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EXHIBIT 10.48
CONSULTING AND NONCOMPETE AGREEMENT
THIS CONSULTING AND NONCOMPETE AGREEMENT ("Agreement"), dated as of
January 6, 2000 (the "Effective Date"), between Fresh Foods, Inc., a North
Carolina corporation ("Fresh Foods"), and X. Xxxx Xxxxxx ("Xxxxxx")
W I T N E S S E T H:
WHEREAS, food processing is the core business of Fresh Foods, and
Xxxxxx assisted in the founding of that business; and
WHEREAS, Xxxxxx has been a director of Fresh Foods while Fresh Foods
executed its acquisition of Pierre Foods and, thereafter, integrated the
business of Pierre Foods into the company; and
WHEREAS, Xxxxxx desires to retire from the Board of Directors of Fresh
Foods while Fresh Foods desires to engage the services of Xxxxxx as a consultant
relative to its food processing business;
NOW, THEREFORE, in consideration of the covenants contained herein,
together with other valuable consideration, the receipt and legal sufficiency of
which are hereby acknowledged, the parties hereby agree as follows:
1. CONSULTING SERVICES. Xxxxxx hereby resigns from the Board of
Directors of Fresh Foods and from all Committees of the Board of Directors of
which he is a member, and Fresh Foods hereby accepts his resignation. Fresh
Foods agrees to engage Xxxxxx as a consultant as of the Effective Date, and
Xxxxxx hereby accepts that engagement, in each case upon the terms and
conditions set forth in this Agreement. Throughout the term of this Agreement,
Xxxxxx shall report to the Chairman of the Board of Directors of Fresh Foods
(or, if none exists, then the most senior executive officer of Fresh Foods) and
shall perform such Consulting Services (as defined in Section 2) as the Chairman
or such officer, as the case may be (the "Superior Officer"), may reasonably
request.
2. DUTIES. Xxxxxx shall, to the extent reasonably requested by the
Superior Officer, at reasonable times and places (a) consult with and advise
Fresh Foods on management of Fresh Foods' food processing business and (b)
market and promote Fresh Foods' food processing business in the southeastern
United States (collectively, "Consulting Services"). Xxxxxx need not devote more
than twenty hours per calendar week or 500 hours per calendar year to Consulting
Services. Xxxxxx is not entitled to payment of any fee or other compensation for
his Consulting Services, but Fresh Foods shall reimburse him for the reasonable
out-of-pocket expenses that he incurs while performing Consulting Services upon
presentation of receipts or other documentation in reasonable detail.
3. INDEPENDENT CONTRACTOR. Fresh Foods and Xxxxxx hereby agree that
Xxxxxx is an independent contractor, solely responsible for the manner and form
in which he performs Consulting Services. Nothing contained herein shall be
construed as creating an
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employer/employee, master/servant, principal/agent, partnership, joint venture
or other similar kind of relationship. Xxxxxx agrees that he will not take any
action on behalf of Fresh Foods without specific instructions from, and the
prior approval of, the Superior Officer and that he does not have any right or
power in any manner to bind or commit Fresh Foods to any contract or other
obligation with any individual or entity except upon the specific prior written
approval of the Superior Officer.
4. TERM. This Agreement shall terminate five years from the Effective
Date.
5. COMPENSATION.
(a) CASH. Fresh Foods shall pay to Xxxxxx $200,000 annually
for the five-year term of this Agreement, less such amounts, if any, as
Fresh Foods may withhold pursuant to federal and state tax laws. Such
payments shall be made monthly in the amount of $16,667.67 per month,
less any applicable tax withholding, payable on the first day of each
month, in sixty installments, commencing the first day of the month
immediately following the Effective Date. As between the parties, Fresh
Foods will determine whether and to what extent it is obligated to
withhold portions of payments due to Xxxxxx pursuant to federal and
state tax laws. Fresh Foods will make these determinations reasonably,
in good faith and in consultation with Xxxxxx.
(b) MEDICAL BENEFIT. Xxxxxx may obtain if he so elects, but
subject to Fresh Foods' approval (not to be unreasonably withheld or
delayed), a medical insurance policy covering himself and his spouse.
For the five-year term of this Agreement, Fresh Foods will pay the
entire cost of medical insurance premiums due on such policy, provided
that the coverage of such policy is no more favorable, in the
aggregate, than the coverage presently enjoyed by Fresh Foods' most
senior executive officer under the medical insurance policy provided
and paid for him by Fresh Foods.
6. COVENANT NOT TO DISCLOSE CONFIDENTIAL INFORMATION. During Xxxxxx'x
prior positions with Fresh Foods and during the term of this Agreement, Xxxxxx
has and will become acquainted with confidential information of Fresh Foods and
its affiliates, including, but not limited to, customer names and
representatives, customer files, customer lists, customer specifications and
requirements, special customer matters, sales methods and techniques,
merchandising concepts and plans, business plans, sources of supply and vendors,
terms and conditions of business relationships with vendors, agents and brokers,
promotional materials and information, financial matters, mergers, acquisitions,
personnel matters and confidential processes, designs, formulas, ideas, plans,
devices and materials and other similar matters that are kept confidential (any
and all such information being referred to herein as "Confidential
Information"). The parties agree that the use of Confidential Information
against Fresh Foods would seriously damage its business. Accordingly, Xxxxxx
agrees that:
(a) He shall not, directly or indirectly, use any Confidential
Information for any purpose other than to benefit Fresh Foods except
with the prior, express and written consent of Fresh Foods or as
required by law;
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(b) He shall not, directly or indirectly, divulge, publish or
otherwise reveal or allow to be revealed any Confidential Information
to any individual or entity except with the prior, express and written
consent of Fresh Foods or as required by law;
(c) He shall refrain from any action or conduct that might
reasonably or foreseeably be expected to compromise the confidentiality
or proprietary nature of any Confidential Information; and
(d) He shall have no right to apply for, or to obtain any
patent, copyright or other form of intellectual property protection
regarding, any Confidential Information.
7. COVENANT NOT TO COMPETE.
(a) COVENANT. Xxxxxx hereby stipulates, covenants and agrees
that, during the Restrictive Period (as defined below), he shall not,
directly or indirectly, other than on behalf of Fresh Foods, without
Fresh Foods' prior, express and written consent:
(i) Engage in Competition (as defined below) with
Fresh Foods or any of its successors or assigns; or
(ii) Employ or solicit the employment of any
individual who is, or has been, at any time during the
Restrictive Period or during the twelve complete calendar
months immediately preceding the Effective Date, an employee
of Fresh Foods.
(b) CERTAIN DEFINITIONS. As used in this Section, the
following terms shall have the following meanings:
(i) "Business" shall mean food processing.
(ii) "Competition" shall mean:
(1) Engaging in the Business with a Contact
Person;
(2) Assisting any individual or entity,
whether in a financial, managerial, employment,
advisory or other material capacity, to engage in the
Business with a Contact Person; or
(3) Owning any interest in, or organizing an
entity that engages in, the Business with a Contact
Person; provided, however, that nothing herein shall
preclude Xxxxxx, directly or indirectly, from holding
not more than one percent of the outstanding shares
of common stock of any company whose shares of common
stock are listed on a national securities exchange or
authorized for quotation by NASDAQ.
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(iii) "Contact Person" shall be any customer, vendor,
agent or broker at any time of Fresh Foods with which or with
whom Xxxxxx has contact on behalf of Fresh Foods at any time
during the term of this Agreement.
(iv) "Restrictive Period" shall mean the five-year
period beginning on the Effective Date.
8. REMEDIES. In the event of any breach of this Agreement, Fresh Foods
and its successors and assigns shall be entitled to any and all of the following
remedies in addition to such other remedies as they may have in equity or at
law:
(a) In that a breach of this Agreement would cause damages to
Fresh Foods that, although capable of estimation, would be inherently
difficult to measure, Xxxxxx shall pay to Fresh Foods by bank check or
other good funds, upon Fresh Foods' demand following any such breach,
the amount of $500,000. Such amount shall be paid as liquidated damages
for the breach and not as a penalty.
(b) The Restrictive Period shall be extended by any time
period during which Xxxxxx is in violation of this Agreement.
In that a breach or anticipatory breach by Xxxxxx of Section 6 or 7 of this
Agreement would cause irreparable damage to Fresh Foods, Fresh Foods also shall
be entitled to an injunction restraining Xxxxxx from attempting to violate,
violating or continuing a violation of Section 6 or 7. The existence of any
claim or cause of action on the part of Xxxxxx against Fresh Foods or its
successors or assigns, whether arising from this Agreement or otherwise, shall
in no way constitute a defense to the enforcement of Sections 6 and 7.
9. ACKNOWLEDGEMENT OF ADEQUATE CONSIDERATION. The parties stipulate and
agree that the payments and other benefits owed to Xxxxxx by Fresh Foods under
this Agreement and the performance of Fresh Foods' obligations hereunder
constitute sufficient consideration to support enforcement of the covenants of
this Agreement.
10. ACKNOWLEDGEMENT OF REASONABLENESS. Xxxxxx has carefully read and
considered the provisions of this Agreement in consultation with attorneys of
his choice and agrees that the restrictions set forth herein are fair and
reasonably required for Fresh Foods' protection. In the event that any provision
relating to the Restrictive Period or to Contact Persons (or both) shall be
declared by a court of competent jurisdiction to exceed the maximum time period
or geographical area such court deems reasonable and enforceable under
applicable law, the time period or area of restriction considered reasonable and
enforceable by the court shall thereafter be the applicable Restrictive Period
or to Contact Persons under this Agreement.
11. RELEASE BY XXXXXX AND XXXXXX ENTITIES. For his affiliates, related
parties, heirs, assigns, agents, servants and representatives (the "Xxxxxx
Entities"), as well as himself, Xxxxxx does hereby release and forever discharge
and acquit the affiliates, related parties, employees, officers, directors,
shareholders, attorneys, accountants, agents, servants, representatives,
successors and assigns of Fresh Foods (the "Fresh Foods Entities"), and Fresh
Foods itself, from
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any and all claims, demands, actions, rights, causes of action, obligations and
liabilities, known and unknown (collectively, "Claims"), that he or any of the
Xxxxxx Entities has or may have against Fresh Foods or any of the Fresh Foods
Entities from the beginning of time until the date of this Agreement. Without
limiting the generality of the foregoing, Xxxxxx also releases and forever
discharges and acquits Fresh Foods and the Fresh Foods Entities, on his own
behalf and on behalf of the Xxxxxx Entities, from any and all Claims that have
arisen, may have arisen or might arise at any time in the future from the status
of any of them as a Company shareholder. Xxxxxx represents and warrants to Fresh
Foods that neither he nor any of the Xxxxxx Entities has assigned, transferred
or conveyed in any manner all, or any part, of his or its Claims against Fresh
Foods or any of the Fresh Foods Entities. Xxxxxx further represents and warrants
to Fresh Foods that this Agreement is the legal, valid and binding obligation of
himself and the Xxxxxx Entities, enforceable against each of them in accordance
with its terms.
12. RELEASE BY FRESH FOODS. Fresh Foods does hereby release and forever
discharge and acquit Xxxxxx and the Xxxxxx Entities from any and all Claims that
Fresh Foods has or may have against Xxxxxx or any of the Xxxxxx Entities from
the beginning of time until the date of this Agreement. Fresh Foods represents
and warrants to Xxxxxx that none of the Fresh Foods Entities has any Claim
against Xxxxxx or any of the Xxxxxx Entities and that neither Fresh Foods nor
any of Fresh Foods Entities has assigned, transferred or conveyed in any manner
all, or any part, of any Claim against Xxxxxx or any of the Xxxxxx Entities.
Fresh Foods further represents and warrants to Xxxxxx that this Agreement is the
legal, valid and binding obligation of Fresh Foods, enforceable against Fresh
Foods in accordance with its terms.
13. FRESH FOODS SECURITIES. Xxxxxx represents and warrants to Fresh
Foods that, other than the shares of Fresh Foods common stock that he has
unconditionally contracted to sell to Xxxxx X. Xxxxxxxxxx, Xx., neither he nor
any of the Xxxxxx Entities beneficially owns any shares of common stock or other
securities issued by Fresh Foods. Xxxxxx covenants and agrees with Fresh Foods
that neither he nor any of the Xxxxxx Entities will at any time hereafter
purchase or otherwise acquire (so as to beneficially own) any security issued by
Fresh Foods.
14. CERTAIN DEFINITIONS. As used in this Agreement: (a) a person's
"affiliate" is a second person controlled, directly or indirectly, by the first
person; (b) a person's "related party" is a second person related (by blood or
marriage) to the first person, a trust as to which the first person was or is a
settlor, trustee or beneficiary or a corporation, partnership or other company
as to which the first person was or is a shareholder, partner, member, officer,
director or manager; and (c) the term "beneficially owns" derives its meaning
from Rule 13d-3 under the Securities Exchange Act of 1934, as amended.
15. CONFIDENTIALITY; COVENANT NOT TO DISPARAGE. Each party covenants
and agrees with the other not to disclose the existence or terms of this
Agreement to any person at any time for any purpose, except that (a) either
party may make such disclosures confidentially to the party's lawyers and
accountants in connection with the rendition of their professional services and
(b) Fresh Foods may make such disclosures as it deems to be required by
applicable securities laws. Each party represents and warrants to the other that
the one party knows of no unlawful conduct by the other. Each party covenants
and agrees with the other not to disparage the reputation of the other.
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16. CHANGE OF CONTROL. If a Change in Control of the Company shall
occur before the expiration of this Agreement, then Fresh Foods shall pay to
Xxxxxx, by bank check or other good funds on the Change in Control Date, the
entire unpaid portion of the $1,000,000 amount otherwise due to be paid to
Xxxxxx in annual installments over the five-year term of this Agreement pursuant
to Section 5(a) of this Agreement. As used herein, the terms "Change in Control
of the Company" and "Change in Control Date" shall have the meanings assigned to
them in that certain Amended and Restated Change in Control Agreement between
Xxxxx X. Xxxxx and Fresh Foods as in effect at the date hereof.
17. ATTORNEYS' FEES. Should it become necessary for Fresh Foods to
institute legal proceedings as a result of a breach of any terms or covenants
contained in this Agreement, Fresh Foods shall, if it is the prevailing party in
such litigation, be entitled to have and recover from the non-prevailing party
reasonable attorneys' fees plus court costs in addition to any and all relief
otherwise available to it, either at law or in equity. Should it become
necessary for Xxxxxx to institute legal proceedings as a result of a breach of
any terms or covenants contained in this Agreement, Xxxxxx shall, if he is the
prevailing party in such litigation, be entitled to have and recover from the
non-prevailing party reasonable attorneys' fees plus court costs in addition to
any and all relief otherwise available to him, either at law or in equity.
18. SEVERABILITY. The illegality, unenforceability or invalidity of any
one or more covenants, phrases, clauses, sentences or paragraphs of this
Agreement, as determined by a court of competent jurisdiction, shall not affect
the remaining portions of this Agreement, or any part thereof; and, in case of
any such illegality, unenforceability or invalidity, this Agreement shall be
construed as if such covenants, phrases, clauses, sentences or paragraphs, to
the extent and only to the extent determined to be illegal, unenforceable or
invalid, had not been inserted.
19. WAIVER OF BREACH. The waiver by either party of any breach of any
provision of this Agreement shall not operate or be construed as a waiver of any
subsequent breach of any provision of this Agreement.
20. ENTIRE AGREEMENT. This Agreement evidences the entire agreement
among the parties and their privies relative to the subject matter covered
hereby and supersedes all prior or contemporaneous oral or written agreements
among any or all of them.
21. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of North Carolina without regard to the
principles of conflict of laws thereof.
22. NOTICES. Any notice that may be given hereunder shall be in writing
and shall be deemed to have been given on the earlier to occur of (a) actual
receipt or (b) the second business day after the same shall have been mailed by
certified mail, postage prepaid, return receipt requested, to the parties at the
addresses listed below:
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If to Fresh Foods: Fresh Foods, Inc.
X.X. Xxx 0000
Xxxxxxx, XX 00000
Attention: Xxxxx X. Xxxxx
If to Xxxxxx: Xx. X. Xxxx Xxxxxx
000 Xxxxxx Xxxx
Xxxxxxxxxxx, XX 00000
or, in any case, to such other address as the party to whom or to which such
notice is to be given shall have specified by notice given to the other parties.
23. SUCCESSORS, HEIRS AND ASSIGNS. This Agreement shall inure to the
benefit of and be binding upon the parties hereto, their successors, heirs and
assigns.
24. COUNTERPARTS. This Agreement may be executed in counterparts, each
of which shall constitute an original and all of which, taken together, shall
constitute one and the same Agreement.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the Effective Date.
FRESH FOODS, INC.
By: /s/ Xxxxx X. Xxxxx
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Xxxxx X. Xxxxx
Vice Chairman of the Board of Directors
XXXXXX:
/s/ X. Xxxx Xxxxxx (SEAL)
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X. Xxxx Xxxxxx,
on behalf of himself and the
Xxxxxx Entities referred to above
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