Document:

FIRST AMENDMENT TO PARTICIPATION AGREEMENT
                   ------------------------------------------

          FIRST AMENDMENT TO PARTICIPATION AGREEMENT, dated as of August 7, 2000
(this "Agreement"), to the Participation Agreement dated as of September 2, 1999
(The "Participation Agreement"), among KINDERCARE LEARNING CENTERS, INC., a
Delaware corporation (the "Lessee"); THE KINDERCARE REALTY TRUST 1999, a
Delaware business trust (the "Trust" or the "Lessor"); THE CHASE MANHATTAN BANK,
a New York banking corporation, as agent (in such capacity, the "Agent") for the
Lenders; SCOTIABANC INC., as an investor ("Scotiabanc" or an "Investor"); and
the Required Lenders.

                              Preliminary Statement
                              ---------------------

          WHEREAS, pursuant to the Participation Agreement, the parties thereto
agreed to participate in a transaction in which, among other things, (i) the
Lenders agreed to make certain loans to the Lessor pursuant to the Credit
Agreement dated as of September 2, 1999 among the Lessor, the Agent and the
Lenders; (ii) the Lessor agreed to use the proceeds of the Loans to acquire and
construct certain properties; and (iii) the Lessor agreed to lease such
properties to Lessee pursuant to the Lease.

          WHEREAS, the Lessee has requested, and, upon this Amendment becoming
effective, the Lenders have agreed, that certain provisions of the Participation
Agreement be amended in the manner provided for in this Amendment;

          NOW, THEREFORE, the parties hereto hereby agree as follows:

          1.   Defined Terms. (a) General. Terms defined in the Participation
Agreement and used herein shall, unless otherwise indicated, have the meanings
given to them in the Participation Agreement. Terms defined and used in this
Amendment shall have the meanings given to them in this Amendment.

          (b)  Addition of Definitions. The following defined terms are hereby
added to Annex A of the Participation Agreement in appropriate alphabetical
order:

               "Non-Pool Property" shall mean each Property which is not a Pool
Property.

               "Pool Properties" shall mean the Properties located at the
following addresses:

          1.   Center No. 1606, 7113 Wallace Road, Orlando, Florida
          2.   Center No. 1610,1-5 & 1-205, Vancouver, Washington
          3.   Center No. 1613, 425 Sumneytown Pike, North Wales, Pennsylvania
          4.   Center No. 1616, 14050 Central Loop Road, Woodbridge, Virginia
          5.   Center No. 1627, 146-148 Berlin Road, Cromwell, Connecticut
          6.   Center No. 1628, 355 Cumberland Parkway, Mechanicsburg,
               Pennsylvania

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                                                                               2

          7.   Center No. 1658, 1717 NE 44th Street, Renton, Washington
          8.   Center No. 1662, 100 Saturn Parkway, Spring Hill, Tennessee
          9.   Center No. 1672, Clarkson & Clayton Road, Ellisville, Missouri
          10.  Center No. 1690, 50-1050 Ernest Barrett Parkway, Marietta,
               Georgia
          11.  Center No. 1661, 303 & 323 Cromwell Avenue, Rocky Hill,
               Connecticut

          and the following properties, when they become Properties:

          12.  Center No. 1632, Route 106 & Garden Lane, Londonderry, New
               Hampshire

          2.   Amendment to Section 6.26(j). Section 6.20(j) of the
Participation Agreement is hereby deleted and the following inserted in its
place:

          "(j) Appraisal. The Agent and the Investor shall have received an
     Appraisal of each Property being acquired on such Property Closing Date and
     such Appraisal or Appraisals shall show a value (i) for each Non-Pool
     Property at least equal to 90.91% of the projected Project Costs for each
     such Non-Pool Property and (ii) for the Pool Properties collectively at
     least equal to 90.91 % of the projected Project Costs for such Pool
     Properties collectively and shall otherwise be in form and substance
     acceptable to each Lender and Investor and the Lessor, or, in the
     alternative, (i) (1) if the Property has no Improvements or Improvements
     which the Lessee intends to completely demolish, an appraisal of the Land
     only, or (2) if the Property has Improvements which the Lessee intends to
     renovate, an appraisal of the Land and Improvements, in either case ordered
     by the Agent, prepared by a reputable independent appraiser reasonably
     satisfactory to the Agent, which in the judgment of counsel to the Agent,
     as of the applicable Property Closing Date, complies with all of the
     provisions of the Financial Institutions Reform, Recovery and Enforcement
     Act of 1989, as amended, the rules and regulations adopted pursuant
     thereto, and all other applicable Legal Requirements, showing the value of
     the Land at least equal to the amount requested or the Requisition with
     respect to such Land and (ii) a valuation letter, ordered by the Agent,
     prepared by a reputable independent appraiser reasonably satisfactory to
     the Agent, of such Property as if improved in accordance with the Plans and
     Specifications of such Property. The valuation letter shall state the
     amount of the Projected Completion Value with respect to such Property and
     an estimate of the value thereof at the end of the Term.

          3.   Amendment to Section 6.3(f). Section 6.3(f) of the Participation
Agreement is hereby deleted and the following inserted in its place:

          "(a) Appraisal. The Agent and the Investor shall have received an
     Appraisal of each Property being acquired on such Property Closing Date and
     such Appraisal or Appraisals shall show a value (i) for each Non-Pool
     Property at least equal to 90.91% of the projected Project Costs for each
     such Non-Pool Property and (ii) for the Pool Properties collectively at
     least equal to 90.91% of the projected Project Costs for such

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                                                                               3

     Pool Properties collectively and shall otherwise be in form and substance
     acceptable to each Lender and the Required Investors.

          4.   Amendment to Section 7.2(h). Section 7.7(h) of the Participation
Agreement is hereby deleted and the following inserted in its place:

          "(h) Projected Completion Value. The Property Cost of each Improvement
     on each Non-Pool Property as established by Budget will not exceed an
     amount equal to one hundred ten percent (110%) of the projected Completion
     Value with respect to such Improvements. The Property Cost of Improvements
     on all Pool Properties collectively as established by Budget will not
     exceed an amount equal to one hundred ten percent (110%) of the Projected
     Completion Value with respect to such Improvements on all such Pool
     Properties, collectively."

          5.   Payment of Expenses. The Lessee agrees to pay or reimburse the
Agent for all of its out-of-pocket costs and expenses incurred in connection
with the Amendment, any other documents prepared in connection herewith and the
transactions contemplated hereby, including, without limitation, the reasonable
fees and disbursements of counsel to the Agent.

          6.   Reference to and Effect on the Operative Agreement; Limited
Effect. On and after the date hereof, each reference in the Participation
Agreement to "this Agreement", "hereunder", "hereof' or words of like import
referring to the Participation Agreement, and each reference in the other
Operative Agreements to "the Participation Agreement", "thereunder", "thereof'
or words of like import referring to the Participation Agreement, shall mean and
be a reference to the Participation Agreement as amended hereby. The execution,
delivery and effectiveness of this Amendment shall not, except as expressly
provided herein, operate as a waiver of any right, power or remedy of any Lender
or any Agent under any of the Operative Agreements, nor constitute a waiver of
any provisions of any of the Operative Agreements. Except as expressly amended
herein, all of the provisions and covenants of the Participation Agreement and
the other Operative Agreements are and shall continue to remain in full force
and effect in accordance with the terms thereof and are hereby in all respects
ratified and confirmed.

          7.   Counterparts. This Amendment may be executed by one or more of
the parties hereto in any number of separate counterparts (which may include
counterparts delivered by facsimile transmission) and all of said counterparts
taken together shall be deemed to constitute one and the same instrument. Any
executed counterpart delivered by facsimile transmission shall be effective as
for all purposes hereof.

          8.   GOVERNING LAW. THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF
THE PARTIES HERETO SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

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                                                                               4

          IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be duly executed and delivered by their respective proper and duly authorized
officers as of the day and year first above written.

                                       KINDERCARE LEARNING CENTERS, INC.

                                       By: /s/ JOSEPH KEOUGH
                                           -------------------------------------
                                           Name: Joseph Keough
                                           Title: Vice President, Real Estate

                                       THE KINDERCARE REALTY TRUST 1999

                                       By:  WILMINGTON TRUST COMPANY, not
                                            in its individual capacity but
                                            solely as Trustee

                                       By: /s/ JOSEPH B. FEIL
                                           -------------------------------------
                                           Name: Joseph B. Feil
                                           Title: Senior Financial Services
                                                  Officer

                                       SCOTIABANC INC., as an Investor

                                       By: /s/ W.J. BROWN
                                           -------------------------------------
                                           Name: W.J. Brown
                                           Title: Managing Director

                                       Required Lenders:

                                       THE CHASE MANHATTAN BANK, as Agent
                                       and a Lender

                                       By: /s/ KATHRYN A. DUNCAN
                                           -------------------------------------
                                           Name: Kathryn A. Duncan
                                           Title: Vice President

                                       CITICORP USA, INC.

                                       By: /s/ TIMOTHY L. FREEMAN
                                           -------------------------------------
                                           Name: Timothy L. Freeman
                                           Title: Managing Director/SCO

                                       THE BANK OF NOVA SCOTIA

                                       By: /s/ DARYL K. HOGGE
                                           -------------------------------------
                                           Name: Daryl K. Hogge
                                           Title: Director

                                       CREDIT SUISSE FIRST BOSTON

                                       By: /s/ ROBERT HETU
                                           -------------------------------------
                                           Name: Robert Hetu
                                           Title: Vice President

                                       By: /s/ LALITA ADVANI
                                           -------------------------------------
                                           Name: Lalita Advani
                                           Title: Assistant Vice President

                                       FIRSTRUST BANK

                                       By: /s/ KENT NELSON
                                           -------------------------------------
                                           Name: Kent Nelson
                                           Title: VP

                                       BANK OF AMERICA, N.A.

                                       By: /s/ KEVIN C. LEADER
                                           -------------------------------------
                                           Name: Kevin C. Leader
                                           Title: Managing DirectorSECOND AMENDMENT TO PARTICIPATION AGREEMENT
                   -------------------------------------------

          SECOND AMENDMENT TO PARTICIPATION AGREEMENT, dated as of February 12,
2001 (this "Amendment"), to the Participation Agreement dated as of September 2,
1999, as previously amended by the First Amendment to Participation Agreement
dated as of August 7, 2000 (as further amended and/or restated, the
"Participation Agreement"), among KINDERCARE LEARNING CENTERS, INC., a Delaware
corporation (the "Lessee"), THE KINDERCARE REALTY TRUST 1999, a Delaware
business trust (the "Trust" or the "Lessor"), THE CHASE MANHATTAN BANK, a New
York banking corporation, as agent (in such capacity, the "Agent") for the
Lenders, SCOTIABANC INC., as an investor ("Scotiabanc" or an "Investor"), and
the Required Lenders.

                              Preliminary Statement
                              ---------------------

          WHEREAS, pursuant to the Participation Agreement, the parties thereto
agreed to participate in a transaction in which, among other things, (i) the
Lenders agreed to make certain loans to the Lessor pursuant to the Credit
Agreement dated as of September 2, 1999 among the Lessor, the Agent and the
Lenders; (ii) the Lessor agreed to use the proceeds of the Loans to acquire and
construct certain properties; and (iii) the Lessor agreed to lease such
properties to Lessee pursuant to the Lease.

          WHEREAS, the Lessee has requested, and, upon this Amendment becoming
effective, the Lenders have agreed that certain provisions of the Participation
Agreement be amended in the manner provided for in this Amendment;

          NOW, THEREFORE, the parties hereto hereby agree as follows:

          1.   Defined Terms. (a) General. Terms defined in the Participation
Agreement and used herein shall, unless otherwise indicated, have the meanings
given to them in the Participation Agreement. Terms defined and used in this
Amendment shall have the meanings given to them in this Amendment.

          (b)  Deletion of Definitions. The definitions of "Consolidated Senior
Debt" and "Consolidated Senior Debt to Consolidated EBITDA Ratio" are hereby
deleted.

          (c)  Addition of Definitions. The following definitions are hereby
added to Annex A of the Participation Agreement in appropriate alphabetical
order:

               "Cash Collateral Agreement" shall mean the Cash Collateral
          Agreement dated as of February 12, 2001 between the Construction Agent
          and the Agent, as amended, supplemented or otherwise modified from
          time to time in accordance with the terms thereof.

               "Consolidated Total Debt to Consolidated EBITDA Ratio" shall
          mean, as of any date of determination, the ratio of (a) Consolidated
          Total Debt as of the last day of the relevant Test Period to (b)
          Consolidated EBITDA for such Test Period.

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                                                                               2

               "Expected Project Costs" shall mean those Project Costs not yet
          incurred by and invoiced to the Construction Agent that the
          Construction Agent reasonably expects to incur and be invoiced on
          within 120 days of the date of the Cash Collateral Agreement, for work
          performed and services rendered on Properties on which Completion has
          occurred by the date of the Cash Collateral Agreement.

          (d)  Replacement of Definitions. The definitions of "Security
Documents", and "Status" are hereby deleted and replaced in their entirety with
the following:

               "Security Documents" shall mean the collective reference to the
          Mortgage, the Deed of Trust, the Lease, the Memorandum of Lease, the
          Assignment of Lease, the Contract Assignment, and the Cash Collateral
          Agreement, and all other security documents hereafter delivered to the
          Agent granting a Lien on any asset or assets of any Person to secure
          the obligations and liabilities of the Lessor under the Credit
          Agreement and/or under any of the other Credit Documents or to secure
          any guarantee of any such obligations and liabilities.

               "Status" shall mean, as to the Company as of any date, the
          existence of Level I Status, Level II Status, Level III Status, Level
          IV Status or Level V Status, as the case may be, on such date. Changes
          in Status resulting from changes in the Consolidated Total Debt to
          Consolidated EBITDA Ratio shall become effective (the date of such
          effectiveness, the "Status Effective Date") as of the first day
          following the most recent fiscal year or period for which (a) Section
          9.1 Financials are delivered to the Lenders and (b) an officer's
          certificate is delivered by the Company to the Lenders setting forth,
          with respect to such Section 9.1 Financials, the then-applicable
          Status, and shall remain in effect until the next change to be
          effected pursuant to this definition, provided that (i)
          notwithstanding the foregoing, for the period from and including the
          Initial Closing Date to but excluding the initial Status Effective
          Date the Status of the Company shall be deemed to be Level III and
          (ii) each determination of the Consolidated Total Debt to Consolidated
          EBITDA Ratio pursuant to this definition shall be made with respect to
          the Test Period ending at the end of the fiscal period covered by the
          relevant financial statements.

          (e)  Modification of Definitions. The definition of Operative
Agreements is hereby modified by deleting the end of the definition as follows:
"(m) the Requisitions; and (n) the Trust Agreement" and replacing it with the
following:

               "(m)   the Requistions;
                (n)   the Trust Agreement; and
                (o)   the Cash Collateral Agreement."

          2.   Amendment to Section 5.2(b). Section 5.2(b) of the Participation
Agreement is hereby deleted and the following inserted in its place:

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                                                                               3

               "(b)  Each Requisition shall: (i) be irrevocable; and (ii)
          request funds in an amount of at least $500,000 (or such lesser amount
          representing Property Acquisition Costs for any Property or such
          lesser amount as shall be equal to the total aggregate of the
          Available Commitments plus the Available Investor Commitment at such
          time) for the payment of Project Costs which have previously been
          incurred and/or Expected Project Costs and were not the subject of and
          funded pursuant to a prior Requisition, in each case as specified in
          the Requisition."

          3.   Amendment to Section 5.2(c). Section 5.2(c) of the Participation
Agreement is hereby modified by deleting the period at the end of the paragraph
and adding the following:

               "and/or Expected Project Costs. Notwithstanding anything to the
          contrary in this Agreement, all funds advanced as Expected Project
          Costs shall be deposited in the Cash Collateral Agreement and shall be
          released therefrom strictly in accordance with the terms thereof."

          4.   Payment of Expenses. The Lessee agrees to pay or reimburse the
Agent for all of its out-of-pocket costs and expenses incurred in connection
with the Amendment, any other documents prepared in connection herewith and the
transactions contemplated hereby, including, without limitation, the reasonable
fees and disbursements of counsel to the Agent.

          5.   Reference to and Effect on the Operative Agreements; Limited
Effect. On and after the date hereof, each reference in the Participation
Agreement to "this Agreement", "hereunder", "hereof" or words of like import
referring to the Participation Agreement, and each reference in the other
Operative Agreements to "the Participation Agreement", "thereunder", "thereof"
or words of like import referring to the Participation Agreement, shall mean and
be a reference to the Participation Agreement as amended hereby. The execution,
delivery and effectiveness of this Amendment shall not, except as expressly
provided herein, operate as a waiver of any right, power or remedy of any Lender
or any Agent under any of the Operative Agreements, nor constitute a waiver of
any provisions of any of the Operative Agreements. Except as expressly amended
herein, all of the provisions and covenants of the Participation Agreement and
the other Operative Agreements are and shall continue to remain in full force
and effect in accordance with the terms thereof and are hereby in all respects
ratified and confirmed.

          6.   Counterparts. This Amendment may be executed by one or more of
the parties hereto in any number of separate counterparts (which may include
counterparts delivered by facsimile transmission) and all of said counterparts
taken together shall be deemed to constitute one and the same instrument. Any
executed counterpart delivered by facsimile transmission shall be effective for
all purposes hereof.

          7.   GOVERNING LAW. THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF
THE PARTIES HERETO SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

<PAGE>
                                                                               4

          IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be duly executed and delivered by their respective proper and duly authorized
officers as of the day and year first above written.

                                      KINDERCARE LEARNING CENTERS, INC.

                                      By: /s/ EVA M. KRIPALANI
                                          --------------------------------------
                                          Name: Eva M. Kripalani
                                          Title: VP, General Counsel & Secretary

                                      THE KINDERCARE REALTY TRUST 1999

                                      By:  WILMINGTON TRUST COMPANY, not
                                           in its individual capacity but
                                           solely as Trustee

                                      By: /s/ JOSEPH B. FEIL
                                          --------------------------------------
                                          Name: Joseph B. Feil
                                          Title: Senior Financial Services
                                                 Officer

                                      SCOTIABANC INC., as an Investor

                                      By: /s/ WILLIAM E. ZARRETT
                                          --------------------------------------
                                          Name: William E. Zarrett
                                          Title: Managing Director

                                      Required Lenders:

                                      THE CHASE MANHATTAN BANK, as Agent
                                      and a Lender

                                      By: /s/ KATHRYN A. DUNCAN
                                          --------------------------------------
                                          Name: Kathryn A. Duncan
                                          Title: Vice President

                                      BANK OF AMERICA, N.A.

                                      By: /s/ KEVIN LEADER
                                          --------------------------------------
                                          Name: Kevin Leader
                                          Title: Managing Director

                                      THE BANK OF NOVA SCOTIA, as Lender

                                      By: /s/ DARYL K. HOGGE
                                          --------------------------------------
                                          Name: Daryl K. Hogge
                                          Title: Director

                                      BANKERS TRUST COMPANY

                                      By: /s/ MARY JO JOLLY
                                          --------------------------------------
                                          Name: Mary Jo Jolly
                                          Title: Assistant Vice President

                                      CITICORP, USA

                                      By: /s/ MICHAEL CHLOPAK
                                          --------------------------------------
                                          Name: Michael Chlopak
                                          Title: VP

                                      CREDIT SUISSE FIRST BOSTON

                                      By: /s/ ROBERT HETU
                                          --------------------------------------
                                          Name: Robert Hetu
                                          Title: Director

                                      By: /s/ WILLIAM S. LUTKINS
                                          --------------------------------------
                                          Name: William S. Lutkins
                                          Title: Vice President

                                      FIRSTRUST BANK

                                      By: /s/ KENT NELSON
                                          --------------------------------------
                                          Name: Kent Nelson
                                          Title: Vice President

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