EXHIBIT 10.13
CONSULTING AGREEMENT
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This Agreement by and between Hospitality Design & Supply, Inc.,
("Company") and Xxxxxxx Xxxxxxxx ("Consultant") is entered into as of the
consummation of the initial public offering of the Company.
1. Engagement and Scope. The Company hereby engages Consultant and Consultant
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hereby accepts the engagement upon the terms and conditions hereinafter set
forth. Consultant shall consult, advise and assist the Company with respect to
commercial kitchen design and/or supply and related opportunities and its
efforts to identify, locate, evaluate, and acquire entities or their assets in
these businesses. Consultant shall perform such duties in connection with this
engagement as the Company or corporations affiliated with the Company may
reasonably require.
2. Term. Subject only to the provisions for termination set forth in Paragraph
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6 below, the term of Consultant's engagement hereunder to acquire commercial
kitchen design and/or supply and related businesses shall be for a period of
three years beginning on the date hereof, which will be automatically renewed
for additional one year terms thereafter unless the Company or Consultant
terminates the Agreement with at least thirty (30) days advance written notice.
3. Compensation.
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a. The Company shall reimburse Consultant for all ordinary and necessary
business expenses lawfully and reasonably incurred by Consultant in the
performance of his services pursuant to this Agreement. Such expenses may
include but are not necessarily limited to (i) telephone, photocopying, and
facsimile charges as well as postal and courier charges incurred on behalf of
the Company, (ii) economy class airfare, and (iii) reasonable hotel, meals, and
automobile travel expenses exclusively incurred for the benefit of the Company.
For the avoidance of doubt, all such expenses are subject to allocation if
incurred in part for third parties, personal purposes, or otherwise not
specifically and directly related to or exclusively incurred in furtherance of
Consultant's objectives under this Agreement.
b. All reimbursable expenses shall be appropriately documented in
reasonable detail by Consultant upon submission of any request for
reimbursement, which submission shall be submitted monthly for any such expenses
incurred in the prior month. All documented expenses will be available and
subject to review and audit from time to time upon request by the Company.
c. In addition to the reimbursement of expenses provided for in
subparagraph (a) above, the Company agrees to pay Consultant a bonus consulting
fee after the Company's completion of each acquisition of an entity, division,
or substantially all assets of an entity or division (an "Acquisition") that
resulted directly from the services and efforts of Consultant during the term of
this Agreement. The amount of such bonus consulting fee shall be equal to one
percent (1.0%) of the last twelve months revenues of the entity or division
which was the subject of such Acquisition. Notwithstanding anything in this
Paragraph to the contrary, Consultant's bonus
consulting agreement shall not exceed one hundred thousand dollars ($100,000) in
respect of any Acquisition. To the extent that any acquisition is consummated by
the Company and there is a dispute between Consultant and any other party or
parties regarding the payment of the above-stated bonus consulting fee for such
acquisition, then the Company, in its sole discretion, will allocate such bonus
consulting fee between Consultant and such other party or parties to reflect the
respective effort of each such party in bringing such acquisition to completion.
The above-mentioned bonus consulting fees shall be distributed to Consultant
within 30 days after closing. The Company shall pay Consultant a nonrefundable
advance against the bonus consulting fee of $50,000, payable monthly. Upon the
completion of any Acquisition, the amount of bonus consulting fee payable shall
be reduced by the amount of any of such nonrefundable advance paid through the
date of such Acquisition, and no further advance shall be paid after the
aggregate amount of bonus consulting fees and advances paid in any one year
equals $50,000.
d. Any payment to Consultant contemplated hereunder shall be net of
applicable taxes, if any, whether income, sales, or otherwise which the Company
is required by law to withhold.
4. Extent of Service. Within the scope of the engagement, Consultant shall
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devote such time, attention and energy to the business of the Company, and
corporations affiliated with the Company, as shall be reasonably required in
order for Consultant to meet his objectives hereunder. The Company anticipates
that Consultant's efforts hereunder on an annual basis shall result in completed
acquisitions with an annual revenue goal which is mutually agreeable to
Consultant and Company. Consultant shall not commit any act, or make any
statement, which would be deleterious to the reputation and goodwill of the
Company or corporations affiliated with the Company.
5. Disclosure of Information. Consultant recognizes and acknowledges that he
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will have access to certain confidential information of the Company, and of
corporations affiliated with the Company, and that such information constitutes
valuable, special, and unique property of the Company, and such other
corporations. Consultant will not, during or after the term of this Agreement,
disclose any of such confidential information to any person, firm, corporation,
association or other entity, unless it is in the public domain or required by
law, except to authorized representatives of the Company and corporations
affiliated with the Company, for any reason or purpose whatsoever, or use such
information, other than in furtherance of this Agreement upon the written
authorization of the Company. In the event of a breach or threatened breach by
Consultant of the provisions of this paragraph, the Company, and corporations
affiliated with the Company, shall be entitled to injunctive relief or other
judicial restraint prohibiting Consultant from disclosing, or using, in whole or
in part, such confidential information. Nothing herein shall be construed as
prohibiting the Company, and corporations affiliated with the Company, from
pursuing any other remedies available to them for such breach or threatened
breach, including the recovery of damages from Consultant. The provisions of
this Paragraph 5 shall survive the dissolution or termination of this Agreement.
6. Termination.
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a. In the event Consultant materially fails to observe or perform any of
the written duties required of him under this Agreement, or otherwise violates
the provisions of the Agreement, the Company may immediately terminate
Consultant's engagement under this
Agreement subsequent to a written notification of the material failure to
perform, as per Paragraph 11, and a reasonable period of time for corrective
action.
b. Without cause, the Company may terminate Consultant upon six (6) months
prior written notice by the Company. In such event, the Company shall continue
to pay Consultant the compensation reflected in subparagraph 3(c) accrued prior
to such termination.
c. In the event of change in control of the Company, this Agreement shall
immediately terminate, provided, however, all outstanding amounts of advance
draw, bonus consulting fees, and expenses that arose prior to such change of
control shall become due and payable, in addition to a severance payment equal
to sixty (60) days pro-rata share of annual advance draw compensation. For the
purposes of this Agreement, a "change in control" of the Company shall be deemed
to have occurred if: (i) any person (other than any employee benefit plan of
the Company and its subsidiaries of the Company or any person organized,
appointed, or established pursuant to the terms of any such benefit plan) is or
becomes the beneficial owner of securities of the Company representing at least
50% of the combined voting power of the Company's then outstanding securities,
or (ii) there shall be consummated (x) any consolidation, merger, share exchange
or other business combination of the Company in which the Company is not the
continuing or surviving corporation or pursuant to which shares of the Company's
capital stock would be converted into cash, securities, or other property, other
than any of the foregoing events in which the holders of the Company's capital
stock immediately prior to such event own not less than fifty percent (50%) of
the capital stock of the surviving corporation immediately after such event, or
(y) any sale, lease, exchange, or other transfer (in one transaction or a series
of related transactions) of all, or substantially all, of the consolidated
assets of the Company.
d. In the event of a termination of Consultant's engagement in accordance
with the provisions of subparagraph (a) above, the Company shall have no further
obligation to Consultant, other than the amount owed to Consultant under 3(a)
and 3(c) through the date of such termination..
e. In the event of a pending acquisition which has not been consummated
prior to termination of Consultant's engagement by the Company in accordance
with the provisions of (b) or (c) above, and the acquisition is in fact
consummated no later than six (6) months after the termination of this
Agreement, the obligation of the Company to pay the bonus consulting fee
described in paragraph 3(c) with respect to such acquisition above shall survive
the termination of this Agreement. For the avoidance of doubt, after said six
(6) month period, any outstanding obligation to Consultant pertaining to a
pending acquisition shall terminate.
f. Upon termination of this Agreement, for whatever reason, Consultant will
promptly deliver to Company all originals and copies, whether in note, memo, or
other document form or on film, video, audio, or computer tapes or discs or
otherwise of confidential information of the Company and of corporations
affiliated with the Company that are in Consultant's possession, custody, or
control whether prepared by Consultant or others. Confidential information
includes, but is not limited to, the name of any person, entity, company, or
business all or any part of which is or at any time was a candidate for a
potential acquisition by or joint undertaking with the Company (whether or not
through the introduction or efforts of Consultant), together with all analysis
and other information which Consultant or the Company has generated, received,
compiled, or otherwise obtained or possesses with respect to such potential
acquisition or joint undertaking.
7. Limit of Engagement. This Agreement does not and shall not be construed to
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create any partnership or agency whatsoever beyond the purposes set forth in
Paragraph 1 above. Consultant acknowledges and agrees that he is an independent
contractor vis-a-vis the Company and that Consultant shall not be deemed to be a
partner, employee, agent, or legal representative of the Company for any purpose
other than the purposes of this Agreement set forth in said Paragraph 1, nor
shall Consultant have any authority or power to act for, or to undertake any
obligation or responsibility on behalf of, the Company, or corporations
affiliated with the Company, other than as expressly herein provided.
Consultant represents and warrants that he is engaged independently in the field
of business prospect qualification and the service sought by the Company under
this Agreement, and conducts a business enterprise independent of the Company.
Further, Consultant acknowledges and agrees that the amounts paid under
Paragraph 3 hereof are in full satisfaction of all amounts due by the Company
for services rendered by Consultant hereunder and the Consultant disclaims any
right, title, or interest in employee benefits offered by the Company or other
compensation without regard to the reclassification or other characterization of
Consultant's relationship with the Company at a future point in time by any
Federal, State, or local government or agency.
8. Unauthorized Acts.
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a. Consultant represents and agrees with the Company that he will make no
disbursement or other payment of any kind or character out of the compensation
paid to him hereunder or with any other fund, or take or authorize the taking of
any other action which contravenes any statute or rule, regulation, or order of
any jurisdiction. Consultant further agrees to indemnify and save harmless the
Company, its subsidiaries and affiliates and their directors, officers, and
employees from any and all liabilities, obligations, claims, penalties, fines or
losses resulting from any unauthorized or unlawful acts of Consultant (or from
any violations by Consultant of any laws or regulations, whether willful or not)
except to the extent such acts were undertaken at the direction of the Company.
Consultant further represents and warrants that under no circumstances shall
Consultant solicit or accept either directly or indirectly any form of
remuneration from any third party including but not limited to any business
owner or broker for or related to the performance of Consultant's service
hereunder. The provisions of this Paragraph 8 shall survive the dissolution or
termination of this Agreement.
b. The Consultant agrees to disclose honestly and fully all information and
documentation in his possession concerning all transactions or events relating
to or affecting the Company or any affiliate of the Company as and to the extent
such information or documentation (i) was acquired or developed by Consultant
during his engagement under this Agreement and (ii) is requested by the Company
or the authorized representative thereof.
9. Conflict of Interest. Consultant acknowledges that he was the beneficial
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owner of capital stock of Economy Restaurant Fixtures, Inc. ("Economy") at the
time of its merger into a subsidiary of the Company pursuant to the Agreement
and Plan of Reorganization ("Reorganization Agreement") by and among the
Company, its subsidiary, Economy and the shareholders of Economy, which
shareholders included a revocable trust established by
Consultant and his spouse. Consultant acknowledges that the Company and he
intend that Consultant be bound by the provisions of Section 13 of the
Reorganization Agreement, and Consultant acknowledges and agrees that he is so
bound and will remain so regardless of any termination of this Agreement.
Company may engage other consultants and Consultant may otherwise be engaged by
third parties (subject to said Section 13) outside of the scope of Consultant's
engagement hereunder.
10. Pending Acquisitions and Geographical Noncompetition. It is recognized that
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pending acquisitions may not have been consummated prior to the expiration or
termination of this Agreement. Therefore, it is mutually agreed that the
parties shall identify in writing on or about the date of expiration or
termination of the Agreement, all geographical areas in which such acquisitions
have been actively pursued by Consultant and in which such acquisitions may be
pending. Consultant agrees that, subject to Section 13 of the Reorganization
Agreement, he will not consult with, represent, or be employed by any
competition of the Company with respect to (i) such geographical areas
(determined by county together with a buffer zone of 20 miles from the outside
perimeter thereof); and (ii) any pending acquisition prior to one (1) year after
the expiration or termination of the Agreement, without first obtaining the
written approval of the Company. Notwithstanding the foregoing, in the event of
change in control of the Company (as defined above herein), the restrictions
reflected in this Paragraph 10 shall be null and void.
11. Notices. Any notice required or permitted to be given under this Agreement
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shall be in writing and shall be deemed to have been given seven (7) days after
deposited with the United States postal service in a postage prepaid envelope
addressed, if to the Consultant, at Economy Restaurant Fixtures, Inc., 000 Xx
Xxxx Xxxxx, Xxxxx Xxxx, XX 00000 and if to the Company, c/o CEO, Hospitality
Design & Supply, Inc., X.X. Xxx 0000, Xxxxxx Xxxx, XX 00000 or to such other
address as either party shall designate by written notice to the other.
12. Assignment. Consultant may not assign his rights or obligations hereunder.
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The rights and obligations of the Company hereunder shall insure to the benefit
of, and shall be binding upon the successors and assigns of the Company.
13. Miscellaneous.
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a. This Agreement shall be subject to and governed by the laws of the State
of California. The parties submit to the exclusive jurisdiction of the State
and Federal Courts located in the State of California if a lawsuit is filed by
Consultant and to the exclusive jurisdiction of the State and Federal Courts
located in the State of California if a lawsuit is filed by the Company.
b. Failure to insist upon strict compliance with any provision hereof shall
not be deemed a waiver of such provision or any other provision hereof.
c. This Agreement may not be modified except by an agreement in writing
executed by the parties hereto.
d. The invalidity or unenforceability of any provision hereof shall not
affect the validity or enforceability of any other provision.
e. Consultant represents and warrants that entering into this Agreement and
the performance of Consultant's services hereunder shall not be in violation of
any other agreement with any third party to the best knowledge of Consultant.
f. If Company breaches Paragraph 3 of this agreement, Consultant will have
the right to terminate the agreement immediately, upon written notice, according
to Paragraph 11, and the Company remains responsible for any payment for
remuneration referred to in Paragraph 3, until the date of termination.
IN WITNESS WHEREOF, the parties have executed this Agreement effective
as of the day and year first above written.
"Consultant" Hospitality Design & Supply, Inc.
By: _______________________ By: ____________________________
Xxxxxxx Xxxxxxxx Xxxxx X. Xxxxxxx
Title: Chief Executive Officer
