EXHIBIT 10.13
FEE AGREEMENT
FEE AGREEMENT dated as of December 31, 1996 between COLOR SPOT
NURSERIES, INC., a Delaware corporation whose name is to be changed to "CSN,
Inc." (the "Company"), and KOHLBERG & CO., L.L.C., a Delaware limited liability
company ("KoCo").
KoCo has previously provided services to the Company in connection
with the transactions contemplated by the Recapitalization and Stock Purchase
Agreement dated as of December 31, 1996 among the Company, KCSN Acquisition
Company, L.P. and the stockholders of the Company (the "Recapitalization
Agreement"). The Company desires for KoCo to provide certain ongoing management
and advisory services to the Company, and KoCo is willing to provide such
services subject to the terms and conditions contained herein.
NOW, THEREFORE, for good and valuable consideration, the receipt of
which is hereby acknowledged, the parties hereto agree as follows:
Section 1. SERVICES. During the term of this Agreement, KoCo shall
provide such advisory and management services to the Company and its
subsidiaries as the Board of Directors of the Company shall reasonably request.
Such services shall be performed at KoCo's offices.
Section 2. COMPENSATION. In consideration of the services previously
provided and to be provided in accordance with Section 1, the Company shall pay
to KoCo (i) an advisory fee of $1.5 million by wire transfer of immediately
available funds on January 2, 1997, and (ii) an annual management fee equal to
the greater of (x) $300,000 or (y) 3.0% of the Company's earnings before
interest, taxes, depreciation and amortization for the year in question (not to
exceed $750,000), which fee shall accrue beginning January 1, 1997 and shall be
payable quarterly in advance in installments of $62,500 with the balance (if
any) payable within ten days of delivery of the Company's audited financial
statements for such year.
Section 3. REIMBURSEMENT. KoCo and its affiliates shall be entitled
to reimbursement of all reasonable out-of-pocket expenses (including travel
expenses) incurred in connection with the transactions contemplated by the
Recapitalization Agreement and in connection with the performance of this
Agreement (other than salary expenses and associated overhead charges), which
amounts shall be promptly reimbursed by the Company upon request.
Section 4. NO LIABILITY. (a) None of KoCo, any of its affiliates or
any of their respective members, partners, officers, directors, stockholders,
agents or employees (each an "Indemnified Party") shall have any liability to
the Company for any services provided pursuant to the Recapitalization Agreement
or this Agreement, except as may result from such Indemnified Party's gross
negligence or willful misconduct.
(b) The Company hereby agrees to indemnify each Indemnified Party
against any and all damages, costs, liabilities, losses, judgments, penalties,
fines, expenses or other costs, including attorney's fees, arising from any
claims by third parties relating to this Agreement.
Section 5. NOTICES. All notices, demands or other communications to
be given or delivered under or by reason of the provisions of this Agreement
will be in writing and will be deemed to have been given when delivered
personally, mailed by certified or registered mail, return receipt requested and
postage prepaid, or sent via a nationally recognized overnight courier, or sent
via facsimile to the recipient. Such notices, demands and other communications
will be sent to the address indicated below:
To the Company:
Color Spot Nurseries, Inc.
3478 Buskirk Avenue, Suite 260
Pleasant Hill, CA 94523
Attention: Michael F. Vukelich
Telecopy No.: (510) 935-0799
To KoCo:
Kohlberg & Co., LLC
2400 Sand Hill Road, Suite 100
Menlo Park, CA 94025
Attention: W. Dexter Paine III
Telecopy No.: (415) 854-5415
or such other address or to the attention of such other person as the recipient
party shall have specified by prior written notice to the sending party.
Section 6. ADDITIONAL COMPENSATION. KoCo shall be entitled to
customary investment banking fees in connection with material future
transactions involving the Company or its subsidiaries other than the Company's
initial public offering or its proposed acquisition of Lone Star Growers.
Neither KoCo nor any affiliate of KoCo shall receive any other compensation
without the approval of a majority of the members of the Company's board of
directors that are not affiliated with KoCo.
Section 7. GOVERNING LAW; SUBMISSION TO JURISDICTION. ALL QUESTIONS
CONCERNING THE CONSTRUCTION, VALIDITY AND INTERPRETATION OF THIS AGREEMENT WILL
BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAW (AND NOT THE
LAW OF CONFLICTS) OF THE STATE OF CALIFORNIA.
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Section 8. TERMINATION. This Agreement may be terminated by KoCo at
any time by written notice to the Company. In addition, this Agreement will
terminate automatically as of the earlier of (i) the tenth anniversary of this
Agreement and (ii) the end of the fiscal year in which the aggregate percentage
interest in the Company's outstanding common stock held by affiliates of KoCo
falls below 20%. The provisions of Section 4 shall survive any termination of
this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the date first written above.
COLOR SPOT NURSERIES, INC.
By: /s/ Michael F. Vukelich
---------------------------------
Name:
Title:
KOHLBERG & CO., L.L.C.
By: /s/ Samuel P. Frieder
---------------------------------
Name: Samuel P. Frieder
Title: Principal
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