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EXHIBIT 4.2
CONSULTING AGREEMENT
This Consulting Agreement (this "AGREEMENT"), is entered into as of
November 22, 1995 by CALIDAD FOODS, INC. ("CALIDAD") and XXXXXX XXXXXXXX
("PATOSKIE").
AGREEMENTS
1. DUTIES. Calidad agrees to hire Patoskie, and Patoskie agrees
to serve Calidad as a consultant and advisor (and not as an employee) of
Calidad. In such capacity, Patoskie shall perform such consulting services
relating to Calidad's business as reasonably requested by Calidad. While
performing his duties hereunder, Patoskie shall devote such time, efforts,
skills and attention to the affairs of Calidad as are reasonably necessary to
fulfill the requirements hereunder. The duties of Patoskie shall be performed
at the offices of Calidad in Dallas County, Texas, or such other location
reasonably suited to the performance of such services. Patoskie hereby
acknowledges and agrees he has no authority to bind or act on behalf of
Calidad, and Patoskie covenants and agrees he will not represent himself as
having any such authority to any third party.
2. TERM. The term of service under this Agreement shall be for a
period commencing on the date hereof and ending on the fifth anniversary of
such date (the "SERVICE PERIOD").
3. COMPENSATION. As compensation for his services to Calidad
under this Agreement, in whatever capacity or capacities rendered, and for the
covenant not to compete set forth herein Calidad shall pay to Patoskie during
the term of this Agreement a consulting fee ("ANNUAL COMPENSATION") at an
annual rate of $70,000 per year, payable in monthly installments of $5,833.33,
subject only to such withholdings or deductions as may be required by law.
Patoskie (or Patoskie's estate) shall be paid the Annual Compensation if
Patoskie dies or is incapacitated by accident, sickness or otherwise. The
parties agree that $750 of each monthly installment of Annual Compensation
shall be paid in consideration of the performance of consulting services
hereunder and the balance of each such monthly installment shall be paid in
consideration of the covenant not to compete contained herein. Calidad shall
file a separate form 1099 with the Internal Revenue Service for that portion of
the Annual Compensation allocated to the performance of consulting services and
that portion allocated to the covenant not to compete.
4. EFFECT OF TERMINATION ON COMPENSATION. Upon expiration of the
Service Period, all compensation and benefits relating thereto to Patoskie
hereunder shall terminate.
5. CONFIDENTIAL INFORMATION.
(a) CALIDAD INFORMATION. Patoskie acknowledges that
Calidad's business is highly competitive and that Calidad's books, records and
documents, Calidad's procurement procedures and pricing techniques, the names
of and other information (such as credit and financial
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data) concerning Calidad's customers and business affiliates, and any such
information relating to the assets acquired by Calidad from El Paco Foods, Inc.
("EL PACO") pursuant to the terms of the Asset Purchase Agreement between El
Paco and Calidad of even date herewith, all comprise confidential business
information and trade secrets of Calidad which are valuable, special, and
unique assets of Calidad, which Calidad uses in its business to obtain a
competitive advantage over Calidad's competitors which do not know or use this
information. Patoskie further acknowledges that protection of Calidad's
confidential business information and trade secrets against unauthorized
disclosure and use is of critical importance to Calidad in maintaining its
competitive position. Accordingly, Patoskie hereby agrees that he will not, at
any time during or after his service with Calidad, make any unauthorized
disclosure of any confidential business information or trade secrets of
Calidad, or make any use thereof, except for the benefit of, and on behalf of,
Calidad. The foregoing shall not apply to any information that was generally
available to the public on a nonconfidential basis prior to the date of this
Agreement or was or becomes generally available to the public on a
nonconfidential basis from a third party who is not bound to keep such
information confidential.
(b) RETURN OF DOCUMENTS. All written materials, records
and other documents made by, or coming into the possession of, Patoskie during
the period of his service with Calidad which contain or disclose Calidad
confidential business information or trade secrets shall be and remain the
property of Calidad. Upon termination of Patoskie's service with Calidad, for
any reason, he promptly shall deliver the same, and all copies thereof, to
Calidad.
6. NON-COMPETITION.
(a) As part of the consideration for the compensation to
be paid to Patoskie hereunder, and as an additional incentive for Calidad to
enter into this Agreement, Patoskie hereby agrees that he will not, without the
prior written consent of Calidad, at any time during his service with Calidad,
or at any time following his service with Calidad prior to the first
anniversary of the voluntary or involuntary termination of his service with
Calidad provided such termination occurs prior to the expiration of the Service
Period, directly or indirectly, for himself or for others, transact any
business in any county or parish within the United States in which Calidad is
then conducting business in any manner pertaining to suppliers or customers of
Calidad or any affiliate which, in any manner, would have, or is likely to
have, a material adverse effect upon Calidad or any affiliate of Calidad; or,
induce any employee of Calidad or any affiliate to terminate his or her
employment with Calidad or such affiliate.
(b) Patoskie understands that the foregoing restrictions
may limit his ability to engage in a business similar to Calidad's business in
counties and parishes in which Calidad is then doing business, but acknowledges
that he is so imbued with Calidad's trade secrets and confidential information
and that he will receive sufficiently high remuneration and other benefits from
Calidad hereunder to justify such restriction.
(c) It is expressly understood and agreed that Calidad
and Patoskie consider the restrictions contained in Section 6.(a) above to be
reasonable and necessary for the purposes of preserving and protecting the
goodwill and proprietary information of Calidad. Nevertheless, if any
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of the aforesaid restrictions are found by a court having jurisdiction to be
unreasonable, or over broad as to geographic area or time, or otherwise
unenforceable, the parties intend for the restrictions therein set forth to be
modified by such court so as to be reasonable and enforceable and, as so
modified by the court, to be fully enforced.
7. NOTICE. All notices and other communications required or
permitted hereunder or necessary or convenient in connection herewith shall be
in writing and shall be deemed to have been given when sent by telecopy or
facsimile transaction or delivered or mailed, certified first-class mail,
postage prepaid, return receipt requested, as follows (provided that notice of
change of address shall be deemed given only when received):
If to Calidad, to: Xxx Xxxxxx
Calidad Foods, Inc.
0000 Xxxxxx X
Xxxxx Xxxxxxx, Xxxxx 00000
Fax Number: 000-000-0000
If to Patoskie, to: Xxxxxx Xxxxxxxx
c/o El Paco Foods, Inc.
0000 Xxxx Xxxxxxxx
Xxxxxx, Xxxxx 00000
Fax Number: 000-000-0000
or to such other names or addresses as Calidad or Patoskie, as the case may be,
shall designate by notice to the other in the manner specified in this Section
7.
8. INDEPENDENT CONTRACTOR. In his capacity as a consultant for
Calidad, Patoskie will act as an independent contractor, and will pay all
income tax and social security requirements relating to the Annual Compensation
and Calidad shall have no liability or obligations relating thereto.
9. DEFAULT. Provided that Patoskie is not in default hereunder,
if Calidad fails to pay 6 or more consecutive installments required hereunder
within ten days after delivery of written notice thereof by Patoskie, then, at
the option of Patoskie, all of the remaining unpaid installments provided for
herein may be accelerated and be immediately due and payable in full.
10. GOVERNING LAW. This Agreement shall be governed by and
interpreted under the laws of the State of Texas, and, where applicable, the
laws of the United States.
11. CONTENTS OF AGREEMENT, AMENDMENT AND ASSIGNMENT. This
Agreement sets forth the entire understanding between the parties hereto with
respect to the subject matter hereof and cannot be changed, modified or
terminated except upon written amendment executed by Patoskie and Calidad. All
of the terms and provisions of this Agreement shall be binding upon and inure
to the benefit of and be enforceable by the respective heirs, representatives,
successors and assigns of the parties hereto, except that (a) the duties and
responsibilities of Patoskie hereunder (but not the
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right to receive Annual Compensation) shall not be assignable in whole or in
part by Patoskie without the prior written consent of Calidad; and (b) should
Calidad sell its business to a third party (a "BUSINESS BUYER"), Calidad will
require the Business Buyer to assume expressly the payment and performance of
all of the obligations of Calidad hereunder, and such Business Buyer shall not
have a negative net worth, as determined by Calidad using generally accepted
accounting principles consistently applied, unless Patoskie consents thereto,
which consent shall not be unreasonably withheld, delayed or conditioned.
12. SEVERABILITY. If any provision of this Agreement or
application thereof to anyone or under any circumstances shall be determined to
be invalid or unenforceable, such invalidity or unenforceability shall not
affect any other provisions or applications of this Agreement which can be
given effect without the invalid or unenforceable provision or application.
13. HEADINGS; REFERENCES. The headings of the Sections and
paragraphs of this Agreement are inserted for convenience only and are not to
be used to interpret or define the provisions of this Agreement. Any reference
in this Agreement to a Section is deemed a reference to the applicable Section
of this Agreement unless otherwise indicated.
14. WAIVER. The waiver by either party of a breach of any term or
provision of this Agreement shall not operate or be construed as a waiver of a
subsequent breach of the same provision or the breach of any other term or
provision of this Agreement.
15. ATTORNEY's FEES AND COSTS. In the event of a breach by any
party to this Agreement and commencement of a subsequent legal action in a
court of law or form of arbitration, the prevailing party in whose favor a
final judgment is rendered in any such dispute shall be entitled to
reimbursement of reasonable attorneys' fees and court costs, including but not
limited to, the cost of expert witnesses, transportation, lodging, meal costs
of the parties and witnesses, costs of transcript preparation and other
reasonable and necessary direct and incidental costs of such dispute.
16. ARBITRATION. Any controversy, dispute or claim of whatsoever
nature arising out of, or in connection with or in relation to the
interpretation, performance or breach of this Agreement, including any claim
based on contract, tort or statute, shall be resolved by final and binding
arbitration conducted in Dallas County, Texas, administered by and in
accordance with the then existing rules of practice and procedure of Judicial
Arbitration & Mediation Services, Inc. ("JAMS") and judgment upon any award
rendered by the arbitrator may be entered in any state or federal court having
jurisdiction thereof. The arbitrator shall determine which is the prevailing
party and shall include the award of the costs and reasonable attorneys' fees
of that party's attorneys. The arbitrator shall make such determination based
on applicable Texas law. If JAMS is unable or legally precluded from
administering the arbitration, then the American Arbitration Association ("AAA")
shall serve and the rules of practice and procedure of the AAA will apply. All
arbitration hearings shall be commenced within ninety (90) days after the
demand for arbitration. Further, the arbitrator shall only upon a showing of
cause, be permitted to extend the commencement of such hearing up to an
additional sixty (60) days. This provision shall not be deemed to limit the
right of either party to exercise self-help remedies or to obtain from a court
provisional or ancillary remedies of any nature. Either party may exercise
such self-help or obtain provisional or ancillary remedies
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before, during or after the pendency of any arbitration proceeding brought
pursuant to this agreement. Neither the exercise of self-help remedies nor the
institution of an action for provisional or ancillary remedies shall constitute
a waiver of the right of the claimant in any such action to arbitrate the
merits of the controversy or claim occasioning resort to such remedies.
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the date first above written.
CALIDAD:
CALIDAD FOODS, INC.
By:
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Name:
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Title:
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PATOSKIE:
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XXXXXX XXXXXXXX
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