EXHIBIT 10.3
NONCOMPETITION AND NONSOLICITATION AGREEMENT
This Noncompetition and Nonsolicitation Agreement ("Agreement") is made
effective as of January 7, 2005, by and between Kipling Thacker ("Executive"),
an individual resident of the State of Minnesota, and Lifecore Biomedical, Inc.,
("Lifecore"), a corporation organized under the laws of the State of Minnesota.
WHEREAS, Executive is employed as an executive officer of Lifecore; and
WHEREAS, Lifecore wishes to enter into this noncompetition and
nonsolicitation agreement with Executive in order to protect its business; and
WHEREAS, in consideration for entering into this Agreement, Lifecore has
agreed to grant to Executive, contingent upon Executive agreeing to the
covenants and restrictions contained herein, options to purchase shares of
common stock of Lifecore (as provided in that certain Incentive Stock Option
Agreement between the parties dated the date hereof), which options shall be
fully vested and exercisable on the date of grant, and shares of restricted
stock of Lifecore (as provided in that certain Restricted Stock Award Agreement
between the parties dated the date hereof).
NOW THEREFORE, in consideration of the foregoing and the mutual
obligations incurred and benefits obtained hereunder, the sufficiency of which
is admitted, Lifecore and Executive agree as follows:
1. Restrictive Covenants. Executive agrees that, due to Executive's employment
with Lifecore, Executive has and will have access to Lifecore's trade secrets
and confidential information, including but not limited to: Lifecore's current
and proposed plans and strategies in sales, marketing, target customers, product
development and pricing; customer-specific information generated and compiled by
Lifecore; Lifecore's national customer management database (MarketForce) which
contains an exhaustive compilation of information regarding Lifecore's customers
and potential customers nationwide; and Lifecore's financial information.
Executive acknowledges that these trade secrets and confidential information are
valuable to Lifecore and, accordingly, agrees to the following provisions:
1.1 Covenant Not To Compete. During Executive's employment by Lifecore,
and for a period of 24 consecutive months from the date of termination of such
employment for whatever reason (whether occasioned by Executive or Lifecore),
Executive will not, directly or indirectly, in any manner (e.g., as an
executive, agent, consultant, partner, member, manager, officer, director,
shareholder, or otherwise), render services, advice or assistance to any
division, group or part of any corporation, person, organization or other entity
which engages in the marketing, selling, production, design or development of
any product, good, service or procedure which is or may reasonably be used as an
alternative to, or which is or may reasonably be sold in competition with, any
product, good, service or procedure marketed, sold, produced, designed or
developed by Lifecore (including products, goods, services or procedures
currently being researched or under development by Lifecore) ("Competitive
Activities") but only with regard to those Competitive Activities which
Executive had responsibility for or regarding which Executive received
confidential and proprietary information of Lifecore (the "Competitive
Business"), in any geographic location, domestic or foreign, in which Executive
performed services or had responsibility on behalf of Lifecore. It is understood
that Executive may render services, advice or assistance to any separate
division, group or part of any corporation, person, organization or other entity
which is not engaged in a Competitive Business regardless of whether another
separate division, group or part of such corporation, person, organization or
other entity is engaged in a Competitive Business. For purposes of this
Agreement, information is not "confidential" to Lifecore if the information is
disclosed to Executive in good faith by a third party who is in lawful
possession of that information and who has the right to make such disclosure, or
is or becomes part of the public domain, by publication or otherwise, through no
fault of Executive.
1.2 Covenant Not To Solicit Business and Customers. During Executive's
employment by Lifecore, and for a period of 24 consecutive months from the date
of termination of such employment for whatever reason (whether occasioned by
Executive or Lifecore), Executive shall not, directly or indirectly, divert,
solicit, or accept Competitive Business from any client or prospective client of
Lifecore which was solicited or serviced by Lifecore or about which Executive
received or had access to confidential information. During that same period of
time, Executive shall not, directly or indirectly, in any way interfere, or
attempt to interfere, with Lifecore's relationships with any of its actual or
potential vendors or suppliers.
1.3 Covenant Not To Solicit For Employment. During Executive's employment
by Lifecore, and for a period of 24 consecutive months from the date of
termination of such employment for whatever reason (whether occasioned by
Executive or Lifecore), Executive shall not, directly or indirectly, induce,
solicit, endeavor to entice or attempt to induce any other officer, employee,
consultant or independent contractor of Lifecore to leave the employ of
Lifecore, or supply confidential information of Lifecore to, any third person or
entity, or to in any other way materially and adversely interfere with the
relationship between any such officer, consultant or independent contractor and
Lifecore. Likewise, during that same period of time, Executive shall not,
directly or indirectly, induce, solicit, endeavor to entice or attempt to induce
any other officer or employee of Lifecore to work for, or render services or
provide advice to, any third party.
1.4 Notification of Employment. If at any time covered by the covenants
contained in this Section 1, Executive accepts new employment or becomes
affiliated with a third party, Executive shall immediately notify Lifecore of
the identity and business of the new employer or affiliation. Without limiting
the foregoing, Executive's obligation to give notice under this Section 1.4
shall apply to any business ventures in which Executive proposes to engage, even
if not with a third-party employer (such as, without limitation, a joint
venture, partnership or sole proprietorship). Executive hereby consents to
Lifecore notifying any such new employer or business venture of the terms of the
covenants in this Section 1.
1.5 De Minimis Exclusion. Notwithstanding anything in this Agreement to
the contrary, nothing contained in this Section 1 prohibits Executive from
investing his funds in securities of a company engaged in a Competitive Business
if (a) the securities of that company are listed for trading on a national stock
exchange or traded in the over-the-counter market and
2
(b) Executive's holdings in that company's securities represent less than two
percent of the total number of outstanding shares of that company.
2. Miscellaneous.
2.1 Governing Law and Venue Selection. This Agreement is made under and
shall be governed by and construed in accordance with the laws of the State of
Minnesota, without regard to its conflicts of laws principles or those of any
other State.
2.2 Entire Agreement. This Agreement (including other agreements
specifically mentioned in this Agreement except as terminated herein) contains
the entire agreement of the parties relating to the subject matter hereof and
supersedes, terminates and replaces all prior promises, contracts, agreements
and understandings of any kind, whether express or implied, oral or written,
with respect to such subject matter (including, but not limited to, any promise,
contract or understanding, whether express or implied, oral or written, by and
between Lifecore and Executive), and the parties hereto have made no agreements,
representations or warranties relating to the subject matter of this Agreement
which are not set forth herein.
2.3 Amendments. No amendment or modification of this Agreement shall be
deemed effective unless made in writing and signed by Executive and Lifecore.
2.4 No Waiver. No term or condition of this Agreement shall be deemed to
have been waived, nor shall there be any estoppel to enforce any provisions of
this Agreement, except by a statement in writing signed by the party against
whom enforcement of the waiver or estoppel is sought. Any written waiver shall
not be deemed a continuing waiver unless specifically stated, shall operate only
as to the specific term or condition waived, and shall not constitute a waiver
of such term or condition for the future or as to any act other than as
specifically set forth in the waiver.
2.5 Assignment. This Agreement shall not be assignable, in whole or in
part, by any party without the written consent of the other party, except that
Lifecore may, without the consent of Executive, assign its rights and
obligations under this Agreement to any Lifecore affiliate or to any
corporation, firm or other business entity with or into which Lifecore may merge
or consolidate, or to which Lifecore may sell or transfer all or substantially
all of its assets or all or substantially all of the assets of either of
Lifecore's primary business units, or of which 50% or more of the equity
investment and of the voting control is owned, directly or indirectly, by, or is
under common ownership with, Lifecore.
2.6 Injunctive Relief. Executive acknowledges and agrees that any
violation of Section 1 hereof would be highly injurious to Lifecore, and that it
would be extremely difficult to compensate Lifecore fully for damages for any
such violation. Accordingly, Executive specifically agrees that Lifecore shall
be entitled to temporary and permanent injunctive relief to enforce the
provisions of Section 1 hereof, and that such relief may be granted without the
necessity of proving actual damages and without necessity of posting any bond.
This provision with respect to injunctive relief shall not, however, diminish
the right of Lifecore to claim and recover damages, or to seek and obtain any
other relief available to it at law or in equity, in addition to injunctive
relief.
3
2.7 Arbitration. Any dispute arising out of or relating to this Agreement
or the alleged breach of it, or the making of this Agreement, including claims
of fraud in the inducement, shall be discussed between the disputing parties in
a good faith effort to arrive at a mutual settlement of any such controversy. If
such dispute cannot be resolved, such dispute shall be settled by binding
arbitration, except that Lifecore may elect to seek such temporary or
preliminary injunctive relief from an appropriate court pursuant to Section 2.6
as may be necessary to protect its interest prior to arbitration. Judgment upon
the award rendered by the arbitrator may be entered in any court having
jurisdiction thereof. The arbitrator shall be a retired state or federal judge
or an attorney who has practiced business or employment litigation for at least
10 years. If the parties cannot agree on an arbitrator within 20 days, either
party may request that the chief judge of the district court for Hennepin
County, Minnesota, select an arbitrator. If the chief judge does not select an
arbitrator within 30 days of such request, either party may request that the
American Arbitration Association (AAA) designate a panel of five proposed
arbitrators meeting the criteria set forth in this Section, and the parties
shall alternate striking members of the panel, with Executive having the first
strike, until an arbitrator is thereby selected. Arbitration will be conducted
pursuant to the provisions of this Agreement, and the applicable arbitration
rules of the AAA, unless such rules are inconsistent with the provisions of this
Agreement, but, unless an arbitrator is selected through the AAA, without
submission of the dispute to the AAA. Each party shall be permitted reasonable
discovery, including the production of relevant documents by the other party,
exchange of witness lists, and a limited number of depositions, including
depositions of any experts who will testify at the arbitration. The summary
judgment procedure applicable in Hennepin County, Minnesota, District Court
shall be available and apply to any arbitration conducted pursuant to this
Agreement. The arbitrator shall have the authority to award to the prevailing
party any remedy or relief that a court of the State of Minnesota could order or
grant, including costs and attorneys' fees. Unless otherwise agreed by the
parties, the place of any arbitration proceedings shall be Minneapolis,
Minnesota.
2.8 Severability. To the extent any provision of this Agreement shall be
determined to be invalid or unenforceable in any jurisdiction, such provision
shall be deemed to be deleted from this Agreement as to that jurisdiction only,
and the validity and enforceability of the remainder of such provision and of
this Agreement shall be unaffected. In furtherance of and not in limitation of
the foregoing, Executive expressly agrees that should the duration of,
geographical extent of, or business activities covered by, any provision of this
Agreement be in excess of that which is valid or enforceable under applicable
law in a given jurisdiction, then such provision, as to such jurisdiction only,
shall be construed to cover only that duration, extent or activities that may
validly or enforceably be covered. Executive acknowledges the uncertainty of the
law in this respect and expressly stipulates that this Agreement shall be
construed in a manner that renders its provisions valid and enforceable to the
maximum extent (not exceeding its express terms) possible under applicable law
in each applicable jurisdiction.
4
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date set forth in the first paragraph.
LIFECORE BIOMEDICAL, INC.
By /s/ David M. Noel
-----------------
Name: David M. Noel
Title: VP of Finance and CFO
EXECUTIVE
/s/ Kipling Thacker, Ph.D.
-----------------------------
Name: Kipling Thacker, Ph.D.
Title: VP of New Business Development
5