Exhibit 2.09
SETTLEMENT AGREEMENT BETWEEN XXXXX X. XXXXXXXX, Xx,
TRUSTEE OF THE CHAPTER 7 ESTATE OF SUNNY FARMS
CORPORATION AND SPECTRUM ORGANIC PRODUCTS, INC., A
CALIFORNIA CORPORATION, FORMERLY KNOWN AS ORGANIC FOOD
PRODUCTS, INC., A CALIFORNIA CORPORATION
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THIS SETTLEMENT AGREEMENT (the "Agreement") is made by and between Xxxxx X.
Xxxxxxxx, Xx., trustee of the Chapter 7 bankruptcy estate of Sunny Farms
Corporation ("Debtor") the debtor in bankruptcy case number 98-70687-JT
("Trustee"), and Spectrum Organic Products, Inc., a California Corporation,
formerly known as Organic Food Products, Inc., a California Corporation
("Defendant") (collectively the "Parties").
RECITALS
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A. (On October 23, 2000, the Trustee filed with the United States Bankruptcy
Court for the Northern District of California, Oakland Division
("Bankruptcy Court") its Complaint For Damages, Turnover, And Declaratory
Relief ("Complaint") against Defendant, as Adversary Proceeding No.
O0--04445-J ("Adversary Proceeding").
B. In the Complaint, the Trustee seeks to recover from Defendant damages,
turnover of estate property, and declaratory relief regarding the number of
shares of common stock due to the Trustee pursuant to an asset purchase
contract between the Debtor and Organic Food Products, Inc., the name by
which the Defendant was formerly known.
C. Defendant denies certain material allegations in the Complaint and alleges
several affirmative defenses.
D. Both Parties wish to resolve the dispute between them to avoid additional
litigation expenses, attorneys' fees, and the risks of litigation.
AGREEMENTS
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1. Incorporation Of Recitals. The Recitals set forth hereinabove are hereby
referred to, incorporated herein, and made a part of this Agreement. The
Parties agree that this Agreement has been entered into for and in
consideration of the provisions contained in the Recitals as well as those
contained in the balance of this Agreement. Each party to this Agreement
attests to the truth and accuracy of the Recitals stated hereinabove.
2. Transfer Of Stock From Defendant To Trustee. Upon receipt of a stock
assignment separate from certificate in the form attached as Exhibit A duly
executed by the Trustee on behalf of Debtor, Defendant shall issue and
release from that certain Pledge and Escrow Agreement by and between Debtor
and Defendant dated February 10, 1998, a stock certificate(s) representing
117,950 shares of its own common stock to the Trustee (the "Stock
Transfer") in full settlement of the Trustee's claims against Defendant as
set forth in the Complaint on the eleventh (11th) day following the entry
by the Bankruptcy Court of a final, non-appealable order approving
Agreement, in a form satisfactory to Defendant ("Bankruptcy Court
Approval). The escrow agent, Carr, McClellan, Ingersoll, Xxxxxxxx and Xxxx,
is hereby directed by the Parties to release Certificate Nos. 169-3 in the
amount of 212,500 shares and 199-0 in the amount of 70,834 shares to Xxxxxx
Godward LLP, (Attn: Xxxxxx X. Xxxxxxxxx, III) Xxx Xxxxxxxx Xxxxx, 00xx
Xxxxx; Xxx Xxxxxxxxx, XX 00000, counsel for Defendant, to complete the
transfers set forth herein,
3. Approval of the Court and Dismissal Of The Adversary Proceeding. Upon
execution of this Agreement by the Parties, the Trustee will file a motion
seeking a an order from the Bankruptcy Court (the "Order") that approves
the settlement contained in this Agreement and authorizes the Trustee to
execute any documents necessary to implement this Agreement. Pursuant to
Bankruptcy Local Rule 9014-l(b)(3) of the United States Bankruptcy Court
For The Northern District of California, Trustee shall provide notice of
this Agreement to the Debtor's creditor; the United States Trustee, and
those parties requesting special notice. This Agreement is contingent upon
Bankruptcy Court Approval. If Bankruptcy Court Approval is not obtained,
this Agreement is null and void and has no evidentiary, or other legal,
effect. If Bankruptcy Court Approval is obtained, as the Adversary
Proceeding has already been dismissed contingent on settlement of the
Adversary Proceeding, then the Trustee will promptly and in no event later
than five (5) business days following the Stock Transfer, finalize
dismissal of the Adversary Proeeeding with prejudice.
4. Defendant Release. In consideration of the Trustee Release, as that term
is defined in Paragraph 5 herein and the obligations of the Trustee set
forth in Paragraph 3 herein:
Defendant hereby forever releases and discharges the Trustee and his
agents, employees, servants, representatives, parent and subsidiary
organizations, affiliates, partners, stockholders and attorneys and their
respective assigns and successors, jointly and individually, of and from,
and covenants not to xxx, or commence or prosecute, or aid in the
commencement or prosecution, for any and all rights, claims, demands,
damages, actions, and causes of action of every kind and nature, arising
from or relating to the claims or facts alleged in the Complaint or which
could have been so alleged, with the exception of the rights and
obligations expressly retained or granted by, or set forth in this
Agreement (the "Defendant Re1ease").
The foregoing paragraph and the releases and covenants contained therein,
shall not and do not apply to the rights and claims expressly retained or
granted by this Agreement.
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5. Trustee Release. In consideration of the Stock Transfer and the Defendant
Release, the Trustee hereby forever releases and discharges Defendant and
its agents, employees, officers, directors, servants, representatives,
parent and subsidiary corporations and organizations, affiliates, partners,
stockholders and attorneys and their respective assigns and successors,
jointly and individually, of and from, and covenants not to xxx, or
commence or prosecute, or aid in the commencement or prosecution, for any
and all rights, claims, demands, damages, actions, and causes of action of
every kind and nature, arising from or relating to the claims or facts
alleged in the Complaint, or which could have been so alleged with the
exception of the rights and obligations expressly retained or granted by,
or set forth in, this Agreement (the "Trustee Release").
In connection with the Defendant Release and the Trustee Release, the
Parties waive the requirements of California Civil Code ss. 1542, which
states: "A general release does not extend to claims which the creditor
does not know or suspect to exist in his favor at the time of executing the
release, which if known by him must have materially affected his settlement
with the debtor."
6. No Admission Of Liability. The Parties so released deny the liability of
each party to the other for all matters that are the subject of the
foregoing releases, and this Agreement, which constitutes a final
compromise and settlement thereof, will never be treated as an admission
of liability or responsibility at any time for any purpose whatsoever.
7. Cost. Except as provided in Paragraph 8 below, the Parties shall each bear
their own respective attorneys' fees and costs in connection with the
matters referenced in this Agreement, the investigation preceding this
Agreement, and the negotiation and review of this Agreement.
8. Enforcement. Should any litigation be commenced between the Parties to this
Agreement concerning the enforcement or interpretation of this Agreement,
or any rights and duties hereunder, the party prevailing in such litigation
shall be entitled, in addition to such other relief as may be granted, to a
reasonable sum as and for its attorneys' fees and costs in such litigation,
which shall be determined by the Bankruptcy Court in such litigation or in
a separate action brought for that purpose. The Bankruptcy Court shall
retain exclusive jurisdiction over any disputes regarding the enforcement
of this Agreement.
9. Modification. The term "Agreement," as used herein, will include any future
written amendments, modifications, or supplements made hereto; provided,
however, that this Agreement may be modified or amended only by a writing
signed by the parties hereto and approved by the Bankruptcy Court.
10. Meaning Of Terms. The term "Paragraph" or "Paragraphs" refers to the
paragraph or paragraphs of this Agreement. The titles and subtitles used
herein are not a part of this Agreement, and are included solely for
convenient reference to the Paragraphs hereof.
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11. Controlling Law. The validity, interpretation, and performance of this
Agreement will be controlled by and construed under the laws of the State
of California, as well as any applicable U.S. bankruptcy law.
12. Interpretation. If any provision of this Agreement is invalid under any
applicable statute or rule of law, it is to that extent to be deemed
omitted. This Agreement may be executed in counterpart, and may be executed
in duplicate original, each of which is equally admissible as evidence.
13. Integration Clause. Any and all prior agreements among the Parties hereto
with respect to the matters that are the subject of this Agreement are
superseded by the terms of this Agreement. The terms of this Agreement are
intended by the Parties hereto as a final, complete and exclusive
expression of their agreement with respect to such matters, and may not be
controverted or contradicted by evidence or any prior or contemporaneous
oral or written agreement.
14. Advice Of Attorney. Each party warrants and represents that in executing
this Agreement, such party has either (I) relied upon legal advice from
the attorney of that party's choosing and that the terms of this Agreement
have been read and its consequences (including risks, complications, and
costs) have been completely explained to that party by its attorney; or
(ii) has voluntarily declined to seek such legal advice, and that such
party fully understands the terms of this Agreement. Each party further
acknowledges and represents that, in executing that party's release, it has
not relied on any inducements, promises, or representations made by the
other party or any party representing or serving the other party. Each
party hereto represents and warrants that this Agreement is being
voluntarily executed by such party without any duress or undue influence of
any kind on the part of any person, firm, or entity.
15. Effect On Successors. This Agreement will inure to the benefit of and be
binding upon the Parties hereto and their respective heirs, successors,
assigns, and legal representatives.
16. Effective Date. This Agreement shall become effective immediately upon
Bankruptcy Court Approval.
17. Notice. Any notice, request, demand, or other communication required or
permitted hereunder will be given in writing by first class mail, postage
prepaid, to the party (ies) to be notified. All communications will be
deemed given when received. The addresses of the Parties for the purposes
of such communication are:
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Trustee: Xxxxx X. Xxxxxxxx, Xx., Trustee
c/o: Xxxxxx X. Xxxxxxx, Esq.
Goldberg, Stinnett, Xxxxxx & Xxxxx
00 Xxxxxxxxxx Xxxxxx, Xxx. 0000
Xxx Xxxxxxxxx, XX 00000
Defendant: Spectrum Organic Products, Inc.
x/x Xxxxxx X. Xxxxxxxxx XXX, Xxx.
Xxxxxx Godward LLP
Xxx Xxxxxxxx Xxxxx, 00xx Xxxxx
Xxx Xxxxxxxxx, XX 00000-0000
A party may change his or her address only upon written notice to the other
party as provided hereinabove.
XXXXX X. XXXXXXXX, XX.
Trustee of the Chapter 7 Estate
of Sunny Farms Corporation
By: /s/ Xxxxx X. Xxxxxxxx
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Xxxxx X. Xxxxxxxx, Xx.,
Trustee
Spectrum Organic Products, Inc., a
California Corporation formerly
known as Organic Food Products,
Inc., a California Corporation
By: /s/ Xxxxxx X. Xxxxxx
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Xxxxxx X. Xxxxxx
Chief Financial Officer
APPROVED AS TO FORM AND CONTENT;
XXXXXX GODWARD LLP
By: /s/ Xxxxxx X. Xxxxxxxxx III, Esq.
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Xxxxxx X. Xxxxxxxxx III, Esq.
Attorneys for Defendant
Spectrum Organic Products, Inc.
GOLDBERG, STINNETT, XXXXXX & XXXXX
A Professional Corporation
By: /s/ Xxxxxx X. Xxxxxxx, Esq.
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Xxxxxx X. Xxxxxxx, Esq.
Attorneys for Trustee
Xxxxx X. Xxxxxxxx, Xx.
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Exhibit A
STOCK ASSIGNMENT SEPARATE FROM CERTIFICATE
FOR VALUE RECEIVED, SUNNY FARMS CORP. hereby sells assigns and transfers
unto SPECTRUM ORGANIC PRODUCTS, INC. a California corporation (the "Company"),
for cancellation pursuant to that Settlement Agreement between Xxxxx X.
Xxxxxxxx., Jr., Trustee of the Chapter 7 Estate of Sunny Farms Corporation and
Spectrum Organic Products, Inc., a California Corporation, Formerly Known as
Organic Foods Products, Inc., a California Corporation, by and between the
undersigned and the Company, 165,384 shares of Common Stock of the Company
standing in the undersigned's name on the books of the Company represented by
Certificate No 169-3 and does hereby irrevocably constitute and appoint the
Company's Secretary attorney to transfer said stock on the books of the Company
with full power of substitution in the premises.
Dated: 10-9-01
By: /s/ Xxxxx X. Xxxxxxxx, Xx.
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Xxxxx X. Xxxxxxxx, Xx.
