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Exhibit 10.11
SETTLEMENT AGREEMENT
THIS SETTLEMENT AGREEMENT (this "Agreement"), dated as of September 30,
1997, is between Health Valley Company, a Delaware corporation ("Buyer"),
Intrepid Food Holdings, Inc., a Delaware corporation ("Intrepid"), and Xxxxxx
Xxxxxxxx, Xx. ("Shareholder").
RECITALS
A. Buyer and Shareholder entered into that certain Stock Purchase
Agreement dated March 17, 1996, as amended (the "Stock Purchase Agreement"),
pursuant to which, among other things:
(i) Shareholder sold all the issued and outstanding shares
of capital stock of Health Valley Foods, Inc. and Health
Valley Manufacturing Company (collectively, the "Companies")
to Buyer;
(ii) Shareholder agreed to indemnify Buyer for certain
matters as set forth in Section 8 of the Stock Purchase
Agreement, subject to certain limitations set forth therein;
(iii) Certain portions of the Purchase Price were deposited in
various escrow accounts, including, but not limited to,
$1,793,230 pursuant to the Escrow Agreement and $350,000
pursuant to the State Tax Escrow Agreement, for the
satisfaction of certain indemnification claims made by Buyer
against Shareholder in accordance with the terms of the Stock
Purchase Agreement;
(iv) Buyer granted Shareholder an option to purchase 100
shares of Common Stock of Buyer (the "HVC Option") pursuant to
the Option Agreement; and
(v) Buyer agreed to cause the Companies to pay to
Shareholder any Tax Refunds promptly upon receipt thereof.
B. Buyer has notified Shareholder of various claims to indemnification
against Shareholder pursuant to the terms of the Stock Purchase Agreement (the
"Buyer's Claims").
C. Buyer and Shareholder desire, among other things, to settle all
claims arising out of the Stock Purchase Agreement and the transactions
contemplated thereby, subject to the terms and satisfaction of the conditions
set forth in this Agreement.
AGREEMENTS
In full settlement of the Buyer's Claims and any other claims of Buyer
or Shareholder under the Stock Purchase Agreement (except as expressly provided
herein or in the Mutual General Releases (as hereinafter defined)), and in
consideration of the premises and the respective agreements and covenants herein
contained, Buyer, Intrepid and Shareholder hereby agree as follows:
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ARTICLE I
DEFINITIONS
SECTION 1.1 DEFINITIONS. (a) In addition to the terms elsewhere defined
herein, the following terms, when used herein, shall have the following
meanings:
"Affiliate" as applied to any Person, means any other Person directly
or indirectly controlling, controlled by, or under common control with, that
Person. The term "control" (including, with correlative meanings, the terms
"controlling", "controlled by", and "under common control with"), as applied to
any Person, means the possession, directly or indirectly, of the power to vote
more than 10% of the voting stock (or in the case of a Person which is not a
corporation, more than 10% of the equity interest) of such Person, or otherwise
able to direct or cause the direction of the management and policies of that
Person, whether through the ownership of voting stock (or equity interest), by
contract or otherwise.
"Alabama Action" means Xxxxxx and Xxxxxxxx v. Health Valley Foods, Inc.
et al., Civil Action No. CV96-939, Circuit Court for Tuscaloosa, Alabama, and
any actions relating thereto.
"Xxxxxxxx Action" means the pending action Xxxxxxxx v. Health Valley
and any actions relating thereto.
"Escrow Agent" means U.S. Trust Company of California, N.A., the escrow
agent under the Escrow Agreement, the State Tax Escrow Agreement, the Other
Repairs Escrow Agreement, the Roof Repair Escrow Agreement and the Xxxx Xxxxxxx
Escrow Agreement.
"General Escrow Account" shall mean the escrow account into which
$1,793,230 was deposited pursuant to the Escrow Agreement.
"Intrepid Option" means the option to be granted to Shareholder
pursuant to the Intrepid Option Agreement.
"Intrepid Option Agreement" means that certain Option Agreement between
Intrepid and Shareholder in substantially the form attached hereto as EXHIBIT A.
"Xxxxxx Action" means Xxx X. Xxxxxx v. Xxxxxx Xxxxxxxx and Health
Valley Foods, Inc., Case No. BC 159162, Superior Court of the State of
California for the County of Los Angeles, and any actions relating thereto.
"Mutual General Releases" means the Mutual General Releases in the form
of EXHIBIT B attached hereto.
"Person" means a natural person, a partnership, a corporation, a
limited liability company, 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.
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"Registration Agreement" means that certain Second Amended and Restated
Registration Agreement dated as of even date herewith between Intrepid and
certain other Persons.
"State Tax Escrow Account" means the escrow account into which $350,000
was deposited pursuant to the State Tax Escrow Agreement.
"Stockholders Agreement" means that certain Second Amended and Restated
Stockholders Agreement dated as of an even date herewith between Intrepid and
the stockholders and option holders of Intrepid.
(b) Capitalized terms used but not otherwise defined in this Agreement
shall have the meanings ascribed to such terms in the Stock Purchase Agreement.
ARTICLE II
PROVISIONS OF SETTLEMENT
SECTION 2.1 GENERAL ESCROW. Buyer and Shareholder agree that Buyer
shall receive $1,793,320 from the General Escrow Account and the Shareholder
shall receive any additional amounts in the General Escrow Account.
Simultaneously with the execution and delivery of this Agreement, Buyer and
Shareholder shall execute and cause to be delivered to the Escrow Agent a joint
letter of direction instructing the Escrow Agent to disburse the funds on
deposit in the General Escrow Account in accordance with the foregoing sentence.
SECTION 2.2 STATE TAX ESCROW. Buyer and Shareholder agree that
Shareholder shall receive all of the funds in the State Tax Escrow Account.
Simultaneously with the execution and delivery of this Agreement, Buyer and
Shareholder shall execute and cause to be delivered to the Escrow Agent a joint
letter of direction instructing the Escrow Agent to disburse the funds on
deposit in the State Tax Escrow Account in accordance with the foregoing
sentence.
SECTION 2.3 MUTUAL GENERAL RELEASES. Simultaneously with the execution
and delivery of this Agreement, Buyer and Shareholder shall execute and deliver
the Mutual General Releases.
SECTION 2.4 INTREPID OPTIONS. Simultaneously with the execution and
delivery of this Agreement, Intrepid and Shareholder shall execute and deliver
the Intrepid Option Agreement. Effective upon the execution and delivery of the
Intrepid Option Agreement by Intrepid, the HVC Option shall be automatically
cancelled, without any further action by HVC or Shareholder. Simultaneously with
the execution and delivery of this Agreement, Shareholder agrees to execute and
deliver the Registration Agreement and the Stockholders Agreement in connection
with the grant of the Intrepid Option.
SECTION 2.5 TAX REFUND. Shareholder hereby irrevocably waives all
right, title and interest to the Tax Refunds and Buyer and Shareholder agree
that the Stock Purchase Agreement is hereby amended by deleting Section 11.17 in
its entirety. Shareholder represents and warrants to Buyer and Intrepid that he
has not sold, transferred or assigned, or pledged or hypothecated, any interest
in all or any portion of the Tax Refunds to any Person.
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SECTION 2.6 INDEMNIFICATION. Buyer agrees to indemnify and hold
harmless Shareholder and his Affiliates from and against any and all damages,
losses, liabilities and reasonable costs and expenses resulting from the Alabama
Action, the Xxxxxxxx Action and the Xxxxxx Action (other than legal fees and
expenses and court costs incurred by Shareholder in connection with his defense
of himself as an individually named defendant in the Xxxxxx Action). Subject to
Section 2.7, the rights to indemnification pursuant to this Section 2.6 are in
addition to the rights to indemnification that the Shareholder may have as a
former officer and director of certain predecessors of the Buyer, including, but
not limited to, Health Valley Foods, Inc. and Health Valley Manufacturing
Company and their predecessors, under the articles of incorporation and bylaws
of such predecessors.
SECTION 2.7 XXXXXX LEGAL FEES. Shareholder agrees to pay all legal fees
and expenses and court costs incurred by him in connection with his defense of
himself as an individually named defendant in the Xxxxxx Action. Shareholder
waives any and all rights of indemnification or reimbursement with respect to
such legal fees and expenses and court costs, whether such fees and expenses and
court costs were incurred on or prior to the date hereof or are incurred on or
after the date hereof.
SECTION 2.8 LITIGATION. In connection with the investigation, defense
or prosecution of any action, suit, proceeding or other litigation, at law or in
equity, which is now or hereafter may be pending or threatened against Buyer,
any of its predecessors, any of its past or current officers, directors,
employees or any of its Affiliates and which relates, in any material respect,
to events, facts, circumstances or conditions existing or arising on or prior to
April 15, 1996 with respect to the Companies or any of their predecessors or the
conduct of the Business on or prior to April 15, 1996 (collectively, "Relevant
Subject Matter"), including, but not limited to, the Alabama Action, the Xxxxxx
Action, and the Xxxxxxxx Action, Shareholder agrees that he shall, until the
close of business on September 30, 2002, do the following (a) upon reasonable
notice and at the request of Buyer make himself available at reasonable times
for interviews and to give depositions or testimony to the extent he has
personal knowledge (and as to his then current recollection) of the Relevant
Subject Matter and (b) upon reasonable notice and at the request of Buyer
furnish such documents in his possession as may relate to the Relevant Subject
Matter; provided however, that (i) all such requests of Buyer shall be
reasonable as to scope, (ii) with respect to documents in his possession, Buyer
does not have other reasonable means of obtaining such documents from others and
(iii) Buyer advances to Shareholder his reasonable costs and expenses
(including, but not limited to, air fare, meals, lodging and attorneys' fees
should Shareholder wish to consult with Xxxx X. Xxxxxx with respect to such
interviews and/or depositions and/or testimony).
SECTION 2.9 CHARTER AMENDMENT. Within two business days of the date
hereof, Intrepid shall file with the Secretary of State of the State of Delaware
a Certificate of Amendment to the Amended and Restated Certificate of
Incorporation of Intrepid in the form attached hereto as EXHIBIT C.
SECTION 2.10 OTHER ESCROWS. Buyer and Shareholder agree that
Shareholder shall receive (a) all of the funds, if any, in the escrow account
into which the Other Repairs Escrow Amount was deposited pursuant to the Other
Repairs Escrow Agreement (the "Other Repairs Escrow Account"), (b) all of the
funds, if any, in the escrow account into which the Roof Repair
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Escrow Amount was deposited pursuant to the Roof Repair Escrow Agreement (the
"Roof Repairs Escrow Account") and (c) all of the funds, if any, in the escrow
account into which the Xxxx Xxxxxxx Escrow Amount was deposited pursuant to the
Xxxx Xxxxxxx Escrow Agreement (the "Xxxx Xxxxxxx Escrow Account"), in each case,
minus the Shareholder's portion of the fees and expenses of the Escrow Agent
under the Other Repairs Escrow Agreement, the Roof Repair Escrow Agreement and
the Xxxx Xxxxxxx Escrow Agreement, as the case may be. Simultaneously with the
execution and delivery of this Agreement, Buyer and Shareholder shall execute
and cause to be delivered to the Escrow Agent a joint letter of direction
instructing the Escrow Agent to disburse the funds on deposit in the Other
Repairs Escrow Account, the Roof Repair Escrow Account or the Xxxx Xxxxxxx
Escrow Account, as the case may be, in accordance with the foregoing sentence.
ARTICLE III
MISCELLANEOUS
SECTION 3.1 CONSENT TO AMENDMENTS. The provisions of this Agreement may
be amended or waived only by the written agreement of the parties hereto. Any
waiver, permit, consent or approval of any kind or character on the part of any
party of any provisions or conditions of this Agreement must be made in writing
and shall be effective only to the extent specifically set forth in such
writing.
SECTION 3.2 SUCCESSORS AND ASSIGNS This Agreement will bind and inure
to the benefit of the respective successors and assigns of the parties hereto,
whether so expressed or not.
SECTION 3.3 SEVERABILITY. Whenever possible, each provision of this
Agreement will be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be prohibited
by or invalid under applicable law, such provision will be ineffective only to
the extent of such prohibition or invalidity, without invalidating the remainder
of this Agreement.
SECTION 3.4 DESCRIPTIVE HEADINGS. The descriptive headings of this
Agreement are inserted for convenience of reference only and do not constitute a
part of this Agreement.
SECTION 3.5 NOTICES. Any notices required, permitted or desired to be
given hereunder shall be delivered personally, sent by overnight courier or
mailed, registered, certified mail, return receipt requested, to the following
addresses, and shall be deemed to have been received on the day of personal
delivery, one business day after deposit with an overnight courier or three
business days after deposit in the mail:
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If to Buyer or Intrepid, to:
Intrepid Food Holdings, Inc.
000 X. XxXxxxx Xxxxxx
Xxxxx 0000
Xxxxxxx, XX 00000
with a copy to:
Xxxxxx Xxxxxx & Xxxxx
000 X. Xxxxxx Xxxxxx
Xxxxx 0000
Xxxxxxx, XX 00000-0000
Attention: Xxxxxxx X. Xxxxxx, Esq.
If to Shareholder, to:
Xxxxxx Xxxxxxxx, Xx.
c/o Xxxx X. Xxxxxx, Esq.
Suite 1920
00000 Xxxxxxxx Xxxxxxxxx
Xxx Xxxxxxx, XX 00000
with a copy to:
Xxxx X. Xxxxxx, Esq.
Suite 1920
00000 Xxxxxxxx Xxxxxxxxx
Xxx Xxxxxxx, XX 00000
or to such other address as any party may specify in a written notice given to
the other panics hereto.
SECTION 3.6 GOVERNING LAW. All questions concerning the construction,
ability and interpretation of this Agreement and the Exhibits hereto shall be
governed in all respects by the internal law, and not the law of conflicts of,
the State of California, and the performance of the obligations imposed by this
Agreement shall be governed by the laws of the State of California applicable to
contracts made and wholly to be performed in such state. Any suit brought
hereon, whether in contract, tort, equity or otherwise, shall be brought in the
state or federal courts sitting in Los Angeles, California, if such courts have
jurisdiction over the subject matter of such suit, the parties hereto hereby
waiving any claim or defense that such forum is not convenient or proper. Each
party hereby agrees that any such court shall have in personam jurisdiction over
it, consents to service of process in any manner authorized by California law,
and agrees that a final judgment in any such action or proceeding shall be
conclusive and may be enforced in other jurisdictions by suit on the judgment or
in any other manner specified by law.
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SECTION 3.7 EXHIBITS. Exhibits A, B and C hereto are an integral part
of this Agreement.
SECTION 3.8 FINAL AGREEMENT. This Agreement, together with those
documents expressly referred to herein, constitute the final agreement of the
parties concerning the matters referred to herein, and supersede all prior
agreements and understandings with respect thereto.
SECTION 3.9 EXECUTION IN COUNTERPARTS. This Agreement may be executed
in counterparts, each of which when so executed and delivered shall be deemed an
original and such counterparts together shall constitute one instrument.
SECTION 3.10 PARTIES IN INTEREST. This Agreement is made for the
benefit of the parties hereto (and their respective successors and assigns). No
third Person, other than an assign or successor, shall have independent rights
as a third party beneficiary of this Agreement.
SECTION 3.11 FURTHER COOPERATION. At any time and from time to time,
each party hereto shall promptly execute and deliver all such documents and
instruments, and do all such acts and things, as the other party may reasonably
request in order to further effect the purposes of this Agreement.
SECTION 3.12 FEES AND EXPENSES. Each of the parties shall bear its own
expenses in connection with this Agreement and the agreements contemplated
hereby, and the transactions contemplated hereby and thereby.
SECTION 3.13 SPECIFIC PERFORMANCE AND OTHER REMEDIES. Each of the
parties hereto agree that any breach or threatened breach by the other party of
any provision of this Agreement implicates certain and clearly ascertainable
protectible rights, that there is no adequate remedy at law for the breach or
threatened breach of these provisions and the violation of these rights, and
that, without equitable relief, the breach or threatened breach of these
provisions and the violation of these rights will result in substantial and
irreparable damage to the non-breaching parties, the amount of which may be
difficult, if not impossible, to ascertain. By reason of that fact, each of the
parties hereto agree that, in the event of any such breach or threatened breach,
each party shall have the right to enforce this Agreement by temporary
restraining order, preliminary or permanent injunctive or other relief in
equity, without the necessity of proving any actual damages or posting any bond.
The right of each party to obtain injunctive or other equitable relief to
enforce the terms hereof shall be in addition to all other rights and remedies
such party may otherwise have at law, in equity, or otherwise. Such right to
obtain injunctive or other equitable relief may be exercised at the option of a
party, concurrently with, prior to, after, or in lieu of the exercise of any
other rights or remedies which such party have as a result of any breach or
threatened breach of any of the terms hereof.
SECTION 3.14 LITIGATION COSTS AND EXPENSES. If any party hereto brings
suit at law, in equity or otherwise, to enforce any of the provisions of this
Agreement or recover damages and is successful in such suit, it shall be
entitled to recover all reasonable costs and expenses incurred by it in bringing
such suit, including, but not limited to, reasonable attorneys' fees and
disbursements. On the other hand, if a party brings any such suit and it is
determined, on a dispositive motion or after a trial on the merits, with
finality, that none of the breaches or
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violations alleged therein has occurred, the party bringing such suit shall be
obligated to reimburse the defendants therein for all reasonable costs and
expenses incurred by the defendants in defending such suit including, but not
limited to, reasonable attorney's fees and disbursements.
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The parties hereto have executed this Agreement as of the date first
set forth above.
HEALTH VALLEY COMPANY
By: /s/ Xxxxxxx X. Xxxx
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Its: President
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INTREPID FOOD HOLDINGS, INC.
By: /s/ Xxxxxxx X. Xxxx
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Its: President
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/s/ Xxxxxx Xxxxxxxx, Xx.
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XXXXXX XXXXXXXX, XX.
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