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EXHIBIT NUMBER 2.1
STOCK PURCHASE AGREEMENT
This AGREEMENT is made and entered into on June 29, 2001, (the
"EFFECTIVE DATE") by and among Vita Food Products, Inc., a Nevada corporation
("VITA"), and Xxxxx X. Xxxx, ("XXXXX"). Vita and Xxxxx are referred to
collectively herein as the Parties.
Xxxxx owns all of the outstanding capital stock of Virginia Honey
Company, Inc., a Virginia corporation ("VIRGINIA HONEY").
This Agreement contemplates a transaction in which Vita will purchase
from Xxxxx, and Xxxxx will sell to Vita, all of the outstanding capital stock of
Virginia Honey on the terms and conditions set forth herein.
As a material inducement of Vita to enter into this Agreement, Xxxxx is
willing to enter into that certain employment agreement with Virginia Honey (the
"EMPLOYMENT AGREEMENT") attached hereto as Exhibit A-1 and Xxxxx is willing to
enter into that certain non-competition, non-solicitation and confidentiality
agreement with Virginia Honey and Vita (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.
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.
"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.
"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.
"CLOSING" has the meaning set forth in ss.2(c) below.
"CLOSING DATE" has the meaning set forth in ss.2(c) below.
"CLOSING PAYMENT" has the meaning set forth in ss.2(b)(i) below.
"COBRA" means the requirements of Part 6 of Subtitle B of Title I of
ERISA and Code ss.4980B.
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"CODE" means the Internal Revenue Code of 1986, as amended.
"CONFIDENTIAL INFORMATION" means any information concerning the
businesses and affairs of Virginia Honey 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.
"EBITDA" has the meaning set forth in ss.2(b)(ii) below.
"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).
"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 Xxxxx for purposes of Code ss.414.
"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(b)(ii) below.
"GAAP" means United States of America, generally accepted accounting
principles as in effect from time to time.
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"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) 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).
"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 Virginia Honey'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.
"MOST RECENT BALANCE SHEET" means the balance sheet contained within
the Most Recent Financial Statements.
"MOST RECENT FINANCIAL STATEMENTS" has the meaning set forth in ss.4(g)
below.
"MOST RECENT FISCAL MONTH END" has the meaning set forth in ss.4(g)
below.
"MOST RECENT FISCAL YEAR END" has the meaning set forth in ss.4(g)
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.
"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
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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.
"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.
"PURCHASE PRICE" has the meaning set forth in ss.2(b) below.
"REPORTABLE EVENT" has the meaning set forth in ERISA ss.4043.
"SECOND EARNOUT" has the meaning set forth in ss.2(b)(iii) below.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SECURITIES EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.
"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.
"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 the preface above.
"THIRD PARTY CLAIM" has the meaning set forth in ss.8(d) below.
"VIRGINIA HONEY" has the meaning set forth in the preface above.
"VIRGINIA HONEY DEBT" has the meaning set forth in ss.2(b)(i) below.
"VIRGINIA HONEY SHARE" means any share of the Common Stock, par value
$1.00 per share, of Virginia Honey.
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"VITA" has the meaning set forth in the preface above.
2. PURCHASE AND SALE OF VIRGINIA HONEY SHARES; PLEDGE.
(a) The Transaction. On and subject to the terms and conditions of this
Agreement, Vita agrees to purchase from Xxxxx, and Xxxxx agrees to sell to Vita,
all of his Virginia Honey Shares for the consideration specified below in this
ss.2.
(b) Purchase Price. Vita shall pay Xxxxx the following purchase price
in cash, or by wire transfer of immediately available funds ("the PURCHASE
PRICE"):
(i) At the Closing, Vita shall pay to Xxxxx approximately
$4,843,359.20 (the "CLOSING PAYMENT"). The Closing Payment equals forty
percent (40%) of: Sixteen Million Dollars ($16,000,000) less the
aggregate of certain designated outstanding Virginia Honey liabilities
set forth on the Most Recent Balance Sheet, attached hereto as Exhibit
B, which certain unaudited liabilities total $3,891,602; (the "VIRGINIA
HONEY DEBT"); plus
(ii) For the period April 1, 2001 thru December 31, 2004, Vita
shall pay Xxxxx forty percent (40%) of five (5) times the average
quarterly earnings of Virginia Honey, multiplied by four (4), before
interest, taxes, depreciation and amortization ("EBITDA") less Virginia
Honey Debt (the "FIRST EARNOUT"). Vita shall pay Xxxxx the First
Earnout, or the undisputed portion of the First Earnout on or before
April 1, 2005; plus
(iii) For the period January 1, 2005 thru December 31, 2006,
Vita shall pay Xxxxx twenty percent (20%) of five (5) times the average
quarterly EBITDA, multiplied by four (4), less Virginia Honey Debt (the
"SECOND EARNOUT"). Vita shall pay Xxxxx the Second Earnout, or the
undisputed portion of the Second Earnout on or before April 1, 2006.
The calculation of the First Earnout and Second Earnout shall be
prepared utilizing the audited statements prepared by Vita's independent
certified public accounting firm. Xxxxx 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 Xxxxx shall submit the disputed claim, if the same remains
unresolved for thirty (30) days, to a mutually acceptable, nationally-recognized
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. Xxxxx
and Vita shall equally share responsibility for fees and expenses of such an
accounting firm for the resolution of such a disputed claim.
(c) Pledge of Virginia Honey Shares. As security for Vita's performance
under this Agreement, Vita grants Xxxxx a security interest in all Virginia
Honey Shares, which corporation is a 100% owned subsidiary of Vita. 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, Xxxxx shall have
all rights with respect to such stock collateral as are available under the
Uniform Commercial Code of the State of Delaware. The Virginia Honey Shares
shall be held in escrow by Xxxxxxx X. Xxxxxxxxxx of Much Shelist Freed Xxxxxxxxx
Xxxxx & Xxxxxxxxxx, P.C., legal counsel for Vita, and Xxxx X. Xxxxxx of Xxxx and
Xxxxxx, P.L.C., endorsed in blank, until full
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payment of the First Earnout and Second Earnout. Upon a joint order of the
Parties, Xx. Xxxxxxxxxx and Xx. Xxxxxx will transfer the Virginia Honey Shares
as instructed. After agreed final payment, the Virginia Honey Shares shall be
returned to Vita. The Escrow Agents acknowledge and the parties agree that
physical possession of all certificates held in escrow will be with Xx.
Xxxxxxxxxx.
(d) The Closing. The closing of the transactions contemplated by this
Agreement (the "CLOSING") shall take place at the offices of Much Shelist Freed
Xxxxxxxxx Xxxxx & Xxxxxxxxxx, P.C. on or prior to [July 17, 2001], commencing at
10:00 a.m. local time or such other date as Vita and Xxxxx xxx mutually
determine (the "CLOSING DATE").
(e) Deliveries at the Closing. At the Closing, (i) Xxxxx will deliver
to Vita the various certificates, instruments, and documents referred to in
ss.7(a) below, (ii) Vita will deliver to Xxxxx the various certificates,
instruments, and documents referred to in ss.7(b) below, (iii) Xxxxx will
deliver to Vita stock certificates representing all of his Virginia Honey
Shares, endorsed in blank or accompanied by duly executed assignment documents,
and (iv) Vita will deliver to Xxxxx the consideration specified in ss.2(b)
above.
3. REPRESENTATIONS AND WARRANTIES CONCERNING THE TRANSACTION.
(a) Representations and Warranties of Xxxxx. Xxxxx 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)) with respect
to himself, except as set forth in Annex I attached hereto.
(i) Authorization of Transaction. Xxxxx has full power and
authority to execute and deliver this Agreement and to
perform his obligations hereunder. This Agreement
constitutes the valid and legally binding obligation of
Xxxxx, enforceable in accordance with its terms and
conditions. Xxxxx need not 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 Xxxxx 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 Xxxxx
is a party or by which he is bound or to which any of
his assets is subject.
(iii) Brokers' Fees. Xxxxx 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.
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(iv) Virginia Honey Shares. At Closing, Xxxxx will hold of
record and own beneficially one (1) Virginia Honey Share
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. Xxxxx is not a party to
any option, warrant, purchase right, or other contract
or commitment that could require Xxxxx to sell,
transfer, or otherwise dispose of any capital stock of
Virginia Honey (other than this Agreement). Xxxxx is not
a party to any voting trust, proxy, or other agreement
or understanding with respect to the voting of any
capital stock of Virginia Honey.
(v) No Knowledge of Breach. Xxxxx has no Knowledge of any
information which makes any representation or warranty
of Vita contained herein untrue.
(b) Representations and Warranties of Vita. Vita represents and
warrants to Xxxxx that the statements contained in this ss.3(b) 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(b)), except as
set forth in Annex II attached hereto.
(i) Organization of Vita. Vita is a corporation duly
organized, validly existing, and in good standing under
the laws of the jurisdiction of its incorporation. Vita
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. Vita has full power and
authority (including full corporate power and authority)
to execute and deliver this Agreement and to perform its
obligations hereunder. This Agreement constitutes the
valid and legally binding obligation of Vita,
enforceable in accordance with its terms and conditions.
Vita need not 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 is 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 is a
party or by which it is bound or to which any of its
assets is subject.
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(iv) Brokers' Fees. Vita 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 Xxxxx could become liable or
obligated.
(v) No Knowledge of Breach. Vita has no Knowledge of any
information which makes any representation or warranty
of Xxxxx or Virginia Honey contained herein untrue.
4. REPRESENTATIONS AND WARRANTIES CONCERNING VIRGINIA HONEY.
Except as otherwise indicated in this ss.4 and, as applicable, the
representations and warranties made by Xxxxx in this ss.4 are made to Terry's
Knowledge. Xxxxx 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 Xxxxx to Vita on the date hereof and initialed by the Parties (the
"DISCLOSURE SCHEDULE"). 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).
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. Virginia Honey is
a corporation duly organized, validly existing, and in good standing under the
laws of the jurisdiction of its incorporation. Virginia Honey is duly authorized
to conduct business and is in good standing under the laws of each jurisdiction
where such qualification is required. Virginia Honey has full corporate power
and authority and all 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 Virginia Honey. Xxxxx
will deliver to Vita correct and complete copies of the charter and bylaws, the
minute books and the stock record books of Virginia Honey (as amended to date).
Virginia Honey 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 Virginia Honey consists of 5,000 Virginia Honey Shares, of which 1
Virginia Honey Share is issued and outstanding and 499 Virginia Honey Shares are
held in escrow as security for certain obligations of Virginia Honey to
Arlington X. Xxxxxx. All of the issued and outstanding Virginia Honey Shares (i)
have been duly authorized, are validly issued, fully paid, and nonassessable,
and are held of record by Xxxxx; (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 Virginia Honey 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
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rights with respect to Virginia Honey. There are no voting trusts, proxies, or
other agreements or understandings with respect to the voting of the capital
stock of Virginia Honey.
(c) Noncontravention. 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 Virginia Honey is subject or any
provision of the charter or bylaws of Virginia Honey or (ii) 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 Virginia Honey 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). Virginia Honey 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). Virginia Honey 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). Virginia Honey 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 Most Recent Balance
Sheet 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 Most Recent Balance Sheet, and except as noted
in ss.4(e) of the Disclosure Schedule.
(f) Subsidiaries. Virginia Honey 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) Financial Statements. Attached hereto as Exhibit C are the
following financial statements (collectively the "FINANCIAL STATEMENTS"): (i)
unaudited consolidating balance sheets and statements of income, changes in
stockholders' equity, and cash flow as of and for the fiscal years ended
December 31, 1999 and December 31, 2000 (the "MOST RECENT FISCAL YEAR END") for
Virginia Honey; and (ii) consolidated and consolidating balance sheets and
statements of income, (the "MOST RECENT FINANCIAL STATEMENTS") as of and for the
3 months ended March 31, 2001 (the "MOST RECENT FISCAL MONTH END") for Virginia
Honey. The Financial Statements (including the notes thereto) 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, present fairly the financial condition of Virginia Honey as of
such dates and the results of operations of Virginia Honey for such periods, are
correct and complete, and are consistent with the books and records of Virginia
Honey (which books and records are correct and complete); provided, however,
that the Most Recent Financial Statements are subject to normal year-end
adjustments (which will not be material individually or in the aggregate).
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(h) Events Subsequent to Most Recent Fiscal Year End. Since the Most
Recent Fiscal Year End, there has not been any material adverse change in the
business, financial condition, operations, results of operations, or future
prospects of Virginia Honey. Without limiting the generality of the foregoing,
except as set forth in ss.4(h) of the Disclosure Schedule, since that date:
(i) Virginia Honey 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) Virginia Honey 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 Virginia Honey) 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 Virginia Honey is a party or
by which any of them is bound;
(iv) Virginia Honey has not imposed any Security Interest
upon any of its assets, tangible or intangible;
(v) Virginia Honey 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) Virginia Honey 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) Virginia Honey 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) Virginia Honey has not delayed or postponed the payment
of accounts payable and other Liabilities outside the
Ordinary Course of Business;
(ix) Virginia Honey 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) Virginia Honey has not granted any license or
sublicense of any rights under or with respect to any
Intellectual Property;
(xi) there has been no change made or authorized in the
charter or bylaws of Virginia Honey;
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(xii) Virginia Honey 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) Virginia Honey 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) Virginia Honey has not experienced any damage,
destruction, or loss (whether or not covered by
insurance) to its property;
(xv) Virginia Honey 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 for Virginia Honey's obligation to
Arlington X. Xxxxxx with respect to Virginia Honey's
redemption of all his Virginia Honey Shares and the
Leases;
(xvi) Virginia Honey 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) Virginia Honey has not granted any increase in the
base compensation to any of its employees outside the
Ordinary Course of Business or to any of its directors
or officers;
(xviii) Virginia Honey 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) Virginia Honey 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) Virginia Honey 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 Virginia Honey; and
(xxii) Virginia Honey has not committed to any of the
foregoing.
(i) Undisclosed Liabilities. Virginia Honey 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 face of the
Most Recent Balance Sheet (rather than in any notes thereto) and (ii)
Liabilities which have arisen after the Most Recent Fiscal Month End in the
Ordinary Course of Business
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(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). ss.4(i) of the Disclosure Schedule
contains a complete and accurate description (including name of the lender,
amount outstanding and any related Security Interests) of all indebtedness for
borrowed money of Virginia Honey, whether owed to a bank or any other Person.
(j) Legal Compliance. Virginia Honey and its respective predecessors
and Affiliates have complied with all 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. Xxxxx has not made payments in
connection with the operation of Virginia Honey 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 ofss.4 does not apply to thisss.4(k).
(i) Virginia Honey has filed all Tax Returns that it was
required to file. All such Tax Returns were correct and
complete in all respects. All Taxes owed by Virginia
Honey (whether or not shown on any Tax Return) have been
paid. Virginia Honey 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 Virginia Honey 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 Virginia Honey that arose in connection
with any failure (or alleged failure) to pay any Tax.
(ii) Virginia Honey 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 Xxxxx, there is no dispute or claim
concerning any Tax Liability of Virginia Honey claimed
or raised by any authority.
(iv) Virginia Honey 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 Virginia Honey (A) did not, as of
the Most Recent Fiscal Month End, exceed 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 Most
Recent Balance Sheet (rather than in any notes thereto)
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 Virginia Honey in
filing their Tax Returns.
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(l) Real Property. The Knowledge qualifier set forth in the first
sentence ofss.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 Virginia Honey. Xxxxx shall deliver to Vita correct
and complete copies of the leases and subleases listed
in ss.4(l)(i) of the Disclosure Schedule (as amended to
date). 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) Virginia Honey has not assigned, transferred,
conveyed, mortgaged, deeded in trust, or encumbered
any interest in the leasehold or subleasehold;
(H) all facilities leased or subleased thereunder have
received all approvals of governmental authorities
(including licenses and permits) required in
connection with the operation thereof and have been
operated and maintained 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 Terry's knowledge, the owner of the facility,
leased or subleased, has good and marketable title
to the parcel of real property, free and clear of
any Security Interest, easement, covenant, or other
restriction, except for installments of special
easements not yet delinquent and recorded easements,
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covenants, and other restrictions which do not
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.
(i) Virginia Honey owns or has the right to use pursuant to
license, sublicense, agreement, or permission all
Intellectual Property necessary for the operation of the
businesses of Virginia Honey as presently conducted and
as presently proposed to be conducted. Each item of
Intellectual Property owned or used by Virginia Honey
immediately prior to the Closing hereunder will be owned
or available for use by Virginia Honey on identical
terms and conditions immediately subsequent to the
Closing hereunder. Virginia Honey has taken all
necessary action to maintain and protect each item of
Intellectual Property that it owns or uses.
(ii) To the Knowledge of Virginia Honey, Virginia Honey has
not interfered with, infringed upon, misappropriated, or
otherwise come into conflict with any Intellectual
Property rights of third parties, and Xxxxx has never
received any charge, complaint, claim, demand, or notice
alleging any such interference, infringement,
misappropriation, or violation (including any claim that
Virginia Honey must license or refrain from using any
Intellectual Property rights of any third party). To the
Knowledge of Virginia Honey, no third party has
interfered with, infringed upon, misappropriated, or
otherwise come into conflict with any Intellectual
Property rights of Virginia Honey.
(iii) ss.4(m)(iii) of the Disclosure Schedule identifies each
patent or registration which has been issued to Virginia
Honey with respect to any of its Intellectual Property,
identifies each pending patent application or
application for registration which Virginia Honey has
made with respect to any of its Intellectual Property,
and identifies each license, agreement, or other
permission which Virginia Honey has 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 used by Virginia Honey 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 Virginia Honey uses pursuant to license,
sublicense, agreement, or permission.
(v) Virginia Honey 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 and as presently proposed to be
conducted.
(vi) Xxxxx does not know of any new products, inventions,
procedures, or methods of manufacturing or processing
that any competitors or other
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third parties have developed which reasonably could be
expected to supersede or make obsolete any product or
process of Virginia Honey.
(n) Tangible Assets. Virginia Honey owns or leases all buildings,
machinery, equipment, and other tangible assets necessary for the conduct of
their businesses as presently conducted and as presently proposed to be
conducted. Each such tangible asset is free from defects (patent and latent),
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 Virginia Honey 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, and none of which is below
standard quality, obsolete, damaged, or defective, subject only to the reserve
for inventory writedown 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 Virginia
Honey.
(p) Contracts.ss.4(p) of the Disclosure Schedule lists the following
contracts and other agreements to which Virginia Honey 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 Virginia Honey, 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 Xxxxx and its Affiliates (other than
Virginia Honey);
(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;
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(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 Virginia Honey;
(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) 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 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
Virginia Honey 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 Virginia Honey.
(r) Powers of Attorney. There are no outstanding powers of attorney
executed on behalf of Virginia Honey.
(s) Insurance. With respect to each insurance policy of Virginia Honey:
(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 Virginia Honey 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. Virginia Honey 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.
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(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 Virginia Honey (i) is subject to any outstanding
injunction, judgment, order, decree, ruling, or charge or (ii) is a party or, is
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. 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 Virginia Honey. None of Xxxxx and
the directors and officers (and employees with responsibility for litigation
matters) of Virginia Honey has any reason to believe that any such action, suit,
proceeding, hearing, or investigation may be brought or threatened against
Virginia Honey, except for the potential litigation involving a Canadian broker,
Xxx Xxx, and his company, "To Live For Foods."
(u) Product Warranty. To the Knowledge of Virginia Honey, each product
manufactured, sold, leased, or delivered by Virginia Honey has been in
conformity with all applicable contractual commitments and all express and
implied warranties. To the Knowledge of Virginia Honey, Virginia Honey 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 Virginia Honey.
No product manufactured, sold, leased, or delivered by Virginia Honey is subject
to any guaranty, warranty, or other indemnity beyond the applicable standard
terms and conditions of sale or lease. ss.4(u) of the Disclosure Schedule
includes copies of the standard terms and conditions of sale or lease for
Virginia Honey (containing applicable guaranty, warranty, and indemnity
provisions).
(v) Product Liability. Virginia Honey 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 Virginia Honey.
(w) Employees. To the Knowledge of the directors and officers of
Virginia Honey, no executive, key employee, or group of employees has any plans
to terminate employment with Virginia Honey. Virginia Honey is not a party to or
bound by any collective bargaining agreement, nor has any of them experienced
any strikes, grievances, claims of unfair labor practices, or other collective
bargaining disputes. Virginia Honey has not committed any unfair labor practice.
None of Xxxxx and the directors and officers (and employees with responsibility
for employment matters) of Virginia Honey 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 Virginia Honey.
(x) Employee Benefits.
(i) ss.4(x) of the Disclosure Schedule lists each Employee
Benefit Plan that Virginia Honey maintains or to which
Virginia Honey contributes or has any obligation to
contribute.
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(A) each such Employee Benefit Plan (and each related
trust, insurance contract, or fund) complies in form
and in operation in all respects with the applicable
requirements of ERISA, the Code, and other
applicable laws.
(B) 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. To the
Knowledge of Virginia Honey, the requirements of
COBRA have been met with respect to each such
Employee Benefit Plan which is an Employee Welfare
Benefit Plan.
(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 Virginia Honey. All
premiums or other payments for all periods ending on
or before the Closing Date 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,
within the last two years, a favorable determination
letter from the Internal Revenue Service that it is
a "qualified plan," and Xxxxx is not aware of any
facts or circumstances that could result in the
revocation of such determination letter.
(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 Liabilities thereunder determined in
accordance with PBGC methods, factors, and
assumptions applicable to an Employee Pension
Benefit Plan terminating on the date for
determination.
(F) Xxxxx 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 Virginia
Honey 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:
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(A) No such Employee Benefit Plan which is an Employee
Pension Benefit Plan (other than any Multiemployer
Plan) has been completely or partially terminated or
been the subject of a Reportable Event as to which
notices would be required to be filed with the PBGC.
No proceeding by the PBGC to terminate any such
Employee Pension Benefit Plan (other than any
Multiemployer Plan) has been instituted or, to the
Knowledge of Xxxxx, threatened.
(B) To the Knowledge of Virginia Honey, there have been
no Prohibited Transactions with respect to any such
Employee Benefit Plan. To the Knowledge of Virginia
Honey, 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
or, to the Knowledge of Xxxxx, threatened. Xxxxx has
no Knowledge of any Basis for any such action, suit,
proceeding, hearing, or investigation.
(C) Virginia Honey has not incurred, and Xxxxx has no
reason to expect that Virginia Honey will incur, any
Liability to the PBGC (other than PBGC premium
payments) or otherwise under Title IV of ERISA
(including any withdrawal liability as defined in
ERISA ss.4201) or under the Code with respect to any
such Employee Benefit Plan which is an Employee
Pension Benefit Plan.
(iii) Virginia Honey and the other members of the Controlled
Group that includes Virginia Honey 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) Virginia Honey 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).
(y) Guaranties. The Knowledge qualifier set forth in the first sentence
of ss.4 does not apply to this ss.4(y). Virginia Honey is not a guarantor or
otherwise is liable for any Liability or obligation (including indebtedness) of
any other Person.
(z) Environmental, Health, and Safety Matters.
(i) Virginia Honey and its respective predecessors and
Affiliates have complied and is in compliance with all
Environmental, Health, and Safety Requirements.
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(ii) Without limiting the generality of the foregoing,
Virginia Honey and its respective Affiliates have
obtained and complied with, and is in 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 Virginia Honey 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 its facilities arising under
Environmental, Health, and Safety Requirements.
(iv) None of the following exists at any property or
facility owned or operated by Virginia Honey: (1)
underground storage tanks, (2) asbestos-containing
material in any form or condition, (3) materials or
equipment containing polychlorinated biphenyls, or (4)
landfills, surface impoundments, or disposal areas.
(v) Virginia Honey 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
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) To the Knowledge of Virginia Honey, 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.
(vii) Neither Virginia Honey 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) To the Knowledge of Virginia Honey, no facts, events or
conditions relating to the past or present facilities,
properties or operations of
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Virginia Honey or any of its respective predecessors or
Affiliates will prevent, hinder or limit continued
compliance with Environmental, Health, and Safety
Requirements, give rise to any investigatory, remedial
or corrective obligations pursuant to Environmental,
Health, and Safety Requirements, or give rise to any
other 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.
(aa) Certain Business Relationships with Virginia Honey. None of Xxxxx
and its Affiliates has been involved in any business arrangement or relationship
with Virginia Honey 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 Xxxxx and its Affiliates owns any asset, tangible or
intangible, which is used in the business of Virginia Honey, 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. Xxxxx will cause Virginia Honey to give any
notices to third parties, and will cause Virginia Honey 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 (and Xxxxx will
cause Virginia Honey 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. Xxxxx will not cause or permit Virginia
Honey 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, Xxxxx will not cause or permit Virginia Honey 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.
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(d) Preservation of Business. Xxxxx will cause Virginia Honey 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. Xxxxx will permit, and Xxxxx will cause Virginia Honey
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
Virginia Honey, to all premises, properties, personnel, books, records
(including Tax records), contracts, and documents of or pertaining to Virginia
Honey.
(f) Notice of Developments. Xxxxx will give prompt written notice to
Vita of any material adverse development causing a breach of any of the
representations and warranties in ss.4 above. 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 in ss.3 above. 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. Xxxxx will not (and Xxxxx will not cause or permit
Virginia Honey 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 Virginia Honey (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 existence or
substance of this Agreement, except to Persons within Terry's or Virginia
Honey's organization who must be so informed, or to their professional advisors.
Xxxxx will not vote his Virginia Honey Shares in favor of any such acquisition
structured as a merger, consolidation, or share exchange. Xxxxx 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, Xxxxx will cause the Leases to be
amended granting Virginia Honey, Vita or its assignee the following: (a) an
option to extend the Leases for four (4) additional five (5) year periods at the
present rent and terms, plus an increment of rental for each five (5) year
option period of three percent (3%) per year; (b) an option to purchase, 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 Virginia Honey's manufacturing facilities after January
1, 2004, at a purchase, price of $2,000,000 for the Killer Bee manufacturing
facility and $750,000 for the honey manufacturing facility; and (c) the right of
first refusal on any proposed disposition of each such 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 of the written notice thereof, Xxxxx shall have the right to cancel
the Lease and any options to purchase each of Virginia Honey's manufacturing
facilities shall be terminated.
6. POST-CLOSING COVENANTS.
The Parties agree as follows with respect to the period following the
Closing.
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(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).
Xxxxx acknowledges and agrees that from and after the Closing, Vita will be
entitled to possession of all documents, books, records (including Tax records),
agreements, and financial data of any sort relating to Virginia Honey.
(b) Management Relationships.
(i) Terry's Management. Xxxxx shall be President and the Chief
Executive Officer of Virginia Honey so long as he remains employed by
Virginia Honey pursuant to the Employment Agreement. In connection
therewith with respect to Virginia Honey, Xxxxx shall be responsible
for:
(A) the operations, manufacturing, sales and
distribution;
(B) all employment and compensation matters;
(C) the preparation and delivery of all financial
reporting, including operating and budgeting;
(D) such other areas of responsibility generally within
the scope of the office of the President.
(ii) Vita's Management. Assistance shall be provided by Vita
to Virginia Honey. In connection therewith:
(A) Vita shall not accrue or charge Virginia Honey 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 contracted with sales commission),
etc.);
(B) Vita shall charge Virginia Honey for all its
out-of-pocket expenses incurred for the benefit of
Virginia Honey (e.g., Virginia Honey's proportionate
share of independent accountants charges, outside
legal counsel work for the benefit of Virginia
Honey, etc.)
(iii) Mutual Management Responsibilities.
(A) Virginia Honey shall timely submit its annual
operating budget for the approval of Vita's Board of
Directors;
(B) Virginia Honey shall timely submit its capital
expenditure budget for the approval of Vita's Board
of Directors;
(C) Virginia Honey and Vita shall have the normal
obligations, responsibilities and relationship
between a subsidiary corporation and its public
parent corporation.
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(D) Vita's Board of Directors shall act in a good
business manner in reviewing and approving Virginia
Honey's operating budget and capital expenditure
budget.
(c) Litigation. Xxxxx shall be liable for and make all payments,
expenses, fees, costs and judgments related to any litigation matters relating
to Xxx Xxx and his company, "To Live For Foods." In the event and for so long as
any Party actively is contesting or defending against any action, suit,
proceeding, hearing, investigation, charge, complaint, claim, or demand in
connection with (i) any transaction contemplated under this Agreement or (ii)
any fact, situation, circumstance, status, condition, activity, practice, plan,
occurrence, event, incident, action, failure to act, or transaction on or prior
to the Closing Date involving Virginia Honey, each of the other Parties will
cooperate with him or it and his or its counsel in the contest or defense, make
available their personnel, and provide such testimony and access to their books
and records as shall be necessary in connection with the contest or defense, all
at the sole cost and expense of the contesting or defending Party (unless the
contesting or defending Party is entitled to indemnification therefor under ss.8
below).
(d) Life Insurance. Virginia Honey shall maintain in full force and
effect a key man life insurance policy in the amount of no less than
$3,000,000.00 on the life of Xxxxx, the proceeds of which shall be payable by
Vita to Arlington X. Xxxxxx in the amount equal to Virginia Honey's indebtedness
to Xx. Xxxxxx at the time of Terry's death. Such policy may be reduced on a
dollar-for-dollar basis in the amount of any payments from Virginia Honey to Xx.
Xxxxxx.
(e) Transition. Xxxxx 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 Virginia Honey from maintaining the
same business relationships with Virginia Honey after the Closing as it
maintained with Virginia Honey prior to the Closing.
(f) Confidentiality. Xxxxx 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, 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 that Xxxxx 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 Xxxxx 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(f). If, in the absence of a protective order or the
receipt of a waiver hereunder, Xxxxx is, on the advice of counsel, compelled to
disclose any Confidential Information to any tribunal or else stand liable for
contempt, that Xxxxx xxx disclose the Confidential Information to the tribunal;
provided, however, that the disclosing Xxxxx shall use his reasonable best
efforts to obtain, at the reasonable request 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.
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7. CONDITIONS TO OBLIGATION TO CLOSE.
(a) Conditions to Obligation of Vita. The obligation of Vita 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 Xxxxx set forth
inss.3(a) andss.4 above shall be true and correct in
all material respects at and as of the Closing Date;
(ii) Xxxxx shall have performed and complied with all of his
covenants hereunder in all material respects through
the Closing;
(iii) Virginia Honey 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 Vita to own Virginia
Honey Shares and to control Virginia Honey, or (D)
affect adversely the right of Virginia Honey to own its
assets and to operate its businesses (and no such
injunction, judgment, order, decree, ruling, or charge
shall be in effect);
(v) Xxxxx shall have delivered to Vita a certificate to the
effect that each of the conditions specified above
inss.7(a)(i)-(iv) is satisfied in all respects;
(vi) the Parties and Virginia Honey 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-4 attached hereto and the same
shall be in full force and effect;
(viii) Vita shall have received the resignations, effective as
of the Closing, of each director, other than Xxxxx, of
Virginia Honey other than those whom Vita shall have
specified in writing at least five (5) business days
prior to the Closing;
(ix) the Leases shall be amended and shall be reasonably
satisfactory in form and substance to Vita; and
(x) all actions to be taken by Xxxxx in connection with
consummation of the transactions contemplated hereby
and all certificates, opinions, instruments, due
diligence documents, accounting review, and other
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documents required to effect the transactions
contemplated hereby will be reasonably satisfactory in
form and substance to Vita.
(xi) Net Worth. Virginia Honey's balance sheet on the
Closing Date shall reflect the assets and liabilities
reported on the Most Recent Financial Statements,
subject only to normal changes that may occur in the
Ordinary Course of Business. The terms of the
indebtedness of $2,910,567 shall remain unchanged,
except as may be reduced in accordance with the terms
of such indebtedness. The net book value of Virginia
Honey on the Closing Date shall be equal to or greater
than the net book value on the Most Recent Fiscal Month
End.
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 Xxxxx. The obligation of Xxxxx to
consummate the transactions to be performed by them in connection with the
Closing is subject to satisfaction of the following conditions:
(i) the representations and warranties of Vita set forth
inss.3(b) above shall be true and correct in all
material respects at and as of the Closing Date;
(ii) Vita 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 shall have
delivered to Xxxxx a certificate to the effect that
each of the conditions specified above
inss.7(b)(i)-(iii) is satisfied in all respects;
(v) the Parties and Virginia Honey 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-4 and the same shall be in full
force and effect;
(vii) the Leases shall be amended and shall be reasonably
satisfactory in form and substance to Xxxxx; and
(viii) all actions to be taken by Vita in connection with
consummation of the transactions contemplated hereby
and all certificates, opinions, instruments, and other
documents required to effect the transactions
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contemplated hereby will be reasonably satisfactory in
form and substance to Xxxxx.
Xxxxx 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 Xxxxx contained in ss.4
above (except for ss.4(k), 3(a)(iv), 4(b) 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
Xxxxx contained in ss.4(k) subject to any applicable statutes of limitations,
3(a)(iv), 4(b) and 4(z)) shall survive the Closing and continue in full force
and effect forever thereafter.
(b) Indemnification Provisions for Benefit of Vita.
(i) In the event Xxxxx breaches (or in the event any third
party alleges facts that, if true, would mean Xxxxx has
breached) any of his representations, warranties, and
covenants contained herein (other than the
representations and warranties inss.3(a) above), and, if
there is an applicable survival period pursuant
toss.8(a) above, provided that Vita makes a written
claim for indemnification against Xxxxx pursuant
toss.11(g) below within such survival period, then Xxxxx
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 Xxxxx 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
Xxxxx contained inss.4(a)-(j), ss.4(m)-(w)
andss.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.
The maximum aggregate amount recoverable from Xxxxx with
respect to any Adverse Consequences Vita may suffer
relating to this Agreement or the transactions
contemplated hereby shall not exceed $343,359.20 plus
the remaining portion of the Purchase Price.
(ii) In the event Xxxxx breaches (or in the event any third
party alleges facts that, if true, would mean Xxxxx has
breached) any of his representations and warranties
inss.3(a) above, and, if there is an applicable survival
period pursuant toss.8(a) above, provided that Vita
makes a written claim for indemnification against Xxxxx
pursuant toss.11(g) below within such survival period,
then Xxxxx agrees to indemnify Vita from and against the
entirety of any Adverse
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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) Xxxxx agrees to indemnify Vita from and against the
entirety of any Adverse Consequences Vita may suffer
resulting from, arising out of, relating to, in the
nature of, or caused by any Liability of Virginia Honey
for any Taxes of Virginia Honey 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 withss.9(c)) to the
portion of such period beginning before and ending on
the Closing Date), to the extent 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 Most Recent Balance Sheet (rather than
in any notes thereto).
(c) Indemnification Provisions for Benefit of Xxxxx. 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 Xxxxx makes a written claim for indemnification
against Vita pursuant to ss.11(g) below within such survival period, then Vita
agrees to indemnify Xxxxx from and against the entirety of any Adverse
Consequences Xxxxx xxx suffer through and after the date of the claim for
indemnification (including any Adverse Consequences Xxxxx 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
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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
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 inss.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 thisss.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 (including without limitation any such remedy
arising under Environmental, Health, and Safety Requirements) any Party may have
with respect to Virginia Honey or the transactions contemplated by this
Agreement. Xxxxx hereby agrees that he will not make any claim for
indemnification against Virginia Honey by reason of the fact that he was a
director, officer, employee, 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 Xxxxx (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 Xxxxx shall be paid pursuant to ss.8(g)
herein below. Each Party shall be entitled to recover any indemnification
payments due hereunder by directly obtaining
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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 to Xxxxx after the Closing, as the sole available remedy against Xxxxx
hereunder, other than the amount of $343,359.20 as provided for under Section
8(b)(i) above.
9. TAX MATTERS.
The following provisions shall govern the allocation of responsibility
as between Vita and Xxxxx for certain tax matters following the Closing Date:
(a) Tax Sharing Agreements. All tax sharing agreements or similar
agreements with respect to or involving Virginia Honey shall be terminated as of
the Closing Date and, after the Closing Date, Virginia Honey 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 this Agreement, shall be
paid by Xxxxx when due, and Xxxxx will, at their 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 Xxxxx xxx terminate this Agreement by mutual
written consent at any time prior to the Closing;
(ii) Vita may terminate this Agreement by giving written
notice to Xxxxx on or before June 26, 2001 if Vita is
not reasonably satisfied with the results of its
continuing due diligence regarding Virginia Honey;
(iii) Vita may terminate this Agreement by giving written
notice to Xxxxx at any time prior to the Closing (A) in
the event any of Xxxxx has breached any material
representation, warranty, or covenant contained in this
Agreement in any material respect, Vita has notified
Xxxxx 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 August 30, 2001, by reason of the failure of
any condition precedent underss.7(a) hereof (unless the
failure results primarily from Vita itself breaching any
representation, warranty, or covenant contained in this
Agreement); and
(iv) Xxxxx xxx terminate this Agreement by giving written
notice to Vita at any time prior to the Closing (A) in
the event Vita has breached any material representation,
warranty, or covenant contained in this Agreement in any
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material respect, Xxxxx 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 August 30,
2001, by reason of the failure of any condition
precedent underss.7(b) hereof (unless the failure
results primarily from Xxxxx himself breaching any
representation, warranty, or covenant contained in this
Agreement).
(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 Xxxxx; 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.
(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 and Xxxxx; 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 Terry's death,
Terry's rights, interests and obligations under this Agreement shall inure to
Terry's 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 two
business days after) it is sent by
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registered or certified mail, return receipt requested, postage prepaid, and
addressed to the intended recipient as set forth below:
If to Xxxxx: Xxxxx X. Xxxx
X.X. Xxx 0000
Xxxxxx, Xxxx Xxxxxxxx 00000
with copy to: Xxxxxx & Xxxxxxx, X.X.
Attn: Xxxxxx X. Xxxxx, III
0000 Xxxxxxxxxx Xxxxxx
P.O. Drawer 1286
Xxxxxxxxxxx, XX 00000
Fax: (000) 000-0000
and to:
Xxxx X. Xxxxxx
Xxxx & Xxxxxx, PLC
000 Xxxxx Xxxxxxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxxx 00000
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
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. 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
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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 Philadelphia, Pennsylvania. 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 Philadelphia, Pennsylvania with the
application of the laws of the State of Delaware.
(i) 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 Xxxxx, and such 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.
(j) 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.
(k) Expenses. Each of the Parties and Virginia Honey 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. In the
event this transaction shall not close, due to the fault of Vita, pursuant to
ss.10(a)(iii)(B) and ss.10(a)(iv)(B), Vita shall reimburse Xxxxx for one-half
(1/2) of the reasonable costs for services rendered with respect to the audit of
the Financial Statements. Xxxxx agrees that Virginia Honey has not borne or will
not bear any of Terry's costs and expenses (including any of his legal fees and
expenses) in connection with this Agreement or any of the transactions
contemplated hereby.
(l) 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.
(m) 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.
(n) Cure Period. Notwithstanding anything herein to the contrary, the
parties to this Agreement shall have thirty (30) days to cure any breach or
default hereunder after written notice thereof, provided it is curable.
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(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.
BUYER SELLER
Vita Food Products, Inc. Xxxxx X. Xxxx
By: By:
------------------------ ------------------------
Xxxxxxx X. Xxxxx Xxxxx X. Xxxx
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MEMORANDUM AGREEMENT
This Agreement ("AGREEMENT") is made the 15th day of August 2001, by
and among Vita Food Products, Inc., a Nevada corporation ("VITA") and Xxxxx X.
Xxxx ("XXXXX"). Terms not otherwise defined herein shall have the meanings as
set forth in that certain Stock Purchase Agreement, dated June 29, 2001, between
Vita and Xxxxx.
1. DEFINITION. "CAPITAL CHARGES" - Means any interest, depreciation, lease
payments and other like charges related to capitalizable expenditures in any
fiscal year.
2. CAPITALIZABLE EXPENDITURES - If the capitalizable expenditures of
Virginia Honey in any fiscal year beginning January 1, 2001 ("POST FISCAL YEAR")
is greater than the average capitalizable expenditures (excluding the
expenditures related to the construction of manufacturing and warehouse
facilities) of Virginia Honey ("HONEY AVERAGE CAPITAL EXPENDITURE") in the
fiscal years 1999 and 2000, the following amounts determined by the formula
below shall be deducted from the respective years Post Fiscal Year earnings in
determining the First Earnout and Second Earnout.
3. FORMULA - (x) Multiply the amount of a fiscal year Capital Charges by
the fraction, the denominator of which is the Honey Average Capital Expenditure
for 1999 and 2000, and the numerator of which is the Post Fiscal Year's Honey
Average Capital Expenditures, and (y) Deduct from such product of (x) above, the
amount of such fiscal year Capital Charges.
Attached hereto is an example for explanation of the above formula.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first stated above.
XXXXX X. XXXX VITA FOOD PRODUCTS, INC.
By: By:
---------------------------- ----------------------------------
XXXXX X. XXXX Its:
----------------------------------
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EMPLOYMENT AGREEMENT
This Employment Agreement ("AGREEMENT") is made as of this 1st day of July,
2001, by Virginia Honey Company, Inc., a Virginia corporation ("VIRGINIA
HONEY"), and Xxxxx X. Xxxx ("XXXXX").
RECITALS
A. Virginia Honey is engaged in the business of processing, manufacturing
and distributing various food products, including salad dressings and honey (the
"BUSINESS").
B. Vita Food Products, Inc., a Nevada corporation ("VITA "), Virginia
Honey, and Xxxxx have entered into that certain Stock Purchase Agreement dated
June 29, 2001, ("STOCK PURCHASE AGREEMENT") whereby Vita agreed to purchase and
Xxxxx agreed to sell, transfer, assign, and deliver all of the issued and
outstanding capital stock of Virginia Honey. Capitalized terms used herein, but
not defined, have the meanings set forth in the Stock Purchase Agreement. Xxxxx
and Vita acknowledge and agree that each would not enter into the Stock Purchase
Agreement without entering into this Agreement.
C. Virginia Honey desires to employ Xxxxx as its Chief Executive Officer
and Xxxxx desires to perform the services of the Chief Executive Officer for
Virginia Honey.
CLAUSES
In consideration of the foregoing, and the covenants, duties, rights, and
obligations set forth below, the parties agree as follows:
ARTICLE 1
EMPLOYMENT AND DUTIES
1.1 EMPLOYMENT
(a) DUTIES. Subject to the terms and conditions in this Agreement, Virginia
Honey agrees to employ Xxxxx as its Chief Executive Officer, to perform the
usual duties of such office and such other reasonable additional
responsibilities commensurate with his position as may be added to the Terry's
duties from time to time, at the direction of the Board of Directors of Virginia
Honey. Xxxxx shall devote his full and exclusive working time and efforts to the
business and affairs of Virginia Honey, and his duties shall include, but not be
limited to, directing and overseeing the operations and daily functions of
Virginia Honey's Business and the supervising and training of other employees of
Virginia Honey. Xxxxx shall also serve as a member of the Board of Directors of
Vita.
(b) PLACE OF PERFORMANCE. In his employment by Virginia Honey, Xxxxx shall
be based in Inwood, West Virginia and Berryville, Virginia.
1.2 TERM. The term of Terry's employment under this Agreement shall be for
the period commencing from the Closing Date and continuing through December 31,
2004, subject to early termination as set forth herewith (the "TERM").
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ARTICLE 2
COMPENSATION AND DAMAGES
2.1. COMPENSATION. During the Term, Xxxxx shall be paid a salary of Three
Hundred Thousand Dollars ($300,000) per year (the "SALARY"). The Salary shall
accrue and be due and payable in equal, or as nearly equal as practicable,
bi-weekly installments or in the manner and on the timetable that Virginia
Honey's payroll is customarily handled. The Salary shall be increased from time
to time, at the sole discretion of the Board of Directors of Virginia Honey, by
a percentage equal to the percentage increase in the cost of living.
2.2 EXPENSE REIMBURSEMENT. While Xxxxx is performing the services described
herein, Virginia Honey shall, upon request, reimburse Xxxxx for all reasonable
and necessary expenses incurred by Xxxxx in connection with the performance of
duties of employment hereunder (in accordance with the policies and procedures
established by the Board of Directors of Virginia Honey for all of Virginia
Honey's officers), provided that Xxxxx properly accounts therefor.
2.3 BENEFITS.
(a) BENEFIT PLAN. If Virginia Honey now maintains or, while Xxxxx renders
services to Virginia Honey, establishes (i) an incentive or other compensation
plan (however described or denominated) for its senior executive officers or
other management of Virginia Honey; or (ii) any other benefit program(s)
(however described or denominated), Xxxxx shall be eligible to fully participate
in each such plan or benefit program.
(b) INSURANCE. During the Term, Virginia Honey shall provide health,
medical, and term life insurance to Xxxxx in accordance with any group plan
which it now maintains or which may hereafter be established by Virginia Honey.
(c) VACATION. Xxxxx shall receive not less than four (4) weeks paid
vacation during each twelve (12) month period of employment and shall also be
entitled to all paid holidays afforded by Virginia Honey to its employees.
2.4 TERMINATION.
(a) CAUSE. Virginia Honey shall have the right, at any time during the Term
of this Agreement, to terminate Terry's employment (the "TERMINATION DATE")
under this Agreement, if such termination is for "Cause." For purposes of this
Agreement, "CAUSE" shall mean Terry's, (i) commission of any act of fraud or
dishonesty relating to and affecting the business affairs of Virginia Honey;
(ii) conviction of any felony; (iii) failure to reasonably exercise the
responsibilities and duties as the Chief Executive Officer of Virginia Honey
after written notice specifying such failure and a reasonable opportunity to
cure such failure; or (iv) a material breach of the restrictive covenants set
forth in Article 3 of this Agreement or as set forth in that certain
Non-Competition and Non-Solicitation Agreement entered into by and among
Virginia Honey, Vita, and Xxxxx dated of even date herewith. In the event that
employment is terminated by Virginia Honey for Cause, Virginia Honey will have
no obligations to pay any further amounts hereunder or under the Stock Purchase
Agreement beyond the date of such termination.
(b) DAMAGES. If Terry's employment is "Voluntarily Terminated" (as defined
below) by Xxxxx or for Cause (as defined in subsection 1.2(b)) before the end of
the Term, Xxxxx shall
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pay Vita, as liquidated damages, and not as a penalty, the following amounts,
which amounts shall be set off and forfeited by Xxxxx only from compensation due
Xxxxx hereunder, the First Earnout and/or the Second Earnout and not paid by
Xxxxx directly:
Termination on or Before Liquidated Damage Amount
------------------------ ------------------------
December 31, 2002 $3.5 million
December 31, 2003 $2.5 million
December 31, 2004 $1.5 million
"VOLUNTARILY TERMINATED" shall be limited to a cessation of employment by
Xxxxx for reasons other than death, a material breach by Vita of the Stock
Purchase Agreement or this Agreement or "Total Disability". For the purposes of
this Agreement, "TOTAL DISABILITY" means the Terry's inability, through physical
or mental illness or accident, to perform the majority of his usual duties and
responsibilities hereunder (as such duties are constituted on the date of the
commencement of such disability) in the manner and to the extent required under
this Agreement for a period of at least one hundred eighty (180) days out of a
360 day period. Total Disability shall be deemed to have occurred on the first
day following the expiration of such one hundred eighty (180) days.
2.5 SET OFF. Vita and Xxxxx xxx set-off any amounts due to the other in
order to reconcile any amounts due to the other.
ARTICLE 3
RESTRICTIVE COVENANTS
3.1 CONFIDENTIALITY. Xxxxx acknowledges that the nature of his engagement
by Virginia Honey and Vita (collectively, "VHVP") is such that Xxxxx shall have
access to information of a confidential and/or trade secret nature which has
great value to VHVP. Such information includes, without limitation, financial,
manufacturing and marketing data, business plans and methods, processes, product
formulas, books and records, sales know-how, pricing information, developmental
work, work in process, methods, trade secrets (including, without limitation,
customer lists, supplier lists and lists of customer, supplier and food broker
sources), and any other information relating to the products, services,
customers, sales or business affairs of VHVP, which has value and is treated as
secret and/or confidential by VHVP (the "CONFIDENTIAL INFORMATION"). VHVP has
and will also have access to Confidential Information of its "Suppliers" (for
the purposes of this Agreement, "SUPPLIERS" means any persons with whom VHVP has
a co-packing or joint venture relationship with or who supplies any products or
materials to VHVP). Confidential Information includes not only information
disclosed by VHVP or its Suppliers to Xxxxx in the course of employment, but
also information developed or learned by Xxxxx during the course of employment
with VHVP. Confidential Information is to be broadly defined. Confidential
Information includes all information that has or could have commercial value or
other utility in the business in which VHVP or Suppliers are engaged.
Confidential Information also includes all information of which the unauthorized
disclosure could be materially detrimental to the interests of VHVP or
Suppliers. Xxxxx agrees to keep all Confidential Information that could be
materially detrimental to the interests of VHVP or Suppliers in confidence
during the term of this Agreement and at any time thereafter and shall not use,
disclose, publish or otherwise disseminate any of such Confidential Information
to any other person, except to the extent such disclosure is, (i) required by
applicable law, (ii) lawfully obtainable from other sources, (iii) authorized in
writing by VHVP, (iv) no longer qualifies as a trade secret or confidential
information under applicable law, or (v) necessary to enforce this Agreement.
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3.2 REMEDIES. The parties hereto agree that the services to be rendered by
Xxxxx pursuant to this Agreement, and the rights and privileges granted by VHVP
pursuant to this Agreement, are of a special, unique, extraordinary and
intellectual character, which gives them a peculiar value, the loss of which
cannot be reasonably or adequately compensated in damages in any action at law,
and that a breach by Xxxxx of any of the terms of this Agreement will cause VHVP
great and irreparable injury and damage. Therefore, Xxxxx agrees that in
addition to such other remedies as may be available to VHVP, at law or in
equity, any court of competent jurisdiction may issue a decree of specific
performance on a temporary or permanent basis. VHVP also is entitled to seek an
injunction, specific performance and other equitable relief, without posting
bond, to enjoin, restrict or prevent a breach, or threatened breach, of this
Agreement by Xxxxx.
3.3 CUMULATIVE REMEDIES. The remedies contained in this Agreement are in
addition to and not to the exclusion of any other remedies whether specified in
this Agreement, available at law, in equity or otherwise.
3.4 SURVIVAL OF COVENANTS. Terry's duties and obligations under this
Agreement shall survive the termination of this Agreement or any of its
provisions; provided, however, if Xxxxx is terminated without Cause by Virginia
Honey, Terry's obligation of confidentiality in Section 3.1 above shall survive
only with respect to Vita confidential information and shall terminate with
respect to Virginia Honey confidential information.
3.5 RETURN OF MATERIAL. Upon the termination of Terry's employment with
Virginia Honey for any reason, with or without cause, Xxxxx immediately shall
deliver to Virginia Honey all documents, records, notebooks, work papers,
instruments, and/or electronic, magnetic, or other media which in any way
contain any information involving the Confidential Information, or other
information, materials, equipment or items of VHVP. Xxxxx shall not retain any
copies of the preceding except for such financial information necessary to
protect his interest as a creditor.
ARTICLE 4
12. GENERAL
4.1 TERMINATION OF AGREEMENT. Nothing contained in this Agreement shall
affect or impair any rights or obligations which arise prior to or at the time
this Agreement terminates, or which may arise due to any event which causes this
Agreement to terminate.
4.2 NOTICES. All notices concerning this Agreement shall be given in
writing, as follows: (i) by actual delivery of the notice into the hands of the
party entitled to receive it, in which case such notice shall be effective upon
such delivery, (ii) by mailing such notice by registered or certified mail,
return receipt requested, in which case the notice shall be deemed given four
(4) days from the date of its mailing; (iii) by Federal Express or any other
overnight carrier, in which case the notice shall be deemed to be given on the
date next succeeding the date of its transmission; or (iv) by facsimile, in
which case the notice shall be deemed given as of the date it is sent. Notices
shall be sent to the appropriate party at its address or facsimile number given
below (or at such other address or facsimile number for such party as shall be
specified by notice given hereunder):
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If to Vita or Virginia Honey: If to Xxxxx:
---------------------------- -----------
Vita Food Products, Inc. Xxxxx X. Xxxx
Attention: Xxxxxxx X. Xxxxx, President P.O. Box 1915
0000 Xxxx Xxxx Xxxxxx Xxxxxx, XX 00000
Xxxxxxx, XX 00000 Fax: (000) 000-0000
Fax: (000) 000-0000
With a copy to: With a copy to:
Much Shelist Freed Xxxxxxxxx Xxxxxx & Xxxxxxx, X.X.
Xxxxx & Xxxxxxxxxx, P.C. Attn: Xxxxxx X. Xxxxx, III
Attn: Xxxxxxx X. Xxxxxxxxxx 0000 Xxxxxxxxxx Xxxxxx
000 Xxxxx XxXxxxx Xxxxxx P.O. Drawer 1286
Suite 2100 Martinsburg, WV 25401
Xxxxxxx, XX 00000-0000 Fax: (000) 000-0000
Fax: (000) 000-0000
and to:
Xxxx and Truban, PLC
Attn: Xxxx X. Xxxxxx
000 Xxxxx Xxxxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
Fax: (000) 000-0000
4.3 ASSIGNMENT. This Agreement and the rights and obligations of the
parties hereunder may not be assigned by either party hereto without the prior
written consent of the other party hereto.
4.4 WAIVER. The waiver by either party hereto of any breach of this
Agreement by the other party hereto shall not be effective unless in writing,
and no such waiver shall operate or be construed as the waiver of the same or
another breach on a subsequent occasion.
4.5 BENEFICIARY. All of the terms and provisions of this Agreement shall be
binding upon and inure to the benefit of and be enforceable by the parties
hereto and their respective successors, heirs, executors, administrators and
permitted assigns.
4.6 COMPLETE UNDERSTANDING. This Agreement constitutes the complete
understanding between the parties. No alteration or modification of any of this
Agreement's provisions shall be valid unless made in writing and signed by the
parties to this Agreement.
4.7 APPLICABLE LAW. The internal substantive laws of the State of West
Virginia shall govern all aspects of this Agreement without respect to its
conflicts of laws principles, irrespective of the fact that one or more of the
parties now is or may become a resident of a different state.
4.8 DESCRIPTIVE HEADINGS. All section headings, titles, and subtitles are
inserted in this Agreement for the convenience of reference only, and are to be
ignored in any construction of this Agreement or its provisions.
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4.9 SEVERABILITY. If a court of competent jurisdiction rules that any one
or more of this Agreement's provisions is invalid, illegal or unenforceable in
any respect, such invalidity, illegality or unenforceability shall not affect
any of this Agreement's other provisions, and this Agreement shall be construed
as if it had never contained such invalid, illegal, or unenforceable provision.
4.10 PRIOR AGREEMENTS SUPERSEDED. This Agreement supersedes any prior
understandings, written agreements, or oral arrangements among the parties
respecting the subject matter of this Agreement.
4.11 CURE PERIOD. Notwithstanding anything herein to the contrary, the
parties to this Agreement shall have thirty (30) days to cure any breach or
default hereunder after written notice thereof, provided it is curable.
4.12 GOOD FAITH AND REASONABLENESS. The parties agree to exercise good
faith and reasonableness in the interpretation and implementation of this
Agreement.
Executed this 15th day of August, 2001.
VIRGINIA HONEY COMPANY, INC., XXXXX X. XXXX
a Virginia corporation
---------------------------------------- ------------------
By: By: Xxxxx X. Xxxx
----------------------------------------
Its:
----------------------
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NON-COMPETITION AND NON-SOLICITATION AGREEMENT
This Non-Competition and Non-Solicitation Agreement ("AGREEMENT"), is made
as of this 1st day of July, 2001 by and among VITA FOOD PRODUCTS, INC., a Nevada
corporation with its principal place of business in Chicago, IL ("VITA"),
VIRGINIA HONEY COMPANY, INC., a Virginia corporation ("VIRGINIA HONEY") with its
principal place of business in Martinsburg, West Virginia, and XXXXX X. XXXX,
("XXXXX").
RECITALS A. Vita is engaged in the business of processing, manufacturing
and distributing various food products (the "VITA BUSINESS").
B. Virginia Honey is engaged in the business of manufacturing and
distributing various food products, including salad dressings and honey (the
"VIRGINIA HONEY BUSINESS").
C. The Virginia Honey Business and the Vita Business together with any
business conducted jointly by Virginia Honey and Vita shall be referred to as
the "BUSINESS."
D. This Agreement is entered into in conjunction with that certain Stock
Purchase Agreement dated June 29, 2001 ("STOCK PURCHASE AGREEMENT") by and
between Vita and Xxxxx, whereby Vita agreed to purchase and Xxxxx agreed to sell
all of the issued and outstanding capital stock of Virginia Honey (the
"TRANSACTION"). Xxxxx and Vita acknowledge and agree that each would not enter
into the Stock Purchase Agreement without entering into this Agreement.
X. Xxxxx acknowledges and agrees that: (i) he has been an officer,
director, shareholder and an employee of Virginia Honey for a number of years;
(ii) the past and future services rendered, or to be rendered, by Xxxxx to
Virginia Honey were and are of extraordinary merit, and constitute a necessary
and valuable contribution to the general growth and development of Virginia
Honey; (iii) during the course of his employment with and relationship to
Virginia Honey, Vita and its affiliates (all together "GREATER VIRGINIA HONEY"),
he has and will continue to acquire special knowledge of the relationships and
business techniques, internal business organization, financial data, marketing
plans, intellectual property and other proprietary matters of Greater Virginia
Honey; and (iv) Vita would not be willing to consummate the Transaction without
the protection against unfair competition this Agreement affords.
CLAUSES
NOW, THEREFORE, in consideration of the premises and the following
covenants and agreements, the parties agree as follows:
1. RESTRICTIONS ON COMPETITION. During the term of his employment with
Greater Virginia Honey and for a period of five (5) years from the date of the
termination of Terry's employment with Greater Virginia Honey, for any reason
(the "RESTRICTIVE PERIOD"), Xxxxx agrees that he shall not engage in any
business which competes with the Business. Specifically, Xxxxx agrees that he
shall not, directly or indirectly:
(i) own, manage, operate, control, consult, be compensated by,
be employed by, participate in, or be connected in any manner with
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the ownership (except for ownership of less than 3% in a public
company), management, operation, or control of any business which is
located within the United States of America, and which competes with,
or is similar to, the Business;
(ii) attempt in any way to obtain for himself, or others, or
to divert from Greater Virginia Honey, any rights, benefits, sales or
profits arising out of or in connection with the Business;
(iii) divulge, communicate, use or disclose, or permit others
to use or disclose, any nonpublic information concerning the Business,
or Greater Virginia Honey, including customer lists, suppliers and
employees;
(iv) interfere with the business relationships or disparage
the good name or reputation of Greater Virginia Honey or the Business;
or
(v) solicit, encourage or accept any contract, arrangement or
understanding with respect to any of the foregoing, or solicit,
encourage, support or arrange to have any other person engage in any of
the foregoing restricted activities.
2. NON-SOLICITATION. During the Restrictive Period, Xxxxx will not,
directly or indirectly, through one or more intermediaries or affiliates or
otherwise:
(i) solicit anyone who was a customer or supplier of Greater
Virginia Honey during the term of Terry's employment with Greater
Virginia Honey with respect to any business which competes with the
Business as it is then being conducted;
(ii) divert, take away, solicit or seek to induce employment
of any of the employees of Greater Virginia Honey; or
(iii) entice, persuade, advise or induce any employee of
Greater Virginia Honey to terminate or refrain from renewing or
extending his/her employment with Greater Virginia Honey.
3. COUNSEL. Xxxxx represents and warrants that he has read and understands
this Agreement, he has consulted with legal counsel who has explained all of its
terms and provisions, and he has received fair and adequate consideration for
the undertakings made hereunder.
4. REMEDIES. Xxxxx acknowledges that the breach of any of the covenants
contained in Sections 1 and 2 hereof, after notice of such breach by Greater
Virginia Honey and thirty (30) days to cure such breach, provided such breach is
curable, will result in irreparable harm and continuing damages to Greater
Virginia Honey and the Business, and that Greater Virginia Honey's remedy at law
for any such breach or threatened breach will be inadequate. Accordingly, in
addition to such other remedies as may be available to Greater Virginia Honey,
at law or in equity, any court of competent jurisdiction may issue a decree of
specific performance and other equitable relief, and a temporary or permanent
injunction, without
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posting bond, enjoining, restricting or preventing the breach, or threatened
breach, of any such covenant. Furthermore, Greater Virginia Honey may seek any
and all other remedies to which it may be entitled.
5. EXTENSION OF TERM FOR BREACH. If Xxxxx violates or breaches any of the
restrictive covenants in Sections 1 and 2 of this Agreement, and if Greater
Virginia Honey institutes legal action for injunctive or other relief, Greater
Virginia Honey shall not, as a result of the time involved in obtaining such
relief, be deprived of the benefit of the full period. Accordingly, such a
restrictive covenant shall be deemed extended by the "BREACH PERIOD." The
"BREACH PERIOD" shall be that period of time commencing the date Xxxxx breaches
any covenant hereunder and ending the earlier of the date (i) a judgment is
entered against Xxxxx or (ii) Xxxxx ceases the prohibited act, after which date,
the restrictive covenant shall continue to run for the remainder of the term
plus the Breach Period.
6. UNENFORCEABLE PROVISION. The parties hereby agree and acknowledge that:
(i) the duration, scope and geographic area applicable to each of the
restrictions set forth in this Agreement are fair, reasonable and necessary;
(ii) the consideration provided for in this Agreement, the Stock Purchase
Agreement and that certain employment agreement by and among Virginia Honey and
Xxxxx of even date herewith, are sufficient and adequate to compensate Xxxxx for
agreeing to each of the restrictions contained in this Agreement; and (iii) such
restrictions contained herein do not prevent Xxxxx from earning a livelihood. If
any court of competent jurisdiction shall determine that any of the restrictions
contained in Sections 1 and 2 hereof are unreasonable, invalid or unenforceable,
it is the intention of the parties that such a restrictive covenant shall not be
terminated or invalidated, but shall be deemed amended to the extent required to
render it reasonable, valid or enforceable, and such amendment to apply only
with respect to the operation of Sections 1 and 2 hereof in the jurisdiction of
the court which has made such adjudication.
7. SEVERABILITY. If a court of competent jurisdiction rules that any one or
more of this Agreement's provisions are invalid, illegal or unenforceable in any
respect, such invalidity, illegality or unenforceability shall not affect any of
this Agreement's other provisions, and this Agreement shall be construed as if
it has never contained such invalid, illegal or unenforceable provision.
8. TERMINATION OF COVENANTS. Notwithstanding anything herein to the
contrary, if Terry's employment with Virginia Honey is terminated by Xxxxx due
to the breach by Vita and/or Virginia Honey of the Stock Purchase Agreement or
the Employment Agreement, Terry's restrictive covenant obligations hereunder
will terminate only with respect to Virginia Honey and the restrictive covenant
obligations of Xxxxx with respect to Vita and its Business shall survive in
accordance with the terms hereunder.
9. ATTORNEYS' FEES AND COSTS. If any action is brought by either party to
enforce any provision of this Agreement, the prevailing party shall be entitled
to recover court costs and reasonable attorneys' fees
10. ASSIGNMENT. Xxxxx shall not have the right to assign this Agreement or
any of his rights or obligations hereunder to another party or parties. This
Agreement shall inure to the benefit of Greater Virginia Honey and its
successors and assigns, and shall be fully transferable and assignable by
Greater Virginia Honey.
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11. APPLICABLE LAW. The internal substantive laws of the State of Delaware
shall govern the interpretation of this Agreement, irrespective of the fact that
one or more of the parties now or may become a resident of a different
jurisdiction.
12. NO WAIVER. No waiver by Greater Virginia Honey of Terry's breach of any
covenant or obligation hereof shall be considered to be a continuing waiver of
any such covenant or provision, or a waiver of any other or future breach
thereof.
13. NOTICE. For the purposes of this Agreement, notices and all other
communications provided for in this Agreement shall be provided by all parties
to this Agreement in writing: (i) by actual delivery of the notice into the
hands of the party entitled to receive it; (ii) by mailing the notice by
registered or certified mail, return receipt requested, in which case the notice
shall be deemed to be given four (4) days following the date of its mailing;
(iii) by Federal Express or other overnight carrier, in which case the notice
shall be deemed to be given on the day following delivery into the hands of such
carrier; or (iv) by facsimile, in which case notice shall be deemed given on the
day sent. Notices shall be sent to the appropriate party at its address or
facsimile number given below (or at such other address or facsimile number for
such party as shall be specified by notice given hereunder):
If to Vita or Virginia Honey: If to Xxxxx:
---------------------------- -----------
Vita Food Products, Inc. Xxxxx X. Xxxx
Attention: Xxxxxxx X. Xxxxx, President P.O. Box 1915
0000 Xxxx Xxxx Xxxxxx Xxxxxx, XX 00000
Xxxxxxx, XX 00000 Fax: (000) 000-0000
Fax: (000) 000-0000
With a copy to: With a copy to:
Much Shelist Freed Xxxxxxxxx Xxxxxx & Xxxxxxx, X.X.
Xxxxx & Xxxxxxxxxx, P.C. Attn: Xxxxxx X. Xxxxx, III
Attn: Xxxxxxx X. Xxxxxxxxxx 0000 Xxxxxxxxxx Xxxxxx
000 Xxxxx XxXxxxx Xxxxxx P.O. Drawer 1286
Suite 2100 Martinsburg, WV 25401
Xxxxxxx, XX 00000-0000 Fax: (000) 000-0000
Fax: (000) 000-0000
and to:
Xxxx and Truban, PLC
Attn: Xxxx X. Xxxxxx
000 Xxxxx Xxxxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
Fax: (000) 000-0000
14. COMPLETE UNDERSTANDING. This Agreement contains all of the agreements
and understandings between the parties hereto with respect to the restrictive
covenants contained herein, and no oral agreements or written correspondence
shall be held to affect the provisions hereof. All subsequent changes and
modifications, to be valid, shall be by written instrument executed by Virginia
Honey, Vita and Xxxxx.
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Executed this 15th day of August, 2001.
VITA FOOD PRODUCTS, INC.,
a Nevada corporation
By:
-----------------------------------
Its:
-----------------------------------
VIRGINIA HONEY COMPANY, INC.,
a Virginia corporation
By:
-----------------------------------
Its:
-----------------------------------
XXXXX X. XXXX
--------------------------------------
Xxxxx X. Xxxx, individually
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STATE OF ________ )
) SS
COUNTY OF ______ )
On this ___ day of ___________________, 2001, before me, a Notary Public
within and for such county, personally appeared XXXXX X. XXXX who, being
personally known to me, executed the foregoing document and acknowledged the
execution of same.
----------------------------------
Notary Public
My Commission Expires:
----------------------
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ANNEX I
EXCEPTIONS TO VITA'S REPRESENTATIONS AND WARRANTIES
None.
48
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ANNEX II
EXCEPTIONS TO TERRY'S REPRESENTATIONS AND WARRANTIES
None.
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VITA FOOD PRODUCTS, INC.
STOCK PURCHASE AGREEMENT
DISCLOSURE SCHEDULE INDEX
Section Description
------- -----------
4(a) Directors and Officers
4(c) Title of Assets
4(h) Events Subsequent to Most Recent Fiscal Year End
4(i) Indebtedness
4(I)(i) Real Property
4(m)(iii) Patents, Other Registrations, Applications and
Licenses
4(m)(iv) Intellectual Property
4(p) Contracts
4(t) Litigation
4(u) Product Warranty
4(x) Employee Benefits
4(z) Environmental, Health and Safety Requirements
4(aa) Certain Business Relationships
Vita Food Products, Inc. agrees to furnish supplementally to the Securities and
Exchange Commission a copy of any of the disclosure schedules listed above upon
request.
