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EXHIBIT 99.F
NON-COMPETITION AGREEMENT
THIS AGREEMENT, made and entered into this the 1st day of March,
1997, by and between XXXXX X. XXXX, a citizen and resident of Forsyth County,
North Carolina (hereinafter "Hash"), and WSMP, INC., a North Carolina
corporation (hereinafter "WSMP");
W I T N E S S E T H:
WHEREAS, Hash is the owner of F & H Companies, Inc., Western Steer of
North Carolina, Inc., Northwest Food Systems, Inc., Davidson Food Systems, Inc.,
Mocksville Food Systems, Inc., and CFR Foods, Inc. (hereinafter, the "Hash
Companies") and
WHEREAS, the Hash Companies have entered into an Agreement of Purchase
and Sale with WSMP as of even date herewith (the "Agreement of Purchase and
Sale"), by which WSMP has acquired the assets used in the operation of 14 of the
Hash Companies' restaurants, which WSMP intends to continue operating
(hereinafter, the "Hash Companies Restaurants"; and
WHEREAS, Hash has been the major contributor to the success of the Hash
Companies Restaurants in developing, operating and supervising the Hash
Companies' restaurants; and
WHEREAS, Hash and WSMP agree that the preservation of the good will,
proprietary rights and going business value of the Hash Companies Restaurants
for the benefit of WSMP as their new owner will be facilitated by this
Agreement; and
WHEREAS, that the execution and delivery of this Agreement by Hash is a
condition to WSMP's acquisition of the Hash Companies Restaurants;
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NOW, THEREFORE, in consideration of the premises and the consideration
hereinafter stated to Hash, the parties agree as follows:
1. Restrictive Covenants.
For the fifteen year period commencing on the date hereof and ending on
March 1, 2012 ("Term"), Hash shall not, directly or indirectly, except as
otherwise permitted hereunder:
(a.) Own, operate, manage or otherwise have control or
interest in the operation of any restaurant or food service business
similar to the restaurants or food service businesses operated by WSMP
at the date of this Agreement, either as an officer, director,
proprietor, employee, partner, investor (other than as a passive
investor in less than ten percent (10%) of the outstanding stock of a
publicly traded corporation), consultant, advisor, agent, franchisee,
or otherwise in any states in which WSMP presently operates restaurants
or franchises;
(b.) Assist others in engaging in any of the activities
specified in the foregoing Subparagraph (a);
(c.) Induce employees of WSMP to engage in any of the
activities specified in the foregoing Subparagraph (a) or induce any
former Hash Companies employees to terminate their employment with
WSMP.
2. Exceptions.
The parties hereto expressly agree that the following activities of
Hash shall not be included in and shall be specifically excluded from the
prohibitions of this Agreement:
(a.) Any activities of Hash as an employee, director,
consultant, franchisee or agent of WSMP;
(b.) Any activities of Hash in any capacity in connection with
the ownership, operation, investment, or otherwise, in the restaurants
and restaurant franchisees in which Hash has
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such activities as of the date of this Agreement; and
(c.) Any activities of Hash in any state other than the states
described in Paragraph 1(a).
3. Consideration.
In consideration for the agreements of Hash hereunder, WSMP does hereby
issue and deliver to Hash a total of 98,750 shares of authorized but unissued
WSMP, Inc. common stock (the "WSMP Stock"), which the parties value for the
purpose of this agreement at $9.00 per share, or $888,750, irrespective of the
market price of WSMP Stock at this or any later time.
The WSMP stock will be unregistered, will bear a restrictive legend,
and will be restricted in Hash's hands. Hash acknowledges that sale of such
shares will only be made through the provisions of the Securities and Exchange
Commission's Rule 144. Hash acknowledges and warrants the following:
(a) He is an "accredited investor" within the meaning of Rule
501 under the Securities Act or has sufficient knowledge and experience
in investing in companies similar to WSMP so as to be able to evaluate
the risks and merits of his investment in WSMP and he is able
financially to bear the risks thereof;
(b) He is a resident of, and is domiciled in, the State of
North Carolina; the transactions contemplated by this Agreement have
been negotiated solely in the State of North Carolina; and, without
limiting the generality of the foregoing, the subject matter of this
agreement (i) originated within the State of North Carolina, (ii) was
directed to and received by Hash within the State of North Carolina,
and (iii) has been accepted by communications to WSMP made solely in
the State of North Carolina.
(c) Hash has had an opportunity to discuss the business,
management and financial affairs of WSMP with WSMP's management and has
received (or had made available to him) any financial and business
documents requested by him;
(d) The WSMP Stock being issued to Hash is being
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acquired for its own account, for investment, and not with a view to or
for sale in connection with any unregistered distribution thereof in
violation of the Securities Act or any state securities act;
(e) Hash understands that (i) the WSMP Stock must be held for
a period of two (2) years unless a subsequent disposition thereof is
registered under the Securities Act or is exempt from such
registration, (ii) the WSMP Stock will bear a legend to such effect and
(iii) WSMP will make or cause to be made a notation on its transfer
books to such effect;
(f) Hash does not have any contract, arrangement or
understanding with any broker, finder or similar agent with respect to
the WSMP Stock, or the transactions contemplated by this Agreement.
If any WSMP Stock becomes eligible for resale pursuant to Rule 144(k),
WSMP shall, upon the request of Hash, remove the legend from the certificate for
such WSMP Stock.
4. Breach.
Should Hash breach the terms of this Agreement, WSMP shall be entitled
to demand and receive back from Hash the WSMP Stock as an element of its
damages, provided, however, that should Hash's breach occur in year two through
year 15 of this Agreement, the amount of stock to be returned to WSMP shall be a
pro-rata amount as set forth in Paragraph 6 hereof.
Should the stock no longer be in possession of Hash at the time of the
breach, then WSMP may recover a like sum in cash, based on a valuation of $9.00
per share.
5. Death.
Upon the death of Hash during the term of this Agreement, his estate
shall refund to WSMP a pro-rata portion of the WSMP Stock, as determined under
Paragraph 6 hereof. Should the stock no longer be a possession of Hash at the
time of Hash's death, then WSMP may
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recover a like sum in cash based upon a valuation of $9.00 per share. In order
to fund this obligation, WSMP shall have the right to acquire a policy of
insurance at WSMP's cost upon Hash's life payable to WSMP in the face amount of
$888,750. This policy shall have a declining term, and shall reduce itself to
the amounts set forth in Paragraph 6 for each passing year of the term of this
Agreement.
6. Pro Rata Determinations.
For the purposes of Paragraphs 5 and 6 hereof, the parties agree that
should a breach or Hash's death occur any one of the following years of the term
of this Agreement, the pro-rata recovery of WSMP shall be as follows:
Year Shares of Stock Cash
---- --------------- ----
One 98,750 $888,750
Two 92,150 828,750
Three 85,550 768,750
Four 78,950 708,750
Five 72,350 648,750
Six 65,750 588,750
Seven 59,150 528,750
Eight 52,550 468,750
Nine 45,950 408,750
Ten 39,350 348,750
Eleven 32,750 288,750
Twelve 26,150 228,750
Thirteen 19,550 168,750
Fourteen 12,950 108,750
Fifteen 6,300 48,750
7. Change in Control.
a. Right to Register. Should there ever occur a "change in control"
of WSMP, then Hash may require WSMP to take all necessary steps promptly to
file a registration statement so as to permit a public offering of the WSMP
Stock by Hash, and to utilize its best efforts to have the registration
statement declared effective at the earliest
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practical date under the Securities Act of 1933 and all applicable state Blue
Sky Laws.
b. "Change in Control". As used herein, "change in control" shall
mean (i) any direct or indirect change in the ownership of WSMP by HERTH
Management, Inc., RSH Management, Inc., Xxxxx X. Xxxxxxxxxx, Xx., Xxxxxxx X.
Xxxxxx, Xxxxx X. Xxxxxxxxx, or their affiliates which reduces their collective
ownership below 40%; or, once their collective holdings are below 40%, then
again if their collective holdings are reduced to below 25%; or (ii) should
Xxxxx X. Xxxxxxxxxx, Xx. or Xxxxxxx X. Xxxxxx leave the active employment or
involvement with WSMP.
7. Judicial Amendments.
It is expressly understood and agreed that although Hash and WSMP
consider the restrictions contained in this Agreement to be reasonable for the
purpose of preserving for WSMP's benefit the good will, proprietary rights, and
going business value of the Company's businesses, if a final judicial
determination is made by a court of competent jurisdiction that the time or
territory or any other restriction contained in this Agreement is an
unreasonable or otherwise unenforceable restriction against Hash, the provisions
of this Agreement shall not be rendered void but shall be deemed amended to
apply as to such maximum time and territory and to such other extent as such
court may judicially determine or indicate to be reasonable.
8. WSMP's Remedies.
It is expressly understood and agreed that WSMP's remedy at law for a
breach or threatened breach of any of the provisions of Paragraph 1 of this
Agreement would be inadequate and, in recognition of that fact, in the event of
a breach or threatened breach by Hash, of the provisions of Paragraph 1 of this
Agreement, WSMP, in addition to its remedy at law, shall be entitled to obtain,
and Hash shall not oppose WSMP's request for, equitable
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relief in the form of specific performance, a temporary restraining order, a
temporary or permanent injunction, or any other equitable remedy which may then
be available.
9. Waiver.
The Waiver by WSMP of a breach of any provision of this Agreement by
Hash shall not operate or be construed as a waiver of any subsequent breach by
Hash.
10. Governing Law.
This Agreement shall be governed by and construed in accordance with
the laws of the State of North Carolina.
11. Provisions.
The provisions of this Agreement shall inure to the benefit of the
parties hereto, their heirs, representatives, successors and assigns.
12. Conditional Agreement.
Notwithstanding anything herein to the contrary, this Agreement and the
obligations hereunder it conditioned upon and shall be effective only upon
closing and consummation of the Agreement of Purchase and Sale in accordance
with its terms.
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IN WITNESS WHEREOF, the parties have hereunto executed this Agreement,
this the day and year first above written.
/s/ XXXXX X. XXXX
---------------------------(SEAL)
XXXXX X. XXXX
WSMP, INC.
By: /s/ Xxxxx X. Xxxxxxxxxx, Xx.
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President
ATTEST:
/s/ Xxxxxxx X. Xxxxxxxxxx
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Asst. Secretary
(corporate seal)
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