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Form Of Advisory Agreement

This is an actual contract by Authentic Specialty Foods.

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Sectors: Retail
Governing Law: Texas, View Texas State Laws
Effective Date: January 01, 1997
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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 2 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
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