MERGER AGREEMENT
This AGREEMENT is made and entered into on October 17, 2002 as of November
1, 2002, (the "EFFECTIVE DATE") by and among Vita Food Products, Inc., a Nevada
corporation ("VFP"), Vita Holdings, Inc., a Delaware corporation ("VITA
HOLDINGS") (VFP and Vita Holdings collectively, "VITA"), Vita/Halifax
Acquisition Company, a Georgia corporation ("SUB"), and The Halifax Group, Inc.,
a Georgia corporation ("HALIFAX"), Xxxxxx X. Xxxx ("XXXX"), Oak Hill Family LLC
("OAK") (Oak and Xxxx collectively "XXXXXX") and Xxxxx X. Xxxx ("XXXXX"). VFP,
Vita Holdings, Sub, Halifax, Oak, Xxxx, Xxxxxx and Xxxxx are referred to
collectively herein as the Parties.
RECITALS
1. The Board of Directors of Vita, Sub and Halifax have been presented with the
potential merger (the "MERGER") of Halifax with Sub, with Halifax as the
surviving corporation in accordance with the Georgia Business Corporation Code
(the "GEORGIA LAW") upon the terms and subject to the conditions set forth
herein.
2. Xxxxxx is the beneficial record owner of all of the issued and outstanding
shares of stock of Halifax, $1.00 par value per share (the "HALIFAX COMMON
STOCK").
3. As inducement to the willingness of Vita and Sub to enter into this
Agreement, Xxxxxx has agreed to join with Halifax in this Agreement to support
the representations, warranties, covenants and agreements made by Halifax
herein.
4. As additional material inducement of Vita to enter into this Agreement,
Xxxxxx is willing to enter into that certain employment agreement with Sub, Vita
and its affiliates (the "EMPLOYMENT AGREEMENT") attached hereto as Exhibit A-1
and Xxxxxx is willing to enter into that certain non-competition,
non-solicitation and confidentiality agreement with Sub, Vita and its affiliates
(the "NON-COMPETITION AGREEMENT") attached hereto as Exhibit A-2. The Employment
Agreement and the Non-Competition Agreement are each incorporated herein by
reference and made a part hereof.
CLAUSES
Now, therefore, in consideration of the premises and the mutual
promises herein made, and in consideration of the representations, warranties,
and covenants herein contained, the Parties agree as follows.
1. DEFINITIONS.
"ACT" means the Securities Act of 1933, as amended.
"ADVERSE CONSEQUENCES" means all actions, suits, proceedings, hearings,
investigations, charges, complaints, claims, demands, injunctions, judgments,
orders, decrees, rulings, damages, dues, penalties, fines, costs, amounts paid
in settlement, Liabilities, obligations, Taxes, liens, losses, expenses, and
fees, including court costs and reasonable attorneys' fees and expenses.
"AFFILIATE" has the meaning set forth in Rule 12b-2 of the regulations
promulgated under the Securities Exchange Act.
"APPLICABLE XXXXXX ALLOCATION" has the meaning set forth in ss.2(c).
"APPLICABLE XXXXX ALLOCATION" has the meaning set forth in ss.2(c).
"BASIS" means any past or present fact, situation, circumstance, status,
condition, activity, practice, plan, occurrence, event, incident, action,
failure to act, or transaction that forms or could form the basis for any
specified consequence.
"XXXX" has the meaning set forth in the preface above.
"XXXX DEBT" has the meaning set forth in ss.2(e)(i) below.
"CHANGE OF CONTROL" means (i) the merger or consolidation of VFP in a
transaction pursuant to which all of the outstanding shares of VFP Stock are
converted into or exchanged for securities or property of another person, (ii)
the acquisition by a person or entity or group of related persons or entities in
a single transaction or series of related transactions of more than fifty
percent (50%) of the issued and outstanding shares of VFP Stock, (iii) the sale
of all or substantially all of the assets of VFP in a single transaction or
series of related transactions, (iv) the merger or consolidation of Halifax or
Virginia Honey with or into an entity other than VFP or a more than fifty
percent (50%) owned subsidiary of VFP in a transaction in which Halifax,
Virginia Honey or VFP is not the surviving corporation, (v) the acquisition by a
person or entity or group of related persons or entities other than a more than
fifty percent (50%) owned subsidiary of VFP in a single transaction or series of
related transactions of more than fifty percent (50%) of the outstanding voting
securities of Halifax or Virginia Honey, or (vi) the sale of all or
substantially all of the assets of Halifax or Virginia Honey to any person or
entity or group of related persons or entities, other than to VFP or a more than
fifty percent (50%) owned subsidiary of VFP, in a single transaction or series
of related transactions.
"CLOSING" has the meaning set forth in ss.2(h) below.
"CLOSING DATE" has the meaning set forth in ss.2(h) below.
"CLOSING PAYMENT" has the meaning set forth in ss.2(e)(i) below.
"COBRA" means the requirements of Part 6 of Subtitle B of Title I of ERISA
and Code ss.4980B.
"CODE" means the Internal Revenue Code of 1986, as amended.
"CONFIDENTIAL INFORMATION" means any information concerning the businesses
and affairs of Halifax that is not already generally available to the public.
"CONTROLLED GROUP" has the meaning set forth in Code ss.1563.
"DISCLOSURE SCHEDULE" has the meaning set forth in ss.4 below.
"EARNOUT" has the meaning set forth in ss.2(e) below.
"EBITDA" means earnings before interest, taxes, depreciation and
amortization, all as determined in accordance with GAAP.
"EFFECTIVE DATE" has the meaning set forth in the preface above.
"EMPLOYEE BENEFIT PLAN" means any (a) nonqualified deferred compensation or
retirement plan or arrangement, (b) qualified defined contribution retirement
plan or arrangement which is an Employee Pension Benefit Plan, (c) qualified
defined benefit retirement plan or arrangement which is an Employee Pension
Benefit Plan (including any Multiemployer Plan), or (d) Employee Welfare Benefit
Plan or material fringe benefit or other retirement, bonus, or incentive plan or
program.
"EMPLOYEE PENSION BENEFIT PLAN" has the meaning set forth in ERISA ss.3(2).
"EMPLOYEE WELFARE BENEFIT PLAN" has the meaning set forth in ERISA ss.3(1).
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"EMPLOYMENT AGREEMENT" has the meaning set forth in the preface above.
"ENVIRONMENTAL, HEALTH, AND SAFETY REQUIREMENTS" shall mean all federal,
state, local and foreign statutes, regulations, ordinances and other provisions
having the force or effect of law, all judicial and administrative orders and
determinations, all contractual obligations and all common law concerning food
safety preservation, storage and distribution, public health and safety, worker
health and safety, and pollution or protection of the environment, including
without limitation all those relating to the presence, use, production,
generation, handling, transportation, treatment, storage, disposal,
distribution, labeling, testing, processing, discharge, release, threatened
release, control, or cleanup of any hazardous materials, substances or wastes,
chemical substances or mixtures, pesticides, pollutants, contaminants, toxic
chemicals, petroleum products or byproducts, asbestos, polychlorinated
biphenyls, noise or radiation, each as amended and as now or hereafter in
effect.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"ERISA AFFILIATE" means each entity which is treated as a single employer
with Xxxxxx for purposes of Code ss.414.
"ESCROW AGENT" has the meaning set forth in ss.2(g) below.
"FIDUCIARY" has the meaning set forth in ERISA ss.3(21).
"FINANCIAL STATEMENTS" has the meaning set forth in ss.4(g) below.
"FIRST EARNOUT" has the meaning set forth in ss.2(c)(ii) below.
"GAAP" means United States of America, generally accepted accounting
principles as in effect from time to time.
"GEORGIA LAW" has the meaning set forth in the preface above.
"HALIFAX" has the meaning set forth in the preface above.
"HALIFAX DEBT" means $2,636,443, being the indebtedness of Halifax as of
June 30, 2002.
"HALIFAX COMMON STOCK" has the meaning set forth in the preface above.
"HALIFAX SHARES" means the issued and outstanding shares of Common Stock of
Halifax.
"INDEMNIFIED PARTY" has the meaning set forth in ss.8(d) below.
"INDEMNIFYING PARTY" has the meaning set forth in ss.8(d) below.
"INTELLECTUAL PROPERTY" means (a) all inventions (whether patentable or
unpatentable and whether or not reduced to practice), all improvements thereto,
and all patents, patent applications, and patent disclosures, together with all
reissuances, continuations, continuations-in-part, revisions, extensions, and
reexaminations thereof, (b) all trademarks, service marks, trade dress, logos,
trade names, and corporate names, together with all translations, adaptations,
derivations, and combinations thereof and including all goodwill associated
therewith, and all applications, registrations, and renewals in connection
therewith, (c) all copyrightable works, all copyrights, and all applications,
registrations, and renewals in connection therewith, (d) all mask works and all
applications, registrations, and renewals in connection therewith, (e) all trade
secrets and confidential business information (including ideas, research and
development, know-how, formulas, compositions, manufacturing and production
processes and techniques, technical data, designs, drawings, specifications,
customer and supplier lists, pricing and cost information, and business and
marketing plans and proposals), (f)
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all computer software (including data and related documentation), (g) all
proprietary information systems and management procedures, (h) all other
proprietary rights, and (i) all copies and tangible embodiments thereof (in
whatever form or medium).
"INTERIM FINANCIAL STATEMENTS" has the meaning set forth in ss.4(g) below.
"INVENTORY ADJUSTMENT" has the meaning set forth in ss.4(g)(2) below.
"KNOWLEDGE" means actual knowledge after reasonable investigation. A Person
will be deemed to have "Knowledge" of a particular fact or other matter if any
individual who is serving, or has at any time served, as a director, officer,
partner, or executor of such Person (or in any similar capacity) has, or at any
time had, Knowledge of such fact of other matter.
"LEASES" means the amended leases for Halifax's existing manufacturing
facilities, attached hereto as Exhibits A-3 and A-4. The Leases are incorporated
herein by reference and made a part hereof.
"LIABILITY" means any liability (whether known or unknown, whether asserted
or unasserted, whether absolute or contingent, whether accrued or unaccrued,
whether liquidated or unliquidated, and whether due or to become due), including
any liability for Taxes.
"MERGER" has the meaning set forth in the preface above.
"MERGER CONSIDERATION" has the meaning set forth in ss.2(d) and 2(e) below.
"MULTIEMPLOYER PLAN" has the meaning set forth in ERISA ss.3(37).
"NON-COMPETITION AGREEMENT" has the meaning set forth in the preface above.
"OAK" has the meaning set forth in the preface above.
"ORDINARY COURSE OF BUSINESS" means an action taken by a Person in the
ordinary course of business consistent with past custom and practice (including
with respect to quantity and frequency), an action taken in the ordinary course
of the normal day-to-day operations of such Person and such action is not
required to be authorized by the board of directors of such Person.
"PARTY" has the meaning set forth in the preface above.
"PBGC" means the Pension Benefit Guaranty Corporation.
"PERIOD 1" has the meaning set forth in ss.2(e)(ii) below.
"PERIOD 2" has the meaning set forth in ss.2(e)(iii) below.
"PERSON" means an individual, a partnership, a corporation, an association,
a joint stock company, a trust, a joint venture, an unincorporated organization,
or a governmental entity (or any department, agency, or political subdivision
thereof).
"PROHIBITED TRANSACTION" has the meaning set forth in ERISA ss.406 and Code
ss.4975.
"REPORTABLE EVENT" has the meaning set forth in ERISA ss.4043.
"XXXXXX" has the meaning set forth in the preface above.
"SALAD CO." means the combined operations of Halifax and VHC.
"SECOND EARNOUT" has the meaning set forth in ss.2(e)(iii) below.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SECURITIES EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.
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"SECURITY INTEREST" means any mortgage, pledge, lien, encumbrance, charge,
or other security interest, other than (a) mechanic's, materialmen's, and
similar liens, (b) liens for Taxes not yet due and payable, (c) purchase money
liens and liens securing rental payments under capital lease arrangements, and
(d) other liens arising in the Ordinary Course of Business and not incurred in
connection with the borrowing of money.
"SUB" has the meaning set forth in the preface above.
"TAX" means any federal, state, local, or foreign income, gross receipts,
license, payroll, employment, excise, severance, stamp, occupation, premium,
windfall profits, environmental (including taxes under Code ss.59A), customs
duties, capital stock, franchise, profits, withholding, social security (or
similar), unemployment, disability, real property, personal property, sales,
use, transfer, registration, value added, alternative or add-on minimum,
estimated, or other tax of any kind whatsoever, including any interest, penalty,
or addition thereto, whether disputed or not.
"TAX RETURN" means any return, declaration, report, claim for refund, or
information return or statement relating to Taxes, including any schedule or
attachment thereto, and including any amendment thereof.
"XXXXX" has the meaning set forth in Section 2(c) below.
"THIRD PARTY CLAIM" has the meaning set forth in ss.8(d) below.
"UNAUDITED FINANCIAL STATEMENTS" has the meaning set forth in ss.4(g)(1),
"UNAUDITED INTERIM BALANCE SHEET" means the balance sheet contained within
the Interim Statements.
"VFP" has the meaning set forth in the preface above.
"VFP STOCK" has the meaning set forth in Section 2(f) below.
"VHC" means Virginia Honey Company, Inc., a Virginia corporation.
"VITA" has the meaning set forth in the preface above.
"VITA HOLDINGS" has the meaning set forth in the preface above.
2. MERGER; CONSIDERATION; PLEDGE.
(a) Merger. At Closing, and upon the terms and subject to the satisfaction
or waiver of the conditions of this Agreement, Sub shall be merged with and into
Halifax. The Parties hereto will file a Certificate of Merger or other
appropriate document with the Secretary of State of the State of Georgia
pursuant to the appropriate section of the Georgia Law, and the Parties shall
take all such other and further actions as may be required by the law to make
the Merger effective. Following the Merger, the separate corporate existence of
Sub shall cease. Halifax shall continue as the surviving corporation and shall
succeed to assume all the rights and obligations of Sub, but Halifax shall amend
its articles of incorporation and bylaws as determined in VFP's sole discretion,
subject to the terms and conditions of this Agreement.
(b) Effects of the Merger. The Merger shall be dated as of the Effective
Date and have the effects set forth under Georgia Law. As of the Effective Date,
all the properties, rights, privileges, powers and franchises of Halifax and Sub
shall vest in Halifax, and all debts, liabilities and duties of Sub shall become
the debts, liabilities and duties of Halifax. Additionally, the Certificate of
Incorporation and By-Laws of Sub in effect immediately prior to the Effective
Date shall remain in effect at the Effective Date until amended in accordance
with applicable law.
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(c) Salad Co. Integration. The parties desire and agree to fully integrate
the operations of Halifax with the business of VHC. As a result of such
integration, the financial results will be combined beginning as of the
Effective Date. Xxxxxx and Xxxxx X. Xxxx, President of VHC, have agreed to
allocate the EBITDA of Salad Co. to Xxxxxx (the "APPLICABLE XXXXXX ALLOCATION")
and to Xxxxx (the "APPLICABLE XXXXX ALLOCATION") for Periods 1 and 2 (as defined
below) to compute the First Earnout and the Second Earnout in the following
proportions:
(i) If, for the applicable Earnout period (Period 1 or 2, as
appropriate), the net collected sales of: (1) existing
products of Halifax, as set forth in the attached Exhibit E;
(2) new products developed from licenses obtained by Xxxx
and/or existing Halifax employees; and (3) new products
developed by Halifax (collectively "POST-HALIFAX SALES"), are
less than $12,000,000 (per calendar year on an annualized
basis, such Post-Halifax Sales amount adjusted annually for
inflation); the Applicable Xxxxx Allocation shall be eighty
percent (80%) and the Applicable Xxxxxx Allocation shall be
twenty percent (20%).
(ii) If, for the applicable Earnout period, the Post-Halifax Sales
are at least $12,000,000, but less than $15,000,000 (per
calendar year on an annualized basis, such Post-Halifax Sales
amount adjusted annually for inflation); the Applicable Xxxxx
Allocation shall be seventy five percent (75%) and the
Applicable Xxxxxx Allocation shall be twenty five percent
(25%).
(iii) If, for the applicable Earnout period, the Post-Halifax Sales
are at least $15,000,000, but less than $18,000,000 (per
calendar year on an annualized basis, such Post-Halifax Sales
amount adjusted annually for inflation); the Applicable Xxxxx
Allocation shall be seventy percent (70%) and the Applicable
Xxxxxx Allocation shall be thirty percent (30%).
(iv) If, for the applicable Earnout Period, the Post-Halifax Sales
are at least $18,000,000, but less than $22,600,000 (per
calendar year on an annualized basis, such Post-Halifax Sales
amount adjusted annually for inflation); the Applicable Xxxxx
Allocation shall be sixty five percent (65%) the Applicable
Xxxxx Allocation shall be thirty five percent (35%).
(v) If, for the applicable Earnout Period, the Post-Halifax Sales
are at least $22,600,000 (per calendar year on an annualized
basis, such Post-Halifax Sales amount adjusted annually for
inflation); the Applicable Xxxxx Allocation shall be sixty
percent (60%) and the Applicable Xxxxxx Allocation shall be
forty percent (40%) to Xxxxxx.
As an example, assume the EBITDA of Salad Co. is in: 2003, $4 million (during
which 2003 calendar year the Post-Halifax Sales are $18,000,000 readjusted to
$17,000,000 because of the inflation from the base CPI date of November 1, 2002
until the mid year date of July 1, 2003); 2004, $5 million (during which 2004
calendar year the Post-Halifax Sales are $19,000,000 readjusted to $18,000,000
because of the inflation from the base CPI date of November 1, 2002 until the
mid year date of July 1, 2004); and in 2005 is $6 million (during which 2005
calendar year the Post-Halifax Sales are $25,000,000 readjusted to $23,000,000
because of the inflation from the base CPI date of November 1, 2002 until the
mid year date of July 1, 2005). In such case, the allocation of Post-Halifax
Sales for purposes of calculating the First Earnout shall be made as follows:
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(i) For the calendar year 2003, the allocation of Salad Co.'s $4
million EBITDA is seventy percent (70%) Applicable Xxxxx
Allocation and thirty percent (30%) Applicable Xxxxxx
Allocation;
(ii) For the calendar year 2004, the allocation of Salad Co.'s $5
million EBITDA is sixty-five percent (65%) Applicable Xxxxx
Allocation and thirty-five percent (35%) Applicable Xxxxxx
Allocation; and
(iii) For the calendar year 2005, the allocation of Salad Co.'s $6
million EBITDA is sixty percent (60%) Applicable Xxxxx
Allocation and forty percent (40%) Application Xxxxxx
Allocation.
(d) Conversion of Halifax and Sub Common Stock.
(i) At Closing, by virtue of the Merger, and without any action on
the part of Halifax, Sub or the holder of any of the Halifax
Common Stock, all shares of Halifax Common Stock issued and
outstanding immediately prior to Closing shall by virtue of
the Merger and without any action on the part of the holder
thereof, be cancelled and extinguished and all shares of
Halifax Common Stock be converted into the right to receive in
total for all shares of such Halifax Common Stock the
consideration set forth in subparagraph (e) below
(collectively, "MERGER CONSIDERATION").
(ii) At Closing, by virtue of the Merger, and without any action on
the part of Halifax, Sub or the holder of any of the Common
Stock of Sub, all shares of the Common Stock of Sub issued and
outstanding immediately prior to Closing shall by virtue of
the Merger and without any action on the part of the holder
thereof, be cancelled and extinguished and all shares of
Common Stock of Sub shall be converted into an equal number of
shares of Halifax Common Stock.
(e) The Merger Consideration shall be payable as follows:
(i) At the Closing, Vita shall assign to Xxxxxx all rights, title
and interest in the legal case of Xxxxxxx Mountain, Inc. vs.
Halifax Group, Inc. (the "CASE"). Xxxxxx agrees to indemnify,
defend and hold harmless Vita and Halifax from all liability,
costs of expenses, if any, related to the Case other than
legal costs paid prior to September 19, 2002. Other than the
amounts due from Xxxxxx pursuant to the indemnity in
this ss.2(e)(i), all other amounts due from the indemnity
in ss.8 hereof shall be recouped by Vita solely from amounts
payable to Xxxxxx, except as set forth in ss.2.5 of the
Employment Agreement. Such assignment (the "CLOSING PAYMENT")
shall be deemed to equal full payment of twenty-five percent
(25%) of the Merger Consideration. Additionally, at Closing,
$450,000 of all amounts due Xxxxxx, being a total of $795,781
("XXXX DEBT") shall be repaid. Any accrued interest on the
Xxxx Debt shall be extinguished. No interest or charges of any
kind shall accrue hereafter with respect to the Xxxx Debt.
(ii) For the period January 1, 2003 thru December 31, 2005 ("PERIOD
1"), Vita shall pay Xxxxxx: (A) the remainder of the Xxxx
Debt, being $345,781.00, constituting payment in full; and (B)
the Applicable Xxxxxx Allocation of forty-five percent (45%)
of (five (5) times the average annual EBITDA of Salad Co.,
less: (1) the Halifax Debt); less (2) $345,781.00
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(the "FIRST EARNOUT"). Vita shall pay Xxxxxx the First
Earnout, or the undisputed portion of the First Earnout on or
before April 1, 2006; plus
(iii) For the period January 1, 2006 thru December 31, 2007 ("PERIOD
2"), Vita shall pay Xxxxxx the Applicable Xxxxxx Allocation of
thirty percent (30%) of (five (5) times the average annual
EBITDA of Salad Co., less the Halifax Debt) (the "SECOND
EARNOUT"). Vita shall pay Xxxxxx the Second Earnout, or the
undisputed portion of the Second Earnout on or before April 1,
2008.
The calculation of the First Earnout and Second Earnout (collectively,
"EARNOUT") shall be prepared with respect to Salad Co. utilizing the audited
statements, based upon GAAP consistently applied, prepared by Vita's independent
certified public accounting firm. Xxxxxx shall have the right of access to all
records relating to the audited statements, and shall have the right to submit
said records to a certified public accountant of his choice. In the event of a
dispute as to the valuation of either the First Earnout or the Second Earnout,
Vita shall pay in accordance with the above provisions any undisputed amounts,
and Vita and Xxxxxx shall submit the disputed claim, if the same remains
unresolved for thirty (30) days, to a mutually acceptable, nationally-recognized
independent accounting firm. The determination of the accounting firm so
selected shall be set forth in writing and shall be conclusive and binding upon
the parties. Xxxxxx and Vita shall equally share responsibility for fees and
expenses of such an accounting firm for the resolution of such a disputed claim.
(f) Form of Payment of Merger Consideration. Each Earnout payment to Xxxxxx
hereunder shall be payable fifty-five percent (55%) in cash by wire transfer and
forty-five percent (45%) in Common Stock of VFP ("VFP STOCK"); provided at the
time of the payment of the First Earnout, VFP can make a binding written
election to make all the Earnout payments in cash. The value of each share of
VFP Stock shall be determined by taking the average closing price of the VFP
Stock reported by the American Stock Exchange on each of the trading days in the
month of March preceding the date of each Earnout payment.
(g) Pledge of Halifax Shares. As security for Vita's performance under this
Agreement, Vita grants Xxxxxx a security interest in all Halifax Shares. In the
event of default by Vita in payment of the First Earnout or Second Earnout, or
in the event of a material breach by Vita hereunder, which breach or default is
not cured within thirty (30) days of the written notice thereof (or within a
reasonable period thereafter if Vita is not able to perfect such cure within 30
days), Xxxxxx shall have all rights with respect to such stock collateral as are
available under the Uniform Commercial Code of the State of Georgia. The Halifax
Shares shall be held in escrow by Banc One ("ESCROW AGENT") endorsed in blank,
until full payment of the First Earnout and Second Earnout. Upon a joint order
of the Parties, Banc One will transfer the Halifax Shares as instructed. After
agreed final payment of the Earnout, the Halifax Shares shall be returned to
Vita without any action or direction of the Parties. The Escrow Agent
acknowledges and the parties agree that physical possession of all certificates
held in escrow will be with Banc One.
(h) The Closing. The closing of the Merger contemplated by this Agreement
(the "CLOSING") shall take place at the offices of Halifax on or about November
5, 2002, commencing at 10:00 a.m. local time or such other date as Vita and
Xxxxxx xxx mutually determine (the "CLOSING DATE").
(i) Deliveries at the Closing. At the Closing, (i) Xxxxxx and Halifax will
deliver to Vita the various certificates, instruments, and documents referred to
in ss.7(a) below, (ii) Vita will deliver to Xxxxxx the various certificates,
instruments, and documents referred to in ss.7(b) below, (iii) Xxxxxx and
Halifax will deliver to Vita stock certificates representing all of the Halifax
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Common Stock, endorsed in blank or accompanied by duly executed assignment
documents, and (iv) Vita will deliver to Xxxxxx the Merger Consideration
specified in ss.2(c) above.
(j) VFP Stock Rights. Xxxxxx shall have the right to include all or any
portion of the VFP Stock issued pursuant to this Agreement as part of any
registration of VFP Stock filed by VFP pursuant to the Act on the same terms and
proportionate in size to Xxxxxxx Xxxxx and Xxxxx Xxxxxxx'x VFP Stock. In
addition, Xxxxxx shall have the right to one "demand" registration of the VFP
Stock issued pursuant to this Agreement. All of these rights will be set forth
in a registration agreement in the form attached hereto as Exhibit A-5.
(k) Change of Control. In the event of a Change of Control, Vita shall
require the acquiring party to expressly assume all of Vita's obligations
hereunder. Vita shall not transfer, sell or assign the assets or stock of VHC or
of Halifax, without a concurrent transfer of the assets or stock of the other
and an assumption by the assuming entity of Vita's obligations hereunder.
(l) Subordination of Halifax Obligations to Xxxxxx. Xxxxxx hereby expressly
subordinates that portion of the Xxxx Debt other than the $450,000 to be paid at
Closing (the "SUBORDINATED INDEBTEDNESS") to all indebtedness and payments of
any type or nature which Halifax now or subsequently may owe to any and all
debts, liabilities and payment obligations of Halifax to Bank One, N.A. or any
successor financial institution or commercial lender ("BANK"), whether direct or
indirect, absolute or contingent, now or subsequently existing, due or to become
due, known or unknown to Xxxxxx, and however evidenced or arising (collectively,
the "SENIOR INDEBTEDNESS"). All security interests, liens and encumbrances which
Xxxxxx now has or subsequently may have in any Halifax's assets are subordinated
to all security interests, liens and encumbrances which Bank now has or
subsequently may have thereon. Except as set forth below, Xxxxxx covenants and
agrees that until the Senior Indebtedness is indefeasibly performed or paid in
xxxx, Xxxxxx will not seek, accept or retain any payment from Halifax or any
other individual or entity on account of the Subordinated Indebtedness. Instead,
any such payments (which are subject to subordination as set forth herein) which
Xxxxxx receives on account of the Subordinated Indebtedness shall be collected
and received by Xxxxxx in trust solely for Bank's benefit. If requested by the
Bank, Xxxxxx shall pay over to Bank all such payments which Xxxxxx collects,
within twenty-four (24) hours of collecting the same. Xxxxxx xxx receive and
retain the payments of Xxxx Debt contemplated by ss.2(e)(ii) without
accountability or further liability to Bank, so long as no default exists under
any loan or any loan document executed between Halifax and Bank; provided that
immediately upon the occurrence of any default, and without any notice or demand
of any kind, all subordination provisions set forth in this ss.2(l) shall become
fully operative. Notwithstanding anything contained herein to the contrary, if
no such default exists at the time such payment is made, Xxxxxx shall have no
further liability to Bank with respect to such payment. The parties agree that
Bank is a third party beneficiary of this ss.2(l).
3. REPRESENTATIONS AND WARRANTIES CONCERNING THE TRANSACTION.
(a) Representations and Warranties of Xxxxxx. Xxxxxx represents and
warrants to Vita that the statements contained in this ss.3(a) are correct and
complete as of the date of this Agreement and will be correct and complete as of
the Closing Date (as though made then and as though the Closing Date were
substituted for the date of this Agreement throughout this ss.3(a)), except as
set forth in Annex I attached hereto.
(i) Authorization of Transaction. Xxxxxx has full power and
authority (including, with respect to Oak, full limited
liability company power and authority) to execute and deliver
this Agreement and to perform its obligations hereunder. The
execution, delivery and performance of this
9
Agreement has been authorized by the Manager and the members
of Oak and no other limited liability company proceedings are
necessary to authorize this Agreement and the transactions
contemplated hereby. This Agreement has been duly executed and
delivered by Xxxxxx and constitutes the valid and legally
binding obligation of Xxxxxx, enforceable in accordance with
its terms and conditions. Xxxxxx does not need to give any
notice to, make any filing with, or obtain any authorization,
consent, or approval of any government or governmental agency
in order to consummate the transactions contemplated by this
Agreement.
(ii) Noncontravention. Neither the execution and the delivery of
this Agreement, nor the consummation of the transactions
contemplated hereby, will (A) violate any constitution,
statute, regulation, rule, injunction, judgment, order,
decree, ruling, charge, or other restriction of any
government, governmental agency, or court to which Xxxxxx is
subject or, (B) conflict with, result in a breach of,
constitute a default under, result in the acceleration of,
create in any party the right to accelerate, terminate,
modify, or cancel, or require any notice under any agreement,
contract, lease, license, instrument, or other arrangement to
which Xxxxxx is a party or by which he or it is bound or to
which any of his or its assets are subject.
(iii) Brokers' Fees. Xxxxxx has no Liability or obligation to pay
any fees or commissions to any broker, finder, or agent with
respect to the transactions contemplated by this Agreement for
which Vita could become liable or obligated.
(iv) Halifax Common Stock. At Closing, Xxxxxx will hold of record
and own beneficially all of the Halifax Common Stock,
representing 500 shares free and clear of any restrictions on
transfer (other than any restrictions under the Securities Act
and state securities laws), Taxes, Security Interests,
options, warrants, purchase rights, contracts, commitments,
equities, claims, and demands. Xxxxxx is not a party to any
option, warrant, purchase right, or other contract or
commitment that could require Xxxxxx to sell, transfer, or
otherwise dispose of any capital stock of Halifax (other than
this Agreement). Xxxxxx is not a party to any voting trust,
proxy, or other agreement or understanding with respect to the
voting of any capital stock of Halifax.
(v) Organization of Oak. Oak is a limited liability company duly
organized, validly existing, and in good standing under the
laws of the jurisdiction of its organization. Oak is qualified
to do business as a foreign organization and is in good
standing in all jurisdictions in which the conduct of its
business requires such qualification, except where the failure
to be so qualified would not have an adverse effect upon its
business or assets.
(vi) No Knowledge of Breach. To Robert's Knowledge, the
representations and warranties of Xxxxxx contained herein or
in the ancillary documents to this Agreement (i) do not
contain any untrue statement of material fact and (ii) do not
omit any material fact necessary in order to make the
statement and information contained herein not misleading.
(b) Representations and Warranties of Vita and Sub. Vita and Sub represent
and warrant to Xxxxxx that the statements contained in this ss.3(b) are correct
and complete as of the
10
date of this Agreement and will be correct and complete as of the Closing Date
(as though made then and as though the Closing Date were substituted for the
date of this Agreement throughout this ss.3(b)), except as set forth in Annex II
attached hereto.
(i) Organization of Vita and Sub. Each of Vita and Sub is a
corporation duly organized, validly existing, and in good
standing under the laws of the jurisdiction of its
incorporation. Each of Vita and Sub is qualified to do
business as a foreign corporation and is in good standing in
all jurisdictions in which the conduct of its business
requires such qualification, except where the failure to be so
qualified would not have an adverse effect upon its business
or assets.
(ii) Authorization of Transaction. Each of Vita and Sub has full
power and authority (including full corporate power and
authority) to execute and deliver this Agreement and to
perform its obligations hereunder. The execution, delivery and
performance of this Agreement has been authorized by the Board
of Directors of Vita and no other corporate proceedings are
necessary to authorize this Agreement and the transactions
contemplated hereby. This Agreement has been duly executed and
delivered by Vita and Sub and constitutes the valid and
legally binding obligation of each of Vita and Sub,
enforceable in accordance with its terms and conditions.
Neither Vita nor Sub needs to give any notice to, make any
filing with, or obtain any authorization, consent, or approval
of any government or governmental agency in order to
consummate the transactions contemplated by this Agreement.
(iii) Noncontravention. Neither the execution and the delivery of
this Agreement, nor the consummation of the transactions
contemplated hereby, will (A) violate any constitution,
statute, regulation, rule, injunction, judgment, order,
decree, ruling, charge, or other restriction of any
government, governmental agency, or court to which Vita and
Sub are subject or any provision of its charter or bylaws or
(B) conflict with, result in a breach of, constitute a default
under, result in the acceleration of, create in any party the
right to accelerate, terminate, modify, or cancel, or require
any notice under any agreement, contract, lease, license,
instrument, or other arrangement to which Vita and Sub are a
party or by which it is bound or to which any of its assets is
subject.
(iv) Brokers' Fees. Vita and Sub have no Liability or obligation to
pay any fees or commissions to any broker, finder, or agent
with respect to the transactions contemplated by this
Agreement for which Xxxxxx could become liable or obligated.
(v) Issuance of Vita Stock. Any shares of VFP Stock shall be
issued as duly authorized, validly issued, fully paid and
non-assessable.
(vi) No Knowledge of Breach. To Vita's Knowledge, the
representations and warranties of Vita contained herein or in
the ancillary documents to this Agreement and the Public
Information of Vita (i) do not contain any untrue statement of
material fact and (ii) do not omit any material fact necessary
in order to make the statement and information contained
herein not misleading. The term "Public Information" includes
all Forms 10-K and 10-Q filed by Vita from and after January
1, 2002.
11
4. REPRESENTATIONS AND WARRANTIES CONCERNING HALIFAX.
Except as otherwise indicated in this ss.4 and, as applicable, the
representations and warranties made by Xxxxxx in this ss.4 are made to Robert's
Knowledge. Xxxxxx represents and warrants to Vita that the statements contained
in this ss.4 are correct and complete as of the date of this Agreement and will
be correct and complete as of the Closing Date (as though made then and as
though the Closing Date were substituted for the date of this Agreement
throughout this ss.4), except as set forth in the disclosure schedule delivered
by Xxxxxx to Vita on the date hereof and initialed by the Parties (the
"DISCLOSURE SCHEDULE"), provided no Disclosure Schedule delivered at any time
shall modify any representations made with respect to subparagraphs 4(a)-(k) or
any representations or financial facts or information which is a part of or
directly related to the Interim Balance Sheet. Nothing in the Disclosure
Schedule shall be deemed adequate to disclose an exception to a representation
or warranty made herein, unless the Disclosure Schedule identifies the exception
with reasonable particularity and describes the relevant facts in reasonable
detail. Without limiting the generality of the foregoing, the mere listing (or
inclusion of a copy) of a document or other item shall not be deemed adequate to
disclose an exception to a representation or warranty made herein (unless the
representation or warranty has to do with the existence of the document or other
item itself). Disclosure Schedules delivered after the execution of this
Agreement shall not reduce or modify the representations and warranties herein.
The Disclosure Schedule will be arranged in paragraphs corresponding to the
lettered and numbered paragraphs contained in this ss.4:
(a) Organization, Qualification, and Corporate Power. Halifax is a
corporation duly organized, validly existing, and in good standing under the
laws of the State of Georgia. Halifax is duly authorized to conduct business and
is in good standing under the laws of each jurisdiction where such qualification
is required. Halifax has full corporate power and authority and all material
licenses, permits, and authorizations necessary to carry on the businesses in
which it is engaged and in which it presently proposes to engage and to own and
use the properties owned and used by it. ss.4(a) of the Disclosure Schedule
lists the directors and officers of Halifax. Xxxxxx will deliver to Vita correct
and complete copies of the charter and bylaws, the minute books and the stock
record books of Halifax (as amended to date). Halifax is not in default under or
in violation of any provision of its charter or bylaws.
(b) Capitalization. The Knowledge qualifier set forth in the first sentence
of ss.4 does not apply to this ss.4(b). The entire authorized capital stock of
Halifax consists of 10,000 shares of Halifax Common Stock, of which 000 Xxxxxxx
Xxxxxx Stock share(s) is/are issued and outstanding. All of the issued and
outstanding Halifax Common Stock (i) have been duly authorized, are validly
issued, fully paid, and nonassessable, and are held of record by Xxxxxx; (ii)
were issued in compliance with all applicable state and federal securities laws;
and (iii) were not issued in violation of any preemptive rights or rights of
first refusal. There are no outstanding or authorized options, warrants,
purchase rights, subscription rights, conversion rights, exchange rights, or
other contracts or commitments that could require Halifax to issue, sell, or
otherwise cause to become outstanding any of its capital stock. There are no
outstanding or authorized stock appreciation, phantom stock, profit
participation, or similar rights with respect to Halifax. There are no voting
trusts, proxies, or other agreements or understandings with respect to the
voting of the capital stock of Halifax.
(c) Noncontravention. Except as set forth in Schedule 4(c) to be attached
hereto, neither the execution and the delivery of this Agreement, nor the
consummation of the transactions contemplated hereby, will (i) violate any
constitution, statute, regulation, rule, injunction, judgment, order, decree,
ruling, charge, or other restriction of any government, governmental agency, or
court to which Halifax is subject or any provision of the charter or bylaws of
Halifax or (ii) conflict with, result in a breach of, constitute a default
under, result in the
12
acceleration of, create in any party the right to accelerate, terminate, modify,
or cancel, or require any notice under any agreement, contract, lease, license,
instrument, or other arrangement to which Halifax is a party or by which it is
bound or to which any of its assets is subject (or result in the imposition of
any Security Interest upon any of its assets). Halifax does not need to give any
notice to, make any filing with, or obtain any authorization, consent, or
approval of any government or governmental agency in order for the Parties to
consummate the transactions contemplated by this Agreement.
(d) Brokers' Fees. The Knowledge qualifier set forth in the first sentence
of ss.4 does not apply to this ss.4(d). Halifax has no Liability or obligation
to pay any fees or commissions to any broker, finder, or agent with respect to
the transactions contemplated by this Agreement.
(e) Title to Assets. The Knowledge qualifier set forth in the first
sentence of ss.4 does not apply to this ss.4(e). Halifax has good and marketable
title to, or a valid leasehold interest in, the properties and assets used by
them, located on their premises, or shown on the Unaudited Interim Balance Sheet
(as defined herein) or acquired after the date thereof, free and clear of all
Security Interests, except for properties and assets disposed of in the Ordinary
Course of Business since the date of the Unaudited Interim Balance Sheet, and
except as noted in ss.4(e) of the Disclosure Schedule.
(f) Subsidiaries. Halifax does not own stock or have any equity investment
or other interest in, does not have the right to acquire any such interest, and
does not control, directly or indirectly, any corporation, association,
partnership, joint venture or other entity and has not had such an ownership or
control relationship with any such entity.
(g)(1) Financial Statements.
(i) To be attached hereto as Exhibit C-1A are the following
financial statements (collectively, the "FINANCIAL
STATEMENTS"): audited consolidating balance sheets and
statements of income, changes in stockholders' equity, and
cash flow as of and for the fiscal years ended December 31,
2000 and December 31, 2001 for Halifax. The Financial
Statements (including the notes thereto) will and have been
prepared, generally in accordance with GAAP (with such
exceptions as normally made in first-time audits) applied on a
consistent basis throughout the periods covered thereby; and
(ii) Attached hereto as Exhibit C-1B: (1) unaudited financial
statements for the fiscal years ended December 31, 2000 and
December 31, 2001 (VFP acknowledges receipt of that draft of
the December 2001 statements that have certain corrections to
such December 31, 2001 Financial Statements) ("UNAUDITED
FINANCIAL STATEMENTS"); and (2) consolidated reviewed balance
sheets and statements of income, as of and for the 6 months
ended June 30, 2002 (the "INTERIM FINANCIAL STATEMENTS ") for
Halifax. The Unaudited and Interim Financial Statements
present fairly the financial condition of Halifax as of such
dates and the results of operations of Halifax for such
periods, are correct and complete, and are consistent with the
books and records of Halifax (which books and records are
correct and complete); provided, however, that: (1) the
Interim Financial Statements are subject to normal year-end
adjustments (which will not be material individually or in the
aggregate); and (2) the Interim Financial Statements will be
subject to a reduction for inventory shrinkage in an amount
equal to approximately ($600,000) and a reduction for "prepaid
slotting dies plates" in an amount equal to
13
$133,713.46 (subparagraph (1) and (2) are collectively
referred to as the "INVENTORY ADJUSTMENT").
(g)(2) Halifax's balance sheet on October 31, 2002, which shall be prepared
in accordance with GAAP, shall reflect the assets and liabilities reported on
the Interim Financial Statements, subject only to the Inventory Adjustment and
normal changes that may occur in the Ordinary Course of Business and shall
report a net book value of Halifax on October 31, 2002 equal to or greater than
the net book value on June 30, 2002 (being $358,439.93), less a reduction of not
to exceed the total of: (i) $100,000; plus (ii) the Inventory Adjustment. The
$175,000 deposit for the Case is being transferred to Xxxxxx at Closing pursuant
to this Agreement.
(h) Events Subsequent to June 30, 2002. Since June 30 2002, there has not
been any material adverse change in the business, financial condition,
operations, results of operations, or future prospects of Halifax. Without
limiting the generality of the foregoing, except as set forth in ss.4(h) of the
Disclosure Schedule, since that date:
(i) Halifax has not sold, leased, transferred, or assigned any of
its assets, tangible or intangible, other than for a fair
consideration in the Ordinary Course of Business;
(ii) Halifax has not entered into any agreement, contract, lease,
or license (or series of related agreements, contracts,
leases, and licenses) either involving more than $100,000 or
outside the Ordinary Course of Business;
(iii) no party (including Halifax) has accelerated, terminated,
modified, or cancelled any agreement, contract, lease, or
license (or series of related agreements, contracts, leases,
and licenses) involving more than $25,000 to which Halifax is
a party or by which any of them is bound;
(iv) Halifax has not imposed any Security Interest upon any of its
assets, tangible or intangible;
(v) Halifax has not made any capital expenditure (or series of
related capital expenditures) either involving more than
$100,000 or outside the Ordinary Course of Business;
(vi) Halifax has not made any capital investment in, any loan to,
or any acquisition of the securities or assets of, any other
Person (or series of related capital investments, loans, and
acquisitions) either involving more than $50,000 or outside
the Ordinary Course of Business;
(vii) Halifax has not issued any note, bond, or other debt security
or created, incurred, assumed, or guaranteed any indebtedness
for borrowed money or capitalized lease obligation either
involving more than $50,000 singly or $100,000 in the
aggregate;
(viii) Halifax has not delayed or postponed the payment of accounts
payable and other Liabilities outside the Ordinary Course of
Business;
(ix) Halifax has not cancelled, compromised, waived, or released
any right or claim (or series of related rights and claims)
either involving more than $25,000 or outside the Ordinary
Course of Business;
(x) Halifax has not granted any license or sublicense of any
rights under or with respect to any Intellectual Property;
14
(xi) there has been no change made or authorized in the charter or
bylaws of Halifax;
(xii) Halifax has not issued, sold, or otherwise disposed of any of
its capital stock, or granted any options, warrants, or other
rights to purchase or obtain (including upon conversion,
exchange, or exercise) any of its capital stock;
(xiii) Halifax has not declared, set aside, or paid any dividend or
made any distribution with respect to its capital stock
(whether in cash or in kind) or redeemed, purchased, or
otherwise acquired any of its capital stock;
(xiv) Halifax has not experienced any damage, destruction, or loss
(whether or not covered by insurance) to its property;
(xv) Halifax has not made any loan to, or entered into any other
transaction with, any of its directors, officers, and
employees outside the Ordinary Course of Business; except with
respect to the Leases;
(xvi) Halifax has not entered into any employment contract or
collective bargaining agreement, written or oral, or modified
the terms of any existing such contract or agreement;
(xvii) Halifax has not granted any increase in the base compensation
or paid any bonus compensation to any of its employees outside
the Ordinary Course of Business or to any of its owners,
directors or officers;
(xviii) Halifax has not adopted, amended, modified, or terminated any
bonus, profit-sharing, incentive, severance, or other plan,
contract, or commitment for the benefit of any of its
directors, officers, and employees (or taken any such action
with respect to any other Employee Benefit Plan);
(xix) Halifax has not made any other material change in employment
terms for any of its directors, officers, and employees
outside the Ordinary Course of Business;
(xx) Halifax has not made or pledged to make any charitable or
other capital contribution outside the Ordinary Course of
Business;
(xxi) there has not been any other material occurrence, event,
incident, action, failure to act, or transaction outside the
Ordinary Course of Business involving Halifax; and
(xxii) Halifax has not committed to any of the foregoing.
(i) Undisclosed Liabilities. Halifax has no Liability (and there is no
Basis for any present or future action, suit, proceeding, hearing,
investigation, charge, complaint, claim, or demand against any of them giving
rise to any Liability), except for (i) Liabilities set forth on the balance
sheet of the Interim Financial Statements (rather than in any notes thereto);
(ii) Liabilities which have arisen after June 30, 2002 in the Ordinary Course of
Business, including any loans made by VFP (none of which results from, arises
out of, relates to, is in the nature of, or was caused by any breach of
contract, breach of warranty, tort, infringement, or violation of law; or arose
out of any action, suit, claim, governmental investigation or arbitration
proceeding); (iii) and Liabilities reflected herein or in the Disclosure
Schedule. ss.4(i) of the Disclosure Schedule contains a complete and accurate
description (including name of the lender, amount
15
outstanding and any related Security Interests) of all indebtedness for borrowed
money of Halifax, whether owed to a bank or any other Person.
(j) Legal Compliance. Halifax and its respective predecessors and
Affiliates have complied with all material respects in accordance with
applicable laws (including rules, regulations, codes, plans, injunctions,
judgments, orders, decrees, rulings, and charges thereunder) of federal, state,
local, and foreign governments (and all agencies thereof), and no action, suit,
proceeding, hearing, investigation, charge, complaint, claim, demand, or notice
has been filed or commenced against any of them alleging any failure so to
comply. No party has made payments in connection with the operation of Halifax
to any Person or taken similar actions to obtain or retain business other than
customary and permissible business gifts and entertainment.
(k) Tax Matters. The Knowledge qualifier set forth in the first sentence
of ss.4 does not apply to this ss.4(k).
(i) Halifax has filed all Tax Returns that it was required to
file. All such Tax Returns were correct and complete in all
material respects. All Taxes owed by Halifax (whether or not
shown on any Tax Return) have been paid. Halifax currently is
not the beneficiary of any extension of time within which to
file any Tax Return. No claim has ever been made by an
authority in a jurisdiction where Halifax does not file Tax
Returns that it is or may be subject to taxation by that
jurisdiction. There are no Security Interests on any of the
assets of Halifax that arose in connection with any failure
(or alleged failure) to pay any Tax.
(ii) Halifax has withheld and paid all Taxes required to have been
withheld and paid in connection with amounts paid or owing to
any employee, independent contractor, creditor, stockholder,
or other third party.
(iii) To the Knowledge of Xxxxxx, there is no dispute or claim
concerning any Tax Liability of Halifax claimed or raised by
any authority.
(iv) Halifax has not waived any statute of limitations in respect
of Taxes or agreed to any extension of time with respect to a
Tax assessment or deficiency.
(v) The unpaid Taxes of Halifax (A) did not, as of June 30, 2002,
exceed: (1) the reserve for Tax Liability; (rather than any
reserve for deferred Taxes established to reflect timing
differences between book and Tax income) set forth on the face
of the Interim Balance Sheet (rather than in any notes
thereto); or (2) the amount of federal income tax loss
carryforward which may be utilized to offset Tax Liability and
(B) do not exceed that reserve as adjusted for the passage of
time through the Closing Date in accordance with the past
custom and practice of Halifax in filing their Tax Returns.
(l) Real Property. The Knowledge qualifier set forth in the first sentence
of ss.4 does not apply to this ss.4(l).
(i) ss.4(l)(i) of the Disclosure Schedule lists and describes
briefly all real property leased or subleased to Halifax.
Xxxxxx shall deliver to Vita correct and complete copies of
the leases and subleases listed in ss.4(l)(i) of the
Disclosure Schedule (as to be amended prior to Closing
pursuant
16
to the letter agreement dated September 1, 2002). With respect
to each lease and sublease listed in ss.4(l)(i) of the
Disclosure Schedule:
(A) the lease or sublease is legal, valid, binding,
enforceable, and in full force and effect;
(B) the lease or sublease will continue to be legal, valid,
binding, enforceable, and in full force and effect on
identical terms following the consummation of the
transactions contemplated hereby;
(C) no party to the lease or sublease is in breach or
default, and no event has occurred which, with notice or
lapse of time, would constitute a breach or default or
permit termination, modification, or acceleration
thereunder;
(D) no party to the lease or sublease has repudiated any
provision thereof;
(E) there are no disputes, oral agreements, or forbearance
programs in effect as to the lease or sublease;
(F) with respect to each sublease, the representations and
warranties set forth in subsections (A) through (E) above
are true and correct with respect to the underlying
lease;
(G) Halifax has not assigned, transferred, conveyed,
mortgaged, deeded in trust, or encumbered any interest in
the leasehold or subleasehold except as disclosed on
Schedule 4(l)(i);
(H) all facilities leased or subleased thereunder have
received all material approvals of governmental
authorities (including licenses and permits) required in
connection with the operation thereof and have been
operated and maintained in all material respects in
accordance with applicable laws, rules, and regulations;
(I) all facilities leased or subleased thereunder are
supplied with utilities and other services necessary for
the operation of said facilities; and
(J) to Robert's knowledge, the owner of the facility, leased
or subleased, has good and marketable title to the parcel
of real property, easement, covenant, or other
restriction, except for installments of special easements
not yet delinquent and recorded easements, covenants, and
other restrictions all of which do not materially impair
the current use, occupancy, or value, or the
marketability of title, of the property subject thereto,
except for existing deed of trust obligations.
(m) Intellectual Property. The knowledge qualifier set forth in the first
sentence of ss.4 does not apply to this ss.4(m).
(i) Halifax owns or has the right to use pursuant to license,
sublicense, agreement, permission or otherwise all
Intellectual Property necessary for the operation of the
businesses of Halifax as presently conducted and as presently
proposed to be conducted. Each item of Intellectual Property
owned or used by Halifax immediately prior to the Closing
hereunder will
17
be owned or available for use by Halifax on identical terms
and conditions immediately subsequent to the Closing
hereunder. Halifax has taken all reasonably necessary action
to maintain and protect Halifax's interest in each item of
Intellectual Property that it owns or uses.
(ii) To the Knowledge of Xxxxxx, Halifax has not interfered with,
infringed upon, misappropriated, or otherwise come into
conflict with any Intellectual Property rights of third
parties, and Xxxxxx has not in the last five (5) years
received any charge, complaint, claim, demand, or notice
alleging any such interference, infringement,
misappropriation, or violation (including any claim that
Halifax must license or refrain from using any Intellectual
Property rights of any third party). To the Knowledge of
Halifax, in the last five (5) years no third party has
interfered with, infringed upon, misappropriated, or otherwise
come into conflict with any Intellectual Property rights of
Halifax.
(iii) ss.4(m)(iii) of the Disclosure Schedule identifies each patent
or registration which has been issued to Halifax with respect
to any of its Intellectual Property, identifies each pending
patent application or application for registration which
Halifax has made with respect to any of its Intellectual
Property, and identifies each license, agreement, or other
permission which Halifax has expressly granted to any third
party with respect to any of its Intellectual Property
(together with any exceptions). ss.4(m)(iii) of the Disclosure
Schedule also identifies each trade name or unregistered
trademark presently used by Halifax in connection with any of
its businesses.
(iv) ss.4(m)(iv) of the Disclosure Schedule identifies each item of
Intellectual Property that any third party owns and that
Halifax uses pursuant to license, sublicense, agreement, or
permission.
(v) To the knowledge of Xxxxxx, Halifax will not interfere with,
infringe upon, misappropriate, or otherwise come into conflict
with, any Intellectual Property rights of third parties as a
result of the continued operation of its businesses as
presently conducted.
(n) Tangible Assets. Halifax owns or leases all buildings, machinery,
equipment, and other tangible assets necessary for the conduct of its businesses
as presently conducted and as presently proposed to be conducted. Each such
tangible asset has been maintained in accordance with normal industry practice,
is in good operating condition and repair (subject to normal wear and tear), and
is suitable for the purposes for which it presently is used and presently is
proposed to be used.
(o) Inventory. The Knowledge qualifier set forth in the first sentence of
ss.4 does not apply to this ss.4(o). The inventory of Halifax consists of raw
materials and supplies, manufactured and purchased items, goods in process, and
finished goods, all of which is merchantable and fit for the purpose for which
it was procured or manufactured, are current and consist of quantities not in
excess of a 90-day supply thereof (except for packaging and containers which
consist of quantities not in excess of a 180-day supply and for the quantity of
inventory of Vidalia Onions, flavorings and spices). None of said inventory is
below standard quality, obsolete, damaged, or defective, subject only to the
reserve for Inventory Adjustment as set forth in the Financial Statements and
the most recent balance sheet which was prepared in September 2002 by Halifax's
independent public accountants (rather than in any notes thereto)
18
as adjusted for the passage of time through the Closing Date in accordance with
the past custom and practice of Halifax.
(p) Contracts. ss.4(p) of the Disclosure Schedule lists the following
contracts and other agreements to which Halifax is a party:
(i) any agreement (or group of related agreements) for the lease of
personal property to or from any Person providing for lease
payments in excess of $25,000 per annum;
(ii) any agreement (or group of related agreements) for the purchase
or sale of raw materials, commodities, supplies, products, or
other personal property, or for the furnishing or receipt of
services, the performance of which will extend over a period of
more than one year, result in a material loss to Halifax, or
involve consideration in excess of $50,000;
(iii) any agreement concerning a partnership or joint venture;
(iv) any agreement (or group of related agreements) under which it
has created, incurred, assumed, or guaranteed any indebtedness
for borrowed money, or any capitalized lease obligation, in
excess of $25,000 or under which it has imposed a Security
Interest on any of its assets, tangible or intangible;
(v) any agreement concerning confidentiality or noncompetition;
(vi) any agreement with Xxxxxx and its Affiliates (other than
Halifax), all of which are at fair market arm's length prices,
terms and conditions;
(vii) any profit sharing, stock option, stock purchase, stock
appreciation, deferred compensation, severance, or other plan
or arrangement for the benefit of its current or former
directors, officers, and employees;
(viii) any collective bargaining agreement;
(ix) any agreement for the employment of any individual on a
full-time, part-time, consulting, or other basis providing
annual compensation in excess of $50,000 or providing severance
benefits;
(x) any agreement under which it has advanced or loaned any amount
to any of its employees outside the Ordinary Course of Business
or to any of its directors or officers;
(xi) any agreement under which the consequences of a default or
termination could have a material adverse effect on the
business, financial condition, operations, results of
operations, or future prospects of Halifax;
(xii) any other agreement (or group of related agreements) the
performance of which involves consideration in excess of
$25,000; or
(xiii) any agreement or contract containing a provision to indemnify
any party or assume any Liability.
With respect to each such agreement: (A) the agreement is legal, valid,
binding, enforceable, and in full force and effect; (B) except as set forth in
ss.4(p) of the Disclosure Schedule, the agreement will continue to be legal,
valid, binding, enforceable, and in full force and effect on identical terms
following the consummation of the transactions contemplated hereby; (C) no party
is in breach or default, and no event has occurred which with notice or lapse of
time would constitute a breach or default, or permit termination, modification,
or
19
acceleration, under the agreement; (D) no party has repudiated any provision of
the agreement; and (E) except as set forth in ss.4(p) of the Disclosure Schedule
and the Leases attached hereto as Exhibits A-3 and A-4, the agreement was
entered into at arms-length, and at consideration not greater than the
fair-market value or price.
(q) Notes and Accounts Receivable. All notes and accounts receivable of
Halifax are reflected properly on their books and records, are valid receivables
subject to no setoffs or counterclaims, are current and collectible, and will be
collected in accordance with their terms at their recorded amounts, subject only
to the reserve for bad debts set forth on the face of the Most Recent Balance
Sheet (rather than in any notes thereto) as adjusted for the passage of time
through the Closing Date in accordance with the past custom and practice of
Halifax.
(r) Powers of Attorney. There are no outstanding powers of attorney
executed on behalf of Halifax.
(s) Insurance. With respect to each insurance policy of Halifax: (A) the
policy is legal, valid, binding, enforceable, and in full force and effect; (B)
the policy will continue to be legal, valid, binding, enforceable, and in full
force and effect on identical terms following the consummation of the
transactions contemplated hereby; (C) neither Halifax nor any other party to the
policy is in breach or default (including with respect to the payment of
premiums or the giving of notices), and no event has occurred which, with notice
or the lapse of time, would constitute such a breach or default, or permit
termination, modification, or acceleration, under the policy; and (D) no party
to the policy has repudiated any provision thereof. Halifax has been covered
during the past 3 years by insurance in scope and amount customary and
reasonable for the businesses in which it has engaged during the aforementioned
period.
(t) Litigation. The Knowledge qualifier set forth in the first sentence of
ss.4 does not apply to this ss.4(t). ss.4(t) of the Disclosure Schedule sets
forth each instance in which Halifax (i) is subject to any outstanding
injunction, judgment, order, decree, ruling, or charge or (ii) is a party or,
is, to Robert's Knowledge, threatened to be made a party to any action, suit,
proceeding, hearing, or investigation of, in, or before any court or
quasi-judicial or administrative agency of any federal, state, local, or foreign
jurisdiction or before any arbitrator. The reserve for such items described in
this ss.4(t) of the Disclosure Schedule is in an amount sufficient to fully
satisfy all of these items, including all costs incurred in connection therewith
(e.g., attorneys' fees, etc.); provided, however, no payment has or shall be
made after September 19 by Halifax for any fees or expenses related to the Case.
None of the actions, suits, proceedings, hearings, and investigations set forth
in ss.4(t) of the Disclosure Schedule could result in any material adverse
change in the business, financial condition, operations, results of operations,
or future prospects of Halifax. None of Xxxxxx and the directors and officers
(and employees with responsibility for litigation matters) of Halifax has any
reason to believe that any such action, suit, proceeding, hearing, or
investigation may be brought or threatened against Halifax.
(u) Product Warranty. Each product manufactured, sold, leased, or delivered
by Halifax has been in conformity with all applicable contractual commitments
and in material conformity with all express and implied warranties. Halifax has
no Liability (and there is no Basis for any present or future action, suit,
proceeding, hearing, investigation, charge, complaint, claim, or demand against
any of them giving rise to any Liability) for replacement or repair thereof or
other damages in connection therewith, subject only to the reserve for product
warranty claims set forth on the face of the Most Recent Balance Sheet (rather
than in any notes thereto) as adjusted for the passage of time through the
Closing Date in accordance with the past custom and practice of Halifax. No
product manufactured, sold, leased, or delivered by Halifax: (a) is subject to
any guaranty, warranty, or other indemnity beyond the applicable standard terms
and conditions of sale or lease; or (b) fails to conform and meet all applicable
20
requirements of the Food and Drug Administration and all other applicable state
and federal statutes, rules and regulations. ss.4(u) of the Disclosure Schedule
includes copies of the standard terms and conditions of sale or lease for
Halifax (containing applicable guaranty, warranty, and indemnity provisions).
(v) Product Liability. Halifax has no Liability (and there is no Basis for
any present or future action, suit, proceeding, hearing, investigation, charge,
complaint, claim, or demand against any of them giving rise to any Liability)
arising out of any injury to individuals or property as a result of the
ownership, possession, or use of any product manufactured, sold, leased, or
delivered by Halifax.
(w) Employees. No executive, key employee, or group of employees has any
plans to terminate employment with Halifax. Halifax is not a party to or bound
by any collective bargaining agreement, nor has Halifax experienced any strikes,
grievances, claims of unfair labor practices, or other collective bargaining
disputes. Halifax has not committed any unfair labor practice. None of Xxxxxx
and the directors and officers (and employees with responsibility for employment
matters) of Halifax has any Knowledge of any organizational effort presently
being made or threatened by or on behalf of any labor union with respect to
employees of Halifax.
(x) Employee Benefits.
(i) ss.4(x) of the Disclosure Schedule lists each Employee Benefit
Plan that Halifax maintains or to which Halifax contributes or
has any obligation to contribute.
(A) each such Employee Benefit Plan (and each related trust,
insurance contract, or fund) complies in form and in
operation in all material respects with the applicable
requirements of ERISA, the Code, and other applicable laws.
(B) Except as set forth in ss.4(x) of the Disclosure Schedule,
all required reports and descriptions (including Form 5500
Annual Reports, summary annual reports, PBGC-1's, and
summary plan descriptions) have been timely filed and
distributed appropriately with respect to each such Employee
Benefit Plan. The requirements of COBRA have been met with
respect to each such Employee Benefit Plan which is a "group
health plan" within the meaning of Code ss.5000(b)(1).
(C) All contributions (including all employer contributions and
employee salary reduction contributions) which are due have
been paid to each such Employee Benefit Plan which is an
Employee Pension Benefit Plan and all contributions for any
period ending on or before the Closing Date which are not
yet due have been paid to each such Employee Pension Benefit
Plan or accrued in accordance with the past custom and
practice of Halifax. All premiums or other payments for all
periods ending on or before the Closing Date which are due
have been paid with respect to each such Employee Benefit
Plan which is an Employee Welfare Benefit Plan.
(D) Each such Employee Benefit Plan which is an Employee Pension
Benefit Plan meets the requirements of a "qualified plan"
under Code ss.401(a), has received a favorable determination
letter from
21
the Internal Revenue Service that it is a "qualified plan,"
and Xxxxxx is not aware of any facts or circumstances that
could result in the revocation of such determination letter.
Each such Employee Benefit Plan currently complies in form
with the requirements of Code ss.401(a), other than changes
required by statutes, regulations and rulings for which
amendments are not yet required.
(E) The market value of assets under each such Employee Benefit
Plan which is an Employee Pension Benefit Plan (other than
any Multiemployer Plan) equals or exceeds the present value
of all vested and nonvested benefit liabilities thereunder
determined in accordance with actuarial assumptions set
forth by the terms of the Employee Pension Benefit Plan
terminating on the date for determination.
(F) Xxxxxx shall deliver to Vita correct and complete copies of
the plan documents and summary plan descriptions, the most
recent determination letter received from the Internal
Revenue Service, the most recent Form 5500 Annual Report,
and all related trust agreements, insurance contracts, and
other funding agreements which implement each such Employee
Benefit Plan.
(ii) With respect to each Employee Benefit Plan that Halifax and any
ERISA Affiliate maintains or ever has maintained or to which any
of them contributes, ever has contributed, or ever has been
required to contribute:
(A) No such Employee Benefit Plan which is an Employee Pension
Benefit Plan (other than any Multiemployer Plan) is subject
to Title IV or ERISA.
(B) To the knowledge of Xxxxxx, there have been no Prohibited
Transactions with respect to any such Employee Benefit Plan.
To the knowledge of Xxxxxx, no fiduciary has any Liability
for breach of fiduciary duty or any other failure to act or
comply in connection with the administration or investment
of the assets of any such Employee Benefit Plan. No action,
suit, proceeding, hearing, or investigation with respect to
the administration or the investment of the assets of any
such Employee Benefit Plan (other than routine claims for
benefits) is pending, threatened, nor is there any Basis for
any such action, suit, proceeding, hearing, or
investigation.
(iii) Halifax and the other members of the Controlled Group that
includes Halifax do not contribute to, never have contributed to
and never have been required to contribute to any Multiemployer
Plan or have any Liability (including withdrawal liability as
defined in ERISA ss.4201) under any Multiemployer Plan.
(iv) Halifax does not maintain and never has maintained or
contributed, and never has been required to contribute to any
Employee Welfare Benefit Plan providing medical, health, or life
insurance or other welfare-type benefits for current or future
retired or terminated employees, their spouses, or their
dependents (other than in accordance with COBRA).
22
(y) Guaranties. The Knowledge qualifier set forth in the first sentence of
ss.4 does not apply to this ss.4(y). Halifax is not a guarantor or otherwise is
liable for any Liability or obligation (including indebtedness) of any other
Person, other than the Bank of North Georgia ("BNG"), which Xxxxxx warrants will
be released upon payment of the loans from BNG to Halifax.
(z) Environmental, Health, and Safety Matters.
(i) Halifax and its respective predecessors and Affiliates have
materially complied and are in material compliance with all
Environmental, Health, and Safety Requirements.
(ii) Without limiting the generality of the foregoing, Halifax and
its respective Affiliates have obtained and have materially
complied with, and is in material compliance with, all permits,
licenses and other authorizations that are required pursuant to
Environmental, Health, and Safety Requirements for the
occupation of its facilities and the operation of its business;
a list of all such permits, licenses and other authorizations is
set forth on the attached ss.4(z) of the Disclosure Schedule.
(iii) Neither Halifax nor its respective predecessors or Affiliates
has received any written or oral notice, report or other
information regarding any actual or alleged violation of
Environmental, Health, and Safety Requirements, or any
liabilities or potential liabilities (whether accrued, absolute,
contingent, unliquidated or otherwise), including any
investigatory, remedial or corrective obligations, relating to
any of them or their facilities arising under Environmental,
Health, and Safety Requirements.
(iv) None of the following exists at any property or facility owned
or operated by Halifax: (1) underground storage tanks, (2)
friable asbestos-containing material in any form or condition,
(3) materials or equipment containing polychlorinated biphenyls,
or (4) landfills, surface impoundments, or disposal areas (other
than trash containers and other waste disposal containers).
(v) Halifax or its respective predecessors or Affiliates has not
treated, stored, disposed of, arranged for or permitted the
disposal of, transported, handled, or released any substance,
including without limitation any hazardous substance, or owned
or operated any property or facility (and no such property or
facility is contaminated by any such substance) in a manner that
has given or would give rise to (material in risk (as opposed to
material cost) liabilities, including any liability for response
costs, corrective action costs, personal injury, property
damage, natural resources damages or attorney fees, pursuant to
the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended ("CERCLA"), the Solid Waste
Disposal Act, as amended ("SWDA") or any other Environmental,
Health, and Safety Requirements.
(vi) Neither this Agreement nor the consummation of the transaction
that is the subject of this Agreement will result in any
obligations for site investigation or cleanup, or notification
to or consent of government agencies or third parties, pursuant
to any of the so-called "transaction-triggered" or "responsible
property transfer" Environmental, Health, and Safety
Requirements.
23
(vii) Neither Halifax nor any of its respective predecessors or
Affiliates has, either expressly or by operation of law,
assumed or undertaken any liability, including without
limitation any obligation for corrective or remedial action, of
any other Person relating to Environmental, Health, and Safety
Requirements.
(viii) No facts, events or conditions relating to the present
facilities, properties or operations of Halifax or any of its
respective predecessors or Affiliates will prevent, hinder or
limit continued material compliance with Environmental, Health,
and Safety Requirements, give rise to any investigatory,
remedial or corrective action or obligations pursuant to
Environmental, Health, and Safety Requirements, or give rise to
any other material liabilities (whether accrued, absolute,
contingent, unliquidated or otherwise) pursuant to
Environmental, Health, and Safety Requirements, including
without limitation any relating to onsite or offsite releases
or threatened releases of hazardous materials, substances or
wastes, personal injury, property damage or natural resources
damage.
(ix) The trash containers and other waste disposal containers have
been maintained in all material respects in compliance with all
Environmental, Health, and Safety Requirements and Halifax has
disposed of all wastes in all material respects in compliance
with all Environmental, Health, and Safety Requirements.
(x) There are no conditions existing on Halifax's facilities that
can reasonably be expected to give rise to clean up obligations
under any Environmental, Health, and Safety Requirements,
except for liability for government charges with respect to
Halifax's grease traps, which liability does not exceed
$2,000.00.
(aa) Certain Business Relationships with Halifax. Xxxxxx and its Affiliates
have not been involved in any business arrangement or relationship with Halifax
which are not at the then fair-market value or price and on such terms which
would occur in an arms-length transaction. Except for leased buildings, none of
Xxxxxx and its Affiliates owns any asset, tangible or intangible, which is used
in the business of Halifax, except as noted on ss.4(aa) of the Disclosure
Schedule.
(bb) Disclosure. The representations and warranties contained in this ss.4
do not contain any untrue statement of a material fact. The representations and
warranties contained in this ss.4 do not omit to state any material fact
necessary in order to make the statements and information contained in this ss.4
not misleading.
5. PRE-CLOSING COVENANTS.
The Parties agree as follows with respect to the period between the
execution of this Agreement and the Closing.
(a) General. Each of the Parties will use his or its best efforts to take
all action and to do all things necessary, proper, or advisable in order to
consummate and make effective the transactions contemplated by this Agreement
(including satisfaction, but not waiver, of the closing conditions set forth in
ss.7 below).
(b) Notices and Consents. Xxxxxx will cause Halifax to give any notices to
third parties, and will cause Halifax to use its best efforts to obtain any
third party consents, that Vita may request in connection with the matters
referred to in ss.4(c) above. Each of the Parties will
24
(and Xxxxxx will cause Halifax to) give any notices to, make any filings with,
and use its best efforts to obtain any authorizations, consents, and approvals
of governments and governmental agencies in connection with the matters referred
to in ss.3(a)(i), ss.3(b)(ii), and ss.4(c) above.
(c) Operation of Business. Xxxxxx will not cause or permit Halifax to
engage in any practice, take any action, or enter into any transaction outside
the Ordinary Course of Business. Without limiting the generality of the
foregoing, Xxxxxx will not cause or permit Halifax to (i) declare, set aside, or
pay any dividend or make any distribution with respect to its capital stock or
redeem, purchase, or otherwise acquire any of its capital stock; (ii) pay any
bonus, other then in the Ordinary Cause of Business to its employees, provided,
however, that no bonus shall be paid to its officers; or (iii) otherwise engage
in any practice, take any action, or enter into any transaction of the sort
described in ss.4(h) above.
(d) Preservation of Business. Xxxxxx will cause Halifax to keep its
business and properties substantially intact, including its present operations,
physical facilities, working conditions, and relationships with lessors,
licensors, suppliers, customers, and employees.
(e) Full Access. Xxxxxx will permit, and Xxxxxx will cause Halifax to
permit, representatives of Vita to have full access at all reasonable times, and
in a manner so as not to interfere with the normal business operations of
Halifax, to all premises, properties, personnel, books, records (including Tax
records), contracts, and documents of or pertaining to Halifax.
(f) Notice of Developments. Xxxxxx will give prompt written notice to Vita
of any material adverse development causing a breach of any of the
representations and warranties. Each Party will give prompt written notice to
the others of any material adverse development causing a breach of any of his or
its own representations and warranties. No disclosure by any Party pursuant to
this ss.5(f), however, shall be deemed to amend or supplement Annex I, Annex II,
or the Disclosure Schedule or to prevent or cure any misrepresentation, breach
of warranty, or breach of covenant.
(g) Exclusivity. Xxxxxx will not (and Xxxxxx will not cause or permit
Halifax and any of its respective Affiliates, shareholders, directors, officers,
employees or agents to) (i) solicit, initiate, or encourage the submission of
any proposal or offer from any Person relating to the acquisition of any capital
stock or other voting securities, or any substantial portion of the assets, of
Halifax (including any acquisition structured as a merger, consolidation, or
share exchange); (ii) participate in any discussions or negotiations regarding,
furnish any information with respect to, assist or participate in, or facilitate
in any other manner any effort or attempt by any Person to do or seek any of the
foregoing; or (iii) disclose the substance of this Agreement, except to Persons
within Robert's or Halifax's organization who must be so informed, or to their
professional advisors. Xxxxxx will not vote his or its Halifax Common Stock in
favor of any such acquisition structured as a merger, consolidation, or share
exchange. Xxxxxx will notify Vita immediately if any Person makes any proposal,
offer, inquiry, or contact with respect to any of the foregoing.
(h) Real Estate. At the Closing, Xxxxxx will cause the Leases to be amended
granting Halifax, Vita, Sub or its assignee the following: (a) Lease termination
dates of December 31, 2003 for the Warehouse (as defined below) and March 31,
2004 for the Main Facility (as defined below); (b) an option to extend the
Leases for ten (10) additional one (1) year periods at the rent of $187,500.00
per annum for the Main Facility and $62,500.00 per annum for the Warehouse, plus
an increment of rental for each option period of three percent (3%) per year;
(c) an option to purchase after January 1, 2004, free and clear of any security
interests, claims, leasehold interests, tenancies and restrictions of any
nature, other than the Leases and existing easements and rights-of-way, each of
Halifax's manufacturing facilities, at a purchase, price of $2,000,000 for the
main facility located at 0000 XxXxxx Xxxxx, Xxxxxxx,
00
Xxxxxxx ("MAIN FACILITY") and $750,000 for the warehouse located at 0000-X
Xxxxxxxxx Xxxxxxx, Xxxxxxxx, Xxxxxxx ("WAREHOUSE"); (d) the right of first
refusal on any proposed disposition of each the Warehouse and Main Facility;
provided, however, in the event of Vita's material breach of this Agreement, or
material default under the Leases, which breach or default is not cured within
thirty (30) days (or such time as reasonably necessary to effect such cure) of
the written notice thereof, Xxxxxx shall have the right to cancel the Leases and
any options to purchase each of Halifax's manufacturing facilities shall be
terminated; and (e) the option to extend the Leases or exercise the purchase
options above must be exercised at least nine (9) months prior to the expiration
of each Lease option period.
(i) Manufacturing Agreement. VHC has or will enter into a manufacturing
agreement with Halifax for the production by VHC of certain products created by
Halifax ("MANUFACTURING AGREEMENT") attached hereto as Exhibit D.
6. POST-CLOSING COVENANTS.
The Parties agree as follows with respect to the period following the
Closing.
(a) General. In case at any time after the Closing any further action is
necessary or desirable to carry out the purposes of this Agreement, each of the
Parties will take such further action (including the execution and delivery of
such further instruments and documents) as any other Party reasonably may
request, all at the sole cost and expense of the requesting Party (unless the
requesting Party is entitled to indemnification therefor under ss.8 below).
Xxxxxx acknowledges and agrees that from and after the Closing, Vita and Halifax
will be entitled to possession of all pre-Closing documents, books, records
(including Tax records), agreements, and financial data of any sort relating to
Halifax but Xxxxxx will have reasonable access thereto if reasonably required by
Xxxxxx for Tax or other valid reasons.
(b) Management Relationships.
(i) Xxxx'x Management. Xxxx shall be President of Vita Holdings and
Halifax and a member of the Board of Directors of Halifax so
long as he remains employed pursuant to the Employment
Agreement. With respect to Halifax, Xxxx'x responsibilities
shall be as set forth in the Employment Agreement. The Board of
Directors of VFP shall appoint Xxxx as a director until the
next annual meeting of VFP. In addition, VFP shall nominate and
support Xxxx for election as a director at such annual meeting,
subject to regulatory requirements with respect to independent
directors.
(ii) Vita's and Salad Co.'s Management. Assistance shall be provided
by Vita and Salad Co. to Halifax. In connection therewith:
(A) Xxxxx shall be Chairman and CEO of Vita Holdings, Halifax
and Salad Co. and shall be responsible for the duties of a
CEO, including but not limited to the manufacturing and
distribution activities of Halifax;
(B) Vita shall not accrue or charge Salad Co. or Halifax for
the expenses of Vita's general overhead (e.g., Vita's
compensation to its senior officers, Vita's corporate
headquarter costs, Securities and Exchange Commission and
public company charges, salesmen's salaries (as contrasted
with sales commission), etc.);
(C) Vita shall charge Salad Co. and/or Halifax for all its
out-of-pocket expenses incurred for the benefit of Salad
Co. and/or Halifax (e.g., Salad Co.'s and/or Halifax's
proportionate share of independent
26
accountants charges, outside legal counsel work for the
benefit of Salad Co. or Halifax, etc.)
(iii) Mutual Management Responsibilities.
(A) Salad Co. and Halifax shall timely submit its annual
operating budget for the approval of Vita's Board of
Directors;
(B) Salad Co. and Halifax shall timely submit its capital
expenditure budget for the approval of Vita's Board of
Directors;
(C) Salad Co., Halifax and Vita shall have the normal
obligations, responsibilities and relationship between
subsidiary corporations and their public parent
corporation.
(D) Vita's Board of Directors shall act in a good business
manner in reviewing and approving operating budgets and
capital expenditure budgets of Salad Co. and Halifax.
(c) Transition. Xxxxxx will not take any action that is designed or
intended to have the effect of discouraging any lessor, licensor, customer,
supplier, or other business associate of Halifax from maintaining the same
business relationships with Halifax after the Closing as it maintained with
Halifax prior to the Closing.
(d) Confidentiality. Xxxxxx will treat and hold as such all of the
Confidential Information, refrain from using any of the Confidential Information
except in connection with this Agreement or his employment with Halifax, and
deliver promptly to Vita or destroy, at the request and option of Vita, all
tangible embodiments (and all copies) of the Confidential Information which are
in his or its possession. In the event Xxxxxx is requested or required (by oral
question or request for information or documents in any legal proceeding,
interrogatory, subpoena, civil investigative demand, or similar process) to
disclose any Confidential Information, that Xxxxxx will notify Vita promptly of
the request or requirement so that Vita may seek an appropriate protective order
or waive compliance with the provisions of this ss.6(d). If, in the absence of a
protective order or the receipt of a waiver hereunder, Xxxxxx is, on the advice
of counsel, compelled to disclose any Confidential Information to any tribunal
or else stand liable for contempt, Xxxxxx xxx disclose the Confidential
Information to the tribunal; provided, however, that Xxxxxx shall use his
reasonable best efforts to obtain, at the reasonable request and expense of
Vita, an order or other assurance that confidential treatment will be accorded
to such portion of the Confidential Information required to be disclosed as Vita
shall designate. The foregoing provisions shall not apply to any Confidential
Information which is generally available to the public immediately prior to the
time of disclosure.
(e) Stock Options. Promptly following the Closing, key employees of Halifax
will be issued fourteen thousand (14,000) incentive stock options of VFP in a
total amount of options, being equal to the total number of options granted key
employees of VHC promptly after Vita's acquisition of VHC. Xxxx shall, subject
to the reasonable approval of Vita, allocate such options to the Halifax
employees as he deems reasonable.
7. CONDITIONS TO OBLIGATION TO CLOSE.
(a) Conditions to Obligation of Vita. The obligation of Vita and Sub to
consummate the transactions to be performed by it in connection with the Closing
is subject to satisfaction of the following conditions:
(i) the representations and warranties of Xxxxxx set forth
in ss.3(a) and ss.4 above shall be true and correct in all
material respects at and as of the Closing Date;
27
(ii) Xxxxxx shall have performed and complied with all of his
covenants hereunder in all material respects through the
Closing;
(iii) Halifax shall have procured all UCC and lender consents and
releases, and all of the third party consents specified in
ss.5(b) above;
(iv) no action, suit, or proceeding shall be pending or threatened
before any court or quasi-judicial or administrative agency of
any federal, state, local, or foreign jurisdiction or before
any arbitrator wherein an unfavorable injunction, judgment,
order, decree, ruling, or charge would (A) prevent consummation
of any of the transactions contemplated by this Agreement, (B)
cause any of the transactions contemplated by this Agreement to
be rescinded following consummation, (C) affect adversely the
right of Sub to merge with Halifax, or (D) affect adversely the
right of Halifax to own its assets, and to operate its
businesses (and no such injunction, judgment, order, decree,
ruling, or charge shall be in effect);
(v) Xxxxxx shall have delivered to Vita a certificate to the effect
that each of the conditions specified above in ss.7(a)(i)-(iv)
is satisfied in all respects;
(vi) the Parties shall have received all authorizations, consents,
and approvals of governments and governmental agencies,
including those referred to in ss.3(a)(i), ss.3(b)(ii), and
ss.4(c) above;
(vii) the relevant parties shall have entered into the agreements in
form and substance as set forth in Exhibits A-1 through A-5
attached hereto and the same shall be in full force and effect;
(viii) the Leases shall be amended as set forth above and shall be
reasonably satisfactory in form and substance to Vita;
(ix) all actions to be taken by Xxxxxx in connection with
consummation of the transactions contemplated hereby and all
certificates, opinions, instruments, due diligence documents,
accounting review, and other documents required to effect the
transactions contemplated hereby will be reasonably
satisfactory in form and substance to Vita;
(x) Halifax's balance sheet on the Closing Date shall reflect the
assets and liabilities reported on the Interim Financial
Statements, subject only to the Inventory Adjustment and normal
changes thereafter that may occur in the Ordinary Course of
Business. The terms of the Xxxxxx Debt shall remain unchanged
and no interest or charges shall either be paid or accrued on
the Xxxxxx Debt;
(xi) the relevant parties shall have entered into the agreements in
the form and substance as set forth in Exhibits A-1 through A-5
and the same shall be in full force and effect; and
(xii) Xxxxxx shall deliver to Vita the Financial Statements.
Vita may waive any condition specified in this ss.7(a) if it executes a
writing so stating at or prior to the Closing.
(b) Conditions to Obligation of Xxxxxx and Halifax. The obligation of
Xxxxxx and Halifax to consummate the transactions to be performed by them in
connection with the Closing is subject to satisfaction of the following
conditions:
28
(i) the representations and warranties of Vita and Sub set forth
in ss.3(b) above shall be true and correct in all material
respects at and as of the Closing Date;
(ii) Vita and Sub shall have performed and complied with all of its
covenants hereunder in all material respects through the
Closing;
(iii) no action, suit, or proceeding shall be pending or threatened
before any court or quasi-judicial or administrative agency of
any federal, state, local, or foreign jurisdiction or before
any arbitrator wherein an unfavorable injunction, judgment,
order, decree, ruling, or charge would (A) prevent consummation
of any of the transactions contemplated by this Agreement or
(B) cause any of the transactions contemplated by this
Agreement to be rescinded following consummation (and no such
injunction, judgment, order, decree, ruling, or charge shall be
in effect);
(iv) Vita and Sub shall have delivered to Xxxxxx a certificate to
the effect that each of the conditions specified above in
ss.7(b)(i)-(iii) is satisfied in all respects;
(v) the Parties shall have received all authorizations, consents,
and approvals of governments and governmental agencies
including those referred to in ss.3(a)(i), ss.3(b)(ii), and
ss.4(c) above;
(vi) the relevant parties shall have entered into the agreements in
form and substance as set forth in Exhibits A-1 through A-5 and
the same shall be in full force and effect;
(vii) the Leases shall be amended as set forth above and shall be
reasonably satisfactory in form and substance to Xxxxxx; and
(viii) all actions to be taken by Vita and Sub in connection with
consummation of the transactions contemplated hereby and all
certificates, opinions, instruments, and other documents
required to effect the transactions contemplated hereby will be
reasonably satisfactory in form and substance to Xxxxxx.
(ix) Xxxxxx shall be released from all Halifax loans at the Bank of
North Georgia with respect to which Xxxxxx is a party or a
guarantor and with respect to any other Halifax loans where
release of Xxxxxx cannot be reasonably obtained with respect to
a financial institution or lease loan obligation, Vita shall
indemnify and hold Xxxxxx harmless therefrom.
Xxxxxx xxx waive any condition specified in this ss.7(b) if they execute a
writing so stating at or prior to the Closing.
8. REMEDIES FOR BREACHES OF THIS AGREEMENT.
(a) Survival of Representations and Warranties.
All of the representations and warranties of Vita, Sub and Xxxxxx contained
in ss.4 above (except for ss.3(a)(iv), 4(b), 4(k) and 4(z)) shall survive the
Closing hereunder and continue in full force and effect for a period of two (2)
years thereafter. All of the other representations and warranties of the Parties
contained in this Agreement (including the representations and warranties of
Xxxxxx contained in ss.4(k), 3(a)(iv), 4(b) and 4(z)) shall survive the Closing
and continue in full force and effect forever thereafter subject to any
applicable statutes of limitations.
29
(b) Indemnification Provisions for Benefit of Vita.
(i) In the event Xxxxxx breaches (or in the event any third party
alleges facts that, if true, would mean Xxxxxx has breached)
any of his representations, warranties, and covenants contained
herein (other than the representations and warranties in
ss.3(a) above), and, if there is an applicable survival period
pursuant to ss.8(a) above, provided that Vita makes a written
claim for indemnification against Xxxxxx pursuant to ss.11(g)
below within such survival period, then Xxxxxx agrees to
indemnify Vita from and against the entirety of any Adverse
Consequences Vita may suffer through and after the date of the
claim for indemnification (including any Adverse Consequences
Vita may suffer after the end of any applicable survival
period) resulting from, arising out of, relating to, in the
nature of, or caused by the breach (or the alleged breach);
provided, however, that Xxxxxx shall not have any obligation to
indemnify Vita from and against any Adverse Consequences
resulting from, arising out of, relating to, in the nature of,
or caused by the breach (or alleged breach) of any
representation or warranty of Xxxxxx contained in ss.4(a)-(j),
ss.4(m)-(w) and ss.4(aa)-(bb) above until Vita has suffered
Adverse Consequences by reason of all such breaches (or alleged
breaches) in excess of a $25,000 aggregate threshold
("THRESHOLD"). The maximum aggregate amount recoverable from
Xxxxxx with respect to any Adverse Consequences Vita may suffer
relating to this Agreement or the transactions contemplated
hereby shall not exceed the amount due Xxxxxx or his Affiliates
by Vita and its Affiliates except the Closing Payment but
specifically including the First Earnout and the Second
Earnout, which amounts recoverable shall be recouped only from
such amounts when payable. Notwithstanding anything herein to
the contrary, Vita shall recover amounts due from the First
Earnout and the Second Earnout from the payments due to Xxxxxx
thereunder in the same proportion of the consideration as paid
in cash and stock, if any.
(ii) In the event Xxxxxx breaches (or in the event any third party
alleges facts that, if true, would mean Xxxxxx has breached)
any of his representations and warranties in ss.3(a) above,
and, if there is an applicable survival period pursuant to
ss.8(a) above, provided that Vita makes a written claim for
indemnification against Xxxxxx pursuant to ss.11(g) below
within such survival period, then Xxxxxx agrees to indemnify
Vita from and against the entirety of any Adverse Consequences
Vita may suffer through and after the date of the claim for
indemnification (including any Adverse Consequences Vita may
suffer after the end of any applicable survival period)
resulting from, arising out of, relating to, in the nature of,
or caused by the breach (or the alleged breach).
(iii) Xxxxxx agrees to indemnify Vita from and against the entirety
of any Adverse Consequences (without regard to the Threshold),
Vita may suffer resulting from, arising out of, relating to, in
the nature of, or caused by any Liability of Halifax for any
Taxes of Halifax with respect to any Tax year or portion
thereof ending on or before the Closing Date (or for any Tax
year beginning before and ending after the Closing Date to the
extent allocable (determined in a manner consistent with
ss.9(c)) to the portion of such period beginning before and
ending on the Closing Date), to the extent
30
such Taxes are not reflected in the reserve for Tax Liability
(rather than any reserve for deferred Taxes established to
reflect timing differences between book and Tax income) shown
on the face of the Interim Financial Statements (rather than in
any notes thereto). With respect to the deferred Tax
Liability's depreciation and amortization liability, Xxxxxx
warrants and represents that as of December 31, 2001 such
liability does not exceed $71,000.00. Xxxxxx shall not be
liable for such $71,000.00.
(c) Indemnification Provisions for Benefit of Xxxxxx. In the event Vita
breaches (or in the event any third party alleges facts that, if true, would
mean Vita has breached) any of its representations, warranties, and covenants
contained herein, and, if there is an applicable survival period pursuant to
ss.8(a) above, provided that Xxxxxx makes a written claim for indemnification
against Vita pursuant to ss.11(g) below within such survival period, then Vita
agrees to indemnify Xxxxxx from and against the entirety of any Adverse
Consequences Xxxxxx xxx suffer through and after the date of the claim for
indemnification (including any Adverse Consequences Xxxxxx xxx suffer after the
end of any applicable survival period) resulting from, arising out of, relating
to, in the nature of, or caused by the breach (or the alleged breach).
(d) Matters Involving Third Parties.
(i) If any third party shall notify any Party (the "INDEMNIFIED
PARTY") with respect to any matter (a Third Party Claim) which
may give rise to a claim for indemnification against any other
Party (the "INDEMNIFYING PARTY") under this ss.8, then the
Indemnified Party shall promptly notify each Indemnifying Party
thereof in writing; provided, however, that no delay on the
part of the Indemnified Party in notifying any Indemnifying
Party shall relieve the Indemnifying Party from any obligation
hereunder unless (and then solely to the extent) the
Indemnifying Party thereby is prejudiced.
(ii) Any Indemnifying Party will have the right to defend the
Indemnified Party against the Third Party Claim with counsel of
its choice reasonably satisfactory to the Indemnified Party so
long as (A) the Indemnifying Party notifies the Indemnified
Party in writing within 15 days after the Indemnified Party has
given notice of the Third Party Claim that the Indemnifying
Party will indemnify the Indemnified Party from and against the
entirety of any Adverse Consequences the Indemnified Party may
suffer resulting from, arising out of, relating to, in the
nature of, or caused by the Third Party Claim, (B) the
Indemnifying Party provides the Indemnified Party with evidence
reasonably acceptable to the Indemnified Party that the
Indemnifying Party will have the financial resources to defend
against the Third Party Claim and fulfill its indemnification
obligations hereunder, (C) the Third Party Claim involves only
money damages and does not seek an injunction or other
equitable relief, (D) settlement of, or an adverse judgment
with respect to, the Third Party Claim is not, in the good
faith judgment of the Indemnified Party, likely to establish a
precedential custom or practice materially adverse to the
continuing business interests of the Indemnified Party, and (E)
the Indemnifying Party conducts the defense of the Third Party
Claim actively and diligently.
(iii) So long as the Indemnifying Party is conducting the defense of
the Third Party Claim in accordance with ss.8(d)(ii) above, (A)
the Indemnified Party may retain separate co-counsel at its
sole cost and expense and
31
participate in the defense of the Third Party Claim, (B) the
Indemnified Party will not consent to the entry of any judgment
or enter into any settlement with respect to the Third Party
Claim without the prior written consent of the Indemnifying
Party (not to be withheld unreasonably), and (C) the
Indemnifying Party will not consent to the entry of any
judgment or enter into any settlement with respect to the Third
Party Claim without the prior written consent of the
Indemnified Party (not to be withheld unreasonably).
(iv) In the event any of the conditions in ss.8(d)(ii) above is or
becomes unsatisfied, however, (A) the Indemnified Party may
defend against, and consent to the entry of any judgment or
enter into any settlement with respect to, the Third Party
Claim in any manner it reasonably may deem appropriate (and the
Indemnified Party need not consult with, or obtain any consent
from, any Indemnifying Party in connection therewith), (B) the
Indemnifying Parties will reimburse the Indemnified Party
promptly and periodically for the costs of defending against
the Third Party Claim (including reasonable attorneys' fees and
expenses), and (C) the Indemnifying Parties will remain
responsible for any Adverse Consequences the Indemnified Party
may suffer resulting from, arising out of, relating to, in the
nature of, or caused by the Third Party Claim to the fullest
extent provided in this ss.8.
(e) Other Indemnification Provisions. The foregoing indemnification
provisions are in addition to, and not in derogation of, any statutory,
equitable, or common law remedy arising under Environmental, Health, and Safety
Requirements ("REQUIREMENTS") any Party may have with respect to Halifax or the
transactions contemplated by this Agreement; provided, however, that except for
the Requirements, fraud and the rights of rescission, the foregoing
indemnification provisions shall be the sole and exclusive remedy of Vita for
any breach of the representations and warranties contained in ss.4 hereof.
Xxxxxx hereby agrees that he will not make any claim for indemnification against
Halifax by reason of the fact that he was a director, officer, employee, lessor
or agent of any such entity or was serving at the request of any such entity as
a partner, trustee, director, officer, employee, or agent of another entity
(whether such claim is for judgments, damages, penalties, fines, costs, amounts
paid in settlement, losses, expenses, or otherwise and whether such claim is
pursuant to any statute, charter document, bylaw, agreement, or otherwise) with
respect to any action, suit, proceeding, complaint, claim, or demand brought by
Vita against Xxxxxx (whether such action, suit, proceeding, complaint, claim, or
demand is pursuant to this Agreement, applicable law, or otherwise).
(f) Payment of Indemnification. Notwithstanding anything herein to the
contrary, any payments due hereunder by Xxxxxx shall be paid pursuant to ss.8(g)
herein below, except with respect to the indemnity regarding the Case set forth
in ss.2(e)(i). Except, as otherwise expressly provided herein, each Party shall
be entitled to recover any indemnification payments due hereunder by directly
obtaining indemnification from the other Party, whether or not such amount is
liquidated or reduced to judgment.
(g) Set Off. Vita shall set off the amount of any claims it may have
hereunder, whether liquidated or unliquidated, against any amount payable by
Vita, Halifax and/or Salad Co. to Xxxxxx after the Closing, subject only to the
limitations of ss.2.5 of the Employment Agreement.
32
9. TAX MATTERS.
The following provisions shall govern the allocation of responsibility as
between Vita and Xxxxxx for certain tax matters following the Closing Date:
(a) Tax Sharing Agreements. All tax sharing agreements or similar
agreements with respect to or involving Halifax shall be terminated as of the
Closing Date and, after the Closing Date, Halifax shall not be bound thereby or
have any liability thereunder.
(b) Certain Taxes. All transfer, documentary, sales, use, bulk transfer,
stamp, registration and other such taxes and fees (including any penalties and
interest) incurred in connection with the implementation and execution of
documents and instruments contemplated by this Agreement, shall be paid by
Xxxxxx when due, and Xxxxxx will, at his own expense, file all necessary tax
returns and other documentation with respect to all such transfer, documentary,
sales, use, stamp, registration and other taxes and fees, and, if required by
applicable law, Vita will, and will cause its affiliates to, join in the
execution of any such tax returns and other documentation.
10. TERMINATION.
(a) Termination of Agreement. Certain of the Parties may terminate this
Agreement as provided below:
(i) Vita and Xxxxxx xxx terminate this Agreement by mutual written
consent at any time prior to the Closing;
(ii) Vita may terminate this Agreement on or before twenty-four (24)
hours following Vita's receipt of all of the completed
Disclosure Schedules with respect to this Agreement if Vita is
not reasonably satisfied with the results of its continuing due
diligence regarding Halifax;
(iii) Vita may terminate this Agreement by giving written notice to
Xxxxxx at any time prior to the Closing (A) in the event any of
Xxxxxx has breached any material representation, warranty, or
covenant contained in this Agreement in any material respect,
Vita has notified Xxxxxx of the breach, and the breach has
continued without cure for a period of 30 days after the notice
of breach or (B) if the Closing shall not have occurred on or
before November 15, 2002, by reason of the failure of any
condition precedent under ss.7(a) hereof (unless the failure
results primarily from Vita itself breaching any
representation, warranty, or covenant contained in this
Agreement); and
(iv) Xxxxxx xxx terminate this Agreement by giving written notice to
Vita (A) in the event Vita has breached any material
representation, warranty, or covenant contained in this
Agreement in any material respect, Xxxxxx has notified Vita of
the breach, and the breach has continued without cure for a
period of 30 days after the notice of breach or (B) if the
Closing shall not have occurred on or before November 15, 2002,
by reason of the failure of any condition precedent
under ss.7(b) hereof (unless the failure results primarily from
Xxxxxx breaching any representation, warranty, or covenant
contained in this Agreement); or (C) a material adverse change
has occurred in the assets, liabilities or the future financial
condition or ability of Vita to fulfill its financial
obligations hereunder (Vita's ability to so fulfill shall be
indisputably satisfied by delivery of a copy of the letter of
commitment of Vita's bank to fund this transaction).
33
(b) Effect of Termination. If any Party terminates this Agreement pursuant
to ss.10(a) above, all rights and obligations of the Parties hereunder shall
terminate without any Liability of any Party to any other Party.
11. MISCELLANEOUS.
(a) Press Releases and Public Announcements. No Party shall issue any press
release or make any public announcement relating to the subject matter of this
Agreement prior to the Closing without the prior written approval of Vita and
Xxxxxx; provided, however, that Vita may make any public disclosure it believes
in good faith is required by applicable law or any listing or trading agreement
concerning its publicly-traded securities.
(b) No Third-Party Beneficiaries. This Agreement shall not confer any
rights or remedies upon any Person other than the Parties and their respective
successors and permitted assigns.
(c) Entire Agreement. This Agreement (including the documents referred to
herein) constitutes the entire agreement among the Parties and supersedes any
prior understandings, agreements, or representations by or among the Parties,
written or oral, to the extent they related in any way to the subject matter
hereof, including the Memorandum Agreement dated as of the Effective Date.
(d) Succession and Assignment. This Agreement shall be binding upon and
inure to the benefit of the Parties named herein and their respective successors
and permitted assigns. No Party may assign either this Agreement or any of his
or its rights, interests, or obligations hereunder without the prior written
approval of Vita, Halifax and Xxxxxx; provided, however, that Vita may (i)
assign any or all of its rights and interests hereunder to one or more of its
Affiliates and (ii) designate one or more of its Affiliates to perform its
obligations hereunder (in any or all of which cases Vita nonetheless shall
remain responsible for the performance of all of its obligations hereunder).
Notwithstanding anything herein to the contrary, in the event of Xxxx'x death,
Xxxx'x rights, interests and obligations under this Agreement shall inure to
Xxxx'x estate, heirs, successors and/or assigns.
(e) Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument.
(f) Headings. The section headings contained in this Agreement are inserted
for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
(g) Notices. All notices, requests, demands, claims, and other
communications hereunder will be in writing. Any notice, request, demand, claim,
or other communication hereunder shall be deemed duly given if (and then five
business days after) it is sent by registered or certified mail, return receipt
requested, postage prepaid, and addressed to the intended recipient as set forth
below:
If to Xxxxxx: Xxxxxx X. Xxxx
0000 XxXxxx Xxxxx
Xxxxxxx, XX 00000
Fax: (000) 000-0000
34
with copy to: Powell, Goldstein, Xxxxxx & Xxxxxx LLP
000 Xxxxxxxxx Xxxxxx, XX
Xxxxxxxxx Xxxxx
Xxxxxxx, XX 00000
Attn: Xxxxxxxx Xxxxxxx
Fax: (000) 000-0000
If to Vita: Vita Food Products, Inc.
0000 Xxxx Xxxx Xxxxxx
Xxxxxxx, XX 00000
Attn: Xxxxxxx X. Xxxxx
with copy to: Much Shelist Freed Xxxxxxxxx Xxxxx & Xxxxxxxxxx, P.C.
000 X. XxXxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, XX 00000
Attn: Xxxxxxx X. Xxxxxxxxxx
Fax: (000) 000-0000
Any Party may send any notice, request, demand, claim, or other
communication hereunder to the intended recipient at the address set forth above
using any other means (including personal delivery, expedited courier, messenger
service, telecopy, telex, ordinary mail, or electronic mail), but no such
notice, request, demand, claim, or other communication shall be deemed to have
been duly given unless and until it actually is received by the intended
recipient. Any Party may change the address to which notices, requests, demands,
claims, and other communications hereunder are to be delivered by giving the
other Parties notice in the manner herein set forth.
(h) Governing Law. This Agreement shall be governed by and construed in
accordance with the internal substantive laws of the State of Delaware without
giving effect to any choice or conflict of law provision or rule (whether of the
State of Delaware or any other jurisdiction) that would cause the application of
the laws of any jurisdiction other than the State of Delaware.
(i) Arbitration and Venue. Except with respect to ss.2(e) hereof, in the
event of a difference arising among the parties hereto as to the construction of
any of this Agreement, or as to the rights or obligations of the parties under
and by virtue hereof, all such questions shall be determined by binding
arbitration in accordance with the Commercial Arbitration Rules of the American
Arbitration Association, and judgment upon the award rendered by the
arbitrator(s) may be entered into in any court having jurisdiction thereof. The
disputant seeking such arbitration hereunder shall give written notice to the
others specifying the particulars in dispute and to be arbitrated and,
thereupon, within ten (10) days after giving of such written notice shall submit
the dispute to the American Arbitration Association in Dover, Delaware. The
costs and expenses in connection with said arbitration proceedings shall be paid
by the affected disputants equally, as determined by the arbitrator(s), with
each party being responsible for its attorneys' fees and costs. All arbitration
proceedings shall be conducted telephonically if agreed upon by the affected
disputants, or if conducted in person, shall be held in Dover, Delaware with the
application of the laws of the State of Delaware.
(j) Amendments and Waivers. No amendment of any provision of this Agreement
shall be valid unless the same shall be in writing and signed by Vita and
Xxxxxx, and such
35
amendment shall be effective only in the specific instance and for the specific
purpose for which given. No waiver by any Party of any default,
misrepresentation, or breach of warranty or covenant hereunder, whether
intentional or not, shall be deemed to extend to any prior or subsequent
default, misrepresentation, or breach of warranty or covenant hereunder or
affect in any way any rights arising by virtue of any prior or subsequent such
occurrence.
(k) Severability. Any term or provision of this Agreement that is invalid
or unenforceable in any situation in any jurisdiction shall not affect the
validity or enforceability of the remaining terms and provisions hereof or the
validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction.
(l) Expenses. Each of the Parties (including Xxxxxx on behalf of Halifax)
will bear his or its own costs and expenses (including legal fees and expenses)
incurred in connection with this Agreement and the transactions contemplated
hereby, except if the Agreement closes Vita shall pay (i) all direct costs of
the audit of Halifax and (ii) one-half (1/2) of the accounting fees of Xxxxxx
directly related to the Agreement; provided, however, Vita's liability under
this subsection (ii) shall not exceed $12,500.00. In the event this transaction
shall not close, due to the fault of Vita, pursuant to ss.10(a)(iv)(A) or
ss.10(a)(iv)(B), Vita shall reimburse Xxxxxx for one-half (1/2) of the
reasonable costs for services rendered with respect to the audit of the
Financial Statements. Xxxxxx agrees that Halifax has not borne or will not bear
any of the costs and expenses (including any of his legal fees and expenses) in
connection with this Agreement or any of the transactions contemplated hereby.
(m) Construction. Any reference to any federal, state, local, or foreign
statute or law shall be deemed also to refer to all rules and regulations
promulgated thereunder, unless the context requires otherwise. The word
"including" shall mean including without limitation. The Parties intend that
each representation, warranty, and covenant contained herein shall have
independent significance. If any Party has breached any representation,
warranty, or covenant contained herein in any respect, the fact that there
exists another representation, warranty, or covenant relating to the same
subject matter (regardless of the relative levels of specificity) which the
Party has not breached shall not detract from or mitigate the fact that the
Party is in breach of the first representation, warranty, or covenant.
(n) Incorporation of Exhibits, Annexes, and Schedules. The Exhibits,
Annexes, and Schedules identified in this Agreement are incorporated herein by
reference and made a part hereof.
36
(o) Good Faith and Reasonableness. The parties agree to exercise good faith
and reasonableness in the interpretation and implementation of this Agreement.
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement on the
date first above written.
PARENT SHAREHOLDERS
Vita Food Products, Inc. Oak Hill Family, LLC
By: /s/ Xxxxxxx X. Xxxxx By: /s/ Xxxxxx X. Xxxx
-------------------- ------------------
Xxxxxxx X. Xxxxx Xxxxxx X. Xxxx, Manager
/s/ Xxxxxx X. Xxxx
------------------
Xxxxxx X. Xxxx, Individually
HOLDING COMPANY COMPANY
--------------- -------
Vita Holdings, Inc. The Halifax Group, Inc.
By: /s/ Xxxxxxx X. Xxxxx By: /s/ Xxxxxx X. Xxxx
-------------------- ------------------
Xxxxxxx X. Xxxxx Xxxxxx X. Xxxx, President
SUB
---
Vita/Halifax Acquisition Company
By: /s/ Xxxxxxx X. Xxxxx /s/ Xxxxx X. Xxxx
-------------------- ------------------
Xxxxxxx X. Xxxxx Xxxxx X. Xxxx, with respect to
paragraph 2(c) only
37
Exhibit A-1 - Form of Employment Agreement
Exhibit A-2 - Form of Non-Competition Agreement
Exhibit A-5 - Form of Main Facility Lease
Exhibit A-5 - Form of Warehouse Lease
Exhibit A-5 - Forms of Registration Agreement
Exhibit B - Most Recent Balance Sheet
Exhibit C-1A - Financial Statements
Exhibit C-1B - Unaudited Financial Statements
Exhibit D - Manufacturing Agreement
Exhibit E - List of Existing Products of Halifax
Annex I - Exceptions to Robert's Representations and Warranties Concerning the
Transaction
Annex II - Exceptions to Vita's Representations and Warranties Concerning the
Transaction
Disclosure Schedule - Exceptions to Representations and Warranties Concerning
Halifax
38
