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EXHIBIT 10.10
ADVISORY AGREEMENT
THIS ADVISORY AGREEMENT (the "Agreement") is made and entered into
effective as of __________, 1997, among Authentic Specialty Foods, Inc., a
Texas corporation (the "Company"), and Shansby Partners, L.L.C., a Delaware
limited liability company (together with its successors, "Shansby Partners").
1. Retention. The Company hereby acknowledges that it has
retained Shansby Partners, and Shansby Partners acknowledges that, subject to
reasonable advance notice in order to accommodate scheduling, Shansby Partners
will provide the Company with financial advisory services, including assistance
with respect to identification of potential acquisition candidates and
assistance in the negotiation, implementation and financing of these
acquisitions, during the term of this Agreement.
2. Term. The term of this Agreement shall expire on the third
anniversary of the consummation of the initial public offering (the "Initial
Public Offering") the Company is currently contemplating, and the Agreement may
be terminated by either party for a material breach of the Agreement by the
other party if the breach has not been remedied within 60 days after notice of
the breach is given.
3. Compensation.
(a) As compensation for Shansby Partners' services to the
Company under this Agreement, the Company hereby grants Shansby Partners a
five-year warrant to acquire 350,000 shares of the common stock of the Company,
par value $1.00 per share ("Common Stock"), at an exercise price, subject to
adjustment, equal to the price to public of Common Stock in the Initial Public
Offering (the "Warrant").
(b) The Company shall pay Shansby Partners customary
financial advisory fees in connection with acquisitions identified by the
Company during the term of this Agreement.
4. Reimbursement of Expenses. In addition to the Warrant to be
granted pursuant to Section 3 hereof, the Company agrees to pay or reimburse
Shansby Partners for all "Reimbursable Expenses," which shall consist of all
reasonable disbursement and out-of-pocket expenses (including without
limitation, costs of travel, postage, deliveries, communications, etc.)
incurred by Shansby Partners or its affiliates for the account of the Company
or in connection with the performance by Shansby Partners of the services
contemplated by Section 1 hereof. Promptly (but not more than 10 days) after
request by or notice from Shansby Partners, the Company shall pay Shansby
Partners, by wire transfer of immediately available funds to the account
described on Exhibit A hereto (or such other account as Shansby Partners may
hereafter designate in writing), the Reimbursable Expenses for which Shansby
Partners has provided the Company invoices or reasonably detailed descriptions.
All past due payments in respect of the Reimbursable Expenses shall bear
interest at the lesser of the highest rate of interest which may be charged
under applicable law or the Prime Rate plus 5% from
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the Payment Date to and including the date on which such Reimbursable Expenses
plus accrued interest thereon are fully paid to Shansby Partners.
5. Acquisition Opportunities. During the term of this Agreement,
Shansby Partners shall offer to the Company for its consideration any
acquisition opportunities for Mexican food companies that primarily produce
tortillas, tortilla chips or salsas and that are identified by Shansby Partners
or its affiliates after the consummation of the Initial Public Offering. If
the Company declines to pursue any such acquisition opportunity, then Shansby
Partners or its affiliates can pursue the acquisition opportunity without the
involvement of the Company. Neither Shansby Partners nor any of its affiliates
will be required to use their funds to finance any acquisition on behalf of the
Company.
6. Indemnification. The Company jointly and severally shall
indemnify and hold harmless each of Shansby Partners, its affiliates, and their
respective directors, officers, controlling persons (within the meaning of
Section 15 of the Securities Act of 1933 or Section 20(a) of the Securities
Exchange Act of 1934, as amended), if any, agents and employees (Shansby
Partners, its affiliates, and such other specified persons being collectively
referred to as "Indemnified Persons," and individually as an "Indemnified
Person") from and against any and all claims, liabilities, losses, damages and
expenses incurred by any Indemnified Person (including those arising out of an
Indemnified Person's negligence and fees and disbursements of the respective
Indemnified Person's counsel) which (A) are related to or arise out of (i)
actions taken or omitted to be taken (including any untrue statements made or
any statements omitted to be made) by the Company or (ii) actions taken or
omitted to be taken by an Indemnified Person with the Company's consent or in
conformity with the Company's instructions or the Company's actions or
omissions or (B) are otherwise related to or arise out of Shansby Partners'
engagement, and will reimburse each Indemnified Person for all costs and
expenses, including fees and disbursements of any Indemnified Person's counsel,
as they are incurred, in connection with investigating, preparing for,
defending, or appealing any action, formal or informal claim, investigation,
inquiry or other proceeding, whether or not in connection with pending or
threatened litigation, caused by or arising out of or in connection with
Shansby Partners acting pursuant to Shansby Partners' engagement, whether or
not any Indemnified Person is named as a party thereto and whether or not any
liability results therefrom. The Company will, however, not be responsible for
any claims, liabilities, losses, damages or expenses pursuant to clause (B) of
the preceding sentence that have resulted primarily from Shansby Partners' bad
faith, gross negligence or willful misconduct. The Company also agrees that
neither Shansby Partners nor any other Indemnified Person shall have any
liability to the Company for or in connection with such engagement except for
any such liability for claims, liabilities, losses, damages or expenses
incurred by the Company that have resulted primarily from Shansby Partners' bad
faith, gross negligence or willful misconduct. The Company further agrees that
it will not, without the prior written consent of Shansby Partners, settle or
compromise or consent to the entry of any judgment in any pending or threatened
claim, action, suit or proceeding in respect of which indemnification may be
sought hereunder (whether or not any Indemnified Person is an actual or
potential party to such claim, action, suit or proceeding) unless such
settlement, compromise or consent includes an unconditional release of Shansby
Partners and each other Indemnified Person hereunder from all liability arising
out of such claim, action, suit or proceeding. THE COMPANY HEREBY ACKNOWLEDGES
THAT THE FOREGOING INDEMNITY SHALL BE APPLICABLE TO ANY CLAIMS, LIABILITIES,
LOSSES, DAMAGES OR EXPENSES THAT HAVE RESULTED FROM OR ARE ALLEGED TO HAVE
RESULTED FROM THE ACTIVE OR PASSIVE OR THE SOLE, JOINT OR CONCURRENT ORDINARY
NEGLIGENCE OF SHANSBY PARTNERS OR ANY OTHER INDEMNIFIED PERSON.
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The foregoing right to indemnity shall be in addition to any rights
that Shansby Partners and/or any other Indemnified Person may have at common
law or otherwise and shall remain in full force and effect following the
completion or any termination of the engagement. The Company hereby consents
to personal jurisdiction and to service and venue in any court in which any
claim which is subject to this Agreement is brought against Shansby Partners or
any other Indemnified Person.
It is understood that, in connection with Shansby Partners'
engagement, Shansby Partners may also be engaged to act for the Company in one
or more additional capacities, and that the terms of this engagement or any
such additional engagement(s) may be embodied in one or more separate written
agreements. This indemnification shall apply to the engagement specified in
the first paragraph hereof as well as to any such additional engagement(s)
(whether written or oral) and any modification of said engagement or such
additional engagement(s) and shall remain in full force and effect following
the completion or termination of said engagement or such additional
engagements.
7. Confidential Information. In connection with the performance
of the services hereunder, Shansby Partners agrees not to divulge any
confidential information, secret processes or trade secrets disclosed by the
Company to it solely in its capacity as a financial advisor, unless the Company
consents to the divulging thereof or such information, secret processes or
trade secrets are publicly available or otherwise available to Shansby Partners
without restriction or breach of any confidentiality agreement or unless
required by any governmental authority or in response to any valid legal
process.
8. Governing Law. This Agreement shall be governed by and
construed in accordance with the domestic laws of the State of Texas without
giving effect to any choice or conflict of law provision or rule (whether of
the State of Texas or any other jurisdiction) that would cause the application
of the laws of any jurisdiction other than the State of Texas.
9. Assignment. This Agreement and all provisions contained
herein shall be binding upon and inure to the benefit of the parties hereto and
their respective successors and assigns; provided, however, neither this
Agreement nor any of the rights, interests or obligations hereunder shall be
assigned (other than with respect to the rights and obligations of Shansby
Partners, which may be assigned to any one or more of its principals or
affiliates) by any of the parties without the prior written consent of the
other parties.
10. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument, and the signature of any
party to any counterpart shall be deemed a signature to, and may be appended
to, any other counterpart.
11. Other Understandings. All discussions, understandings and
agreements heretofore made between any of the parties hereto with respect to
the subject matter hereof are merged in this Agreement, which alone fully and
completely expresses the Agreement of the parties hereto. All calculations of
financial advisory fees and Reimbursable Expenses shall be made by Shansby
Partners and, in the absence of mathematical error, shall be final and
conclusive.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the date and year first above written.
SHANSBY PARTNERS, L.L.C.
By:
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Name:
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Title:
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AUTHENTIC SPECIALTY FOODS, INC.
By:
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Name:
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Title:
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EXHIBIT A
Wire Transfer Instructions
__________ Bank
ABA #:
Account #:
Credit:
Reference: Payment of financial advisory fees
or Reimbursable Expenses
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