XXXXXXXX CONSULTING AGREEMENT
THIS CONSULTING AGREEMENT (this "Agreement") is made and entered into as of
February 4, 1997, by and between Redneck Foods, Inc., a Delaware corporation
("Company") and X.X. Xxxxxxxx, an individual ("Consultant") with reference to
the following: Simultaneously with the execution and delivery of this
Agreement, (i) Company is entering into a Series A Convertible Preferred
Stock Purchase Agreement (the "Stock Purchase Agreement") with Xxxxx Xxxxxx
and Xxxx Xxxxxxxxx providing for, among other things, the acquisition by Xxxx
Xxxxxxxxx of certain shares of Series A Convertible Preferred Stock (the
"Preferred Stock") of Company upon the terms and subject to the conditions
set forth therein.
Subject to and in compliance with the execution of the Stock Purchase
Agreement, Company and Consultant desire to enter into this Agreement as
provided herein.
NOW, THEREFORE, in consideration of the mutual premises and covenants set forth
herein, the parties hereto agree as follows:
1. Definitions. All capitalized terms used but not otherwise defined
herein shall have the meanings given to them in the Stock Purchase Agreement.
2. Engagement and Term. Consultant has agreed to be engaged by Company,
and Company has agreed to engage Consultant for a term commencing as of the
date Company completes its acquisition of the Investment Capital and
continuing until at least the third anniversary of the opening of the first
Restaurant, unless sooner terminated pursuant to Section 5 hereof (the
"Consulting Term").
3. Duties. Consultant's primary duties and responsibilities hereunder
shall be to provide Company with consulting advice and services with respect
to the promotion and merchandising of the Restaurants and the Licensed
Products. Consultant shall work out of his offices in Los Angeles,
California and devote as much time as he deems necessary in good faith to
fulfill his obligation hereunder, not to exceed ten (10) hours per month. If
the obligations of Consultant hereunder require more than ten (10) hours per
month, an appropriate, equitable and mutually acceptable adjustment will be
made to the compensation payable to Consultant pursuant to Section 4(a).
Consultant shall provide the services required hereunder subject to the
control and direction of the Board of Directors of Company (the "Board of
Directors") which may from time to time make reasonable changes in
Consultant's duties. Consultant shall be free to pursue any other employment
or ventures during the Consulting Term so long as such other employment or
ventures do not unreasonably interfere with the provision of services by
Consultant to Company hereunder.
4. Compensation.
(a) Base Fee and Bonus. During the Consulting Term, Company hereby agrees
to pay Consultant an annual consulting fee of Ten Thousand Dollars ($10,000)
(the "Base Fee"). In addition to the Base Fee, Consultant may be entitled to
a potential bonus (the "Bonus") the amount of which, if any, shall be
determined by the Board of Directors in its sole and absolute discretion.
(b) Stock Option. In addition to the Base Fee and Bonus, Company hereby
agrees to grant to Consultant options to acquire shares of equity stock of
Company that shall constitute five percent (5%) of the overall equity of
Company as of the date Company completes its acquisition of the Investment
Capital. Consultant's interest in such options shall vest in equal monthly
installments on the first day of each month over the three (3) year
Consulting Term. All options remaining unvested shall vest immediately upon
a Change in Control of Company (as defined in the Stock Purchase Agreement)
or upon a termination of this Agreement by Company without Cause (as defined
in Section 6). If this Agreement terminates prior to the expiration of the
Consulting Term for any other reason, any options remaining unvested as of
the termination date shall expire and Consultant shall have no further
interest therein. After vesting, the options may be exercised by Consultant
in whole or in part at any time for a period of ten (10) years from the date
they are granted. Options that are not exercised within such ten (10) year
period shall expire. The option exercise price shall equal the fair market
value of the shares of equity stock to be received upon exercise of the
options as determined by the Board of Directors of Company pursuant to
Section 4.2 of the Stock Purchase Agreement.
(c) Expenses. In addition to all other compensation provided hereunder,
Consultant shall be entitled to reimbursement for all pre-approved travel and
other expenses necessary for the performance of his duties hereunder, all in
accordance with Company's standard policies and procedures as they may exist
from time to time. All claims for expenses shall be reasonable and
documented in accordance with Company's standard policies and procedures with
respect thereto.
(d) Payment. The payment of the Base Fee and Bonus and any expense
reimbursements shall be according to Company's standard policies and
procedures.
5. Termination
(a) Termination With or Without Cause. Upon written notice to Consultant,
Company shall be entitled to terminate the Consulting Term at any time with
or without Cause. "Cause" with respect to Consultant shall mean (i)
conviction of Consultant of any felony involving moral turpitude or otherwise
affecting or relating to the business of Company (including, without
limitation, his entering of any plea of nolo contendere in connection with
any such felony proceeding); (ii) Consultant's grossly negligent, willful or
intentional conduct resulting in material damage to Company or Company's
business reputation or image; (iii) Consultant's material breach of any
material provisions of this Agreement; (iv) Consultant's willful failure or
gross neglect to abide by the good faith decisions of the Board of Directors;
or (v) the good faith determination of the Board of Directors that Consultant
is performing his duties in a manner which is not commensurate with
reasonable standards for consultants in similar circumstances and with
similar duties to those of Consultant hereunder ("Substandard Performance");
provided that Consultant may not be terminated for Substandard Performance
unless and until (A) the Board of Directors has provided Consultant with
notice of Substandard Performance, which notice specifies with particularity
the areas of such Substandard Performance, (B) Consultant is given at least
thirty (30) days (the "Cure Period") to improve his performance in the
specified areas, and (C) the Board of Directors determines in good faith
after the Cure Period that Consultant is still providing Substandard
Performance in the specified areas.
(b) Death or Disability. This Agreement shall automatically terminate,
without notice, upon the death or permanent disability of Consultant. For
purposes of this Section 5(b), Consultant shall be deemed to be permanently
disabled if he shall be unable, due to illness or injury, to perform his
duties hereunder for eighty percent (80%) or more of the full regular
business days during any two (2) consecutive month period. Consultant shall
be deemed to be permanently disabled on the last day of such two (2) month
period. Consultant shall not be entitled to the Base Fee or Bonus during any
period of disability unless otherwise provided by Company's standard
practices.
6. Relationship of Consultant and Company. Nothing contained in this
Agreement shall be construed as creating a joint venture, partnership or
employment relationship between Consultant and Company nor shall either party
have the right, power or authority to create any obligation or duty, express
or implied, on behalf of the other party. Consultant acknowledges and agrees
that as an independent contractor, Consultant shall be solely responsible for
payment of any and all taxes, worker's compensation, unemployment insurance
and similar taxes or fees required to be paid in conjunction with any
services rendered by Consultant or any of Consultant's consultants hereunder.
7. Proprietary Rights and Confidential Information.
(a) Ownership of Inventions. Consultant agrees that any and all inventions
or original works of authorship in whole or in part conceived or made by
Consultant during the performance of Consultant's duties and responsibilities
to Company hereunder which relate to Company's business or Company's actual
or demonstrably anticipated research and development or which are made
through the use of any of Company's confidential information, equipment,
facilities, supplies, trade secrets or time, or which result from any work
performed by Consultant for Company, shall belong exclusively to Company
whether or not fixed in a tangible medium of expression. Without limiting
the foregoing, Consultant agrees that any such original works of authorship
shall be deemed to be "works made for hire" and that Company shall be deemed
the author thereof under the U.S. Copyright Act (Title 17 of the U.S. Code),
provided that in the event and to the extent such works are determined not to
constitute "works made for hire" as a matter of law, Consultant hereby
irrevocably assigns and transfers to Company all right, title and interest in
and to such works of authorship, including but not limited to copyrights.
Consultant agrees to execute any and all documents required to assign to
Company all of the rights described in this Section and to cooperate with
Company in securing for Company any available protection for any such
inventions, ideas and original works of authorship, including without
limitation patents and copyrights. To the extent that Section 2870 of the
California Labor Code is deemed to apply to the relationship between
Consultant and Company notwithstanding that Consultant is not an employee of
Company, this agreement shall be construed in accordance with the provisions
of Section 2870.
(b) Confidential Information. Consultant shall, if requested by Company,
execute and comply with a standard confidentiality and non-disclosure
agreement pursuant to which Consultant agrees to protect and keep in
confidence all proprietary and confidential information of Company.
8. Miscellaneous.
(a) Notices. All notices and other communications pursuant to this
Agreement shall be made in accordance with the Stock Purchase Agreement. The
address to be used for Company shall be as set forth in the Stock Purchase
Agreement. The address to be used for Consultant shall be:
X.X. Xxxxxxxx
0000 Xxxxxxx Xxxxxx
Xxxxx 000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
(b) Applicable Law. This Agreement and the rights and obligations of the
parties hereunder shall be governed by and construed in accordance with the
internal laws of the State of California applicable to the construction and
enforcement of contracts wholly executed in California by residents of
California and wholly performed in California.
(c) Captions. The section headings and captions contained herein are for
reference purposes only and shall not in any way affect the meaning or
interpretation of this Agreement.
(d) Severability. If any provision of this Agreement shall be unlawful,
void, or for any reason, unenforceable, it shall be deemed stricken from, and
shall in no way affect the validity or enforceability of, the remaining
provisions of this Agreement. If any provision of this Agreement shall be
determined, under applicable law, to be overly broad in duration,
geographical coverage or substantive scope, such provision shall be deemed
narrowed to the broadest term permitted by applicable law.
(e) Waiver. The waiver by either party hereto of a breach of any provision
of this Agreement by the other shall not operate or be construed as a waiver
of any subsequent breach of the same provision or any other provision of this
Agreement.
(f) Entire Agreement. This Agreement represents the entire agreement and
understanding between the parties hereto regarding the provision by
Consultant of consulting services to Company, and supersedes any and all
previous written or oral agreements or discussions between the parties and
any other person or legal entity concerning said employment.
(g) Binding Agreement. The rights and obligations of the parties under
this Agreement shall inure to the benefit of and shall be binding upon the
successors and assigns of such parties. Subject to Consultant's reasonable
consent, Company may assign all or part of its rights hereunder to any
subsidiary or parent company of Company, in which case the services of
Consultant hereunder shall be rendered to such assignee. Notwithstanding the
foregoing, Company may assign its rights hereunder to a wholly owned
subsidiary without Consultant's consent.
(h) Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
(I) Amendments. This Agreement shall not be modified, amended, or in any
way altered except by an instrument in writing and signed by both of the
parties hereto.
(j) Arbitration. Any and all disputes arising hereunder shall be subject
to resolution by arbitration as provided in the Arbitration Agreement.
IN WITNESS WHEREOF, the undersigned have executed this Consulting Agreement as
of the date first written above.
COMPANY: CONSULTANT:
REDNECK FOODS, INC.,
a Delaware corporation
X.X. XXXXXXXX
By: _________________________
Xxxxx Xxxxxx,
President
