Exhibit 2.13
NONCOMPETITION AGREEMENT
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THIS NONCOMPETITION AGREEMENT (this "Agreement") is made and entered into
as of the 25th day of April, 2002, by and among Organic Ingredients, Inc., a
California corporation (the "Company"), Spectrum Organic Products, Inc., a
California corporation (the "Seller"), and Xxxxxxx Xxxxxxxx, a resident of
California ("Phillips"), and Xxxx Xxxxxxxxx, a resident of California,
("Xxxxxxxxx," and together, with Xxxxxxxx, the "Shareholders").
WITNESSETH:
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WHEREAS, pursuant to the Asset Purchase Agreement, dated as of April 25,
2002, by and among the Company, the Seller and Acirca, Inc. (the "Asset Purchase
Agreement"), the Seller will sell to the Company, and the Company will purchase
from the Seller, substantially all of Seller's assets that are used in the
conduct of the Business (as defined therein);
WHEREAS, the Seller conducts the Business within the Area (as defined
herein);
WHEREAS, Xxxxxxxx owns sixty-nine percent (69%) of the issued and
outstanding shares of capital stock of the Seller and will benefit materially
and significantly from the transactions contemplated by the Asset Purchase
Agreement (the "Transactions");
WHEREAS, Xxxxxxxxx owns two percent (2%) of the issued and outstanding
shares of capital stock of the Seller and will benefit materially and
significantly from the Transactions;
WHEREAS, the Seller and each of the Shareholders possess significant
information and experience with regard to the Business, and the Company desires
to protect its investment in the Business upon Closing (as defined herein); and
WHEREAS, as a condition precedent to the Company's obligations to
consummate the Transactions, the Company has required the execution and delivery
of this Agreement by the Seller and each of the Shareholders.
NOW THEREFORE, in consideration of the premises and mutual covenants
hereinafter set forth, the parties hereto, intending to be legally bound hereby,
agree as follows:
1. Definitions.
(a) "Affiliate" has the meaning given to it in the Asset Purchase
Agreement.
(b) "Area" means Aptos, California, the adjacent cities and counties in
California, the rest of the State of California, the states contiguous thereto,
each other state in the United States, Canada, and Mexico.
(c) "Business" means the business of the Organic Ingredients division of
the Seller as conducted on the date hereof and in the twelve (12) prior months,
including but not limited to the procurement, supplying and/or sourcing of
organic ingredients of any kind whatsoever; provided, however, in no event shall
the Business include (i) the oil-based products business of the Seller,
including oil seeds and meal, (ii) the vinegar business of the Seller, (iii) the
dressings and marinades business of the Seller, (iv) any Spectrum
consumer-branded retail or food service products business of the Seller as of
the Closing Date, (v) the organic and conventional dairy and cheese business of
the Seller, (vi) the retail and food service individually quick frozen fruits
and vegetables business of the Seller, or (vii) any business of the Organic
Ingredients division of the Seller as conducted on the date hereof and in the
twelve (12) prior months that related to the procurement, supplying, or sourcing
of organic ingredients not derived from fruits or vegetables and representing
less than $10,000 in aggregate gross sales of the Organic Ingredients division
during the twelve (12) months prior to the date hereof.
(d) "Closing" has the meaning given to it in the Asset Purchase
Agreement.
(e) "Commencement Date" means the date hereof.
(f) "Investment", in any Person, means any direct or indirect advance,
loan or other extension of credit, including by way of guaranty or capital
contribution to (by means of any transfer of cash or other property to others or
any payment for property or services for the account or use of others), or any
purchase or acquisition of capital stock, bonds, notes, debentures or other
similar instruments issued by, such Person.
(g) "Person" has the meaning given to it in the Asset Purchase
Agreement.
(h) "Purchased Assets" has the meaning given to it in the Asset Purchase
Agreement.
(i) "Restriction Period" shall mean a period of three (3) years
commencing on the Commencement Date.
2. Payment; Acknowledgement. Pursuant to the Asset Purchase Agreement, and
in consideration for the Seller's and each Shareholder's covenant in Section 4
hereof, the Seller will be paid the Purchase Price (as defined in the Asset
Purchase Agreement) by the Company, subject to certain adjustments. Further,
each Shareholder hereby represents that he is the beneficial owner of certain
issued and outstanding shares of capital stock of the Seller. The Seller and
each Shareholder acknowledges and agrees that it or he (as applicable) will
benefit materially and significantly from the Transactions.
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3. Term; Termination. This Agreement shall become effective on the
Commencement Date and shall remain in effect until the third (3rd) anniversary
date hereof, unless modified by the parties hereto pursuant to Section 10
hereof.
4. Covenant Not to Compete and Not to Solicit; Confidentiality.
(a) The Seller and each Shareholder covenants and agrees that it or he
(as applicable) shall not, during the Restriction Period, except with the
express prior written consent of the Company, directly or indirectly, whether
through itself, individually or through an Affiliate thereof, whether in
partnership, jointly or in conjunction with any person, firm, partnership,
limited liability company, corporation, or unincorporated association of any
kind, whether as employee, owner, partner, principal, agent, director, officer,
consultant or shareholder (except as the holder of not more than five percent
(5%) of the outstanding shares of a corporation whose stock is listed on any
national or regional securities exchange or reported by the Nasdaq Stock Market
or any successor thereto) (each, a "Prohibited Association"), do any of the
following: (i) engage in or propose to engage in the Business within the Area;
(ii) make or maintain any Investment in any Person that engages in the Business
or portion thereof, or proposes to engage in the Business or portion thereof,
within the Area; (iii) establish or maintain a Prohibited Association with any
Person that engages in the Business or portion thereof, or proposes to engage in
the Business or portion thereof, within the Area; (iv) act as sales agent for
distribution for any Person that engages in the Business or portion thereof, or
proposes to engage in the Business or portion thereof, within the Area; or (v)
act as contractor for product development or research for any Person that
engages in the Business or portion thereof, or proposes to engage in the
Business or portion thereof, within the Area.
(b) Without limiting the generality of the foregoing clause, the Seller
and each Shareholder further covenants and agrees that it or he (as applicable)
shall not, during the Restriction Period, in each case with respect to the
Business as conducted by the Company or any of its Affiliates, directly or
indirectly, disparage or otherwise make any adverse comment concerning the
Company or any portion of the Business.
(c) Each Shareholder agrees that he shall be bound by and subject to the
terms, conditions and obligations of Section 4.6 of the Asset Purchase Agreement
as if such Shareholder were the Seller (as defined therein).
(d) The Seller and each Shareholder acknowledges that it or he (as
applicable) has no right to use any of the Purchased Assets.
5. Acknowledgments; Injunctive Relief. The Seller and each Shareholder
acknowledges and agrees that, given the nature of the relationship of the
parties and the highly competitive nature of the organic food business, (i) its
or his (as applicable) violation of this Agreement would cause the Company and
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its Affiliates to suffer irreparable damage and (ii) the character, periods and
geographical areas and the scope of restrictions on its or his (as applicable)
activities as set forth in this Agreement are fair and reasonably required for
the protection of the Company and its Affiliates. Therefore, in addition to any
other remedies which the Company and its affiliates may have under this
Agreement or otherwise, the Company and each of its Affiliates shall be entitled
to apply to any court of competent jurisdiction for an injunction restraining
the Seller and each Shareholder (as applicable) from committing or continuing
any violation of Section 4 hereof, and the Seller and each Shareholder shall not
object to such application except to litigate whether, in fact, it or he (as
applicable) has violated Section 4 hereof.
6. Notice. For purposes of this Agreement, notices and all other
communications provided for in this Agreement shall be in writing and shall be
deemed to have been duly given when delivered or mailed by United States
registered mail, return receipt requested, postage prepaid, addressed as
follows:
If to the Seller:
Spectrum Organic Products, Inc.
0000 Xxxxx Xxxxx Xxxxxxxxx
Xxxxx 000
Xxxxxxxx, XX 00000
Attention:
Fax: (000) 000-0000
with a copy to:
Xxxxxx Godward LLP
Xxx Xxxxxxxx Xxxxx, 00xx Xxxxx
Xxx Xxxxxxxxx, XX 00000
Attn: Xxxxx Xxxxxx Xxxxxxx
Fax: (000) 000-0000
If to Xxxxxxxx:
Xxxxxxx Xxxxxxxx
0000 Xxxx Xxxxx Xxx.
Xxxxx Xxxx, Xx. 00000
Fax: (000) 000-0000
If to Xxxxxxxxx:
Xxxx Xxxxxxxxx
0000 Xxxxxxx Xx.
Xxxxxxxxxx, Xx. 00000
Fax:
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If to the Company:
Organic Ingredients, Inc.
Xxx Xxxxxx Xxxxx
Xxxxx 000
Xxx Xxxxxxxx, Xxx Xxxx 00000
Attn: Xxxxxxx X. Xxxxx
Fax: (000) 000-0000
with a copy to:
Acirca, Inc.
Xxx Xxxxxx Xxxxx
Xxxxx 000
Xxx Xxxxxxxx, Xxx Xxxx 00000
Attn: Xxxxxxx X. Xxxxx
Fax: (000) 000-0000
and with a copy to:
Xxxxxx & Xxxxxx
000 Xxxxxxx Xxxxxx, X.X.
Xxxxxxxxxx, X.X. 00000
Attn: Xxxx Xxxxxxx
Fax: (000) 000-0000
or to such other address as such party may have furnished to the other parties
in writing in accordance herewith, except that notices of change of address
shall be effective only upon receipt. Each of the parties shall promptly notify
the Company in writing, in accordance herewith, of any change of address during
the Restriction Period.
7. Invalid or Unenforceable Provisions. In the event that any part of this
Agreement shall be held to be unenforceable or invalid, the remaining parts
thereof shall nevertheless continue to be valid and enforceable as though the
invalid portions were not a part hereof. In the event that any of the provisions
of this Agreement relating to the character, period or geographic scope of
restriction shall be deemed to exceed the character of restriction, period of
time or geographic scope which a court of competent jurisdiction deem
enforceable, the character of the restriction, period of time and geographic
scope shall, for purposes of this Agreement, be deemed to be the character of
the restriction and maximum time period and geographic scope which a court of
competent jurisdiction would deem valid and enforceable in any state in which
such court of competent jurisdiction shall be convened. For the purposes of this
Section 7, the parties hereto agree that the covenants contained in Section 4
shall each be construed as a series of separate covenants, one for each
geographic subdivision which comprises the Area and, except for geographic
coverage, each separate covenant shall be deemed identical.
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8. Benefit and Burden. This Agreement shall inure to the benefit of, and
shall be binding upon, the parties hereto and their respective legatees,
distributees, estates, executors, administrators, personal representatives,
heirs, successors and assigns, and other legal representatives. The Company and
each of its Affiliates are intended beneficiaries of the covenants contained in
Section 4 of this Agreement.
9. Indemnification. The Seller and each Shareholder agrees to save and hold
the Company and its affiliates harmless from and against any claim, loss or
damage whatsoever (including reasonable attorneys' fees and other costs of
enforcement of this Agreement) arising out of a final, nonappealable
determination by a court of competent jurisdiction that it or he (as applicable)
has committed a breach of its or his obligations hereunder. The foregoing shall
be in addition to, and not in limitation of, any rights the Company and its
Affiliates may have against the other parties arising out of or in connection
with this Agreement and the Asset Purchase Agreement.
10. Modifications. No change or modification of this Agreement shall be
valid unless the same is in writing and signed by all the parties hereto. No
waiver of any provision of this Agreement shall be valid unless in writing and
signed by the party against whom it is sought to be enforced. The failure of a
party at any time to insist upon strict performance of any condition, promise,
agreement or understanding set forth herein shall not be construed as a waiver
or relinquishment of the right to insist upon strict performance of the same or
other conditions, promises, agreements or understandings at a future time.
11. Entire Agreement. This Agreement, together with the Asset Purchase
Agreement and any other agreements entered into in connection therewith
(collectively the "Acquisition Agreements"), contain all of the promises,
agreements, conditions, understandings, warranties and representations between
the parties hereto with respect to the subject matter hereof, and there are no
promises, agreements, conditions, understandings, warranties or representations,
oral or written, express or implied, between them with respect to such matters
other than as set forth herein or therein. Any and all prior agreements between
the parties hereto with respect to such matters are hereby revoked and are
deemed null and void. The Acquisition Agreements are, and are intended by the
parties to be, an integration of any, and all prior agreements or
understandings, oral or written, with respect to the subject matter hereof.
12. Governing Law. This Agreement shall be governed by and construed in
accordance with the internal laws of the State of New York, without giving
effect to the conflicts rules thereof to the extent such conflicts rules would
require the application of the law of another jurisdiction.
13. Forum Selection And Consent to Jurisdiction. Any legal action or
proceeding with respect to this Agreement may be brought in the courts of New
York, New York or any United States Federal Court sitting in New York, New York,
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and, by the execution and delivery of this Agreement, each party hereto hereby
irrevocably accepts for itself and in respect of any of its property, generally
and unconditionally, the jurisdiction of the aforesaid courts. Each party hereto
further irrevocably consents to the service of process from any of the
aforementioned courts in any such action or proceeding by hand delivery or by
registered or certified mail, postage prepaid, to such party, as the case may
be, at the addresses described in Section 6 hereof, such service to become
effective upon hand delivery or ten (10) days after such mailing. Each party
hereto hereby irrevocably waives to the fullest extent it may effectively do so,
any objection it may have to venue and the defense of an inconvenient forum to
the maintenance of such actions or proceedings.
14. Headings. The headings and other captions in this Agreement are for
convenience and reference only and shall not be used in interpreting, construing
or enforcing any of the provisions of this Agreement.
15. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original and all of which, taken
together, shall constitute one and the same instrument. Any such counterpart may
be executed by facsimile signature with only verbal confirmation, and when so
executed and delivered shall be deemed an original and such counterparts
together shall constitute only one original.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, each of the Company and the Seller has caused this
Agreement to be executed on their behalf and the Shareholder has hereunto set
his hand the day and year first above written.
XXXXXXX XXXXXXXX
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XXXX XXXXXXXXX
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SPECTRUM ORGANIC PRODUCTS, INC.
By:
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Xxxxxx X. Xxxxxx,
Chief Financial Officer
ORGANIC INGREDIENTS, INC.
By:
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Xxxxxxx X. Xxxxx,
Chief Financial Officer
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