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Consulting Agreement, Dated 03/06/98

This is an actual contract by Authentic Specialty Foods.
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Sectors: Retail
Governing Law: Texas, View Texas State Laws
Effective Date: March 06, 1998
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CONSULTING AGREEMENT


This Consulting Agreement is made as of the 6th day of March, 1998, between Authentic Specialty Foods, Inc., a Texas corporation (the "Corporation"), and RKS, Inc. (the "Consultant").


W I T N E S S E T H:


WHEREAS, Consultant is a corporation all of the capital stock of which is owned beneficially by Robert K. Swanson ("Swanson") and certain members of his family;


WHEREAS, the Corporation is desirous of retaining Consultant on the terms and conditions, and for the consideration, hereinafter set forth and Consultant is desirous of being retained by Corporation on such terms and conditions and for such consideration;


WHEREAS, Swanson currently serves as a director of the Corporation;


WHEREAS, the Corporation is desirous of retaining Swanson as Chairman of the Board and Chief Executive Officer of the Corporation, and Swanson is desirous of serving in such capacities;


NOW, THEREFORE, in consideration of the mutual covenants herein contained and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, intending to be legally bound, covenant and agree as follows:


Section 1. Services to be Provided. (a) Until the termination of this Agreement, Consultant shall provide consulting services to the Corporation, and Swanson shall serve as Chairman of the Board and Chief Executive Officer of the Corporation or in such other positions as the parties shall mutually agree. Consultant agrees to serve in such positions and to perform diligently and to the best of his abilities the duties and services appertaining to such office, as well as such additional duties and services appropriate to such office as shall be specified by the Board of Directors from time to time. Consultant's consultancy shall also be subject to the policies maintained and established by Corporation, as the same may be amended from time to time.


(b) The Consultant hereby accepts its retention hereunder and agrees that during the continuance thereof Swanson will devote substantially all of his business time, effort, skill and attention to the affairs of, and for the benefit of, the Corporation and its affiliates (as defined below) and that Swanson will not engage, directly or indirectly, in any other business or businesses, whether or not similar to that of Corporation. The foregoing notwithstanding, the parties recognize and agree that Swanson may engage in private companies and personal investments, in each case to the extent that they do not conflict with the business and affairs of Corporation or interfere with Consultant's performance of his duties hereunder. Consultant acknowledges and agrees that Swanson owes a fiduciary duty of loyalty, fidelity and allegiance to act at all times in the best interests of the


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Corporation and to do no act which would injure the business, interests or reputation of the Corporation or any of its subsidiaries or affiliates. In keeping with these duties, Consultant shall make full disclosure to the Corporation of all business opportunities pertaining to the Corporation's business and shall not appropriate for Consultant's own benefit business opportunities concerning the subject matter of the fiduciary relationship. For purposes of this Agreement, the term "affiliate" shall mean with respect to a specified entity, an entity that directly, or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with the entity specified.


Section 2. Term. The term of this Agreement shall be month-to-month, commencing on the date hereof; provided, however, that this Agreement may be terminated by either party upon 30 days' prior written notice, with or without cause.


Section 3. Compensation.


(a) As compensation for the services to be rendered by the Consultant under this Agreement, the Corporation agrees to pay the Consultant a Consulting Fee of $25,000 per month, prorated appropriately for any partial month and payable at the end of each calendar month during the term hereof in arrears.


(b) In addition to compensation provided for in Section 3(a), the Compensation Committee (the "Compensation Committee") of the Corporation, may, but shall not be obligated to, from time to time grant in its sole discretion consulting fee bonuses, and shall initially consider whether to grant such a bonus no later than the earlier of December 31, 1998 or the date that Swanson ceases to serve as Chairman of the Board of the Corporation. If the Compensation Committee shall elect to grant such a bonus, the amount of any such bonus shall be based upon such factors as the Compensation Committee, in its sole discretion, shall deem appropriate, including without limitation, the performance of the Consultant, the financial performance of the Corporation and the consolidated financial performance of the Corporation and its subsidiaries.


(c) The parties acknowledge that Swanson has received grants of stock options to purchase shares of capital stock of the Corporation, and may receive additional grants of options. The Corporation agrees that, notwithstanding any provision in any option agreement relating to any of such options to the contrary, if Swanson ceases to serve as a director of the Corporation for any reason or if a "Change of Control" shall occur, then all such options shall become immediately exercisable, and Swanson shall be entitled to exercise each such option on the terms set forth therein for (i) a period of 90 days after he ceases to be a director or the Change of Control, as the case may be, or (ii) the period specified in the applicable option agreement, whichever is longer. For purposes of this Agreement, a "Change of Control" shall mean (i) any merger, consolidation, or reorganization with or into any person other than TSG2 L.P. or any partner or affiliate thereof (each, a "Shansby Entity") in which the Corporation is not the surviving entity (or survives only as a subsidiary of an entity) or (ii) when any person or entity, including a "group" as contemplated by Section 13(d)(3) of the 1934 Act, other than a Shansby Entity acquires or gains ownership or control (including,


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without limitation, power to vote) of more than 50% of the outstanding shares of the Corporation's voting stock (based upon voting power).


Section 4. Reimbursement of Expenses; No Employee Benefits. Subject to Corporation's standard policies and procedures with respect to expense reimbursement as applied to its employees generally, Corporation shall reimburse Consultant for, or pay on behalf of Consultant, reasonable and appropriate out-of-pocket expenses incurred by Consultant for business-related purposes in connection with its services hereunder, including without limitation reasonable out-of-pocket travel expenses and legal fees. Without limiting the generality of the foregoing, the Corporation agrees to reimburse Consultant for its out-of-pocket office and similar operating expenses during the term hereof. In accordance with Section 13 hereof, neither Consultant nor Swanson shall be considered an employee of the Corporation and shall not be eligible to participate in any employee benefit plan or program sponsored, contributed to or maintained by the Corporation.


Section 5. Termina
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