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EXHIBIT 10.20
CONSULTING AND NONCOMPETITION AGREEMENT
THIS CONSULTING AND NONCOMPETITION AGREEMENT (the "Agreement") is made
as of the 29th day of January, 1998 between WSMP, Inc., a North Carolina
corporation (the "Company"), and Charles F. Connor, Jr., a North Carolina
resident ("Consultant");
W I T N E S S E T H:
WHEREAS, the Company desires to engage Consultant and Consultant
desires to be engaged as a consultant upon the terms and conditions provided
herein; and
WHEREAS, as a condition precedent to the Company's obligation to
consummate the transactions (the "Closing") contemplated by that certain
Agreement and Plan of Merger dated as of November 14, 1997 (the "Merger
Agreement") among the Company, Sagebrush, Inc. ("Sagebrush"), WSMP Acquisition,
Inc., L. Dent Miller and Consultant, Consultant is required to execute and
deliver this Agreement;
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. The Company agrees to engage Consultant as a
consultant and Consultant hereby accepts such engagement upon the term and
conditions set forth in this Agreement. Consultant shall report to the Chief
Operating Officer of the Company (or, if none exists, then the Chief Executive
Officer of the Company) and shall perform such duties as the Chief Operating
Officer or the Chief Executive Officer, as the case may be (the "Superior
Officer"), may reasonably require.
2. Duties. Consultant shall, to the extent requested by the Superior
Officer, and at such times and places as the parties may mutually agree, (a)
consult with and advise the Company on management and operation of the Company's
restaurant franchising and restaurant operations business and (b) market and
promote the Company's restaurant franchising and restaurant operations business
(collectively, "Consulting Services").
3. Independent Contractor. The Company and Consultant hereby agree that
Consultant 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 employer/employee, master/servant, principal/agent,
partnership, joint venture or other similar kind of relationship. Consultant
agrees that he will not take any action on behalf of the Company 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 the
Company to any contract or other obligation with any Person (as defined below)
except upon the specific prior written approval of the Superior Officer. To the
extent permitted by law, the Company shall not be liable for withholding and
remitting to state, federal or local agencies any income tax withholding, FICA
tax withholding or similar amount from the consulting fee paid to Consultant or
for paying any other similar costs, fees, taxes or contributions associated with
the relationship between the Company and Consultant.
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Consultant shall not take any position on any tax return or in any litigation or
administrative hearing or proceeding or in any other context that is
inconsistent with this Section 3.
4. Term. This Agreement shall terminate two years from the date of the
Closing, unless it is terminated earlier in accordance with other provisions
hereof.
5. Compensation. Consultant shall be entitled to receive an annual
consulting fee of $175,000 during the term of this Agreement, payable in equal
bi-monthly installments.
6. Fringe Benefits. During the term of this Agreement, Connor shall be
entitled to participate in all such health or accident insurance plans, life
insurance plans, major medical plans and other similar plans and arrangements of
the Company as from time to time may be in effect for the benefit of the
Company's, officers and employees generally, consistent with Section 3 hereof.
The parties acknowledge that Consultant presently has group life coverage at the
level of $450,000 face amount, and that Company's present plan does not provide
for such level of coverage. The Company will use its reasonable efforts to
obtain additional term coverage on Consultant, without replacing its standard
plan, and subject to the Consultant's insurability.
Except as heretofore provided, Consultant shall not be entitled to
receive any fringe benefits while serving the Company during the term of this
Agreement; and his only compensation from the Company, whether in cash or in
kind, shall be the annual consulting fee provided for in Section 5 above.
Following the conclusion of the Term, Consultant may continue
at Consultant's own expense to participate in any such plan, as long as such
participation, in the Company's reasonable opinion, does not constitute a
violation of the terms of such plan, or Company's contract with any third-party
provider of such plan benefits or services.
7. Termination of this Agreement.
(a) The Company may, by written notice to Consultant, terminate
this Agreement at any time for Cause (as defined below), it
being understood that no termination of this Agreement shall
affect (1) Consultant's obligations under Sections 9 and 10 of
this Agreement, which shall remain in full force and effect,
or (2) the Company's obligation under Section 5 to pay
Consultant his annual consulting fee for the remainder of the
two-year term of this Agreement, except as provided in
subsection (iii) hereof. The term "Cause" shall mean:
(i) commission of a wrongful act by Consultant that has
had or will have a material adverse effect on the
business, operations or financial condition of the
Company;
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(ii) willful and material failure by Consultant to perform
any one or more of the duties assigned to him
pursuant to this Agreement;
(iii) engaging in any outside activity prohibited by
Section 8 hereof or failing to comply with any
provision of Section 9 or 10 hereof, it being
understood and agreed by the parties that such
activities by Consultant terminate the Company's
obligation to continue paying the Consultant under
Section 5;
(iv) conviction of a criminal offense by Consultant; or
(v) the taking of any act, or the omission to take any
act, the reasonably foreseeable result of which act
or omission is to adversely affect the operations,
goodwill, reputation or image of the Company.
(b) This Agreement shall terminate upon the death or the
Company-approved of Consultant. Neither Consultant nor his
estate shall be entitled to receive any severance pay in
either such event.
8. Outside Activities. During the term of this Agreement, Consultant
shall serve the Company faithfully and to the best of his ability and shall
devote such of his working time and energies to the furtherance of the Company's
business as the Company and the Consultant may agree; provided, however, that
Consultant may continue to operate and manage any restaurant in which
Consultant, but not Sagebrush, owns an equity interest disclosed on the form
attached hereto as Exhibit 8 and may expand and develop such restaurants and
concepts; and provided further that, while engaged hereunder, Consultant shall
not engage in any activity that is detrimental to the Company or that interferes
with the performance of his duties hereunder.
9. Covenant Not to Disclose Confidential Information. During the term
of this Agreement, Consultant will be placed in a position by the Company to
become acquainted with confidential and privileged information of the Company
and its affiliates and successors, including, but not limited to, customer
files, customer lists, special customer matters, sales methods and techniques,
merchandising concepts and plans, business plans, sources of supply and vendors,
special business relationships with vendors, agents and brokers, promotional
materials and information, financial matters, mergers, acquisitions, selective
personnel matters and confidential processes, designs, formulas, ideas, plans,
devices or materials, and other similar matters which are confidential (any and
all such information being referred to herein as "Confidential Information").
The use of Confidential Information against the Company would seriously damage
the Company's business. Accordingly, Consultant agrees that during the term of
this Agreement and at all times thereafter with respect to financial matters and
information, and during the Restrictive Period (as defined below) with respect
to all other Confidential Information:
(a) He shall not, directly or indirectly, use, divulge, publish or
otherwise reveal or allow to be revealed any aspect of the
Confidential Information to any Person except by the Company's
prior, express and written consent or as required by law;
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(b) He shall refrain from any action or conduct which might
reasonably or foreseeably be expected to compromise the
confidentiality or proprietary nature of the Confidential
Information; and
(c) He has no right to apply for or to obtain any patent,
copyright or other form of intellectual property protection
with regard to the Confidential Information.
The term "Person" shall mean any person, firm, partnership, trust, corporation
or other association (whether governmental or private). The disclosure by
Consultant of Confidential Information in the bona fide conduct of his duties
under Section 1 of this Agreement shall not constitute a breach of this
Agreement. In further consideration of the compensation paid to him by the
Company, Consultant agrees that he will promptly communicate, disclose and
deliver to the Company any and all inventions, discoveries, marketing concepts
and ideas, promotional ideas, trade names, trademarks and other improvements
relating to devices, methods, formulas, sales and distribution concepts or
processes of any nature whatsoever that are used in the business of the Company
and created or developed by Consultant while engaged by the Company. The Company
shall have the right, at its expense, to apply for U.S. and foreign patents and
trademarks on any inventions, discoveries, trade names, trademarks and other
improvements in the name of Consultant. Consultant, upon request, shall at once
execute any and all documents relating to the application for and assignment to
the Company of all such applications without further compensation for such
assignment.
10. Covenant Not to Compete.
(a) Covenant. Consultant hereby stipulates, covenants and agrees
that, during the Restrictive Period (as defined below), he
shall not, directly or indirectly, other than on behalf of the
Company, without the Company's prior, express and written
consent:
(i) Engage in Competition (as defined below) with the
Company 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 date of
this Agreement, an employee of the Company.
(b) Definitions. As used in this Section, the following terms
shall have the following meanings:
(i) "Business" shall mean the business conducted by the
Company at the date of this Agreement, including the
business of restaurant franchising, restaurant
operations and food processing; excluding, however,
the operation and management of any restaurant in
which Consultant, but not Sagebrush, owns an equity
interest disclosed on the form attached hereto as
Exhibit 8.
(ii) "Competition" shall mean:
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(1) Engaging in a business substantially similar
to the Business within the Territory;
(2) Assisting any Person (whether in a
financial, managerial, employment, advisory
or other material capacity) to engage in a
business substantially similar to the
Business within the Territory provided,
however, that nothing herein shall preclude
Consultant as a bona fide lessor from
leasing restaurant property to a tenant; or
(3) Owning any interest in or organizing a
corporation, partnership or other business
or organization which engages in a business
substantially similar to the Business within
the Territory; provided, however, that
nothing herein shall preclude Consultant
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.
(iii) "Restrictive Period" shall mean the term of this
Agreement.
(iv) "Territory" shall mean: the 25-mile radius from (A)
any restaurant owned or franchised directly or
indirectly by the Company, (B) any food processing
facility of the Company or (c) any other sites used
directly or indirectly by the Company, in any such
case at which Consultant assisted in the operation of
the Business; and the 25-mile radius from (X) any
restaurant owned or franchised directly or indirectly
by Sagebrush or (Y) any other situs at which
Sagebrush conducted business directly or indirectly
from the date of organization of Sagebrush through
the date of termination of this Agreement.
(c) Reasonable Exception. Should Consultant desire to invest or
operate a restaurant which would constitute engaging in
competition, Consultant may request the Company's consent to
such investment or operation. If the proposed restaurant is of
a type similar to a Sagebrush, Prime Sirloin, Western Steer,
or Bennetts' restaurant concept, or any concept that the
Company at the time is engaged in or has announced plans at
the time to engage in, the Company may withhold its consent
for any reason. If the proposed restaurant is not of one of
the aforenamed concepts, then such consent shall not be
unreasonably withheld. The parties agree that proximity to an
existing Company restaurant constitutes a reasonable basis for
withholding consent.
11. Enforcement. In the event of any breach of the provisions of this
Agreement, the Company, its successors and assigns, in addition to any other
remedies that they may have in law or in equity, shall be entitled to any and
all of the following remedies:
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(a) It is stipulated that a breach or anticipatory breach by
Consultant of Section 8, 9 or 10 of this Agreement will cause
irreparable damage to the Company and that, accordingly, the
Company shall be entitled to an injunction restraining
Consultant from attempting to violate, violating or continuing
a violation of Sections 8, 9 and 10 of this Agreement. The
existence of any claim or cause of action on the part of
Consultant against the Company, its successors or assigns,
whether arising from this Agreement or otherwise, shall in no
way constitute a defense to the enforcement of these
provisions.
(b) The Restrictive Period shall be extended by any time period
during which Consultant is in violation of any of the
provisions of this Agreement.
12. Acknowledgement of Adequate Consideration. The parties stipulate
and agree that the employment of Consultant by the Company under this Agreement
and the performance of the Company's obligations hereunder constitute sufficient
consideration to support enforcement of the covenants of this Agreement.
13. Acknowledgement of Reasonableness. Consultant 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 the Company's protection. In the event that any
provision relating to the Restrictive Period and/or the Territory 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 and/or area of restriction considered reasonable
and enforceable by the court shall thereafter be the applicable Restrictive
Period and/or Territory under this Agreement.
14. Surrender of Books and Records. Consultant agrees that all files,
documents, records, customer lists, vendor and supplier records, books,
products, calculations, drawings, descriptions, designs and other materials that
come into Consultant's use or possession during the term of this Agreement and
that are in any way related to the Company's business shall at all times remain
the property of the Company and that, upon the termination of this Agreement for
any reason, Consultant shall immediately surrender to the Company all such
materials.
15. Attorneys' Fees. Should it become necessary for the Company to
institute legal proceedings as a result of a breach of any terms or covenants
contained in this Agreement, the Company 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 Consultant to institute legal proceedings as a result of a breach
of any terms or covenants contained in this Agreement, Consultant 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.
16. 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 effect
the remaining portions of this Agreement, or any part thereof;
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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.
17. 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.
18. Entire Agreement. This Agreement sets forth the entire
understanding between the parties relating to the subject matter hereof and
supersedes all previous and contemporaneous understandings or agreements,
written and oral. This Agreement may be modified only by an agreement in
writing, signed by all parties, purporting to modify it.
19. 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.
20. 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:
If to the Company: WSMP, Inc.
1 WSMP Drive
Claremont, NC 28610
Attention: David R. Clark
If to Consultant: Charles F. Connor, Jr.
P.O. Box 730
Claremont, NC 28610
21. Successors, Heirs and Assigns. This Agreement shall inure to the
benefit of and be binding upon the parties hereto, their successors, heirs and
assigns.
22. Survival. The provisions of Sections 8, 9, 10, 11, 12 and 13 hereof
shall survive the termination of this Agreement for any reason and shall remain
in full force and effect.
23. 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 day and year first above written.
THE COMPANY:
WSMP, Inc.
By: /s/ JAMES C. RICHARDSON, JR.
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Name: James C. Richardson, Jr.
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Title: Chief Executive Officer
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CONSULTANT:
Charles F. Connor, Jr.
/s/ CHARLES F. CONNOR, JR. (SEAL)
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EXHIBIT 8
Untouchables Pizza
J & W Cafeteria
Flapjack's
Mel's Diner
Bethlehem Fish & Steak
Mom's
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