SALE PARTICIPATION AGREEMENT
February 14, 1997
Xxxxx X. Xxxxxxx
Chief Executive Officer
KinderCare Learning Centers, Inc.
0000 Xxxxxxxxxx Xxxxx
Xxxxxxxxxx, Xxxxxxx 00000
Dear Xx. Xxxxxxx:
You have entered into a Stockholder's Agreement, dated as of February
14, 1997 between KinderCare Learning Centers, Inc., a Delaware corporation ("the
Company"), and you (the Stockholder's Agreement") relating to the purchase from
the Company of shares of the common stock, par value $.01 per share, of the
Company. The undersigned, KKR Partners II, L.P., a Delaware limited partnership
("KKR Partners"), and KLC Associates, L.P., a Delaware limited partnership ("KLC
Associates"), also have purchased shares of common stock of the Company and
hereby agree with you as follows, effective upon such purchase of common stock
by you:
1. In the event that at any time KKR Partners, or KLC Associates, as
the case may be (each, a "Selling Partnership" and collectively, the "Selling
Partnerships"), proposes to sell for cash or any other consideration any shares
of common stock of the Company owned by it, in any transaction other than a
Public Offering (as defined in the Stockholder's Agreement) or a sale to an
affiliate of KKR Partners or KLC Associates, as the case may be, the Selling
Partnership will notify you or your Purchaser's Estate or Purchaser's Trust or
Purchaser's L.P. (as such terms are defined in Section 2 of the Stockholder's
Agreement), as the case may be, in writing (a "Notice") of such proposed sale (a
"Proposed Sale") and the material terms of the Proposed Sale as of the date of
the Notice (the "Material Terms") promptly, and in any event not less than 15
days prior to the consummation of the Proposed Sale and not more than 5 days
after the execution of the definitive agreement relating to the Proposed Sale,
if any (the "Sale Agreement"). If within 10 days of your or your Purchaser's
Estate's or Purchaser's Trust's or Purchaser's L.P.'s, as the case may be,
receipt of such Notice the Selling Partnership receives from you or your
Purchaser's Estate or Purchaser's Trust or Purchaser's L.P., as the case may be,
a written request (a "Request") to include Common Stock held by you or your
Purchaser's Estate or Purchaser's Trust or Purchaser's L.P., as
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the case may be ("Common Stock"), in the Proposed Sale (which Request shall be
irrevocable unless (a) there shall be a material adverse change in the Material
Terms or (b) if otherwise mutually agreed to in writing by you or your
Purchaser's Estate or Purchaser's Trust or Purchaser's L.P., as the case may be,
and the Selling Partnership), the Common Stock held by you will be so included
as provided herein; provided that only one Request, which shall be executed by
you or your Purchaser's Estate or Purchaser's Trust or Purchaser's L.P., as the
case may be, may be delivered with respect to any Proposed Sale for all Common
Stock held by you or your Purchaser's Estate or Purchaser's Trust or Purchaser's
L.P. Promptly after the consummation of the transactions contemplated thereby,
the Selling Partnership will furnish you, your Purchaser's Trust, your
Purchaser's L.P. or your Purchaser's Estate with a copy of the Sale Agreement,
if any. In the event that both KKR Partners and KLC Associates propose to sell
shares of common stock in the Proposed Sale, the term "Selling Partnership"
shall refer only to KLC Associates and not to KKR Partners.
2. The number of shares of Common Stock which you or your Purchaser's
Estate or Purchaser's Trust or Purchaser's L.P., as the case may be, will be
permitted to include in a Proposed Sale pursuant to a Request will be the lesser
of (a) the sum of the number of shares of Common Stock then owned by you or your
Purchaser's Estate or Purchaser's Trust or Purchaser's L.P., as the case may be,
plus all shares of Common Stock which you are then entitled to acquire under an
unexercised option to purchase shares of Common Stock, to the extent such option
is then vested or would become vested as a result of the consummation of the
Proposed Sale and (b) the sum of the shares of Common Stock then owned by you or
your Purchaser's Estate or Purchaser's Trust or Purchaser's L.P., as the case
may be, plus all shares of Common Stock which you are entitled to acquire under
an unexercised option to purchase shares of Common Stock, whether or not fully
vested, multiplied by a percentage calculated by dividing the aggregate number
of shares of Common Stock which KKR Partners and KLC Associates propose to sell
in the Proposed Sale by the total number of shares of Common Stock owned by the
Selling Partnership or, in the case both KKR Partners and KLC Associates propose
to sell in the Proposed Sale, KKR Partners and KLC Associates. If one or more
holders of shares of Common Stock who have been granted the same rights granted
to you or your Purchaser's Estate or Purchaser's Trust or Purchaser's L.P., as
the case may be, hereunder elect not to include the maximum number of shares of
Common Stock which such holders would have been permitted to include in a
Proposed Sale (the "Eligible Shares"), KKR Partners or KLC Associates, or such
remaining holders of shares of Common Stock, or any of them, may sell in the
Proposed Sale a number of additional shares of Common Stock owned by any of them
equal to their pro rata portion of the number of Eligible Shares not included in
the Proposed Sale, based on the relative number of shares of Common Stock then
held by each such holder, and such additional shares of Common Stock which any
such holder or
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holders propose to sell shall not be included in any calculation made pursuant
to the first sentence of this Paragraph 2 for the purpose of determining the
number of shares of Common Stock which you or your Purchaser's Estate or
Purchaser's Trust or Purchaser's L.P., as the case may be, will be permitted to
include in a Proposed Sale. KKR Partners and KLC Associates, or any of them, may
sell in the Proposed Sale additional shares of Common Stock owned by any of them
equal to any remaining Eligible Shares which will not be included in the
Proposed Sale pursuant to the foregoing.
3. Except as may otherwise be provided herein, shares of Common Stock
subject to a Request will be included in a Proposed Sale pursuant hereto and in
any agreements with purchasers relating thereto on the same terms and subject to
the same conditions applicable to the shares of Common Stock which the Selling
Partnership proposes to sell in the Proposed Sale. Such terms and conditions
shall include, without limitation: the sales price; the payment of fees,
commissions and expenses; the provision of, and representation and warranty as
to, information requested by the Selling Partnership; and the provision of
requisite indemnifications; provided that any indemnification provided by you,
your Purchaser's Estate or your Purchaser's Trust or your Purchaser's L.P. shall
be pro rata in proportion with the number of shares of Common Stock to be sold.
4. Upon delivering a Request, you or your Purchaser's Estate or
Purchaser's Trust or Purchaser's L.P., as the case may be, will, if requested by
the Selling Partnership, execute and deliver a custody agreement and power of
attorney in form and substance satisfactory to the Selling Partnership with
respect to the shares of Common Stock which are to be sold by you or your
Purchaser's Estate or Purchaser's Trust or Purchaser's L.P., as the case may be,
pursuant hereto (a "Custody Agreement and Power of Attorney"). The Custody
Agreement and Power of Attorney will provide, among other things, that you or
your Purchaser's Estate or Purchaser's Trust or Purchaser's L.P., as the case
may be, will deliver to and deposit in custody with the custodian and
attorney-in-fact named therein a certificate or certificates representing such
shares of Common Stock (duly endorsed in blank by the registered owner or owners
thereof) and irrevocably appoint said custodian and attorney-in-fact as your or
your Purchaser's Estate's or Purchaser's Trust's or Purchaser's L.P.'s, as the
case may be, agent and attorney-in-fact with full power and authority to act
under the Custody Agreement and Power of Attorney on your or your Purchaser's
Estate's or Purchaser's Trust's or Purchaser's L.P.'s, as the case may be,
behalf with respect to the matters specified therein.
5. Your or your Purchaser's Estate's or Purchaser's Trust's or
Purchaser's L.P.'s, as the case may be, right pursuant hereto to participate in
a Proposed Sale shall be contingent on your or your Purchaser's Estate's or
Purchaser's Trust's or Purchaser's L.P.'s, as the case may be, strict compliance
with
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each of the provisions hereof and your or your Purchaser's Estate's or
Purchaser's Trust's or Purchaser's L.P.'s, as the case may be, willingness to
execute such documents in connection therewith as may be reasonably requested by
the Selling Partnership.
6. In the event of a Proposed Sale pursuant to Section 1 hereof, the
Selling Partnerships may elect, by so specifying in the Notice, to require you
or your Purchaser's Estate or Purchaser's Trust or Purchaser's L.P., as the case
may be, to, and you or your Purchaser's Estate or Purchaser's Trust or
Purchaser's L.P., as the case may be, will, participate in such Proposed Sale in
accordance with the terms and provisions of Section 2, 3 and 4 hereof.
7. The obligations of KKR Partners and KLC Associates hereunder shall
extend only to you or your Purchaser's Estate or Purchaser's Trust or
Purchaser's L.P., as the case may be, and no other of your or your Purchaser's
Estate's or Purchaser's Trust's or Purchaser's L.P.'s, as the case may be,
successors or assigns shall have any rights pursuant hereto.
8. This Agreement shall terminate and be of no further force and
effect on the fifth anniversary of the first occurrence of a Public Offering (as
defined in the Stockholder's Agreement).
9. All notices and other communications provided for herein shall be
in writing and shall be deemed to have been duly given when delivered to the
party to whom it is directed:
(a) If to KKR Partners or KLC Associates, to it at the following
address:
x/x Xxxxxxxx Xxxxxx Xxxxxxx & Co.
0 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxxx X. Xxxxxxx
with a copy to:
Xxxxxxx Xxxxxxx & Xxxxxxxx
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxx X. Xxxxxx, Esq.
(b) If to you, to you at the address first set forth above herein;
(c) If to your Purchaser's Estate or Purchaser's Trust or Purchaser's
L.P., at the address provided to such partnerships by such
entity;
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or at such other address as any of the above shall have specified by notice in
writing delivered to the others by certified mail.
10. 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. No suit, action or
proceeding with respect to this Agreement may be brought in any court or before
any similar authority other than in a court of competent jurisdiction in the
States of Delaware (or if the Company reincorporates in another state, of that
state) or New York, as the Selling Partnerships may elect in their sole
discretion, and you hereby submit to the non-exclusive jurisdiction of such
courts for the purpose of such suit, proceeding or judgment. You hereby
irrevocably waive any right which you may have had to bring such an action in
any other court, domestic or foreign, or before any similar domestic or foreign
authority.
11.If KKR Partners or KLC Associates transfers its interest in the
Company to an affiliate of KKR Partners or KLC Associates, as the case may be,
such affiliate shall assume the obligations hereunder of KKR Partners or KLC
Associates, as the case may be.
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It is the understanding of the undersigned that you are aware that no
Proposed Sale presently is contemplated and that such a sale may never occur.
If the foregoing accurately sets forth our agreement, please
acknowledge your acceptance thereof in the space provided below for that
purpose.
Very truly yours,
KKR PARTNERS II, L.P.
By: KKR Associates L.P., the
General Partner
By: _______________________________
KLC ASSOCIATES, L.P.
By: KKR Associates L.P., the
General Partner
By: _______________________________
Accepted and agreed to:
By: ______________________________
XXXXX X. XXXXXXX
