MANAGEMENT SERVICES AGREEMENT
This MANAGEMENT SERVICES AGREEMENT (this "Agreement"), dated
as of December 29, 1994, is made by and between KASH N' KARRY
FOOD STORES, INC., a Delaware corporation (the "Company"), and
LEONARD GREEN & PARTNERS, L.P. ("LGP").
WHEREAS, the Company desires to obtain from LGP, and LGP
desires to provide, certain management, consulting, financial
planning and financial advisory services on an ongoing basis.
NOW THEREFORE, in consideration of the foregoing and the
mutual agreements contained herein, the parties hereto hereby
agree as follows:
1. Retention. Subject to the terms and conditions hereof, the
Company hereby retains LGP, and LGP hereby agrees to be
retained by the Company, to provide management, consulting,
financial planning and financial advisory services to the
Company on an ongoing basis in connection with the operation
of the Company during the term of this Agreement and in
connection with major financial transactions that may be
undertaken from time to time during the term of this Agree-
ment (collectively, the "Services").
2. Compensation. In consideration of the Services, the Company
shall pay LGP an annual fee of $200,000, payable in equal
monthly installments, in advance, on the first day of each
month commencing on the first such day following the effec-
tive date hereof; provided, however, that the amount of such
fee shall be prospectively reduced by an amount equal to two
percent (2%) of the greater of (x) the cost to LGP and its
affiliates of, or (y) the proceeds received by LGP and its
affiliates with respect to, all or any part of their $10
million equity investment in the Company which is trans-
ferred during the term of this Agreement to the Company or
to any third party which is not an affiliate of LGP or a
partner of Green Equity Investors, L.P.
In the event the Company shall specifically request that LGP
provide investment banking services to the Company in con-
nection with a major financial transaction undertaken by the
Company during the term of this Agreement, and LGP shall
agree to do so, the Company shall pay LGP for such services
reasonable and customary fees for services of like kind,
taking into consideration all relevant factors, including
but not limited to the complexity of the subject transac-
tion, the time devoted to providing such services and the
value of LGP's investment banking expertise and relations
within the business and financial community. The amount of
such fees shall be approved by a majority of the disinter-
ested members of the Company's Board of Directors.
The Company and LGP hereby terminate any prior written or
oral understandings or agreements with respect to the provi-
sion by LGP of management, consulting, financial planning or
financial advisory services to the Company, and LGP hereby
waives any fees and/or expenses that may have accrued or be
payable to LGP by or on behalf of the Company in connection
with or pursuant to any such prior understandings or agree-
ments.
3. Term. This Agreement shall become effective (the "effective
date") on the effective date of the Company's plan of reor-
ganization described in the Company's Disclosure Statement
dated September 2, 1994, and shall terminate on the earlier
to occur of (i) the second anniversary of the effective date
of this Agreement and (ii) the date on which the annual fee
to which LGP is entitled hereunder is reduced to zero pursu-
ant to the provisions of Section 2 hereof. Notwithstanding
any other provision hereof, the Company's obligation, pursu-
ant to Section 2 hereof and the provisions of Section 5
hereof, to pay amounts due with respect to periods prior to
the termination hereof shall survive any termination of this
Agreement.
4. Decisions; Authority of Management Advisor.
4.1 Company Decisions. The Company reserves the right to
make all decisions with regard to any matter upon which
LGP has rendered its advice and consultation, and there
shall be no liability to LGP for any such advice ac-
cepted by the Company pursuant to the provisions of
this Agreement.
4.2 Independent Contractor. LGP shall act solely as an
independent contractor and shall have complete charge
of its personnel engaged in the performance of the
Services. As an independent contractor, LGP shall have
the authority only to act as an advisor to the Company
and shall have no authority to enter into any agreement
or to make any representations, commitment or warranty
binding upon the Company or to obtain or incur any
right, obligation or liability on behalf of the Compa-
ny.
5. Indemnification.
5.1 Indemnification. The Company shall (i) indemnify LGP
and GEI, their respective affiliates, and the partners,
directors, officers, employees, agents and controlling
persons of LGP and GEI and their respective affiliates
(collectively, the "Indemnified Parties"), to the
fullest extent permitted by law, from and against any
and all losses, claims, damages and liabilities, joint
or several, to which any Indemnified Party may become
subject, caused by, related to or arising out of the
Services or the engagement of LGP pursuant to, and the
performance by LGP of the Services contemplated by,
this Agreement, and (ii) promptly reimburse each Indem-
nified Party for all costs and expenses (including
reasonable attorneys' fees and expenses), as incurred,
in connection with the investigation of, preparation
for or defense of any pending or threatened claim or
any action or proceeding arising therefrom, whether or
not such Indemnified Party is a party and whether or
not such claim, action or proceeding is initiated or
brought by or on behalf of the Company and whether or
not resulting in any liability; provided, however, that
the Company shall not be liable under the foregoing
indemnification to the extent that such loss, claim,
damage, liability, cost or expense is found in a final
non-appealable judgment by a court to have resulted
from such Indemnified Party's bad faith or gross negli-
gence or from a material violation of this Agreement or
from actions of such Indemnified Party outside the
scope of and unauthorized by this Agreement; and pro-
vided, further, that no Indemnified Party shall be
reimbursed for costs and expenses unless the Company
shall have received an undertaking by or on behalf of
such Indemnified Party to repay such amounts if it
shall be determined ultimately that such Indemnified
Party is not entitled to be indemnified hereunder.
5.2 The Company agrees that no Indemnified Party shall have
any liability (whether direct or indirect, in contract,
tort or otherwise) to the Company related to or arising
out of the engagement of LGP pursuant to, or the per-
formance by LGP of the Services contemplated by, this
Agreement, except to the extent that such loss, claim,
damage, liability, cost or expense is found in a final
non-appealable judgment by a court to have resulted
from LGP's bad faith or gross negligence or from a
material violation of this Agreement or from actions of
such Indemnified Party outside the scope of an unautho-
rized by this Agreement.
5.3 The Company, upon receipt of notice from any Indemni-
fied Party as to any such pending or threatened claim
or any action or proceeding arising therefrom and at
the Company's request, shall be permitted by such
Indemnified Party to assume (at the Company's expense)
the defense of such claim or any action or proceeding
arising therefrom (including, but not limited to, the
negotiation with the relevant third party of any set-
tlement of such claim and the scope of any nonmonetary
relief or action that may be required in response to
such claim), provided that (i) the counsel for the
Company who shall conduct the defense of such claim or
litigation shall be reasonably satisfactory to such
Indemnified Party and (ii) such Indemnified Party may
participate in (but not control) such defense at such
Indemnified Party's expense. Except with the prior
written consent of such Indemnified Party, such consent
not to be unreasonably withheld, the Company, in the
defense of any such claim or litigation, shall not
consent to entry of any judgment or order, interim or
otherwise, or enter into any settlement that provides
for injunctive or other nonmonetary relief affecting
such Indemnified Party. In each case, such Indemnified
Party will cooperate with the Company, so long as the
Company is conducting the defense of such claim, in the
preparation for and the prosecution of the defense of
such claim, including making available evidence within
the control of such Indemnified Party and persons
needed as witnesses who are employed by such Indemni-
fied Party, as the case may be, in each case as reason-
ably needed for such defense and at cost, which cost,
to the extent reasonably incurred, shall be paid by the
Company.
6. Miscellaneous.
6.1 Assignment. Neither of the parties hereto shall assign
this Agreement or the rights and obligations hereunder,
in whole or in part, without the prior written consent
of the other party. Subject to the foregoing, this
Agreement will be binding upon and inure solely for the
benefit of the parties hereto and their respective
successors and assigns, and no other person shall
acquire or have any right hereunder or by virtue here-
of.
6.2 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of
California as applied to contracts made and performed
within the State of California without regard to prin-
ciples of conflict of laws.
6.3 Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court of
competent jurisdiction to be invalid, illegal, void or
unenforceable, the remainder of the terms, provisions
covenants and restrictions set forth herein shall
remain in full force and effect and shall in no way be
affected, impaired or invalidated, and the parties
hereto shall use their best efforts to find and employ
an alternative means to achieve the same or substan-
tially the same result as that contemplated by such
term, provision, covenant or restriction. It is hereby
stipulated and declared to be the intention of the
parties that they would have executed the remaining
terms, provisions, covenants and restrictions without
including any of such which may hereafter be declared
invalid, illegal, void or unenforceable.
6.4 Entire Agreement. This Agreement contains the entire
agreement between the parties with respect to the
subject matter of this Agreement and memorializes and
supersedes all written or oral representations, warran-
ties, commitments and other understandings prior to the
date of this Agreement relating to the subject matter
of this Agreement.
6.5 Further Assurances. The parties agree to take such
further action and to deliver or cause to be delivered
such additional agreements or instruments as either of
them may reasonably request for the purpose of carrying
out this Agreement and the agreements and transactions
contemplated hereby.
6.6 Attorneys' Fees. In any action or proceeding brought
to enforce any provision of this Agreement, or where
any provision hereof is validly asserted as a defense,
the prevailing party, as determined by the court, shall
be entitled to recover reasonable attorneys' fees in
addition to any other available remedy.
6.7 Headings. The headings in this Agreement are for
convenience of reference only and shall not limit or
otherwise affect the meaning hereof.
6.8 Amendment and Waiver. This Agreement may be amended,
modified or supplemented provided that the same are in
writing and signed by each of the parties hereto.
Waivers or consents to departures from the provisions
hereof may be given provided that the same are in
writing and signed by the party charged with giving the
same. No waiver by either party of any provisions of
this Agreement shall operate as a subsequent waiver of
the same or any other provision of this Agreement.
6.9 Counterparts. This Agreement may be executed in any
number of counterparts and by the parties hereto in
separate counterparts, each of which when so executed
shall be deemed to be an original and all of which
taken together shall constitute one and the same agree-
ment.
IN WITNESS WHEREOF, the parties have executed this Manage-
ment Services Agreement on the date first appearing above.
KASH N' KARRY FOOD STORES, INC.
By: /s/ R. S. Springer
Name: R. S. Springer
Title: Executive Vice President,
Administration
LEONARD GREEN & PARTNERS, L.P.
By: /s/ Jennfier Holden Dunbar
Name: Jennifer Holden Dunbar
Title: President, Willow III, Inc.
A General Partner of
Leonard Green & Partners.