FORM OF MANAGEMENT STOCKHOLDER'S AGREEMENT
This Stockholder's Agreement (this "Agreement") is entered into as of
_____________ __, 199_ between KINDERCARE LEARNING CENTERS, INC., a Delaware
corporation (the "Company"), and _________________ (the "Purchaser") (the
Company and the Purchaser being hereinafter collectively referred to as the
"Parties").
RECITALS
On February 13, 1997, KCLC Acquisition Corp., a Delaware corporation
("KCLC"), 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 key employees of the
Company at a price of $19.00 per share of Common Stock (the "Per Share Purchase
Price").
This Agreement is one of several other agreements ("Other
Purchasers' Agreements") which have been, or which in the future will be,
entered into between the Company and other individuals who are or will be key
employees of the Company or one of its subsidiaries (collectively, the "Other
Purchasers").
The Company has agreed to sell, and the Purchaser has agreed to buy,
___________ shares of Common Stock (the "Purchase Stock") to Purchaser at the
Per Share Purchase Price for an aggregate purchase price of $___________. In
addition, the Company will grant to Purchaser an option or options to purchase
_________ shares of Common Stock ("Options") at an exercise price of $19.00 per
share of Common Stock pursuant to the terms of the 1997 Stock Purchase and
Option Plan for Key Employees of KinderCare Learning Centers, Inc. and
Subsidiaries (the "Option Plan") and the 1997 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) Subject to the terms and conditions hereinafter set forth, the
Purchaser hereby subscribes for and shall purchase, and the Company shall sell
to the Purchaser, the Purchase Stock at the Per Share Purchase Price on
_____________
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____, 199__ (the "Purchase Date"). The Company shall have no obligation to sell
any Purchase Stock to any person who (i) is a resident or citizen of a state or
other jurisdiction in which the sale of the Purchase Stock to him or her would
constitute a violation of the securities or "blue sky" laws of such jurisdiction
or (ii) is not an employee of the Company or any of its subsidiaries on the
Purchase Date.
(b) The aggregate price for the Purchase Stock shall be $__________
(such amount hereinafter sometimes referred to as the "Purchase Price"). The
Purchase Price shall be paid in the following manner: the Purchaser shall
deliver to the Company at least three business days prior to the Purchase Date
cash or a certified bank check or checks payable to the order of the Company in
the aggregate amount of the Purchase Price. On the Purchase Date, in
consideration of receipt of the Purchase Price, the Company will deliver to the
Purchaser a certificate, registered in the Purchaser's name, for the Purchase
Stock, which shall be subject to the terms and conditions hereinafter set forth.
(c)Subject to the terms and conditions hereinafter set forth and upon
and as of the Purchase Date, the Company shall issue to the Purchaser the
Options and the Parties shall execute and deliver to each other copies of the
Non-Qualified Stock Option Agreement concurrently with the issuance of the
Options.
2. Purchaser's Representations, Warranties and Agreements.
(a) The Purchaser hereby represents and warrants that the Purchaser 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 the Purchaser's 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 the Purchaser will not, directly or indirectly,
offer, transfer, sell, assign, pledge, hypothecate or otherwise dispose of any
shares of the Stock unless (A) such offer, transfer, sale, assignment, pledge,
hypothecation or other disposition complies with Section 3 of this Agreement and
(B) the offer, 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") and in compliance with
applicable state securities laws. 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
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The Purchase Price shall be funded through a combination of cash and
borrowing from the Company, which borrowing shall be pursuant to a Note and
Pledge Agreement.
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connection therewith: (x) a transfer made pursuant to Section 4, 5 or 6 hereof,
(y) a transfer upon the death of the Purchaser to the Purchaser's 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 and (z) 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, the Purchaser's spouse or
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.
(b) In addition to any legends required by the Act or applicable state
securities laws, the certificate (or 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 TRANSFER, SALE,
ASSIGNMENT, PLEDGE, HYPOTHECATION OR OTHER DISPOSITION
COMPLIES WITH THE PROVISIONS OF THE MANAGEMENT STOCKHOLDER'S
AGREEMENT DATED AS OF _______________ __199_, 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 the Purchaser has been advised
that (i) a restrictive legend in the form heretofore set forth shall be placed
on the certificates representing the Stock and (ii) a notation shall be made in
the appropriate records of the Company indicating that the Stock is subject to
restrictions on transfer and appropriate stop transfer restrictions will be
issued to the Company's transfer agent with respect to the Stock. If the
Purchaser is an Affiliate, the Purchaser also acknowledges that (1) Rule 144
promulgated under the Act may not be 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), (2) 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 and
(3) 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.
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(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 (the "SEC").
(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 the Purchaser has been
given the opportunity to obtain any additional information or documents and to
ask questions and receive answers about such information and documents, the
Company and the business and prospects of the Company which the Purchaser deems
necessary to evaluate the merits and risks related to the Purchaser's investment
in the Stock and to verify the information received as indicated in this Section
2(f), and the Purchaser 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) the Purchaser's
financial condition is such that the Purchaser can afford to bear the economic
risk of holding the Stock for an indefinite period of time and has adequate
means for providing for the Purchaser's current needs and personal
contingencies, (ii) the Purchaser can afford to suffer a complete loss of the
Purchaser's investment in the Stock, (iii) all information which the Purchaser
has provided to the Company concerning the Purchaser and the Purchaser's
financial position is correct and complete as of the date of this Agreement,
(iv) the Purchaser 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) the Purchaser's knowledge and experience in
financial and business matters are such that the Purchaser is capable of
evaluating the merits and risks of the purchase of the Stock as contemplated by
this Agreement.
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3. Restriction on Transfer.
Except for transfers permitted by clauses (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 not to
transfer, sell, assign, pledge, hypothecate or otherwise dispose of any shares
of the Stock at any time until the fifth anniversary of __________ __, 199_ (the
"Commencement Date") [which shall be the later of February 14, 1997 and the date
of hire of the Purchaser]. 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.
4. Right of First Refusal.
If at any time after the fifth anniversary of the Commencement Date
and 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
the Purchaser's 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 to be reduced to writing and shall notify the Company in writing of
the Purchaser's 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
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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 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 the
fifth anniversary of the Commencement Date, (i) the Purchaser is still in the
employ of the Company and (ii) the Purchaser either dies or becomes permanently
disabled, then the Purchaser or the Purchaser's Estate, 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 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 or the Purchaser's
Trust, 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 or the Purchaser's Estate, 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 or the Purchaser's Estate, as the case may be, of a certified bank
check or checks in the appropriate amount payable to the order of the Purchaser
or the Purchaser's Estate, 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 or the Purchaser's Estate, or his or her or its duly
authorized representative. For purposes of this Agreement, Purchaser shall be
deemed to have a "permanent disability" if the Purchaser is
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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 or the Purchaser's Estate, as the
case may be, if there exists and is continuing, or 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"). 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 the 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 or the Purchaser's Estate, 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 or the Purchaser's Estate, as
the case may be, shall have the right to withdraw any Redemption Notice which
has been pending for 60 or more days and which has remained unsatisfied because
of the provisions of Section 5(b).
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6. The Company's Option to Repurchase Stock and Options of
Purchaser.
(a) If, prior to the fifth anniversary of the Commencement Date, (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 fails to comply with the requirements set forth in
Section 2(a)(z), 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 or a Purchaser's Trust 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 active employment with the Company is terminated by the Company for
Cause, all Options shall terminate without any payment.
(b) If, prior to the fifth anniversary of the Commencement Date, 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 or a Purchaser's Trust
at the applicable Section 6(b) Repurchase Price determined in accordance with
Section 7 hereof.
(c) If, prior to the fifth anniversary of the Commencement Date, 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, 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 or a Purchaser's Trust , provided, however, that the Repurchase Price
shall be the Section 5 Repurchase Price.
(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 as "Call Events." The Company shall have a
period of 75 days from the date of a Call Event in which to give notice in
writing to 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 provided in Section 8, with respect to the
termination of outstanding Options held by the Purchaser.
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(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 or his, her 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 or the
Purchaser's Trust, 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 or a Purchaser's Trust, 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.
(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 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
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for a misdemeanor involving moral turpitude, or (z) which results in
demonstrable 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 all
salaried employees of the Company, (ii) a substantial reduction in Purchaser's
duties and responsibilities or change in the Purchaser's title, (iii) 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 or (iv) a
transfer of the Purchaser's primary workplace by more than fifty (50) miles from
the workplace as of the date hereof.
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 Commencement 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 to (i) prior to a Public Offering, (x) $19 less the decrease in Book
Value Per Share from the Commencement Date through the Repurchase Calculation
Date, if such Book Value Per Share has decreased, (y) $19 plus the product of
(A) the Unrestricted Percentage (as defined below) and (B) the increase in the
Book Value Per Share from the Commencement Date through the Repurchase
Calculation Date, if such Book Value Per Share has increased or (z) $19, if such
Book Value Per Share has neither decreased nor increased and (ii) after a Public
Offering, (x) the Market Price Per Share, if the Market Price Per Share is $19
or less or (y) $19 plus the product of (A) the Unrestricted Percentage and (B)
the Market Price Per Share less $19, if the Market Price Per Share is greater
than $19.
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(d) The Section 6(b) Repurchase Price shall be a per share Repurchase
Price equal 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
Commencement 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 Commencement
Date
After the first anniversary of the 20%
Commencement Date through and including
the second anniversary of the
Commencement Date
After the second anniversary of the 40%
Commencement Date through and including
the third anniversary of the Commencement
Date
After the third anniversary of the 60%
Commencement Date through and including
the fourth anniversary of the
Commencement Date
After the fourth anniversary of the 80%
Commencement Date through and including
the fifth anniversary of the Commencement
Date
After the fifth anniversary of the 100%
Commencement 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
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Act which has been declared effective by the SEC (other than a registration
statement on Form S-8) which results in an active trading market of 30% or more
of the outstanding shares of the Common Stock.
(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 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 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 the Per Share Purchase Price or at a different option exercise
price. The term "Stock" 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
13
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 the
Purchaser's 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.
(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 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) Effective upon the purchase of Common Stock pursuant to this
Agreement 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
14
(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 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 Purchaser, the Purchaser's Trust or the Purchaser's Estate a written request
(a "Request") to register shares of Stock held by the Purchaser, the Purchaser's
Estate or the Purchaser's Trust (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 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 and the Purchaser's Trust.
(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 or a Purchaser's Trust), 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.
15
(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 reallocated among the remaining
requesting Holders in like manner).
(e) Upon delivering a Request the Purchaser, the Purchaser's Estate or
Purchaser's Trust (or his or her 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 or
Purchaser's Trust (or his or her 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 or Purchaser's Trust'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 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 pursuant to this Agreement,
16
the Other Purchasers' Agreements and/or the stockholder's agreement dated as of
February 14, 1997 between Xxxxx X. Xxxxxxx ("Xxxxxxx") and the Company (the
"Xxxxxxx Stockholder's Agreement"), would result in a Blocking Event, then the
Company shall (i) first make purchases from, and payments to, Xxxxxxx with
respect to his Side-by-Side Equity (as defined in the Xxxxxxx Stockholder's
Agreement) for the maximum number of shares of Side-by-Side Equity without
resulting in a Blocking Event and (ii) after all of Xxxxxxx'x Side-by-Side
Equity has been purchased and paid for, make purchases from, and payments to,
the Purchaser, the Other Purchasers and Xxxxxxx pro rata (on the basis of the
proportion of the number of shares of Stock and the number of Options which
Xxxxxxx (with respect to Xxxxxxx'x Promote Equity (as defined in the Xxxxxxx
Stockholder's Agreement)), the Purchaser 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
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, Xxxxxxx, 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, the Xxxxxxx Stockholder's Agreement and the Other Purchasers'
Agreements, except that any purchase of Xxxxxxx'x Side-by-Side Equity by the
Company pursuant to the Xxxxxxx Stockholder's Agreement shall have a priority
over all other purchases of Stock or Options to be made by the Company under
this Agreement or the 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.
17
13. Covenant Regarding 83(b) Election.
Except as the Company may otherwise agree in writing, the Purchaser
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 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, the
Purchaser shall provide the Company with a copy of the instruments creating the
Purchaser's Trust and with the identity of the beneficiaries of the Purchaser's
Trust. The Purchaser shall notify the Company immediately prior to any change in
the identity of any beneficiary of the Purchaser's Trust.
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.
18
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 KKR
or an affiliate (as such term is defined in Section 12b-2 of the Securities
Exchange Act of 1934, as amended) of KKR ("KKR Affiliates" and, together with
KKR, the "KKR Entities") (ii) a sale by KKR or any KKR Affiliate 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 50% of the outstanding shares of the Common Stock of
the Company; if and only if any such event described in either (iii) (a) or (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 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
19
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 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 the Purchaser may now
or hereafter have to the laying of the venue of any suit, action or proceeding
arising out
20
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 the Purchaser 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 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:
21
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
the Purchaser's signature;
or at such other address as either party shall have specified by
notice in writing to the other.
22
26. Covenant Not to Compete; Confidential Information.
(a) In consideration of the Company entering into this Agreement with
the Purchaser, the Purchaser hereby agrees effective as of the Purchase Date,
for so long as the Purchaser is employed by the Company or one of its
subsidiaries and (x) in the event of termination or resignation for any reason
other than a termination by the Company without Cause or a resignation by the
Purchaser for Good Reason, for a period of six months thereafter or (y) in the
event of termination by the Company without Cause or resignation by the
Purchaser for Good Reason, for the shorter of (A) a period of six months
thereafter and (B) the period during which the Company pays the Purchaser
severance pay (the period in either (x) or (y), as applicable, being the
"Initial Noncompete Period"), the Purchaser shall not, directly or indirectly,
engage in the production, sale or distribution of any product produced, sold or
distributed by the Company or its subsidiaries on the date hereof or during the
Initial Noncompete Period or during any extension thereof anywhere in the world
in which the Company or its subsidiaries is doing business other than through
the Purchaser's employment with the Company or any of its subsidiaries. At the
Company's option, the Noncompete Period may be extended for an additional six
month period if (i) within three months of the termination of the Purchaser's
employment or if the Initial Noncompete Period is shorter than three months, at
any time prior to the end of the Initial Noncompete Period, the Company gives
the Purchaser notice of such extension and (ii) beginning with the first
business day following the end of the Initial Noncompete Period, the Company
pays the Purchaser during such extension at a rate equal to the rate of the
Purchaser's base salary on the date of the termination of the Purchaser's
employment. Such amount shall be paid in installments in a manner consistent
with the then current salary payment policies of the Company. For purposes of
this Agreement, the phrase "directly or indirectly engage in" shall include any
direct or indirect ownership or profit participation interest in such
enterprise, whether as an owner, stockholder, partner, joint venturer of
otherwise, and shall include any direct or indirect participation in such
enterprise as a consultant, licensor of technology or otherwise, but shall not
include any purchase of less 5% of the stock of a publicly traded company.
(b) 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
23
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, 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 (whether during or after the Noncompete
Period) to establish and confirm such ownership at the Company's expense
(including without limitation assignments, consents, powers of attorney and
other instruments).
(c) Notwithstanding clauses (a) and (b) above, if at any time a court
holds that the restrictions stated in clauses (a) and (b) are unreasonable or
otherwise unenforceable under circumstances then existing, the parties hereto
agree that the maximum period, scope or geographic area of such restrictions
determined to be reasonable under such circumstances by such court will be
substituted for the stated period, scope or area of such restrictions. 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).
24
(d) Notwithstanding the foregoing paragraphs (a) and (b), the
provisions of any employment agreement in effect on the date hereof between the
Company and Purchaser which contains covenants relating to confidentiality and
competition shall supersede and replace the provisions of paragraphs (a) and (b)
and shall be deemed incorporated by reference in this Agreement in their
entirety.
25
IN WITNESS WHEREOF, the Parties have executed this Agreement as of the
date first above written.
KINDERCARE LEARNING CENTERS, INC.
By ______________________________
Name: ___________________________
Title: __________________________
_________________________________
[PURCHASER]
_________________________________
_________________________________
Address of Purchaser
