WITNESSETH:

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                                                                   EXHIBIT 10.40

NORTH CAROLINA
CATAWBA COUNTY

                     CANCELLATION AND ASSIGNMENT AGREEMENT

         This Agreement effective as of the 25th day of April, 2001, by and
between Xxxxx X. Xxxxx, a citizen residence of Catawba County, North Carolina
("Xxxxx") and HERTH Management, Inc., a North Carolina corporation ("HERTH"),
and PF Management, Inc., a North Carolina corporation ("PFM").

                                   WITNESSETH:

         WHEREAS, Xxxxx and XXXXX entered into a certain Incentive Agreement
effective June 30, 1996 (the "Incentive") and a certain Option Agreement dated
July 1, 1996 (the "Option"); and

         WHEREAS, in consideration of such transactions occurring effective
April 17, 2001, between HERTH and other parties, including PFM, in which Xxxxx
has a beneficial interest, and as an inducement to HERTH for consenting and
permitting such transactions, Xxxxx has agreed to cancel and relinquish all
interests and rights he may have with respect to the Option and the Incentive;
and

         WHEREAS, HERTH is a party to a certain Amended and Restated Management
Services Agreement ("Services Agreement") dated December 17, 1999 with Fresh
Foods, Inc. (now Pierre Foods, Inc.), and it is the intention of the parties
that such services will henceforth be provided by PFM, and as an inducement to
and in consideration of the transactions occurring April 17, 2001, and the
aforesaid cancellation and relinquishment by Xxxxx of his interest in the Option
and the Incentive, HERTH is in agreement to assign its rights and interests
under the Services Agreement and PFM is willing to accept and assume the
obligations thereunder.

         Now, therefore, in consideration of the mutual premises herein, and
other consideration, the receipt and legal sufficiency of which is hereby
acknowledged, the parties agree as follows:

         1.      Xxxxx and XXXXX do hereby cancel and terminate the Option and
the Incentive and neither party shall have any rights, obligation or liability
henceforth under Option and Incentive.

         2.      Subject to the approval of Pierre Foods, Inc., HERTH does
hereby assign and transfer to PFM all of HERTH's right, title and interest in
and to the Services Agreement, and PFM hereby assumes all obligations under the
Services Agreement, and agrees to perform all obligations thereunder from and
after the date hereof, and does further indemnify and hold harmless HERTH from
and against any and all liability from or pursuant to the Services Agreement
subsequent to the day hereof.


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         IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.


                                HERTH MANAGEMENT, INC.


                                By:
----------------------             -------------------------------------
Witness                            Xxxxx X. Xxxxxxxxxx, Xx.
                                   President


----------------------          ----------------------------------------(SEAL)
Witness                         Xxxxx X. Xxxxx


                                PF MANAGEMENT, INC.


                                By:
----------------------             -------------------------------------
Witness                            Xxxxx X. Xxxxx
                                   President