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EXHIBIT 10.20
CONSULTING AGREEMENT
This Consulting Agreement is made as of the 6th day of March, 1998,
between Authentic Specialty Foods, Inc., a Texas corporation (the
"Corporation"), and RKS, Inc. (the "Consultant").
W I T N E S S E T H:
WHEREAS, Consultant is a corporation all of the capital stock of which
is owned beneficially by Xxxxxx X. Xxxxxxx ("Xxxxxxx") and certain members of
his family;
WHEREAS, the Corporation is desirous of retaining Consultant on the
terms and conditions, and for the consideration, hereinafter set forth and
Consultant is desirous of being retained by Corporation on such terms and
conditions and for such consideration;
WHEREAS, Xxxxxxx currently serves as a director of the Corporation;
WHEREAS, the Corporation is desirous of retaining Xxxxxxx as Chairman
of the Board and Chief Executive Officer of the Corporation, and Xxxxxxx is
desirous of serving in such capacities;
NOW, THEREFORE, in consideration of the mutual covenants herein
contained and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties hereto, intending to be legally
bound, covenant and agree as follows:
Section 1. Services to be Provided. (a) Until the termination of this
Agreement, Consultant shall provide consulting services to the Corporation, and
Xxxxxxx shall serve as Chairman of the Board and Chief Executive Officer of the
Corporation or in such other positions as the parties shall mutually agree.
Consultant agrees to serve in such positions and to perform diligently and to
the best of his abilities the duties and services appertaining to such office,
as well as such additional duties and services appropriate to such office as
shall be specified by the Board of Directors from time to time. Consultant's
consultancy shall also be subject to the policies maintained and established by
Corporation, as the same may be amended from time to time.
(b) The Consultant hereby accepts its retention hereunder and agrees
that during the continuance thereof Xxxxxxx will devote substantially all of his
business time, effort, skill and attention to the affairs of, and for the
benefit of, the Corporation and its affiliates (as defined below) and that
Xxxxxxx will not engage, directly or indirectly, in any other business or
businesses, whether or not similar to that of Corporation. The foregoing
notwithstanding, the parties recognize and agree that Xxxxxxx may engage in
private companies and personal investments, in each case to the extent that they
do not conflict with the business and affairs of Corporation or interfere with
Consultant's performance of his duties hereunder. Consultant acknowledges and
agrees that Xxxxxxx owes a fiduciary duty of loyalty, fidelity and allegiance to
act at all times in the best interests of the
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Corporation and to do no act which would injure the business, interests or
reputation of the Corporation or any of its subsidiaries or affiliates. In
keeping with these duties, Consultant shall make full disclosure to the
Corporation of all business opportunities pertaining to the Corporation's
business and shall not appropriate for Consultant's own benefit business
opportunities concerning the subject matter of the fiduciary relationship. For
purposes of this Agreement, the term "affiliate" shall mean with respect to a
specified entity, an entity that directly, or indirectly through one or more
intermediaries, controls, or is controlled by, or is under common control with
the entity specified.
Section 2. Term. The term of this Agreement shall be month-to-month,
commencing on the date hereof; provided, however, that this Agreement may be
terminated by either party upon 30 days' prior written notice, with or without
cause.
Section 3. Compensation.
(a) As compensation for the services to be rendered by the Consultant
under this Agreement, the Corporation agrees to pay the Consultant a Consulting
Fee of $25,000 per month, prorated appropriately for any partial month and
payable at the end of each calendar month during the term hereof in arrears.
(b) In addition to compensation provided for in Section 3(a), the
Compensation Committee (the "Compensation Committee") of the Corporation, may,
but shall not be obligated to, from time to time grant in its sole discretion
consulting fee bonuses, and shall initially consider whether to grant such a
bonus no later than the earlier of December 31, 1998 or the date that Xxxxxxx
ceases to serve as Chairman of the Board of the Corporation. If the Compensation
Committee shall elect to grant such a bonus, the amount of any such bonus shall
be based upon such factors as the Compensation Committee, in its sole
discretion, shall deem appropriate, including without limitation, the
performance of the Consultant, the financial performance of the Corporation and
the consolidated financial performance of the Corporation and its subsidiaries.
(c) The parties acknowledge that Xxxxxxx has received grants of stock
options to purchase shares of capital stock of the Corporation, and may receive
additional grants of options. The Corporation agrees that, notwithstanding any
provision in any option agreement relating to any of such options to the
contrary, if Xxxxxxx ceases to serve as a director of the Corporation for any
reason or if a "Change of Control" shall occur, then all such options shall
become immediately exercisable, and Xxxxxxx shall be entitled to exercise each
such option on the terms set forth therein for (i) a period of 90 days after he
ceases to be a director or the Change of Control, as the case may be, or (ii)
the period specified in the applicable option agreement, whichever is longer.
For purposes of this Agreement, a "Change of Control" shall mean (i) any merger,
consolidation, or reorganization with or into any person other than TSG2 L.P. or
any partner or affiliate thereof (each, a "Shansby Entity") in which the
Corporation is not the surviving entity (or survives only as a subsidiary of an
entity) or (ii) when any person or entity, including a "group" as contemplated
by Section 13(d)(3) of the 1934 Act, other than a Shansby Entity acquires or
gains ownership or control (including,
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without limitation, power to vote) of more than 50% of the outstanding shares of
the Corporation's voting stock (based upon voting power).
Section 4. Reimbursement of Expenses; No Employee Benefits. Subject to
Corporation's standard policies and procedures with respect to expense
reimbursement as applied to its employees generally, Corporation shall reimburse
Consultant for, or pay on behalf of Consultant, reasonable and appropriate
out-of-pocket expenses incurred by Consultant for business-related purposes in
connection with its services hereunder, including without limitation reasonable
out-of-pocket travel expenses and legal fees. Without limiting the generality of
the foregoing, the Corporation agrees to reimburse Consultant for its
out-of-pocket office and similar operating expenses during the term hereof. In
accordance with Section 13 hereof, neither Consultant nor Xxxxxxx shall be
considered an employee of the Corporation and shall not be eligible to
participate in any employee benefit plan or program sponsored, contributed to or
maintained by the Corporation.
Section 5. Termination. (a) This Agreement shall terminate upon the
death or disability (as defined herein) of Xxxxxxx, in which case no
compensation or other payments shall be payable under this Agreement (except for
amounts accrued through the date of such death or disability); provided,
however, that the confidentiality, nonsolicitation and other obligations set
forth in Sections 6, 7 and 8 shall survive Xxxxxxx'x disability. As used herein
"disability" means an illness, injury or incapacity that prevents the Consultant
from performing the essential functions of his position for a period of three
consecutive months, with reasonable accommodation.
(b) Either the Corporation or the Consultant may terminate the
Consultant's services hereunder upon at least 30 days' prior written notice, in
which case no compensation or other payments shall be payable under this
Agreement after the date of such termination (except for amounts accrued through
the date of such termination and except as otherwise expressly provided in this
paragraph (b) in connection with a Change of Control); provided, however, that
the confidentiality, nonsolicitation and other obligations set forth in Sections
6, 7 and 8 shall survive such termination. Notwithstanding the foregoing, if
this Agreement is terminated by either the Corporation or the Consultant within
nine months after the occurrence of a Change of Control (or within 30 days prior
to the public announcement of a Change of Control), then the Consultant shall be
entitled to receive from the Corporation a lump sum payment on the date of such
termination equal to (i) three months' Consulting Fee, less (ii) the amount of
any Consulting Fee actually paid by the Corporation prior to termination (not to
exceed 30 day's Consulting Fee) that accrued between the date of the termination
notice and the date of termination.
Section 6. Confidentiality; Statements regarding the Corporation.
(a) Consultant will not, at any time during or after Consultant's
services hereunder, make any unauthorized disclosure of any confidential
business information or trade secrets of the Corporation or its affiliates, or
make any use thereof, except in the carrying out of Consultant's
responsibilities hereunder. Affiliates of the Corporation shall be third party
beneficiaries of Consultant's obligations under this paragraph. As a result of
Consultant's performance of its services
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hereunder, Consultant may also from time to time have access to, or knowledge
of, confidential business information or trade secrets of third parties, such as
customers, suppliers, partners, joint venturers, and the like, of the
Corporation and its affiliates. Consultant also agrees to preserve and protect
the confidentiality of such third party confidential information and trade
secrets to the same extent, and on the same basis, as the Corporation's
confidential business information and trade secrets.
(b) Consultant shall refrain, both during the consultant relationship
and after the consultant relationship terminates, from publishing any oral or
written statements about the Corporation, any of its affiliates, or any of such
entities' officers, directors, employees, agents or representatives that are
slanderous, libelous, or defamatory; or that disclose private or confidential
information about the Corporation, any of its affiliates, or any of such
entities' business affairs, officers, directors, employees, agents, or
representatives; or that constitute an intrusion into the seclusion or private
lives of the Corporation, any of its affiliates, or any of such entities'
officers, directors, employees, agents, or representatives; or that give rise to
unreasonable publicity about the private lives of the Corporation, any of its
affiliates, or any of such entities' officers, directors, employees, agents, or
representatives; or that place the Corporation, any of its affiliates, or any of
such entities' officers, directors, employees, agents, or representatives in a
false light before the public; or that constitute a misappropriation of the name
or likeness of the Corporation, any of its affiliates, or any of such entities'
officers, directors, employees, agents, or representatives. A violation or
threatened violation of this prohibition may be enjoined by the courts. The
rights afforded the Corporation and its affiliates under this provision are in
addition to any and all rights and remedies otherwise afforded by law.
Section 7. Trademarks, Patents, etc. All information, ideas, concepts,
improvements, discoveries and inventions, whether patentable or not, which are
conceived, made, developed, or acquired by Consultant, individually or in
conjunction with others, during the performance of Consultant's service
hereunder (whether during business hours or otherwise and whether on the
Corporation's premises or otherwise) which relate to the Corporation's business,
products, or services (including, without limitation, all such information
relating to corporate opportunities, research, financial and sales data, pricing
terms, evaluations, opinions, interpretations, acquisitions prospects, the
identity of customers or suppliers or their requirements, the identity of key
contacts within the customer's or supplier's organizations or within the
organization of acquisition prospects, or marketing and merchandising
techniques, prospective names and marks) shall be disclosed to the Corporation
and are and shall be the sole and exclusive property of the Corporation.
Moreover, all documents, drawings, memoranda, notes, records, files,
correspondence, manuals, models, specifications, computer programs, E-mail,
voice mail, electronic databases, maps and all other writings or materials of
any type embodying any of such information, ideas, concepts, improvements,
discoveries and inventions are and shall be the sole and exclusive property of
the Corporation. Upon termination of Consultant's services hereunder for any
reason, Consultant promptly shall deliver the same, and all copies thereof, to
the Corporation.
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Section 8. Nonsolicitation; Corporation Employees. (a) The Consultant
agrees that during the period that the Consultant is retained by the Corporation
and for a two-year period thereafter:
(i) Consultant shall not furnish advice to, solicit, or do
business with any customer (or any previous customer within the last
year) of the Corporation or any of its subsidiaries relating to the
business of the Corporation in any state where such customer is doing
business with Corporation or any of its subsidiaries; and
(ii) Consultant shall not encourage or induce any current or
former employee of the Corporation or any of its subsidiaries or
affiliates to leave the employment of the Corporation or any of its
subsidiaries or affiliates, offer employment, retain, hire or assist in
the hiring of any such employee by any person, association, or entity
not affiliated with the Corporation or any of its subsidiaries or
affiliates.
(b) Although the parties to this Agreement have, in good
faith, used all reasonable efforts to make this covenant reasonable in
both geographic area and in duration, and it is not anticipated, nor is
it intended, by either of the parties to this Agreement that any court
of competent jurisdiction would find it necessary to reform this
covenant to make it reasonable in both scope and in duration, or
otherwise, the parties to this Agreement agree that any court of
competent jurisdiction making a determination that it is necessary to
reform this covenant to make it reasonable in either scope or duration,
or otherwise, shall be, and hereby is, empowered and directed to reform
this Agreement to a reasonable restriction rather than invalidating
this covenant or otherwise rendering it unenforceable.
(c) In the event of breach by Consultant of this covenant, it
is understood and agreed (i) that the Corporation shall be entitled to
injunctive relief as well as any and all other applicable remedies at
law and in equity; and (ii) that damages, if any, for the breach of
this covenant will accrue and be recoverable by the Corporation or any
subsidiary as of and from the date of the breach insofar as the damages
for such breach relate to an action that occurred within the scope and
duration of the covenant determined to be reasonable (whether or not
the covenant is reformed in connection with such determination).
Section 9. Waiver; Remedies for Breach. A waiver by either party hereto
of any breach of any provision of this Agreement shall not operate or be
construed as a waiver of similar or dissimilar provisions at the same time or at
any prior or subsequent time. It is agreed that the Consultant's services are
unique and that any breach or threatened breach by the Consultant of any
provision of Xxxxxxx 0, 0 xx 0 xxxxxx xx remedied solely by damages. Therefore,
if there is a breach or threatened breach of the provisions of Section 6, 7 or
8, the Consultant acknowledges that the Corporation shall be entitled to an
injunction restraining the Consultant from such breach. Nothing herein shall be
construed as prohibiting the Corporation from pursuing any other remedies for
any breach or threatened breach.
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Section 10. Entire Agreement. This Agreement constitutes the entire
agreement of the parties with respect to the retention of the Consultant by the
Corporation, and no agreements or representations, oral or otherwise, express or
implied, with respect to the subject matter hereof have been made by either
party which are not set forth expressly in this Agreement.
Section 11. Severability. The invalidity or unenforceability of any
provision or provisions of this Agreement shall not affect the validity or
enforceability of any other provision of this Agreement, which shall remain in
full force and effect, and any provision of this Agreement shall be construed to
render such provision valid and enforceable to the maximum extent possible by
law in the event of any challenge.
Section 12. Binding Agreement. This Agreement shall be binding on and
shall inure to the benefit of the Corporation and its successors and assigns.
This Agreement and all rights of the Consultant hereunder shall inure to the
benefit of and be enforceable by the Consultant's person or legal
representatives, executors, or administrators. Neither this Agreement nor any
right hereunder may be assigned by the Consultant.
Section 13. Relationship of the Parties. Consultant is engaged by the
Corporation only for the purposes and to the extent set forth in this Agreement,
and its relationship to the Corporation hereunder is that of an independent
contractor. Nothing in this Agreement is intended to create an employer/employee
relationship between the Corporation and Consultant (or Xxxxxxx) or to allow the
Corporation to exercise control or direction over the manner or method by which
Consultant performs the services that are the subject matter of this Agreement.
Consultant shall be responsible for payment of all income, self-employment, or
other taxes attributable to all compensation paid hereunder by the Corporation
to Consultant, and Consultant agrees to hold the Corporation harmless for
withholding or payment of such taxes.
Section 14. Governing Law. The validity, interpretation, construction
and performance of this Agreement shall be governed by the laws of the State of
Texas, without giving effect to principles of conflict of laws.
Section 15. Notice. Any notice, communication, request, instruction or
other document required or permitted hereunder shall be given in writing and
delivered in person or sent by U.S. Mail postage prepaid, return receipt
requested, or by telex, facsimile or telecopy to the addresses of the
Corporation and the Consultant set forth below. Any such notice shall be
effective upon receipt or 3 days after placed in the mail, whichever is earlier.
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To the Corporation:
Authentic Specialty Foods, Inc.
0000 Xxxxxx X
Xxxxx Xxxxxxx, Xxxxx 00000
Attention: Chief Financial Officer
Telecopy: (000) 000-0000
To the Consultant:
RKS, Inc.
c/o Xxxxxx X. Xxxxxxx
0000 Xxxxx Xxxx Xxxxxx Xxxx
Xxxxxxxx Xxxxxx, Xxxxxxx 00000
Telecopy: (000) 000-0000
or to such other address as any party shall hereafter designate by written
notice.
Section 16. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
Section 17. Headings. The headings contained herein are for reference
purposes only and shall not in any way affect the meaning or interpretation of
any provision or provisions of this Agreement.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
AUTHENTIC SPECIALTY FOODS, INC.
By: /s/ XXXXXXX X. XXXXXXXXXX
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Xxxxxxx X. Xxxxxxxxxx
President
RKS, INC.
By: /s/ XXXXXX X. XXXXXXX
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Xxxxxx X. Xxxxxxx
Chairman of the Board
GUARANTEE
The undersigned Xxxxxx X. Xxxxxxx hereby unconditionally guarantees the
obligations of RKS, Inc. under the Consulting Agreement set forth above as if
the undersigned were a party thereto.
/s/ XXXXXX X. XXXXXXX
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XXXXXX X. XXXXXXX
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