KINDERCARE LEARNING CENTERS INC /DE
SEVERANCE AGREEMENT - DAVID J. JOHNSON
<DOCUMENT>
<TYPE>EX-10.1
<SEQUENCE>3
<FILENAME>kcx10119.htm
<DESCRIPTION>SEVERANCE AGREEMENT - DAVID J. JOHNSON
<TEXT>
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<TITLE>Severance Agreement</TITLE>
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<td align=center><u>SEVERANCE AGREEMENT</u></td>
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<tr>
<td align=center>&nbsp;</td>
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<tr>
<td>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;THIS SEVERANCE AGREEMENT (this "Agreement") is
made as of November 5, 2004 between KinderCare Learning Centers, Inc. (the
"Company"), and David J. Johnson (the "Executive").</td>
</tr>

<tr>
<td align=center>&nbsp;</td>
</tr>

<tr><td align=center><u>RECITALS</u></td></tr>
<tr>
<td align=center>&nbsp;</td>
</tr>

<tr><td>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Company considers it essential to the best interests of its stockholders to
foster the continuous employment of key management personnel. In connection with
this, the Company's Board of Directors (the "Board") recognizes that, as is the
case with many publicly held corporations, the possibility of a change in
control of the Company may exist and that such possibility, and the uncertainty
and questions that it may raise among management, could result in the departure
or distraction of management personnel to the detriment of the Company and its
stockholders.</td></tr>

<tr>
<td align=center>&nbsp;</td>
</tr>

<tr><td>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;B.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Executive possesses an intimate knowledge of the Company and the Board believes
that it is desirable that the Company be able to call on and rely upon the
counsel and advice of the Executive during a prospective change in control of
the Company.</td></tr>

<tr>
<td align=center>&nbsp;</td>
</tr>

<tr><td>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;C.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In order
to induce the Executive to remain in the Company's employ and to enhance the
Company's ability to call on and rely on the Executive's counsel and advice in
the event of a possible change in control of the Company, the Board desires to
have the Company enter into this Agreement with the Executive.</td></tr>
<tr>
<td align=center>&nbsp;</td>
</tr>

<tr><td>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;D.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
consideration of the mutual promises and covenants made herein and other good
and valuable consideration, the receipt and adequacy of which is hereby
acknowledged, the parties agree as follows:</td></tr>

<tr>
<td align=center>&nbsp;</td>
</tr>

<tr><td align=center><u>AGREEMENT</u></td></tr>
<tr>
<td align=center>&nbsp;</td>
</tr>

<tr><td>1.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>DEFINITIONS</u>. Capitalized terms
used in this Agreement shall have the meanings assigned to them in the attached
Appendix I or as otherwise defined herein.</td></tr>

<tr>
<td align=center>&nbsp;</td>
</tr>

<tr><td>2.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>OPERATION OF AGREEMENT.</u></td></tr>

<tr>
<td align=center>&nbsp;</td>
</tr>

<tr><td>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>Approval
by Board of Directors</u>. This Agreement has been approved by the Board and is
effective as of the date set forth above.</td></tr>

<tr>
<td align=center>&nbsp;</td>
</tr>

<tr><td>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>Effectiveness
of Certain Provisions</u>. The provisions of Paragraphs 3 and 4 of this Agreement
shall not become effective unless and until (i) there is a Change of Control
Event and (ii) the Executive is employed by the Company at the time of such
Change of Control Event.</td></tr>

<tr>
<td align=center>&nbsp;</td>
</tr>

<tr><td>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>No
Restriction on the Company</u>. Nothing in this Agreement restricts the
Company's right to terminate the Executive's employment with the Company at any
time before or after a Change of Control Event for any reason with or without
Cause and with or without notice or requires the Company to make any payments to
the Executive in connection with any termination of the Executive's employment
before a Change of Control Event.</td></tr>

<tr>
<td align=center>&nbsp;</td>
</tr>

<tr><td>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>Term
and Termination of Agreement</u>. This Agreement shall terminate on the first to
occur of the following:</td></tr>

<tr>
<td align=center>&nbsp;</td>
</tr>

<tr><td>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(i)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Twenty-four
(24) months after a Change of Control Event; or</td></tr>

<tr>
<td align=center>&nbsp;</td>
</tr>

<tr><td>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii)
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The termination of the Executive's employment with
the Company prior to a Change of Control Event; or</td></tr>

<tr>
<td align=center>&nbsp;</td>
</tr>

<tr><td>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
termination of the Executive's employment with the Company following a Change of
Control Event due to any of the following reasons: (a) termination by the
Company for Cause, (b) death of the Executive, or (c) Permanent Disability of
the Executive.</td></tr>

<tr>
<td align=center>&nbsp;</td>
</tr>

<tr><td>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If no Change of Control Event has occurred
on or before March 31, 2006, this Agreement will terminate on April 1,
2006.</td></tr>

<tr>
<td align=center>&nbsp;</td>
</tr>

<tr><td>3.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>PAYMENTS AND BENEFITS UPON
TERMINATION</u>. Subject to Paragraph 2 and contingent upon the Executive's
execution of the Release of Claims in the form of Appendix II and the expiration
of the seven day revocation period provided by the Older Workers Benefit
Protection Act without revocation of the release by the Executive, the Company
shall make the following payments to the Executive following a Termination and
with respect to a Change of Control Event:</td></tr>

<tr>
<td align=center>&nbsp;</td>
</tr>

<tr><td>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>Accrued
Compensation</u>. The Company shall pay to the Executive the following amounts
when they are due, but in no event later than ten days after the date of
Termination: (i) the Executive's unpaid salary and car allowance through the
date of the Termination at the rate in effect at the date of Termination, (ii)
any unpaid bonuses due the Executive under the Company's Management Bonus Plan
with respect to any prior year of such plan and (iii) a bonus under the
Company's Management Bonus Plan or bonus plan then in effect for the plan year
in which the Termination occurs, pro rated through the date of Termination based
on (x) the number of days on which the Executive was employed by the Company
during the plan year prior to the date of Termination, (y) with respect to the
Company performance portion, the estimated formula payout for the plan year
based on the actual results through the date of Termination compared to the
year-to-date budget and (z) the individual objective portion of such bonus being
the greater of the target amount for the year or the amount of the individual
objective portion of the Executive's bonus for the prior plan year. In addition,
the Company shall pay the Executive all other amounts to which the Executive is
entitled under any Company plan, agreement or policy, other than the Company's
severance pay plans, at the time such payments are due.</td></tr>

<tr>
<td align=center>&nbsp;</td>
</tr>

<tr><td>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>Termination
Payment</u>. The Company shall pay the Executive within ten days after the date
of a Termination an amount equal to the product of x the sum of (i) the
Executive's annual base salary in effect immediately prior to the date of
Termination and targeted incentive bonus under the Company's Management Bonus
Plan for the plan year in which the Change of Control Event takes place and (ii)
25% of the amount of such base salary as a benefits allowance, multiplied by y
2.5. An example of the calculation of the Executive's Termination Payment is set
forth in the attached Appendix III.</td></tr>

<tr>
<td align=center>&nbsp;</td>
</tr>

<tr><td>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>Plan
Benefits</u>. Upon a Termination, the Executive's active participation in the
KinderCare Savings and Investment Plan (the "Savings Plan") and Nonqualified
Deferred Compensation Plan (the "Deferred Compensation Plan") (collectively, the
"Plans") shall terminate in accordance with the provisions of the applicable
Plan and the Executive's benefits with respect to the Plans shall be paid in
accordance with the terms of the applicable Plan, provided, however, that the
Executive shall be fully vested in the Executive's accounts in each of the Plans
as of the date of the Termination. The Termination Payment made pursuant to
Paragraph 3(b) above shall not affect the calculation of benefits under the
Plans and therefore shall not in any way increase or reduce the amount payable
to the Executive under the Plans. To the extent that the Executive's account
under the Savings Plan cannot be fully vested without adversely affecting the
qualified status of the Savings Plan under the Internal Revenue Code of 1986, as
amended (the "Code"), the Company shall pay the Executive an additional benefit
under the Deferred Compensation Plan at the time the Executive's Deferred
Compensation Plan benefits are payable in an amount equal to the unvested
portion of the Executive's account in the Savings Plan.</td></tr>

<tr>
<td align=center>&nbsp;</td>
</tr>


<tr><td>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;INTENTIONALLY
OMITTED.</td></tr>

<tr>
<td align=center>&nbsp;</td>
</tr>

<tr><td>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>Taxes
With Respect To Payments</u>. In connection with a Change of Control Event, the
Company's accountants, Deloitte &amp; Touche LLP, shall promptly determine whether
any payments, distributions or benefits (or the acceleration of the right to
receive any payments, distributions or benefits) received or to be received by
the Executive from the Company or any affiliate of the Company under this
Agreement or under any other agreement, plan or otherwise ("Payments") are
subject to the excise tax imposed by Section 4999 of the Code (the "Excise
Tax"). Deloitte &amp; Touche LLP shall make this determination without applying the
exemption for small business corporations contained in Section 280G(b)(5) of the
Code unless Deloitte &amp; Touche LLP delivers a written opinion reasonably
satisfactory to the Executive that the exemption does apply. If Deloitte &amp;
Touche LLP determines that Payments are subject to the Excise Tax, then the
Company shall pay to the Executive an additional payment (the "Excise Tax
Gross-Up Payment") at the time such Payments are made to the Executive. The
amount of the Excise Tax Gross-Up Payment shall be the amount as determined by
Deloitte &amp; Touche LLP necessary to put the Executive in the same after-tax
financial position that the Executive would have occupied if the Payments were
not subject to the Excise Tax, assuming for this purpose that the Executive is
subject to federal and state income tax at the highest marginal rates applicable
to individuals in the state in which the Executive resides in the year in which
any Excise Tax Gross-Up Payment is made. If, after Payments and any related
Excise Tax Gross-Up Payment are made to an Executive, there is a determination,
within the meaning of Section 1313 of the Code, that Excise Tax is owed by the
Executive in an amount greater than the amount originally determined by Deloitte
&amp; Touche LLP, then the Company shall pay an additional Excise Tax Gross-Up
Payment to the Executive with respect to the additional Excise Tax. Any Excise
Tax Gross-Up Payment required pursuant to this Agreement shall be paid to the
Executive less applicable withholding. The Executive shall promptly inform the
Company of, and shall permit participation by the Company in, any investigation,
audit or other proceeding by or with the Internal Revenue Service or any other
taxing authority with respect to Excise Tax, and shall not consent to a
settlement or final determination with respect to Excise Tax without the prior
written consent of the Company, which shall not be withheld
unreasonably.</td></tr>

<tr>
<td align=center>&nbsp;</td>
</tr>

<tr><td>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>No
Mitigation</u>. All payments and benefits to which the Executive is entitled
under this Agreement shall be made and provided without offset, deduction or
mitigation on account of income the Executive may receive from other employment,
and the Executive shall have no duty to mitigate by seeking other employment or
by becoming self-employed.</td></tr>

<tr>
<td align=center>&nbsp;</td>
</tr>

<tr><td>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>Death
of the Executive</u>. In the event of the Executive's death subsequent to a
Termination, all payments and benefits required by this Agreement shall be paid
to the Executive's designated beneficiary or beneficiaries or, if the Executive
has not designated a beneficiary or beneficiaries, to the Executive's
estate.</td></tr>

<tr>
<td align=center>&nbsp;</td>
</tr>

<tr><td>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>Exclusive
Remedy</u>. In the event the Executive accepts the payments and benefits called
for pursuant to this Agreement, such payments and benefits shall be the sole and
exclusive remedy for any alleged injury or other damages arising out of the
cessation of the employment relationship between the Executive and the Company.
Except as expressly set forth herein, the Executive shall be entitled to no
other compensation, benefits, or other payments from the Company as a result of
the termination of the Executive's employment.</td></tr>

<tr>
<td align=center>&nbsp;</td>
</tr>

<tr><td>4.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>OUTPLACEMENT SERVICES</u>.
Outplacement services will be provided at the expense of the Company under a
preferred client contract with Drake, Beam, Morin, Inc. of Portland, Oregon.
These services will consist of the Senior Executive Program provided by such
firm at an approximate cost of $12,000 per person and will be available for six
(6) months following the date of Termination.</td></tr>

<tr>
<td align=center>&nbsp;</td>
</tr>

<tr><td>5.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>CONFLICT IN BENEFITS</u>. This
Agreement shall supersede all prior arrangements and understandings between the
Executive and the Company with respect to any compensation or benefits payable
to the Executive upon a Termination or in connection with a Change of Control
Event. Notwithstanding the forgoing, this Agreement shall not supersede or
affect any rights the Executive may have under the following plans and
agreements:</td></tr>

<tr>
<td align=center>&nbsp;</td>
</tr>


<tr><td>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Management
Bonus Plan,</td></tr>

<tr>
<td align=center>&nbsp;</td>
</tr>

<tr><td>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Nonqualified Option Agreement and 1997
Stock Purchase and Option Plan for Key Employees of the Company and
Subsidiaries,</td></tr>

<tr>
<td align=center>&nbsp;</td>
</tr>

<tr><td>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Management Stockholder's Agreement,</td></tr>

<tr>
<td align=center>&nbsp;</td>
</tr>

<tr><td>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Savings Plan, and</td></tr>

<tr>
<td align=center>&nbsp;</td>
</tr>

<tr><td>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Deferred Compensation Plan.</td></tr>
<tr>

<td align=center>&nbsp;</td>
</tr>

<tr><td>6.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>MISCELLANEOUS</u>.</td></tr>

<tr>
<td align=center>&nbsp;</td>
</tr>

<tr><td>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>Legal
Expenses</u>. The Company shall pay all costs and expenses, including attorney's
fees and disbursements, of the Company and, at least monthly, the Executive, in
connection with any proceeding whether instituted by the Company or the
Executive relating to the interpretation or enforcement of any provision of this
Agreement (including in any action seeking to obtain or enforce any right or
benefit provided by this Agreement or in connection with any tax audit or
proceeding relating to the application of Section 4999 of the Code to any
payment or benefit provided by the Company or any appellate proceeding). The
Company also agrees to pay prejudgment interest on any money judgment obtained
by the Executive as a result of such proceeding, from the date that payment
should have been made to the Executive under this Agreement at the prime rate as
announced from time to time by Bank of America.</td></tr>

<tr>
<td align=center>&nbsp;</td>
</tr>

<tr><td>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>Notices</u>.
Any notice or other communication provided for in this Agreement or contemplated
hereby shall be sufficiently given if given in writing and personally delivered
or delivered by certified mail, return receipt requested, and addressed, in the
case of the Company, to the Company at:</td></tr>

<tr>
<td align=center>&nbsp;</td>
</tr>
</table>

<table width=680 border=0 cellspacing=0 cellpadding=0>
<tr><td width=25%>&nbsp;</td>
<td width=75%>KinderCare Learning Centers, Inc.<br>
650 NE Holladay Street, Suite 1400<br>
Portland, OR 97232<br>
Attn:  General Counsel</td></tr>

<tr>
<td align=center>&nbsp;</td>
</tr>

<tr>
<td colspan=2>and, in the case of the Executive, to the Executive at:</td>
</tr>

<tr>
<td align=center>&nbsp;</td>
</tr>

<tr>
<td>&nbsp;</td>
<td>David J. Johnson<br>
c/o KinderCare Learning Centers, Inc.<br>
650 NE Holladay, Suite 1400<br>
Portland, OR 97232</td></tr>

<tr>
<td align=center>&nbsp;</td>
</tr>
</table>

<table width=680 border=0 cellspacing=0 cellpadding=0>
<tr><td>Either party may designate a different address by giving written notice of
change of address in the manner provided above.</td></tr>

<tr>
<td align=center>&nbsp;</td>
</tr>

<tr><td>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>Waiver</u>.
No waiver or modification in whole or in part of this Agreement, or any term or
condition hereof, shall be effective against any party unless in writing and
duly signed by the party sought to be bound and expressing the intent of the
parties to waive or modify this Agreement. Any waiver of any breach of any
provision hereof or any right or power by any party on one occasion shall not be
construed as a waiver of, or a bar to, the exercise of such right or power on
any other occasion or as a waiver of any subsequent breach.</td></tr>

<tr>
<td align=center>&nbsp;</td>
</tr>

<tr><td>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>Binding
Effect; Successors</u>. This Agreement shall be binding upon, inure to the benefit
of and be enforceable by the Company and the Executive and their respective
heirs, legal representatives, successors and assigns. For purposes of the
foregoing, the successors to the Company shall include, without limitation,
successors (whether direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the assets of the Company (a "Company
Successor"). If the Company shall be merged into or consolidated with another
entity, the provisions of this Agreement shall be binding upon and inure to the
benefit of the entity surviving such merger or resulting from such
consolidation. The provisions of this Paragraph 7(d) shall continue to apply to
each subsequent employer of the Executive hereunder in the event of any
subsequent merger, consolidation or transfer of assets of such subsequent
employer.</td></tr>

<tr>
<td align=center>&nbsp;</td>
</tr>


<tr><td>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>Severability</u>.
Any provision of this Agreement which is unenforceable or invalid in any respect
in any jurisdiction shall be ineffective in such jurisdiction to the extent that
it is unenforceable or invalid without affecting the remaining provisions
hereof, which shall continue in full force and effect. The unenforceability or
invalidity of a provision of this Agreement in one jurisdiction shall not
invalidate or render unenforceable such provision in any other
jurisdiction.</td></tr>

<tr>
<td align=center>&nbsp;</td>
</tr>


<tr><td>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>Controlling
Law</u>. This Agreement shall be governed by and construed in accordance with the
laws of the State of Oregon applicable to contracts made and to be performed
therein.</td></tr>

<tr>
<td align=center>&nbsp;</td>
</tr>

<tr><td>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>No
Employment Right Created</u>. Nothing in this Agreement shall confer on the
Executive any right to continue in the employ of the Company or shall interfere
with or restrict in any way the rights of the Company, which are hereby
expressly reserved, to discharge the Executive at any time for any reason
whatsoever, with or without Cause, except as may be otherwise provided in any
written employment agreement between the Executive and the Company. This
Agreement shall not constitute an agreement for employment.</td></tr>

<tr>
<td align=center>&nbsp;</td>
</tr>

<tr><td>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;IN WITNESS WHEREOF, the Company and the
Executive have executed this Agreement as of the day and year first above
written.</td></tr>
<tr>
<td align=center>&nbsp;</td>
</tr>
</table>

<table width=680 border=0 cellspacing=0 cellpadding=0>

<tr>
     <TD width=50%>COMPANY:</TD>
     <TD width=50%>Executive:</TD>
</tr>

<tr>
<td align=center>&nbsp;</td>
</tr>

<tr>
     <TD>KinderCare Learning Centers, Inc.</TD>
     <td>&nbsp;</td>
</tr>

<tr>
     <td>&nbsp;</td>
</tr>

<tr>
     <TD width=50%>By: /s/ EDWARD BREWINGTON<hr noshade width=300 align=left></TD>
     <TD width=50%>/s/ DAVID J. JOHNSON<hr noshade width=300 align=left></TD>
</tr>
<tr>
     <TD width=50%>Title: Senior VP, Human Resources and Education</TD>
     <TD width=50%>David J. Johnson</TD>
</tr>

<tr><td>
     &nbsp;
</td></tr>

</TABLE>


<table width=680 border=0 cellspacing=0 cellpadding=0>
<tr>
<td><HR SIZE=5 COLOR=GRAY NOSHADE></td>
</tr>

<tr>
     <td>&nbsp;</td>
</tr>
<tr>
<td align=center><u>APPENDIX I</u></td>
</tr>

<tr><td>
     &nbsp;
</td></tr>
<tr>
<td>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>Definitions</u>. As used in this Agreement, and
unless the context requires a different meaning, the following terms have the
meanings indicated.</td>
</tr>
<tr><td>
     &nbsp;
</td></tr>

<tr>
<td>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;"<u>Cause</u>"
means (i) the Executive's willful and continued failure to perform Executive'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 the
Executive by the Company and which could reasonably result in demonstrable and
substantial injury to the Company or (ii) misconduct by Executive (x) involving
dishonesty or breach of trust in connection with Executive's employment, (y)
which would be a reasonable basis for an indictment of Executive for a felony or
for a misdemeanor involving moral turpitude, or (z) which results in
demonstrable and substantial injury to the Company.</td>
</tr>
<tr><td>
     &nbsp;
</td></tr>

<tr>
<td>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;"<u>Change of
Control Event</u>" means any one of the following: (a) the consummation of a sale,
lease, transfer, conveyance or other disposition (other than by way of merger or
consolidation), in one or a series of related transactions, of all or
substantially all of the assets of the Company and its subsidiaries, taken as a
whole, to any person except a person in which the stockholders of the Company
own, directly or indirectly, a majority of the voting power of such person's
outstanding equity securities immediately following such transaction; (b) the
consummation of any transaction which results in another person or group (other
than KLC Associates, L.P., KLC Associates II, L.P. or any of their affiliates,
partners or partners' affiliates) becoming the "beneficial owner" (as defined in
Rules l3d-3 and l3d-5 of the Securities Exchange Act of 1934) directly or
indirectly, of 25% or more of aggregate total voting power of the outstanding
equity securities of the Company if after such transaction KLC Associates, L.P,
KLC Associates II, L.P. and any of their partners, affiliates and partners'
affiliates as a group, are the beneficial owners, directly or indirectly, of
less of the aggregate total voting power of the outstanding equity securities of
the Company than such acquiring person or group; or (c) the Company consolidates
with, or merges with or into, another person, unless immediately after giving
effect to such transaction, the stockholders of the Company immediately prior to
such transaction own, directly or indirectly, and in the same proportion as
immediately prior to the transaction, a majority of the voting power of the
outstanding equity securities of the person surviving or created in such merger
or consolidation or of the person which owns a majority of the voting power of
such surviving or created person's equity securities immediately following such
transaction.</td>
</tr>
<tr><td>
     &nbsp;
</td></tr>

<tr>
<td>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;INTENTIONALLY OMITTED</td>
</tr>
<tr><td>
     &nbsp;
</td></tr>

<tr>
<td>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;"<u>Permanent
Disability</u>" means, as applied to the Executive, that (a) the Executive has
been totally incapacitated by bodily injury or disease so as to be prevented
thereby from engaging in any occupation or employment for remuneration or
profit, (b) such total incapacity shall have continued for a period of six
consecutive months and (c) such total incapacity will, in the opinion of a
qualified physician approved by the Executive and Company, be permanent and
continuous during the remainder of the Executive's life.</td>
</tr>
<tr><td>
     &nbsp;
</td></tr>

<tr>
<td>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(v)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;"<u>Termination</u>"
means any termination of the employment of the Executive following the
occurrence of any Change of Control Event, by the Company except for Cause or by
the Executive for any reason; provided, however, that "Termination" shall not
include any termination of the employment of the Executive (a) by the Company as
a result of the Permanent Disability of the Executive, or (b) as a result of the
death of the Executive.</td>
</tr>
<tr><td>
     &nbsp;
</td></tr>
</table>


<table width=680 border=0 cellspacing=0 cellpadding=0>
<tr>
<td><HR SIZE=5 COLOR=GRAY NOSHADE></td>
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     <td>&nbsp;</td>
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<td align=center><u>APPENDIX II</u><br>
RELEASE OF CLAIMS</td>
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<td>1.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<b>Parties</b>.</td>
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<tr><td>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The parties to Release of Claims
(hereinafter &#147;Release&#148;) are David J. Johnson and KinderCare Learning
Centers, Inc., a Delaware corporation, as hereinafter defined. </td>
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<td>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.1&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<b>Executive</b>.</td>
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<td>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;For the purposes of this Release,
&#147;Executive&#148; means David J. Johnson and his or her attorneys, heirs,
executors, administrators, assigns, and spouse.</td>
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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.2&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<b>The Company</b>.</td>
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<td>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;For purposes of this Release
&#147;Company&#148; means KinderCare Learning Centers, Inc., a Delaware
corporation, its predecessors and successors, corporate affiliates, and all of
each corporation&#146;s officers, directors, employees, insurers, agents, or
assigns, in their individual and representative capacities.</td>
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<td>2.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<b>Background And Purpose</b>.</td>
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<td>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Executive was employed by Company.
Executive&#146;s employment is ending effective __________ under the conditions
described in Section 3 of the Severance Agreement dated November 5, 2004 between
Company and Executive (&#147;Agreement&#148;). </td>
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<tr><td>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The purpose of this Release
is to settle, and the parties hereby settle, fully and finally, any and all
claims Executive may have against Company, whether asserted or not, known or
unknown, including, but not limited to, claims arising out of or related to
Executive&#146;s employment, any claim for reemployment, or any other claims
whether asserted or not, known or unknown, past or future, that relate to
Executive&#146;s employment, reemployment, or application for reemployment.</td>
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<td>3.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<b>Release</b>.</td>
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<td>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Except as provided in paragraph 3.1, Executive
waives, acquits and forever discharges Company from any obligations Company has
and all claims Executive may have including but not limited to obligations
and/or claims arising from the Agreement or any other document or oral agreement
relating to employment compensation, benefits, severance or post-employment
issues. Executive hereby releases Company from any and all claims, demands,
actions, or causes of action, whether known or unknown, arising from or related
in any way to any employment of or past or future failure or refusal to employ
Executive by Company, or any other past or future claim (except as reserved by
this Release or where expressly prohibited by law) that relates in any way to
Executive&#146;s employment, compensation, benefits, reemployment, or
application for employment, with the exception of any claim Executive may have
against Company for enforcement of this Release. This release includes any and
all claims, direct or indirect, which might otherwise be made under any
applicable local, state or federal authority, including but not limited to any
claim arising under state statutes dealing with employment, discrimination in
employment, Title&#160;VII of the Civil Rights Act of 1964, the Civil Rights Act
of 1991, the Americans With Disabilities Act, the Family and Medical Leave Act
of 1993, the Equal Pay Act of 1963, Executive Order 11246, the Rehabilitation
Act of 1973, the Uniformed Services Employment and Reemployment Rights Act of
1994, the Age Discrimination in Employment Act, Older Workers Benefit Protection
Act (&#147;OWBPA&#148;), the Fair Labor Standards Act, state wage and hour
statutes, all as amended, any regulations under such authorities, and any
applicable contract, tort, or common law theories.</td>
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<td>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.1&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<b>Reservations
Of Rights.</b></td>
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<td>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This Release shall not affect any rights which
Executive may have under (i) any employee benefit plans or programs, including,
without limitation, under any medical insurance, disability plan, workers&#146;
compensation, unemployment compensation, indemnifications, company stock
incentive plan(s) and related agreements (including the Management
Stockholder&#146;s Agreement between Company and Executive), or the Savings and
Investment Plan and Nonqualified Deferred Compensation Plan maintained by the
Company or (ii) any provision of the Agreement that contains obligations of
Company that continue after the payment of benefits under Sections 3(a) and 3(b)
of the Agreement, including without limitation, Sections 3(c), 3(d), 3(e), 3(g),
4, 5 and 6.</td>
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<td>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.2&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<b>No
Admission Of Liability.</b></td>
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<td>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;It is understood and agreed that the acts
done and evidenced hereby and the release granted hereunder is not an admission
of liability on the part of Executive or Company, by whom liability has been and
is expressly denied. </td>
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<td>4.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<b>Consideration To Executive</b>.</td>
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<td>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;After receipt of this Release signed by
Executive, and the expiration of the seven-day revocation period provided by the
OWBPA without Executive&#146;s revocation, Company shall pay the Executive the
severance benefits as provided in the Agreement. </td>
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<td>5.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<b>Scope Of Release</b>.</td>
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<td>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The provisions of this Release shall be deemed
to obligate, extend to, and inure to the benefit of the parties; Company&#146;s
parents, subsidiaries, affiliates, successors, predecessors, assigns, directors,
officers, and employees; and each parties insurers, transferees, grantees,
legatees, agents and heirs, including those who may assume any and all of the
above-described capacities subsequent to the execution and effective date of
this Release.
</td>
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<td>6.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<b>Opportunity For Advice Of Counsel</b>.</td>
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<td>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Executive acknowledges that Executive has been encouraged to seek advice of
counsel with respect to this Release and has had the opportunity to do so.
</td>
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<td>
7.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<b>Entire Release</b>.</td>
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<td>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This Release and the Agreement signed by
Executive contain the entire agreement and understanding between the parties
and, except as reserved in paragraph 3, supersede and replace all prior
agreements, written or oral, prior negotiations and proposed agreements, written
or oral. Executive and Company acknowledge that no other party, nor agent nor
attorney of any other party, has made any promise, representation, or warranty,
express or implied, not contained in this Release concerning the subject matter
of this Release to induce this Release, and Executive and Company acknowledge
that they have not executed this Release in reliance upon any such promise,
representation, or warranty not contained in this Release.</td>
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<td>8.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<b>Severability</b>.</td>
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<td>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Every provision of this Release is intended to
be severable. In the event any term or provision of this Release is declared to
be illegal or invalid for any reason whatsoever by a court of competent
jurisdiction or by final and unappealed order of an administrative agency of
competent jurisdiction, such illegality or invalidity should not affect the
balance of the terms and provisions of this Release, which terms and provisions
shall remain binding and enforceable. </td>
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<td>9.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<b>Parties May Enforce Release</b>.</td>
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<td>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Nothing in this Release shall operate to
release or discharge any parties to this Release or their successors, assigns,
legatees, heirs, or personal representatives from any rights, claims, or causes
of action arising out of, relating to, or connected with a breach of any
obligation of any party contained in this Release. </td>
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<td>10.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<b>Costs And Attorney's Fees</b>.</td>
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<td>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In the event of any administrative or civil
action to enforce the provisions of this Release, Company shall pay
Executive&#146;s reasonable attorneys&#146; fees through trial and/or on appeal.
</td>
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<td>11.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<b>Acknowledgment</b>.</td>
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<td>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Executive acknowledges that the Release
provides severance pay and benefits which Company would otherwise have no
obligation to provide. </td>
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<td>12.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<b>Revocation</b>.</td>
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<td>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As provided by the OWBPA, Executive is
entitled to have 21 days [or 45 days if required at the time by the OWBPA] to
consider this Release. For a period of 7 days from execution of this Release,
Executive may revoke this Release. Upon receipt of Executive&#146;s signed
Release and the end of the revocation period without revocation by Executive,
payment by Company as described in paragraph&#160;4 above will be forwarded by
mail in a timely manner as provided herein. </td>
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<table width=680 border=0 cellspacing=0 cellpadding=0>
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     <TD width=50% align=left>&nbsp;<hr noshade width=300>David J. Johnson</TD>
     <TD width=50% align=left>Dated: <hr noshade width=300>&nbsp;</TD>
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<table width=680 border=0 cellspacing=0 cellpadding=0>
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<td width=15%>STATE OF</td>
<td width=15%>_____________</td>
<td width=15%>)</td>
<td width=55%>&nbsp;</td>
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<td width=15%>&nbsp;</td>
<td width=15%>&nbsp;</td>
<td width=15%>) ss.</td>
<td width=55%>&nbsp;</td>
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<td width=15%>County of</td>
<td width=15%>_____________</td>
<td width=15%>)</td>
<td width=55%>&nbsp;</td>
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<td>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Personally appeared the above named ______________________________
and acknowledged the foregoing instrument to be his or her voluntary act and
deed. </td>
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</td>
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<table width=680 border=0 cellspacing=0 cellpadding=0>
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<td width=30%>&nbsp;</td>
<td width=30%>Before me:</td>
<td width=70%>&nbsp;<hr noshade width=300 align=left></td>
</tr>
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<td width=30%>&nbsp;</td>
<td width=30%>&nbsp;</td>
<td width=40%>Notary Public for <hr noshade width=300 align=left>
My commission expires: <hr noshade width=300 align=left></td>
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</table>

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<td width=50%>COMPANY</td>
<td width=50%>&nbsp;</td>
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     &nbsp;
</td></tr>
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<td>By: <hr noshade width=300 align=left></td>
<td>Dated: <hr noshade width=300 align=left></td>
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<td>Its: <hr noshade width=300 align=left></td>
<td>&nbsp;</td>
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