EXHIBT 10.1
Xx. Xxxxx X. Xxxxxxx, Manager
Wabash Foods, LLC
c/o American Pacific Financial Corporation
000 X. Xxxxxxxxxxx Xxxx, Xxxxx 000
Xxx Xxxxxxxxxx, XX 00000
Dear Xx. Xxxxxxx:
The purpose of this letter agreement (the "Agreement") is to outline and
confirm the terms of a management contract between Xxxxx Brothers, Inc. (a
Delaware corporation, hereinafter "Xxxxx Brothers") and Wabash Foods, LLC (a
Delaware limited liability company, hereinafter "Wabash"). This Agreement is a
present binding agreement between the parties. If the terms of this Agreement
are acceptable, please countersign a copy and fax us your countersignature .
1. This Agreement shall be effective April 1, 1999 and continue for four
months through July 31, 1999. The Agreement may be extended by mutual consent of
the parties for up to three additional one-month periods.
2. If the parties do not execute a definitive Purchase and Sale Agreement,
subject to approval by Xxxxx Brothers' shareholders, with respect to the sale of
all membership interests in Wabash to Xxxxx Brothers by 5:00 p.m. (M.S.T.) on
July 1, 1999, or if for any other reason Xxxxx Brothers does not continue the
transactions contemplated by the Purchase Agreement, this Agreement will
terminate.
3. Management of day to day activities will include direction of activities
in the ordinary course of business, including (i) sales and marketing, (ii)
purchasing, (iii) financial matters, (iv) distribution and (v) operations. Xxxxx
Brothers sole obligations hereunder shall be to use reasonable commercial
efforts to fulfill its responsibilities hereunder. Xxxxx Brothers will not be
liable to Wabash for failure of Wabash to generate any specified level of net
income or sales (or any net income at all) and Xxxxx Brothers is no guarantor of
Wabash's ales or income while Xxxxx Brothers is managing its activities
hereunder. In the event of a claimed breach hereof by Xxxxx Brothers, absent
Xxxxx Brothers gross negligence or willful malfeasance, Wabash's sole remedy
shall be to terminate this Agreement and the Purchase Agreement to which
reference is made above. Not withstanding the foregoing, Wabash may terminate
this Agreement upon three days prior written notice to Xxxxx Brothers for any
reason.
4. In exchange for Xxxxx Brothers providing management services to Wabash,
Wabash will remit to Xxxxx Brothers (i) 100% of the first $75,000 of Wabash's
monthly net earnings before taxes, and (ii) 50% of Wabash's monthly net earnings
before taxes which exceed $75,000. Such monthly payments will be made by the
20th day of the following month. In the event no payment is received by the 20th
day of the following month, Xxxxx Brothers may suspend it performance until such
payment is received. Such payments are subject to US Bancorp Republic Commercial
Finance, Inc. approval.
5. So long as Xxxxx Brothers is serving in a management capacity for
Wabash, Wabash shall indemnify, pay, protect, defend and hold Xxxxx Brothers,
its affiliates, and each of their respective directors, officers, employees,
shareholders, agents, advisors and controlling person and assigns harmless from
any loss, damage, liability, claim, obligation, fine, penalty, expenses
(including reasonable fees and expenses of attorneys engaged in defense of any
act or omission), judgments or amounts paid in settlement by such persons by
reason of any act performed by such persons or omitted to be performed by them
in connection with the management of Wabash or in furtherance of Wabash's
interests; provided however, that the foregoing shall not relieve any such
person of liability for such person's gross negligence or willful misconduct.
6. Each party will pay its own legal, accounting and other expenses
incurred by such party or on its behalf in connection with this Agreement. In
the event an action or suit is brought by any party to enforce the terms of this
Agreement, the prevailing party shall be entitled to the payment of its
reasonable attorney's fees and costs, as determined by the judge of the court.
7. This Agreement shall be governed by the laws of the state of Arizona
(regardless of the laws that might otherwise govern under applicable principles
of conflicts of law of the state of Arizona) as to all matters including, but
not limited to, matters of validity, construction, effect, performance and
remedies.
IN WITNESS WHEREOF, the parties have entered into this Agreement as of the
date first hereinabove set forth.
XXXXX BROTHERS, INC., A DELAWARE CORPORATION
By: /s/ Xxxxxx X. Xxxxxx
-----------------------------------------
Its: Vice President and CFO
AGREED TO AND ACCEPTED: WABASH FOODS, LLC, A DELAWARE LIMITED
LIABILITY COMPANY
By: /s/ Xxxxx X. Xxxxxxx
-----------------------------------------
Its: Manager
