EXHIBIT 10.4
PUT/CALL OPTION AGREEMENT
Put/Call Option Agreement dated as of December 31, 1996 among COLOR SPOT
NURSERIES, INC., a Delaware corporation whose name is to be changed to "CSN,
Inc." (the "Company"), KCSN ACQUISITION COMPANY, L.P. ("KCSN"), and the
stockholders of the Company listed on Schedule A hereto (collectively, the
"Stockholders"). The Company is a party to a Recapitalization and Stock
Purchase Agreement of even date herewith (the "Recapitalization Agreement")
with KCSN and certain of the Stockholders pursuant to which KCSN has agreed
to purchase $21.5 million of the Common Stock, $.01 par value (the "Common
Stock"), of the Company. The execution and delivery of this Agreement is a
condition precedent to KCSN's obligations under the Recapitalization
Agreement.
THEREFORE, in consideration of the mutual undertakings contained herein,
the parties agree as follows:
Section 1. GRANT OF PUT AND CALL OPTIONS. (a) The Company hereby
grants to each of the Stockholders the right to sell to the Company, for a
purchase price per share of $4.95037 in cash (the "Purchase Price"), the
number of shares of Common Stock set forth opposite the name of such
Stockholder (the "Redeemed Shares") on Schedule A hereto (the "Put Option").
The Put Option shall be exercisable as to all but not less than all the
Redeemed Shares covered thereby at any time following the closing of the
transactions contemplated by the Recapitalization Agreement (the "Effective
Date") and prior to the 30th day following the Purchase Date set forth
opposite the name of such Stockholder on Schedule A hereto (the "Put Exercise
Period"). The Put Option shall be exercised by the Stockholder by delivering
written notice of exercise to the Company prior to the expiration of the Put
Exercise Period.
(b) Each Stockholder hereby grants to the Company the right to purchase
from such Stockholder, at a cash purchase price per share equal to the
Purchase Price, the number of Redeemed Shares set forth opposite such
Stockholder's name on Schedule A hereto (the "Call Option"). The Call Option
shall be exercisable as to all but not less than all of the Redeemed Shares
covered thereby at any time following the Purchase Date set forth opposite
the name of such Stockholder on Schedule A hereto and prior to the 60th day
following such date (the "Call Exercise Period"). The Call Option shall be
exercised by the Company by delivering written notice of exercise to the
Stockholder prior to the expiration of the Call Exercise Period.
(c) The closing of the purchase and sale of Common Stock pursuant to
exercise of the Put or Call Option shall be consummated within 30 days
following delivery of the applicable notice of exercise. At such closing,
the Company shall deliver the Purchase Price by wire transfer of immediately
available funds against delivery of certificates evidencing the Redeemed
Shares to be purchased, duly endorsed or accompanied by stock powers duly
executed in blank.
Section 2. EXERCISE OF INCENTIVE STOCK OPTIONS. Each Stockholder
holding an "incentive stock option" agrees to exercise such option as of the
Effective Date and to pay the aggregate exercise price reflected on Schedule
A. In connection with such exercise, the Company will make a loan to each
such Stockholder on the Effective Date in the amount of such Stockholder's
aggregate exercise price (a "Loan"). Each Loan shall bear interest at the
applicable federal rate for short-term obligations and shall mature on the
last day of the Put Exercise Period applicable to such Stockholder or earlier
exercise of the Put or Call Option with respect to such Stockholder. Each
Loan shall be secured by the shares of Common Stock issued upon exercise of
the related options, and the Company shall be entitled to retain all
certificates evidencing such shares until such Loan is repaid in full. In
addition, on the Effective Date, the Company shall pay to each Stockholder a
bonus in the amount reflected on Schedule A, which bonus shall be paid in the
form of a reduction of such Stockholder's Loan amount. The net amount of the
Loan to be made to each Stockholder is set forth on Schedule A.
Section 3. EXERCISE OF HALAMUDA OPTION; PAYMENT OF ▇▇▇▇▇▇ FEE. On
January 2, 1997, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ agree to pay to
▇▇▇▇▇▇ Equity Capital Corporation ("▇▇▇▇▇▇") a fee in the amount of $152,848
and 192,731, respectively. On January 2, 1997, ▇▇. ▇▇▇▇▇▇▇▇ agrees to
exercise his non-qualified stock option with respect to 274,242 shares of
Common Stock and to pay the exercise price therefor reflected on Schedule A.
Section 4. REPRESENTATIONS AND WARRANTIES. Each Stockholder severally
represents and warrants to the Company, both as of the date hereof and as of
the date of closing of an exercise of the Put or Call Option with respect to
such Stockholder (i) that such Stockholder is the record and beneficial owner
of the Redeemed Shares set forth opposite such Stockholder's name on Schedule
A, free and clear of any liens, encumbrances or claims of third parties, (ii)
that this Agreement is the valid and binding obligation of such Stockholder
enforceable in accordance with its terms, and (iii) that such Stockholder's
execution and delivery of this Agreement and performance of such
Stockholder's obligations hereunder do not and will not violate any law or
regulation applicable to such Stockholder or any contract or agreement to
which such Stockholder is subject. Each Stockholder agrees to indemnify and
hold harmless the Company for any loss or expense suffered by the Company as
a result of a breach of such Stockholder's representations and warranties set
forth herein.
Section 5. TRANSFER RESTRICTIONS; GRANT OF PROXY. Each Stockholder
hereby agrees that the Redeemed Shares may not be sold, pledged, hypothecated
or otherwise transferred without the Company's prior written consent so long
as the Put and Call Options remain in effect. In addition, each Stockholder
hereby grants to KCSN an irrevocable proxy with respect to the Redeemed
Shares held by it to vote such shares on all matters submitted for
stockholder approval by the Company or to take action by written consent in
lieu thereof so long as the Put and Call Options remain in effect. Such
proxy shall be deemed to be coupled with an interest and shall survive the
death or incapacity of the Stockholder.
Section 6. CONDITIONS TO COMPANY'S OBLIGATIONS. The Company's
obligation to purchase Redeemed Shares from any Stockholder pursuant to an
exercise of the Put or Call Option shall be subject to satisfaction of the
following conditions precedent: (i) the representations and warranties of
such Stockholder set forth herein shall be true and correct in all respects,
and (ii) such purchase shall not constitute a default under the terms of the
Company's indebtedness for borrowed money. In the event of a restriction on
the purchase of Redeemed Shares pursuant to the terms of the Company's
indebtedness, the Company shall purchase the maximum amount of Redeemed
Shares 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 Redeemed Shares.
Section 7. NOTICES. Any notice provided for in this Agreement shall be
in writing and shall be either personally delivered, sent by telecopy
(confirmed in writing) or sent by reputable overnight courier service for
next-day delivery (charges prepaid) to the Company at its address set forth
below and to any Stockholder at the address indicated by the Company's
records, or at such address or to the attention of such other person as the
recipient party has specified by prior written notice to the sending party.
Notices will be deemed to have been given hereunder when delivered
personally, on the date of transmission if sent by confirmed telecopy (or on
the next business day if transmission is not made on a business day) or on
the next business day after deposit with a reputable overnight courier
service for next business day delivery.
The Company's address is:
Color Spot Nurseries, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Section 8. ASSIGNMENT. This Agreement may not be assigned by any
party; provided, however, that the Company may assign its right to purchase
Redeemed Shares to any third party subject only to compliance with applicable
securities laws. This Agreement shall be binding upon the successors of the
parties hereto.
Section 9. TERMINATION. This Agreement and the obligations of the
parties hereunder shall terminate in the event that the Recapitalization
Agreement is terminated prior to the Effective Date.
Section 10. EXECUTION IN COUNTERPARTS. This Agreement may be executed
in any number of counterparts, all of which shall constitute one instrument.
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the date set forth above.
COLOR SPOT NURSERIES, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
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KCSN ACQUISITION COMPANY, L.P.
By KCSN Management Company, L.P.
Its General Partner
By KCSN G.P., Inc.
Its General Partner
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Vice President
STOCKHOLDERS:
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SCHEDULE A TO PUT/CALL OPTION AGREEMENT
Stockholder Option Shares Purchase Date Exercise Price Bonus Amount Loan Amount
----------- ------------- ------------- -------------- ------------ -----------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ 368,482 January 1, 1997 N/A N/A N/A
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ 299,242 January 1, 1997 $274,242 N/A N/A
125,000 May 1, 1997
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ 32,718 May 1, 1997 57,335 $14,431 $42,904
▇▇▇▇ ▇▇▇▇▇ 7,475 December 31, 1996 57,335 8,431 48,904
11,641 December 1, 1997
▇▇▇▇ ▇▇▇▇▇▇▇▇ 19,116 December 1, 1997 57,335 8,431 48,904
▇▇▇▇ ▇▇▇▇▇▇▇ 39,334 May 1, 1997 57,335 23,137 34,198
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ 29,291 December 1, 1997 57,335 9,902 47,433
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ 29,291 December 1, 1997 57,335 9,902 47,433
▇▇▇ Tsurodome 20,201 May 1, 1997 57,335 12,108 45,227
▇▇▇▇ ▇▇▇▇▇▇▇ 13,130 December 1, 1997 25,000 3,876 21,324
▇▇▇▇ ▇▇▇▇▇▇▇ 109,689 May 1, 1997 57,335 26,814 30,521
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ 52,455 July 1, 1997 57,335 23,137 34,198
▇▇▇▇▇▇ ▇▇▇▇▇ N/A N/A 10,000 1,471 8,529