Document:

SALE PARTICIPATION AGREEMENT
                          (Senior Director or Director)

((MSHA_Date))

((First_Name)) ((Last_Name))
((Job_Title))
KinderCare Learning Centers, Inc.
650 NE Holladay, Suite 1400
Portland, Oregon 97232

     You have entered into a Management Stockholder's Agreement, dated as of
((MSHA_Date)) between KinderCare Learning Centers, Inc., a Delaware corporation
("the Company"), and you (the "Stockholder's Agreement") relating to the grant
(and possible future grant) to you of options (the "Options") to purchase from
the Company shares of the common stock, par value $.01 per share, of the Company
(the "Common Stock"). The undersigned, KKR Partners II, L.P., a Delaware limited
partnership ("KKR Partners"), and KLC Associates, L.P., a Delaware limited
partnership ("KLC Associates"), have purchased shares of common stock of the
Company and hereby agree with you as follows, effective upon a purchase of
Common Stock by you pursuant to exercise of any of the Options:

     1. In the event that at any time KKR Partners, or KLC Associates, as the
case may be (each, a "Selling Partnership" and collectively, the "Selling
Partnerships"), proposes to sell for cash or any other consideration any shares
of common stock of the Company owned by it, in any transaction other than
pursuant to a public offer or sale of shares of the Company's common stock or a
sale to an affiliate of KKR Partners or KLC Associates, as the case may be, the
Selling Partnership will notify you or your Purchaser's Estate or Purchaser's
Trust (as such terms are defined in Section 2 of the Stockholder's Agreement),
as the case may be, in writing (a "Notice") of such proposed sale (a "Proposed
Sale") and the material terms of the Proposed Sale as of the date of the Notice
(the "Material Terms") promptly, and in any event not less than 15 days prior to
the consummation of the Proposed Sale and not more than 5 days after the
execution of the definitive agreement relating to the Proposed Sale, if any (the
"Sale Agreement"). If within 10 days of your or your Purchaser's Estate's or
Purchaser's Trust's, as the case may be, receipt of such Notice the Selling
Partnership receives from you or your Purchaser's Estate or Purchaser's Trust,
as the case may be, a written request (a "Request") to include Common Stock held
by you or your Purchaser's Estate or Purchaser's Trust, as the case may be, in
the Proposed Sale (which Request shall be irrevocable unless (a) there shall be
a material adverse change in the Material Terms or (b) if otherwise mutually
agreed to in writing by you or your Purchaser's Estate or Purchaser's Trust, as
the case may be, and the Selling Partnership), the Common Stock held by you will
be so included as provided herein; provided that only one Request, which shall
be executed by you or your Purchaser's Estate or Purchaser's Trust, as the case
may be, may be delivered with respect to any Proposed Sale for all Common Stock
held by you or your Purchaser's Estate or Purchaser's Trust. Promptly after the
consummation of the transactions contemplated thereby, the Selling Partnership
will furnish you, your Purchaser's Trust or your Purchaser's Estate with a copy
of the Sale Agreement, if any. In the event that both KKR Partners

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<PAGE>
and KLC Associates propose to sell shares of common stock in the Proposed Sale,
the term "Selling Partnership" shall refer only to KLC Associates and not to KKR
Partners.

     2. The number of shares of Common Stock which you or your Purchaser's
Estate or Purchaser's Trust, as the case may be, will be permitted to include in
a Proposed Sale pursuant to a Request will be the lesser of (a) the sum of the
number of shares of Common Stock then owned by you or your Purchaser's Estate or
Purchaser's Trust, as the case may be, plus all shares of Common Stock which you
are then entitled to acquire under an unexercised option to purchase shares of
Common Stock, to the extent such option is then vested or would become vested as
a result of the consummation of the Proposed Sale and (b) the sum of the shares
of Common Stock then owned by you or your Purchaser's Estate or Purchaser's
Trust, as the case may be, plus all shares of Common Stock which you are
entitled to acquire under an unexercised option to purchase shares of Common
Stock, whether or not fully vested, multiplied by a percentage calculated by
dividing the aggregate number of shares of common stock which KKR Partners and
KLC Associates propose to sell in the Proposed Sale by the total number of
shares of common stock owned by the Selling Partnership or, in the case both KKR
Partners and KLC Associates propose to sell in the Proposed Sale, KKR Partners
and KLC Associates. If one or more holders of shares of common stock who have
been granted the same rights granted to you or your Purchaser's Estate or
Purchaser's Trust, as the case may be, hereunder elect not to include the
maximum number of shares of common stock which such holders would have been
permitted to include in a Proposed Sale (the "Eligible Shares"), KKR Partners or
KLC Associates, or such remaining holders of shares of common stock, or any of
them, may sell in the Proposed Sale a number of additional shares of common
stock owned by any of them equal to their pro rata portion of the number of
Eligible Shares not included in the Proposed Sale, based on the relative number
of shares of common stock then held by each such holder, and such additional
shares of common stock which any such holder or holders propose to sell shall
not be included in any calculation made pursuant to the first sentence of this
Paragraph 2 for the purpose of determining the number of shares of Common Stock
which you or your Purchaser's Estate or Purchaser's Trust, as the case may be,
will be permitted to include in a Proposed Sale. KKR Partners and KLC
Associates, or any of them, may sell in the Proposed Sale additional shares of
common stock owned by any of them equal to any remaining Eligible Shares which
will not be included in the Proposed Sale pursuant to the foregoing. For
purposes of this Agreement, Common Stock is not deemed to be owned or held by
you if the Company's right to repurchase the Common Stock under Section 6 of the
Stockholders' Agreement has been triggered and such right has not expired.

     3. Except as may otherwise be provided herein, shares of Common Stock
subject to a Request will be included in a Proposed Sale pursuant hereto and in
any agreements with purchasers relating thereto on the same terms and subject to
the same conditions applicable to the shares of common stock which the Selling
Partnership proposes to sell in the Proposed Sale. Such terms and conditions
shall include, without limitation: the sale price; the payment of fees,
commissions and expenses; the provision of, and representation and warranty as
to, information requested by the Selling Partnership; and the provision of
requisite indemnifications; provided that any indemnification provided by you,
your Purchaser's Estate or your Purchaser's Trust shall be pro rata in
proportion with the number of shares of Common Stock to be sold.

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<PAGE>
     4. Upon delivering a Request, you or your Purchaser's Estate or Purchaser's
Trust, as the case may be, will, if requested by the Selling Partnership,
execute and deliver a custody agreement and power of attorney in form and
substance satisfactory to the Selling Partnership with respect to the shares of
Common Stock which are to be sold by you or your Purchaser's Estate or
Purchaser's Trust, as the case may be, pursuant hereto (a "Custody Agreement and
Power of Attorney"). The Custody Agreement and Power of Attorney will provide,
among other things, that you or your Purchaser's Estate or Purchaser's Trust, as
the case may be, will deliver to and deposit in custody with the custodian and
attorney-in-fact named therein a certificate or certificates representing such
shares of Common Stock (duly endorsed in blank by the registered owner or owners
thereof) and irrevocably appoint said custodian and attorney-in-fact as your or
your Purchaser's Estate's or Purchaser's Trust's, as the case may be, agent and
attorney-in-fact with full power and authority to act under the Custody
Agreement and Power of Attorney on your or your Purchaser's Estate's or
Purchaser's Trust's, as the case may be, behalf with respect to the matters
specified therein.

     5. Your or your Purchaser's Estate's or Purchaser's Trust's, as the case
may be, right pursuant hereto to participate in a Proposed Sale shall be
contingent on your or your Purchaser's Estate's or Purchaser's Trust's, as the
case may be, strict compliance with each of the provisions hereof and your or
your Purchaser's Estate's or Purchaser's Trust's or, as the case may be,
willingness to execute such documents in connection therewith as may be
reasonably requested by the Selling Partnership.

     6. In the event of a Proposed Sale pursuant to Section 1 hereof, the
Selling Partnerships may elect, by so specifying in the Notice, to require you
or your Purchaser's Estate or Purchaser's Trust, as the case may be, to, and you
or your Purchaser's Estate or Purchaser's Trust, as the case may be, will,
participate in such Proposed Sale in accordance with the terms and provisions of
Section 2, 3 and 4 hereof.

     7. The obligations of KKR Partners and KLC Associates hereunder shall
extend only to you or your Purchaser's Estate or Purchaser's Trust, as the case
may be, and no other of your or your Purchaser's Estate's or Purchaser's
Trust's, as the case may be, successors or assigns shall have any rights
pursuant hereto.

     8. This Agreement shall terminate and be of no further force and effect on
the fifth anniversary of the first occurrence of a Public Offering (as defined
in the Stockholder's Agreement).

     9. All notices and other communications provided for herein shall be in
writing and shall be deemed to have been duly given when delivered to the party
to whom it is directed:

          (a)  If to KKR Partners or KLC Associates, to it at the following
               address:

                  c/o Kohlberg Kravis Roberts & Co.
                  9 West 57th Street
                  New York, New York 10019
                  Attn:  Scott Nuttall

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<PAGE>
          with a copy to:

                  Simpson Thacher & Bartlett
                  425 Lexington Avenue
                  New York, New York  10017
                  Attn:  David J. Sorkin, Esq.

          (b)  If to you, to you at the address first set forth above herein;

          (c)  If to your Purchaser's Estate or Purchaser's Trust, at the
               address provided to such partnerships by such entity;

or at such other address as any of the above shall have specified by notice in
writing delivered to the others by certified mail.

     10. The laws of the State of Delaware (or if the Company reincorporates in
another state, of that state) shall govern the interpretation, validity and
performance of the terms of this Agreement. No suit, action or proceeding with
respect to this Agreement may be brought in any court or before any similar
authority other than in a court of competent jurisdiction in the States of
Delaware (or if the Company reincorporates in another state, of that state), as
the Selling Partnerships may elect in their sole discretion, and you hereby
submit to the non-exclusive jurisdiction of such courts for the purpose of such
suit, proceeding or judgment. You hereby irrevocably waive any right which you
may have had to bring such an action in any other court, domestic or foreign, or
before any similar domestic or foreign authority.

     11. If KKR Partners or KLC Associates transfers its interest in the Company
to an affiliate of KKR Partners or KLC Associates, as the case may be, such
affiliate shall assume the obligations hereunder of KKR Partners or KLC
Associates, as the case may be.

     It is the understanding of the undersigned that you are aware that no
Proposed Sale presently is contemplated and that such a sale may never occur.

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<PAGE>
     If the foregoing accurately sets forth our agreement, please acknowledge
your acceptance thereof in the space provided below for that purpose.

                                       Very truly yours,

                                       KKR PARTNERS II, L.P.
                                       By: KKR Associates L.P., the General
                                           Partner

                                       By:
                                           -------------------------------------

                                       KLC ASSOCIATES, L.P.
                                       By: KKR Associates L.P., the General
                                           Partner

                                       By:
                                           -------------------------------------

Accepted and agreed to:

By:
   -------------------------------------
   ((First_Name))((Last_Name))

                                       51

                       1997 STOCK PURCHASE AND OPTION PLAN
                              FOR KEY EMPLOYEES OF
               KINDERCARE LEARNING CENTERS, INC. AND SUBSIDIARIES

1.   Purpose of Plan

     The 1997 Stock Purchase and Option Plan for Key Employees of KinderCare
Learning Centers, Inc. and Subsidiaries (the "Plan") is designed:

     (a) to promote the long term financial interests and growth of KinderCare
Learning Centers, Inc. (the "Corporation") and its subsidiaries by attracting
and retaining management personnel with the training, experience and ability to
enable them to make a substantial contribution to the success of the
Corporation's business;

     (b) to motivate management personnel by means of growth-related incentives
to achieve long range goals; and

     (c) to further the identity of interests of participants with those of the
stockholders of the Corporation through opportunities for increased stock, or
stock-based, ownership in the Corporation.

2.   Definitions

     As used in the Plan, the following words shall have the following meanings:

     (a) "Grant" means an award made to a Participant pursuant to the Plan and
described in Paragraph 5.

     (b) "Grant Agreement" means an agreement between the Corporation and a
Participant that sets forth the terms, conditions and limitations applicable to
a Grant.

     (c) "Board of Directors" means the Board of Directors of the Corporation.

     (d) "Committee" means the Compensation Committee of the Board of Directors.

     (e) "Common Stock" or "Share" means common stock of the Corporation which
may be authorized but unissued, or issued and reacquired.

     (f) "Employee" means a person, including an officer, in the regular
full-time employment of the Corporation or one of its Subsidiaries who, in the
opinion of the Committee,

<PAGE>
                                                                               2

is, or is expected, to be primarily responsible for the management, growth or
protection of some part or all of the business of the Corporation.

     (g) "Exchange Act" means the Securities Exchange Act of 1934, as amended.

     (h) "Fair Market Value" means such value of a Share as reported for stock
exchange transactions and/or determined in accordance with any applicable
resolutions or regulations of the Committee in effect at the relevant time.

     (i) "Participant" means an Employee, or other person having a unique
relationship with the Corporation or one of its Subsidiaries, to whom one or
more Grants have been made and such Grants have not all been forfeited or
terminated under the Plan; provided, however, that a non-employee director of
the Corporation or one of its Subsidiaries may not be a Participant.

     (j) "Stock-Based Grants" means the collective reference to the grant of
Stock Appreciation Rights, Dividend Equivalent Rights, Restricted Stocks and
Other Stock Based Grants.

     (k) "Stock Options" means the collective reference to "Incentive Stock
Options" and "Other Stock Options".

     (l) "Subsidiary" means any corporation other than the Corporation in an
unbroken chain of corporations beginning with the Corporation if each of the
corporations other than the last corporation in the unbroken chain owns 50% or
more of the voting stock in one of the other corporations in such chain.

3.   Administration of Plan

     (a) The Plan shall be administered by the Committee. The members of the
Committee shall qualify to administer the Plan for purposes of Rule 16b-3 (and
any other applicable rule) promulgated under Section 16(b) of the Exchange Act
to the extent that the Corporation is subject to such rule. The Committee may
adopt its own rules of procedure, and the action of a majority of the Committee,
taken at a meeting or taken without a meeting by a writing signed by such
majority, shall constitute action by the Committee. The Committee shall have the
power and authority to administer, construe and interpret the Plan, to make
rules for carrying it out and to make changes in such rules. Any such
interpretations, rules, and administration shall be consistent with the basic
purposes of the Plan.

     (b) The Committee may delegate to the Chief Executive Officer and to other
senior officers of the Corporation its duties under the Plan subject to such
conditions and limitations as the Committee shall prescribe except that only the
Committee may designate and make Grants to Participants who are subject to
Section 16 of the Exchange Act.

     (c) The Committee may employ attorneys, consultants, accountants,
appraisers, brokers or other persons. The Committee, the Corporation, and the
officers and directors of the

<PAGE>
                                                                               3

Corporation shall be entitled to rely upon the advice, opinions or valuations of
any such persons. All actions taken and all interpretations and determinations
made by the Committee in good faith shall be final and binding upon all
Participants, the Corporation and all other interested persons. No member of the
Committee shall be personally liable for any action, determination or
interpretation made in good faith with respect to the Plan or the Grants, and
all members of the Committee shall be fully protected by the Corporation with
respect to any such action, determination or interpretation.

4.   Eligibility

     The Committee may from time to time make Grants under the Plan to such
Employees, or other persons having a relationship with Corporation or any of its
Subsidiaries, and in such form and having such terms, conditions and limitations
as the Committee may determine. No Grants may be made under this Plan to
non-employee directors of Corporation or any of its Subsidiaries. Grants may be
granted singly, in combination or in tandem. The terms, conditions and
limitations of each Grant under the Plan shall be set forth in a Grant
Agreement, in a form approved by the Committee, consistent, however, with the
terms of the Plan; provided, however, that such Grant Agreement shall contain
provisions dealing with the treatment of Grants in the event of the termination,
death or disability of a Participant, and may also include provisions concerning
the treatment of Grants in the event of a change of control of Corporation.

5.   Grants

      From time to time, the Committee will determine the forms and amounts
of Grants for Participants.  Such Grants may take the following forms in the
Committee's sole discretion:

      (a)  Incentive Stock Options - These are stock options within the
meaning of Section 422 of the Internal Revenue Code of 1986, as amended
("Code"), to purchase Common Stock.  In addition to other restrictions
contained in the Plan, an option granted under this Paragraph 5(a), (i) must
be granted within ten years from the earlier of (A) the date the Plan is
adopted and (B) the date the Plan is approved by the stockholders, (ii) may
not be exercised more than 10 years after the date it is granted, (iii) may
not have an option price less than the Fair Market Value of Common Stock on
the date the option is granted, (iv) must otherwise comply with Code Section
422 and (v) must be designated as an "Incentive Stock Option" by the
Committee.  The maximum aggregate Fair Market Value of Common Stock
(determined at the time of each Grant) with respect to which any Participant
may first exercise Incentive Stock Options under this Plan and any Incentive
Stock Options granted to the Participant for such year under any plans of the
Corporation or any Subsidiary in any calendar year is $100,000.  Payment of
the option price shall be made in cash or in shares of Common Stock, or a
combination thereof, in accordance with the terms of the Plan, the Grant
Agreement, and of any applicable guidelines of the Committee in effect at the
time.

      (b)  Other Stock Options - These are options to purchase Common Stock
which are not designated by the Committee as "Incentive Stock Options".  At
the time of the Grant the Committee shall determine, and shall have contained
in the Grant Agreement or other Plan rules,

<PAGE>
                                                                               4

the option exercise period, the option price, and such other conditions or
restrictions on the grant or exercise of the option as the Committee deems
appropriate, which may include the requirement that the grant of options is
predicated on the acquisition of Purchase Shares under Paragraph 5(e) by the
Optionee. In addition to other restrictions contained in the Plan, an option
granted under this Paragraph 5(b), (i) may not be exercised more than 10 years
after the date it is granted and (ii) may not have an option exercise price less
than 50% of the Fair Market Value of Common Stock on the date the option is
granted. Payment of the option price shall be made in cash or in shares of
Common Stock, or a combination thereof, in accordance with the terms of the Plan
and of any applicable guidelines of the Committee in effect at the time.

     (c) Stock Appreciation Rights - These are rights that on exercise entitle
the holder to receive the excess of (i) the Fair Market Value of a share of
Common Stock on the date of exercise over (ii) the Fair Market Value on the date
of Grant (the "base value") multiplied by (iii) the number of rights exercised
as determined by the Committee. Stock Appreciation Rights granted under the Plan
may, but need not be, granted in conjunction with an Option under Paragraph 5(a)
or 5(b). The Committee, in the Grant Agreement or by other Plan rules, may
impose such conditions or restrictions on the exercise of Stock Appreciation
Rights as it deems appropriate, and may terminate, amend, or suspend such Stock
Appreciation Rights at any time. No Stock Appreciation Right granted under this
Plan may be exercised less than 6 months or more than 10 years after the date it
is granted except in the event of death or disability of a Participant. To the
extent that any Stock Appreciation Right that shall have become exercisable, but
shall not have been exercised or cancelled or, by reason of any termination of
employment, shall have become non-exercisable, it shall be deemed to have been
exercised automatically, without any notice of exercise, on the last day of
which it is exercisable, provided that any conditions or limitations on its
exercise are satisfied (other than (i) notice of exercise and (ii) exercise or
election to exercise during the period prescribed) and the Stock Appreciation
Right shall then have value. Such exercise shall be deemed to specify that the
holder elects to receive cash and that such exercise of a Stock Appreciation
Right shall be effective as of the time of automatic exercise.

     (d) Restricted Stock - Restricted Stock is Common Stock delivered to a
Participant with or without payment of consideration with restrictions or
conditions on the Participant's right to transfer or sell such stock; provided
that the price of any Restricted Stock delivered for consideration and not as
bonus stock may not be less than 50% of the Fair Market Value of Common Stock on
the date such Restricted Stock is granted or the price of such Restricted Stock
may be the par value. If a Participant irrevocably elects in writing in the
calendar year preceding a Grant of Restricted Stock, dividends paid on the
Restricted Stock granted may be paid in shares of Restricted Stock equal to the
cash dividend paid on Common Stock. The number of shares of Restricted Stock and
the restrictions or conditions on such shares shall be as the Committee
determines and shall be set forth in the Grant Agreement, and the certificate
for the Restricted Stock shall bear evidence of the restrictions or conditions.
No Restricted Stock may have a restriction period of less than 6 months, other
than in the case of death or disability.

     (e) Purchase Stock - Purchase Stock are shares of Common Stock offered to a
Participant at such price as determined by the Committee, the acquisition of
which will make the Participant

<PAGE>
                                                                               5

eligible to receive under the Plan, including, but not limited to, Other Stock
Options; provided, however, that the price of such Purchase Shares may not be
less than 50% of the Fair Market Value of the Common Stock on the date such
shares of Purchase Stock are offered.

     (f) Dividend Equivalent Rights - These are rights to receive cash payments
from the Corporation at the same time and in the same amount as any cash
dividends paid on an equal number of shares of Common Stock to shareholders of
record during the period such rights are effective. The Committee, in the Grant
Agreement or by other Plan rules, may impose such restrictions and conditions on
the Dividend Equivalent Rights, including the date such rights will terminate,
as it deems appropriate, and may terminate, amend, or suspend such Dividend
Equivalent Rights at any time.

     (g) Other Stock-Based Grants - The Committee may make other Grants under
the Plan pursuant to which shares of Common Stock (which may, but need not, be
shares of Restricted Stock pursuant to Paragraph 5(d)), are or may in the future
be acquired, or Grants denominated in stock units, including ones valued using
measures other than market value. Other Stock-Based Grants may be granted with
or without consideration; provided, however, that the price of any such Grant
made for consideration that provides for the acquisition of shares of Common
Stock or other equity securities of the Corporation may not be less than 50% of
the Fair Market Value of the Common Stock or such other equity securities on the
date of grant of such Grant. Such Other Stock-Based Grants may be made alone, in
addition to or in tandem with any Grant of any type made under the Plan and must
be consistent with the purposes of the Plan.

6.   Limitations and Conditions

     (a) The number of Shares available for Grants under this Plan shall be
2,500,000 shares of the authorized Common Stock as of the effective date of the
Plan. The number of Shares subject to Grants under this Plan to any one
Participant shall not be more than 1,000,000 shares. Unless restricted by
applicable law, Shares related to Grants that are forfeited, terminated,
cancelled or expire unexercised, shall immediately become available for Grants.

     (b) At the time a Grant is made or amended or the terms or conditions of a
Grant are changed, the Committee may provide for limitations or conditions on
such Grant.

     (c) Nothing contained herein shall affect the right of the Corporation to
terminate any Participant's employment at any time or for any reason.

     (d) Deferrals of Grant payouts may be provided for, at the sole discretion
of the Committee, in the Grant Agreements.

     (e) Except as otherwise prescribed by the Committee, the amounts of the
Grants for any employee of a Subsidiary, along with interest, dividend, and
other expenses accrued on deferred Grants shall be charged to the Participant's
employer during the period for which the Grant is made. If the Participant is
employed by more than one Subsidiary or by both the Corporation and a Subsidiary
during the period for which the Grant is made, the Participant's

<PAGE>
                                                                               6

Grant and related expenses will be allocated between the companies employing the
Participant in a manner prescribed by the Committee.

     (f) Other than as specifically provided with regard to the death of a
Participant, or as specifically provided in a Grant Agreement or by the
Committee, no benefit under the Plan shall be subject in any manner to
anticipation, alienation, sale, transfer, assignment, pledge, encumbrance, or
charge, and any attempt to do so shall be void. No such benefit shall, prior to
receipt thereof by the Participant, be in any manner liable for or subject to
the debts, contracts, liabilities, engagements, or torts of the Participant.

     (g) Participants shall not be, and shall not have any of the rights or
privileges of, stockholders of the Corporation in respect of any Shares
purchasable in connection with any Grant unless and until certificates
representing any such Shares have been issued by the Corporation to such
Participants.

     (h) No election as to benefits or exercise of Stock Options, Stock
Appreciation Rights, or other rights may be made during a Participant's lifetime
by anyone other than the Participant except by a legal representative appointed
for or by the Participant, or as specifically provided in a Grant Agreement.

     (i) Absent express provisions to the contrary, any grant under this Plan
shall not be deemed compensation for purposes of computing benefits or
contributions under any retirement plan of the Corporation or its Subsidiaries
and shall not affect any benefits under any other benefit plan of any kind or
subsequently in effect under which the availability or amount of benefits is
related to level of compensation. This Plan is not a "Retirement Plan" or
"Welfare Plan" under the Employee Retirement Income Security Act of 1974, as
amended.

     (j) Unless the Committee determines otherwise, no benefit or promise under
the Plan shall be secured by any specific assets of the Corporation or any of
its Subsidiaries, nor shall any assets of the Corporation or any of its
Subsidiaries be designated as attributable or allocated to the satisfaction of
the Corporation's obligations under the Plan.

7.   Transfers and Leaves of Absence

     For purposes of the Plan, unless the Committee determines otherwise: (a) a
transfer of a Participant's employment without an intervening period of
separation among the Corporation and any Subsidiary shall not be deemed a
termination of employment, and (b) a Participant who is granted in writing a
leave of absence shall be deemed to have remained in the employ of the
Corporation during such leave of absence.

8.   Adjustments

     In the event of any change in the outstanding Common Stock by reason of a
stock split, spin-off, stock dividend, stock combination or reclassification,
recapitalization or merger, change of control, or similar event, the Committee
may adjust appropriately the number of Shares

<PAGE>
                                                                               7

subject to the Plan and available for or covered by Grants and Share prices
related to outstanding Grants and make such other revisions to outstanding
Grants as it deems are equitably required.

9.   Merger, Consolidation, Exchange, Acquisition, Liquidation or Dissolution

     In its absolute discretion, and on such terms and conditions as it deems
appropriate, coincident with or after the grant of any Stock Option or any
Stock-Based Grant, the Committee may provide that such Stock Option or
Stock-Based Grant cannot be exercised after the merger or consolidation of the
Corporation into another corporation, the exchange of all or substantially all
of the assets of the Corporation for the securities of another corporation, the
acquisition by another corporation of 80% or more of the Corporation's then
outstanding shares of voting stock or the recapitalization, reclassification,
liquidation or dissolution of the Corporation, and if the Committee so provides,
it shall, on such terms and conditions as it deems appropriate in its absolute
discretion, also provide, either by the terms of such Stock Option or
Stock-Based Grant or by a resolution adopted prior to the occurrence of such
merger, consolidation, exchange, acquisition, recapitalization,
reclassification, liquidation or dissolution, that, for some period of time
prior to such event, such Stock Option or Stock-Based Grant shall be exercisable
as to all shares subject thereto, notwithstanding anything to the contrary
herein (but subject to the provisions of Paragraph 6(b)) and that, upon the
occurrence of such event, such Stock Option or Stock-Based Grant shall terminate
and be of no further force or effect; provided, however, that the Committee may
also provide, in its absolute discretion, that even if the Stock Option or
Stock-Based Grant shall remain exercisable after any such event, from and after
such event, any such Stock Option or Stock-Based Grant shall be exercisable only
for the kind and amount of securities and/or other property, or the cash
equivalent thereof, receivable as a result of such event by the holder of a
number of shares of stock for which such Stock Option or Stock-Based Grant could
have been exercised immediately prior to such event.

10.  Amendment and Termination

     The Committee shall have the authority to make such amendments to any terms
and conditions applicable to outstanding Grants as are consistent with this Plan
provided that, except for adjustments under Paragraph 8 or 9 hereof, no such
action shall modify such Grant in a manner adverse to the Participant without
the Participant's consent except as such modification is provided for or
contemplated in the terms of the Grant.

     The Board of Directors may amend, suspend or terminate the Plan at any time
from time to time.

11.  Foreign Options and Rights

     The Committee may make Grants to Employees who are subject to the laws of
nations other than the United States, which Grants may have terms and conditions
that differ from the terms thereof as provided elsewhere in the Plan for the
purpose of complying with foreign laws.

<PAGE>
                                                                               8

12.  Withholding Taxes

     The Corporation shall have the right to deduct from any cash payment made
under the Plan any federal, state or local income or other taxes required by law
to be withheld with respect to such payment. It shall be a condition to the
obligation of the Corporation to deliver shares upon the exercise of an Option
or Stock Appreciation Right, upon payment of Performance units or shares, upon
delivery of Restricted Stock or upon exercise, settlement or payment of any
Other Stock-Based Grant that the Participant pay to the Corporation such amount
as may be requested by the Corporation for the purpose of satisfying any
liability for such withholding taxes. Any Grant Agreement may provide that the
Participant may elect, in accordance with any conditions set forth in such Grant
Agreement, to pay a portion or all of such withholding taxes in shares of Common
Stock.

13.  Effective Date and Termination Date

     The Plan shall be effective on and as of the date of its approval by the
stockholders of the Corporation and shall continue until terminated by the Board
of Directors pursuant to Paragraph 10.

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