STOCK REPURCHASE AGREEMENT
Stock Repurchase Agreement dated as of December 31, 1996 among (i) COLOR
SPOT NURSERIES, INC., a Delaware corporation whose name is to be changed to
"CSN, Inc." (the "COMPANY"), and (ii) XXXXXXX X. XXXXXXXX and XXXXX X. XXXXXXXX
(the "EXECUTIVES"). The Company, the Executives and other stockholders of the
Company are parties to a Stockholders Agreement of even date herewith (the
"STOCKHOLDERS AGREEMENT"). Capitalized terms used and not defined herein have
the meanings assigned such terms in the Stockholders Agreement.
The parties hereby agree as follows:
SECTION 1. COMPANY'S REPURCHASE OBLIGATION.
(a) Upon the occurrence of a Triggering Event (as defined below), each
Executive shall have the right to cause the Company to purchase all, but not
less than all, of the Subject Securities (as defined below) held by such
Executive (the "PUT") at a purchase price equal to Fair Market Value (as defined
below) as of the date of occurrence of such Triggering Event or, in the case of
options included in the Subject Securities, the excess of Fair Market Value over
the exercise price of such options. An Executive may exercise his right
pursuant to this Section 1 by delivering written notice of such election (a "PUT
NOTICE") to the Company within 30 days of the occurrence of a Triggering Event.
Upon such exercise, the Company shall purchase all of the Subject Securities
held by such Executive and shall pay the aggregate purchase price therefor as
follows: (i) 20% of such aggregate purchase price shall be paid in cash within
90 days after the Company's receipt of the Put Notice, and (ii) the balance of
such aggregate purchase price shall be paid on such date in the form of a
promissory note of the Company (a "NOTE") bearing interest at the then-current
rate payable on 10-year United States Treasury Notes, with interest payable
quarterly in arrears and principal amortized on a ten-year schedule payable
quarterly commencing on the six-month anniversary of the date of issuance, and
with all remaining unpaid principal and accrued interest thereon payable on the
fifth anniversary of the date of issuance.
(b) Notwithstanding the foregoing, (x) the Note shall be accelerated upon
consummation of the Company's initial public offering under the Securities Act,
a Sale of the Company or a disposition of all or substantially all of its
assets, and (y) the Company shall not be obligated to repurchase Subject
Securities to the extent that such repurchase is not permitted pursuant to the
terms of any of the Company's indebtedness for borrowed money or by applicable
corporate law. In the event of a restriction on the purchase of Subject
Securities, the Company shall purchase the maximum amount of Subject Securities
that it is able to purchase consistent with such restriction and shall exercise
reasonable commercial efforts (in no event to require the refinancing of the
Company's indebtedness or the payment of money) to remove such restriction and,
upon such removal, the Company shall purchase the balance of such Subject
Securities. In the event that the Company is prohibited from honoring its
obligation under the Put pursuant to the preceding clause (y), the Company shall
pay the Executive whose Subject Securities are the subject of the Put a fee of
$150,000 per annum on each anniversary of the date of the Put Notice until such
time as the Company has purchased such Subject Securities and, at the option of
such Executive, Executive shall have the right to exchange the Subject
Securities for redeemable preferred stock of the Company with a liquidation
preference equal to the Fair Market Value of the Subject Securities, which
preferred stock shall be subject to optional redemption at any time and
mandatory redemption upon a Sale of the Company and shall be convertible into
Common Stock in connection with the Company's initial public offering of Common
Stock at a conversion price equal to the public offering price. So long as the
preferred stock is outstanding, the
Company will not declare any dividends on its Common Stock or repurchase any
Common Stock held by KCSN or its Affiliates.
(c) For purposes of this Agreement, (x) "SUBJECT SECURITIES" with respect
to an Executive shall mean (i) all Management Stock (other than Option Stock)
held by such Executive, (ii) all options held by such Executive on the date
hereof other than options granted under the Company's 1997 Stock Option Plan,
and (iii) to the extent that such Executive is continuously employed with the
Company for a period of three years from the date hereof (other than
interruption of service by reason of death or disability), all Option Stock and
Vested Options held by such Executive, and (y) a "TRIGGERING EVENT" with respect
to an Executive shall mean: (i) termination by the Company of such Executive's
employment without Cause, or (ii) such Executive's death or permanent
disability.
(d) For purposes of this Agreement, "FAIR MARKET VALUE" shall mean the
value per share of Common Stock determined based on the fair market value of the
entire fully-diluted common equity interest in the Company on a going concern
basis as of the date of determination, without regard to any discount for
minority interest represented by the Subject Securities or the restrictions
imposed by the Stockholders Agreement. Fair Market Value shall initially be
determined by the Board of Directors of the Company within 30 days after
delivery of the Put Notice, and written notice of such determination shall be
provided to the Executive whose shares are to be repurchased. If such Executive
disagrees with the Board's determination of Fair Market Value, such Executive
and the Company shall appoint a mutually acceptable independent appraisal firm
to determine Fair Market Value. The decision of such independent appraisal firm
shall be final and binding on all parties, and the fees and expenses of such
firm shall be borne by the Company unless the appraised Fair Market Value is
less than 110% of the value initially determined by the Board, in which case
such fees and expenses shall be borne by the Executive.
(e) In addition to the foregoing provisions, in the event that an
Executive's employment is terminated by the Company for Cause, the Company shall
have the right to purchase the Subject Securities held by such Executive at any
time following such termination, and in the event that KCSN shall transfer all
or substantially all of its interest in the Company (other than to an Affiliate
of KCSN) following termination of an Executive's employment by the Company for
Cause, such Executive shall have the right to require the Company to purchase
all of such Executive's Subject Securities for a period of 30 days following
such transfer, in either case at a purchase price equal to Fair Market Value as
of the date of such termination, which purchase price shall be payable (x) in
cash in the case of the Company's exercise of its purchase right, and (y) in the
case of Executive's exercise of his resale right, in cash to the extent that
KCSN disposes of its interest for cash and in the form of a Note in the event
that KCSN disposes of its interest for non-cash consideration. The Company
shall give such Executive written notice of such disposition by KCSN and such
Executive shall have a period of 30 days following such notice to exercise his
rights pursuant to this subsection (e). In the event that Executive's
employment is terminated for Cause, Executive hereby waives any rights to
participate in any disposition of Investor Stock by KCSN pursuant to Section 6
of the Stockholders Agreement.
SECTION 2. MODIFICATION OF STOCKHOLDERS AGREEMENT. Notwithstanding any
provision of the Stockholders Agreement to the contrary, all references to "Fair
Market Value" in Section 2 of the Stockholders Agreement as they relate to the
Executives shall mean Fair Market Value as defined in this Agreement.
SECTION 3. CONFLICTING PROVISIONS. In the event of a conflict between
the provisions of this Agreement and the express provisions of the
Stockholders Agreement, the express provisions
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of this Agreement shall control.
SECTION 4. TERMINATION. This Agreement shall terminate in its entirety
upon consummation of the Company's initial public offering of Common Stock under
the Securities Act.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the Date
first above written.
COLOR SPOT NURSERIES, INC.
By:
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XXXXXXX X. XXXXXXXX
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XXXXX X. XXXXXXXX
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