions of the Securities Act, the Exchange Act and the rules
and regulations of the SEC thereunder with respect to the disposition of
all securities covered by such registration statement during such period
in accordance with the intended methods of disposition by the seller or
sellers thereof set forth in such registration statement; provided that
before filing a registration statement or prospectus, or any amendments or
supplements thereto, the Company will furnish to counsel selected pursuant
to Section 7 hereof by the Holders of the Registrable Securities covered
by such registration statement to represent such Holders, copies of all
documents proposed to be filed, which documents will be subject to the
review of such counsel;
(iii) furnish to each seller of such Registrable Securities such
number of copies of such registration statement and of each amendment and
supplement thereto (in each case including all exhibits filed therewith,
including any documents incorporated by reference), such number of copies
of the prospectus included in such registration statement (including each
preliminary prospectus and summary prospectus), in conformity with the
requirements of the Securities Act, and such other documents as such
seller may reasonably request in order to facilitate the disposition of
the Registrable Securities by such seller;
(iv) use its best efforts to register or qualify such Registrable
Securities covered by such registration in such jurisdictions as each
seller shall reasonably request, and do any and all other acts and things
which may be reasonably necessary or advisable to enable such seller to
consummate the disposition in such jurisdictions of the Registrable
Securities owned by such Seller, except that the Company shall not for any
such purpose be required to qualify generally to do business as a foreign
corporation in any jurisdiction where, but for the requirements of this
clause (iv), it would not be obligated to be so qualified, to subject
itself to taxation in any such jurisdiction or to consent to general
service of process in any such jurisdiction;
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(v) use its best efforts to cause such Registrable Securities
covered by such registration statement to be registered with or approved
by such other governmental agencies or authorities as may be necessary to
enable the seller or sellers thereof to consummate the disposition of such
Registrable Securities;
(vi) notify each seller of any such Registrable Securities
covered by such registration statement, at any time when a prospectus
relating thereto is required to be delivered under the Securities Act
within the appropriate period mentioned in clause (ii) of this Section 4,
of the Company's becoming aware that the prospectus included in such
registration statement, as then in effect, includes an untrue statement of
a material fact or omits to state a material fact required to be stated
therein or necessary to make the statements therein not misleading in the
light of the circumstances then existing, and at the request of any such
seller, prepare and furnish to such seller a reasonable number of copies
of an amended or supplemental prospectus as may be necessary so that, as
thereafter delivered to the purchasers of such Registrable Securities,
such prospectus shall not include an untrue statement of a material fact
or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading in the light of
the circumstances then existing;
(vii) otherwise use its best efforts to comply with all applicable
rules and regulations of the SEC, and make available to its security
holders, as soon as reasonably practicable (but not more than eighteen
months) after the effective date of the registration statement, an
earnings statement which shall satisfy the provisions of Section 11(a) of
the Securities Act and the rules and regulations promulgated thereunder;
(viii) (A) use its best efforts to list such Registrable Securities
on any securities exchange on which the Common Stock is then listed (or if
the Common Stock is not then listed, on any securities exchange requested)
if such Registrable Securities are not already so listed and if such
listing is then permitted under the rules of such exchange; (B) if such
Registrable Securities are Common Equivalent Securities, upon the
reasonable request of sellers of a majority of shares of such Registrable
Securities, use its best efforts to list the Common Equivalent Securities
and, if requested, the Common Stock underlying such Common Equivalent
Securities, notwithstanding that at the time of request such sellers hold
only Common Equivalent Securities, on any securities exchange so
requested, if such Registrable Securities are not already so listed, and
if such listing is then permitted under the rules of such exchange; (C)
and use its best efforts to provide a transfer agent and registrar for
such Registrable Securities covered by such registration statement not
later than the effective date of such registration statement;
(ix) enter into such customary agreements (including an
underwriting agreement in customary form), which may include
indemnification provisions in favor of underwriters and other persons in
addition to, or in substitution for the provisions of Section 5 hereof,
and take such other actions as sellers of a majority of shares of such
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Registrable Securities or the underwriters, if any, reasonably requested
in order to expedite or facilitate the disposition of such Registrable
Securities;
(x) obtain a "cold comfort" letter or letters from the Company's
independent public accounts in customary form and covering matters of the
type customarily covered by "cold comfort" letters as the seller or
sellers of a majority of shares of such Registrable Securities shall
reasonably request (provided that Registrable Securities constitute at
least 25% of the securities covered by such registration statement);
(xi) make available for inspection by any seller of such
Registrable Securities covered by such registration statement, by any
underwriter participating in any disposition to be effected pursuant to
such registration statement and by any attorney, accountant or other agent
retained by any such seller or any such underwriter, all pertinent
financial and other records, pertinent corporate documents and properties
of the Company, and cause all of the Company's officers, directors and
employees to supply all information reasonably requested by any such
seller, underwriter, attorney, accountant or agent in connection with such
registration statement;
(xii) notify counsel (selected pursuant to Section 7 hereof) for
the Holders of Registrable Securities included in such registration
statement and the managing underwriter or agent, immediately, and confirm
the notice in writing (i) when the registration statement, or any
post-effective amendment to the registration statement, shall have become
effective, or any supplement to the prospectus or any amendment prospectus
shall have been filed, (ii) of the receipt of any comments from the SEC,
(iii) of any request of the SEC to amend the registration statement or
amend or supplement the prospectus or for additional information, and (iv)
of the issuance by the SEC of any stop order suspending the effectiveness
of the registration statement or of any order preventing or suspending the
use of any preliminary prospectus, or of the suspension of the
qualification of the registration statement for offering or sale in any
jurisdiction, or of the institution or threatening of any proceedings for
any of such purposes;
(xiii) make every reasonable effort to prevent the issuance of any
stop order suspending the effectiveness of the registration statement or
of any order preventing or suspending the use of any preliminary
prospectus and, if any such order is issued, to obtain the withdrawal of
any such order at the earliest possible moment;
(xiv) if requested by the managing underwriter or agent or any
Holder of Registrable Securities covered by the registration statement,
promptly incorporate in a prospectus supplement or post-effective
amendment such information as the managing underwriter or agent or such
Holder reasonably requests to be included therein, including, without
limitation, with respect to the number of Registrable Securities being
sold by such Holder to such underwriter or agent, the purchase price being
paid therefor by such underwriter or agent and with respect to any other
terms of the
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underwritten offering of the Registrable Securities to be sold in such
offering; and make all required filings of such prospectus supplement or
post-effective amendment as soon as practicable after being notified of
the matters incorporated in such prospectus supplement or post-effective
amendment;
(xv) cooperate with the Holders of Registrable Securities covered
by the registration statement and the managing underwriter or agent, if
any, to facilitate the timely preparation and delivery of certificates
(not bearing any restrictive legends) representing securities to be sold
under the registration statement, and enable such securities to be in such
denominations and registered in such names as the managing underwriter or
agent, if any, or such Holders may request;
(xvi) obtain for delivery to the Holders of Registrable Securities
being registered and to the underwriter or agent an opinion or opinions
from counsel for the Company in customary form and in form, substance and
scope reasonably satisfactory to such Holders, underwriters or agents and
their counsel; and
(xvii) cooperate with each seller of Registrable Securities and
each underwriter or agent participating in the disposition of such
Registrable Securities and their respective counsel in connection with any
filings required to be made with the NASD.
The Company may require each seller of Registrable Securities as to
which any registration is being effected to furnish the Company with such
information regarding such seller and pertinent to the disclosure requirements
relating to the registration and the distribution of such securities as the
Company may from time to time reasonably request in writing.
Each Holder of Registrable Securities agrees that, upon receipt of
any notice from the Company of the happening of any event of the kind described
in clause (vi) of this Section 4, such Holder will forthwith discontinue
disposition of Registrable Securities pursuant to the registration statement
covering such Registrable Securities until such Holder's receipt of the copies
of the supplemented or amended prospectus contemplated by clause (vi) of this
Section 4, and, if so directed by the Company, such Holder will deliver to the
Company (at the Company's expense) all copies, other than permanent file copies
then in such Holder's possession, of the prospectus covering such Registrable
Securities current at the time of receipt of such notice. In the event the
Company shall give any such notice, the period mentioned in clause (ii) of this
Section 4 shall be extended by the number of days during the period from and
including the date of the giving of such notice pursuant to clause (vi) of this
Section 4 and including the date when each seller of Registrable Securities
covered by such registration statement shall have received the copies of the
supplemented or amended prospectus contemplated by clause (vi) of this Section
4.
5. Indemnification. (a) Indemnification by the Company. In the event
of any registration of any securities of the Company under the Securities Act
pursuant to Section 2 or 3, the Company will, and it hereby does, indemnify and
hold harmless, to the extent
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permitted by law, the seller of any Registrable Securities covered by such
registration statement, each affiliate of such seller and their respective
directors and officers, general and limited partners or members (including any
director, officer, affiliate, employee, agent and controlling Person of any of
the foregoing), each other Person who participates as an underwriter in the
offering or sale of such securities and each other Person, if any, who controls
such seller or any such underwriter within the meaning of the Securities Act,
against any and all losses, claims, damages or liabilities, joint or several,
and expenses (including reasonable attorney's fees and reasonable expenses of
investigation) to which such indemnified party may become subject under the
Securities Act, common law or otherwise, insofar as such losses, claims, damages
or liabilities (or actions or proceedings in respect thereof, whether or not
such indemnified party is a party thereto) arise out of or are based upon (a)
any untrue statement or alleged untrue statement of any material fact contained
in any registration statement under which such securities were registered under
the Securities Act, any preliminary, final or summary prospectus contained
therein, or any amendment or supplement thereto, or (b) any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein (in the case of a prospectus, in light
of the circumstances under which they were made) not misleading, and the Company
will reimburse such indemnified party for any legal or any other expenses
reasonably incurred by it in connection with investigating or defending against
any such loss, claim, liability, action or proceeding; provided that the Company
shall not be liable to any indemnified party in any such case to the extent that
any such loss, claim, damage, liability (or action or proceeding in respect
thereof) or expense arises out of or is based upon any untrue statement or
alleged untrue statement or omission or alleged omission made in such
registration statement or amendment or supplement thereto or in any such
preliminary, final or summary prospectus in reliance upon and in conformity with
written information furnished to the Company through an instrument duly executed
by such seller specifically stating that it is for use in the preparation
thereof. Such indemnity shall remain in full force and effect regardless of any
investigation made by or on behalf of such seller or any indemnified party and
shall survive the transfer of such securities by such seller.
(b) Indemnification by the Seller. The Company may require, as a
condition to including any Registrable Securities in any registration statement
filed in accordance with Section 4 herein, that the Company shall have received
an undertaking reasonably satisfactory to it from the prospective seller of such
Registrable Securities or any underwriter to indemnify and hold harmless (in the
same manner and to the same extent as set forth in subdivision (a) of this
Section 5) the Company and all other prospective sellers with respect to any
untrue statement or alleged untrue statement in or omission or alleged omission
from such registration statement, any preliminary, final or summary prospectus
contained therein, or any amendment or supplement, if such untrue statement or
alleged untrue statement or omission or alleged omission was made in reliance
upon and in conformity with written information furnished to the Company through
an instrument duly executed by such seller or underwriter specifically stating
that it is for use in the preparation of such registration statement,
preliminary, final or summary prospectus or amendment or supplement, or a
document incorporated by reference into any of the foregoing. Such indemnity
shall remain in full force and effect regardless of any investigation made by or
on behalf of the Company or any of the prospective sellers, or any of their
respective affiliates, directors, officers or
-11-
controlling Persons and shall survive the transfer of such securities by such
seller. In no event shall the liability of any selling Holder of Registrable
Securities hereunder be greater in amount than the dollar amount of the proceeds
received by such Holder upon the sale of the Registrable Securities giving rise
to such indemnification obligation.
(c) Notices of Claims, Etc. Promptly after receipt by an indemnified
party hereunder of written notice of the commencement of any action or
proceeding with respect to which a claim for indemnification may be made
pursuant to this Section 5, such indemnified party will, if a claim in respect
thereof is to be made against an indemnifying party, give written notice to the
latter of the commencement of such action; provided that the failure of the
indemnified party to give notice as provided herein shall not relieve the
indemnifying party of its obligations under the preceding subdivisions of this
Section 5, except to the extent that the indemnifying party is actually
prejudiced by such failure to give notice. In case any such action is brought
against an indemnified party, unless in such indemnified party's reasonable
judgment a conflict of interest between such indemnified party and indemnifying
parties may exist in respect of such claim, the indemnifying party will be
entitled to participate in and to assume the defense thereof, jointly with any
other indemnifying party similarly notified to the extent that it may wish, with
counsel reasonably satisfactory to such indemnified party, and after notice from
the indemnifying party to such indemnified party of its election so to assume
the defense thereof, the indemnifying party will not be liable to such
indemnified party for any legal or other expenses subsequently incurred by the
latter in connection with the defense thereof other than reasonable costs of
investigation. No indemnifying party will consent to entry of any judgment or
enter into any settlement which does not include as an unconditional term
thereof, the giving by the claimant or plaintiff to such indemnified party of a
release from all liability in respect to such claim or litigation.
(d) Contribution. If the indemnification provided for in this
Section 5 from the indemnifying party is unavailable to an indemnified party
hereunder in respect of any losses, claims, damages, liabilities or expenses
referred to herein, then the indemnifying party, in lieu of indemnifying such
indemnified party, shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages, liabilities or
expenses in such proportion as is appropriate to reflect the relative fault of
the indemnifying party and indemnified parties in connection with the actions
which resulted in such losses, claims, damages, liabilities or expenses, as well
as any other relevant equitable considerations. The relative fault of such
indemnifying party and indemnified parties shall be determined by reference to,
among other things, whether any action in question, including any untrue or
alleged untrue statement of a material fact or omission or alleged omission to
state a material fact, has been made by, or relates to information supplied by,
such indemnifying party or indemnified parties, and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such action. The amount paid or payable by a party under this Section 5(d) as a
result of the losses, claims, damages, liabilities and expenses referred to
above shall be deemed to include any legal or other fees or expenses reasonably
incurred by such party in connection with any investigation or proceeding.
The parties hereto agree that it would not be just and equitable if
contribution pursuant to this Section 5(d) were determined by pro rata
allocation or by any other method
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of allocation which does not take account of the equitable considerations
referred to in the immediately preceding paragraph. No Person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any Person who was not
guilty of such fraudulent misrepresentation.
(e) Other Indemnification. Indemnification similar to that specified
in the preceding subdivisions of this Section 5 (with appropriate modifications)
shall be given by the Company and each seller of Registrable Securities with
respect to any required registration or other qualification of securities under
any federal or state law or regulation or governmental authority other than the
Securities Act.
(f) Non-Exclusivity. The obligations of the parties under this
Section 5 shall be in addition to any liability which any party may otherwise
have to any other party.
6. Rule 144. The Company covenants that it will file the reports
required to be filed by it under the Securities Act and the Exchange Act and the
rules and regulations adopted by the SEC thereunder (or, if the Company is not
required to file such reports, it will, upon the request of any Holder of
Registrable Securities, make publicly available such information), and it will
take such further action as any Holder of Registrable Securities may reasonably
request, all to the extent required from time to time to enable such Holder to
sell shares of Registrable Securities without registration under the Securities
Act within the limitation of the exemptions provided by (i) Rule 144 under the
Securities Act, as such Rule may be amended from time to time, or (ii) any
similar rule or regulation hereafter adopted by the SEC. Upon the request of any
Holder of Registrable Securities, the Company will deliver to such Holder a
written statement as to whether it has complied with such requirements.
Notwithstanding anything contained in this Section 6, the Company may deregister
under Section 12 of the Exchange Act if it then is permitted to do so pursuant
to the Exchange Act and the rules and regulations thereunder.
7. Selection of Counsel. In connection with any registration of
Registrable Securities pursuant to Sections 2 and 3 hereof, the Holders of a
majority of the Registrable Securities covered by any such registration may
select one counsel to represent all Holders of Registrable Securities covered by
such registration; provided, however, that in the event that the counsel
selected as provided above is also acting as counsel to the Company in
connection with such registration, the remaining Holders shall be entitled to
select one additional counsel to represent all such remaining Holders.
8. Miscellaneous. (a) Other Investors. The Company may enter into
agreements with other purchasers of Common Stock who are then employees of the
Company (or its successor) or any of its subsidiaries, making them parties
hereto (and thereby giving them all, or a portion, of the rights, preferences
and privileges of an original party hereto) with respect to additional shares of
Common Stock (the "Supplemental Agreements"); provided, however, that pursuant
to any such Supplemental Agreement, such purchaser expressly agrees to be bound
by all of the terms, conditions and obligations of this Agreement as if such
purchaser were an original party hereto. All shares of Common Stock issued or
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issuable pursuant to such Supplemental Agreements shall be deemed to be
Registrable Securities.
(b) Holdback Agreement. If any such registration shall be in
connection with an underwritten public offering, each Holder of Registrable
Securities agrees not to effect any public sale or distribution, including any
sale pursuant to Rule 144 under the Securities Act, of any equity securities of
the Company, or of any security convertible into or exchangeable or exercisable
for any equity security of the Company (in each case, other than as part of such
underwritten public offering), within 7 days before or such period not to exceed
180 days as the underwriting agreement may require (or such lesser period as the
managing underwriters may permit) after the effective date of such registration
(except as part of such registration), and the Company hereby also so agrees and
agrees to cause each other holder of any equity security, or of any security
convertible into or exchangeable or exercisable for any equity security, of the
Company purchased from the Company (at any time other than in a public offering)
to so agree.
(c) Amendments and Waivers. This Agreement may be amended and the
Company may take any action herein prohibited, or omit to perform any act herein
required to be performed by it, only if the Company shall have obtained the
written consent to such amendment, action or omission to act, of the Holders of
a majority of the Registrable Securities then outstanding; provided, however,
that no amendment, waiver or consent to the departure from the terms and
provisions of this Agreement that is adverse to either Common Stock Partnership
or any of their respective successors and assigns shall be effective as against
any such Person for so long as such Person holds any Registrable Securities
unless consented to in writing by such Person. Each Holder of any Registrable
Securities at the time or thereafter outstanding shall be bound by any consent
authorized by this Section 8(c), whether or not such Registrable Securities
shall have been marked to indicate such consent.
(d) Successors, Assigns and Transferees. This Agreement shall be
binding upon and shall inure to the benefit of the parties hereto and their
respective successors and assigns. In addition, and whether or not any express
assignment shall have been made, the provisions of this Agreement which are for
the benefit of the parties hereto other than the Company shall also be for the
benefit of and enforceable by any subsequent Holder of any Registrable
Securities, subject to the provisions contained herein. Without limitation to
the foregoing, in the event that either Common Stock Partnership distributes or
otherwise transfers any shares of the Registrable Securities to any of its
present or future general or limited partners, the Company hereby acknowledges
that the registration rights granted pursuant to this Agreement shall be
transferred to such partner or partners on a pro rata basis, and that at or
after the time of any such distribution or transfer, any such partner or group
of partners may designate a Person to act on its behalf in delivering any
notices or making any requests hereunder.
(e) Notices. All notices and other communications provided for
hereunder shall be in writing and shall be sent by first class mail, telex,
telecopier or hand delivery:
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(i) (A) if to the Company prior to the Merger, to:
KCLC Acquisition Corp.
0 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Xxxxxxx
(B) if to the Company following the Merger, to:
KinderCare Learning Centers, Inc.
0000 Xxxxxxxxxx Xxxxx
Xxxxxxxxxx, Xxxxxxx 00000
Attention: General Counsel
(ii) if to either Common Stock Partnership, to:
x/x Xxxxxxxx Xxxxxx Xxxxxxx & Co., L.P.
0 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Xxxxxxx
with a copy to:
Xxxxxxx Xxxxxxx & Xxxxxxxx
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx X. Xxxxxx, Esq
(iii) if to any other holder of Registrable Securities, to the
address of such other holder as shown in the stock record book of the
Company, or to such other address as any of the above shall have
designated in writing to all of the other above.
All such notices and communications shall be deemed to have been
given or made (1) when delivered by hand, (2) five business days after being
deposited in the mail, postage prepaid, (3) when telexed answer-back received or
(4) when telecopied, receipt acknowledged.
(f) Descriptive Headings. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning of terms contained herein.
(g) Severability. In the event that any one or more of the
provisions, paragraphs, words, clauses, phrases or sentences contained herein,
or the application thereof in any circumstances, is held invalid, illegal or
unenforceable in any respect for any reason, the validity, legality and
enforceability of any such provision, paragraph, word, clause, phrase or
sentence in every other respect and of the remaining provisions, paragraphs,
words, clauses,
-15-
phrases or sentences hereof shall not be in any way impaired, it being intended
that all rights, powers and privileges of the parties hereto shall be
enforceable to the fullest extent permitted by law.
(h) Counterparts. This Agreement may be executed in counterparts,
and by different parties on separate counterparts, each of which shall be deemed
an original, but all such counterparts shall together constitute one and the
same instrument.
(i) Governing Law; Submission to Jurisdiction. This Agreement shall
be governed by and construed and enforced in accordance with the laws of the
State of New York applicable to contracts made and to be performed therein. The
parties to this Agreement hereby agree to submit to the jurisdiction of the
courts of the State of New York, the courts of the United States of America for
the Southern District of New York, and appellate courts from any thereof in any
action or proceeding arising out of or relating to this Agreement.
(j) Specific Performance. The parties hereto acknowledge and agree
that irreparable damage would occur in the event that any of the provisions of
this Agreement were not performed in accordance with their specific terms or
were otherwise breached. Accordingly, it is agreed that they shall be entitled
to an injunction or injunctions to prevent breaches of the provision of this
Agreement and to enforce specifically the terms and provisions hereof in any
court of competent jurisdiction in the United States or any state thereof, in
addition to any other remedy to which they may be entitled at law or in equity.
-16-
IN WITNESS WHEREOF, each of the undersigned has executed this
Agreement or caused this Agreement to be duly executed on its behalf as of the
date first written above.
KCLC ACQUISITION CORP.
By: /s/ Xxxxxxx X. Xxxxxxx
---------------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: President
KLC ASSOCIATES, L.P.
By KKR Associates (KLC) L.P.,
as General Partner
By KKR-KLC L.L.C., as
General Partner
By: /s/ Xxxxxxx X. Xxxxxxx
---------------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Member
KKR PARTNERS II, L.P.
By KKR ASSOCIATES L.P., as
General Partner
By: /s/ Xxxxxxx X. Xxxxxxx
---------------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: General Partner
-17-
ACKNOWLEDGEMENT
The undersigned authorized officer of KinderCare Learning Centers, Inc. is aware
of this Registration Rights Agreement and acknowledges that KinderCare Learning
Centers, Inc. will be bound by the terms hereof as successor to KCLC Acquisition
Corp. by merger.
KINDERCARE LEARNING CENTERS, INC.
By /s/ Xxxxxx X. Xxxxxxx
-----------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: Senior Vice President
Chief Financial Officer
-18-
