Document:

Exhibit 10.1

 

EMPLOYMENT AGREEMENT

 

This Employment Agreement
(“Agreement”) is made as of November 1,
2002, by The Halifax Group, Inc., a Georgia corporation (“Halifax”),
and Robert J. Budd (“Budd”).

 

RECITALS

 

A.            Halifax is engaged in the business
of processing, manufacturing and distributing various food products, including
salad dressings and hot sauces (the “Business”).

 

B.            Vita Food Products, Inc., a Nevada
corporation (“VFP”), Vita Holdings, Inc.,
Vita/Halifax Acquisition Company (“Sub”),
Halifax, Budd and certain other parties have entered into a Merger Agreement
dated as of November 1, 2002, (“Merger Agreement”)
whereby Halifax agreed to merge with Sub, with Halifax as the survivor of the
merger (the “Transaction”).  Capitalized terms used herein, but not
defined, have the meanings set forth in the Merger Agreement.  Budd and VFP acknowledged and agreed in the
Merger Agreement that each would not enter into the Merger Agreement without
entering into this Agreement.

 

C.            Halifax desires to employ Budd as its President and Budd desires
to perform the services of the President for Halifax.

 

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, Halifax agrees to employ Budd as its President, to perform the
duties set forth on Exhibit A attached hereto and incorporated
herein and such other reasonable additional responsibilities as may be added to
Budd’s duties from time to time, at the direction of Terry Hess, Chief
Executive Officer of Halifax (“Terry”) or by
the Board of Directors of VFP or Halifax. 
Budd shall devote his full and exclusive working time and efforts to the
business and affairs of Halifax, and his duties shall include, but not be
limited to, directing and overseeing the operations and daily functions of Halifax
and supervising employees of Halifax.  Budd
shall also serve as a member of the Board of Directors of Halifax, may be
appointed as a member of the Board of Directors of VFP and will be president of
Vita Holdings, Inc. with such duties as set forth on Exhibit A to
be attached hereto.

 

(b)           Place of Performance.  In his employment by Halifax, Budd shall be
based in Atlanta, Georgia.

 

1.2          Term.  The term of Budd’s employment under this
Agreement shall be for the period commencing from the Closing Date and
continuing through December 31, 2007, subject to early termination as set forth
herein (the “Term”).

 

 

ARTICLE 2

COMPENSATION
AND DAMAGES

 

2.1.         Compensation.   During
the Term, Budd shall be paid an annual salary of Two Hundred Forty Two Thousand
Five Hundred Dollars ($242,500), increased annually by 3% on January 1,
beginning January 1, 2004 (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 Halifax’s payroll is customarily
handled.  The Salary may be increased
from time to time, at the sole discretion of the Board of Directors of Halifax.

 

2.2          Expense Reimbursement.  While Budd is performing the services
described herein, Halifax shall, upon request, reimburse Budd for all
reasonable and necessary expenses incurred by Budd in connection with the
performance of duties of employment hereunder (in accordance with the policies
and procedures established by the Board of Directors of Halifax for all of Halifax’s
officers), provided that Budd properly accounts therefor.

 

2.3          Benefits.

 

(a)           Benefit Plan.  If, while Budd renders full time services hereunder
to Halifax:

 

(i)            Halifax or Virginia Honey Company,
Inc. (“Virginia Honey”) establishes an
incentive or other compensation plan (however described or denominated) for
senior executive officers, which includes Terry;

 

(ii)           Halifax or Vita maintains or
establishes any ERISA benefit program(s) for its senior executives such as health
care insurance, dental care insurance, life insurance, 401(k) plan, profit
sharing plan or pension plan, however described or denominated; or

 

(iii)          VFP maintains or establishes a stock
purchase plan;

 

Budd shall be eligible to fully participate in each such plan or
benefit program, provided, however, Budd shall not be eligible for any bonus,
incentive, stock option or any other plan of VFP or its affiliates, unless: (x)
the adoption of such plan by the board of directors of Vita specifically include
Budd; or (y) such plan is established generally for senior management of
Halifax or Virginia Honey, which includes Terry.

 

(b)           Vacation.  Budd 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 Halifax or VFP to its
employees.

 

2.4                               Termination.

 

(a)           Cause.  Halifax shall have the right, at any time
during the Term of this Agreement, to terminate Budd’s employment (the “Termination Date”) under this Agreement,
but only if such termination is for “Cause.” 
For purposes of this Agreement, “Cause”
shall mean Budd’s, (i) commission of any act of fraud, embezzlement or theft relating
to and affecting the business affairs of Halifax; (ii) conviction of any felony
or a criminal offense involving acts of dishonesty (but excluding ordinary
driving offenses); (iii) failure to reasonably exercise the responsibilities
and duties as the President of Halifax 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

 

2

 

and Non-Solicitation Agreement entered into by and among VFP, Halifax and
Budd dated of even date herewith.  In the
event that employment is terminated by Halifax for Cause, Halifax will have no
obligations to pay any further amounts hereunder (except for salary earned and
unpaid, subject to rights of setoff) beyond the date of such termination.

 

(b)           Damages.  If Budd’s employment is “Voluntarily
Terminated” (as defined below) by Budd or for Cause (as defined in subsection
1.2(b)) before the end of the Term, Budd shall pay VFP, as liquidated damages,
and not as a penalty, the following amounts, which amounts shall be set off and
forfeited by Budd only from and only to the extent of compensation (subject to
the limitations of Section 2.5 hereof) due Budd hereunder and amounts subject
to set off pursuant to the Merger Agreement, including the First Earnout and/or
the Second Earnout, and not to be paid by Budd directly:

 

	
  Termination on or Before

  	
   

  	
  Liquidated

  Damage Amount

  
	
   

  	
   

  	
   

  
	
  December 31, 2003

  	
   

  	
  $

  	
  700,000

  
	
  December 31, 2004

  	
   

  	
  $

  	
  500,000

  
	
  December 31, 2005

  	
   

  	
  $

  	
  300,000

  
	
  December 31, 2006

  	
   

  	
  $

  	
  150,000

  

 

Except as set forth herein, in no event shall Robert
be individually or directly liable for such amount.  Notwithstanding anything herein to the
contrary, if VFP shall recover any amounts due from the First Earnout and the
Second Earnout, VFP shall recover these in the same proportion of cash and
stock, if any, used to pay such Earnout payments.

 

“Voluntarily
Terminated” shall be limited to a cessation of employment
by Budd for reasons other than death, Good Reason (as defined below) or Total
Disability (as defined below).

 

For the purposes
of this Agreement, “Total Disability”
means Budd’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.

 

For the purposes
of this Agreement, “Good Reason”
means:

 

(i) any of the following
acts by Halifax or VFP occurring within twelve (12) months following a Change
in Control (as defined in the Merger Agreement): any material diminution in
Budd’s authorities or responsibilities or from his status, title, position
(other than as a member of the board of directors of VFP or any of its
affiliates) or responsibilities without Budd’s express written consent; the
assignment to him of any duties or work responsibilities which are inconsistent
with such status, title position or work responsibilities; or any removal of
Budd from any such positions (other than as a member of the board of directors
of VFP or any of its affiliates except Hailfax), except, in each case, if any
such act are because of Total Disability, retirement, death or Cause; or

 

(ii) material breach by
VHP at any time of the Merger Agreement or by Halifax under this Employment
Agreement, in each case following written notice thereof and failure to cure
within a reasonable time.

 

3

 

2.5          Set Off.  Other than the compensation payable pursuant to Section 2.1 hereof, VFP,
Halifax and Budd may 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.   Budd acknowledges that the nature of his
engagement hereunder is such that Budd shall have access to information of a
confidential and/or trade secret nature which has great value to VFP, Halifax, Virginia
Honey, and their affiliates (collectively, Greater Vita”).
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 Greater Vita , which has value and is treated as secret
and/or confidential by Greater Vita (the “Confidential Information”).
 Budd has and will also have access to
Confidential Information of its “Suppliers” (for the purposes of this
Agreement, “Suppliers” means any
persons with whom Greater Vita  has a
co-packing or joint venture relationship with or who supplies any products or
materials to Greater Vita ). Confidential Information includes not only
information disclosed by Greater Vita or its Suppliers to Budd in the course of
employment, but also information developed or learned by Budd during the course
of employment with Halifax.  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 Greater Vita or Suppliers are engaged. Confidential
Information also includes all information of which the unauthorized disclosure
could be materially detrimental to the interests of Greater Vita or Suppliers.  Budd agrees to keep all Confidential
Information that could be materially detrimental to the interests of Greater
Vita  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 Greater Vita , (iv) no longer qualifies as
a trade secret or confidential information under applicable law, or (v)
necessary to enforce this Agreement.

 

3.2          Remedies.  The parties hereto agree
that the services to be rendered by Budd pursuant to this Agreement, and the
rights and privileges granted by Greater Vita  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 Budd of any of the terms of
this Agreement will cause Greater Vita great and irreparable injury and
damage.  Therefore, Budd agrees that in
addition to such other remedies as may be available to Greater Vita, at law or
in equity, any court of competent jurisdiction may issue a decree of specific
performance on a temporary or permanent basis. 
Greater Vita 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 Budd.

 

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.

 

4

 

3.4          Survival of Covenants.  The parties’ duties and obligations under
this Agreement shall survive the termination of this Agreement or any of its
provisions; provided, however, if Budd is terminated without Cause by Halifax, Budd’s
obligation of confidentiality in Section 3.1 above shall survive only with
respect to VFP, Virginia Honey, and their affiliates’ (other than Halifax) confidential
information and shall terminate with respect to Halifax confidential
information.

 

3.5          Return of Material.  Upon the termination of Budd’s employment
with Halifax for any reason, with or without Cause, Budd immediately shall
deliver to Halifax 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 Greater Vita. 
Budd shall not retain any copies of the preceding except for such
financial information necessary to protect his interest as a creditor.

 

ARTICLE 4

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):

 

	
  If to VFP:

  	
   

  	
  If to Budd:

  
	
   

  	
   

  	
   

  
	
  Vita Food Products, Inc.

  	
   

  	
  Robert J. Budd

  
	
  Attention: Stephen D. Rubin, President

  	
   

  	
  3264 McCall Drive

  
	
  2222 West Lake Street

  	
   

  	
  Atlanta, GA   30340

  
	
  Chicago, IL   60612

  	
   

  	
  Fax:   (770) 457-7546

  
	
  Fax:   (312) 738-3215

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  With a copy to:

  	
   

  	
  With a copy to:

  
	
   

  	
   

  	
   

  
	
  Much Shelist Freed Denenberg

  	
   

  	
  Powell, Goldstein, Frazer & Murphy, LLP

  
	
  Ament & Rubenstein, P.C.

  	
   

  	
  Attn:   Ricarda Heising

  
	
  Attn:   Jeffrey C. Rubenstein

  	
   

  	
  191 Peachtree Street, NE

  
	
  200 North LaSalle Street

  	
   

  	
  Sixteenth Floor

  
	
  Suite 2100

  	
   

  	
  Atlanta, GA   30303

  
	
  Chicago, IL   60601-1095

  	
   

  	
  Fax: (404) 572-6999

  
	
  Fax: (312) 621-1750

  	
   

  	
   

  

 

5

 

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 Georgia 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.

 

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.

 

6

 

This Employment Agreement
is executed as of the day and date first written above.

 

 

	
  THE HALIFAX GROUP, INC.

  	
   

  	
  ROBERT J. BUDD

  
	
  a Georgia corporation

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  By: 

  	
  /s/
  Terry W. Hess

  	
   

  	
   

  	
  /s/
  Robert J. Budd

  	
   

  
	
   

  	
  Terry W. Hess, CEO

  	
   

  	
  By: Robert J. Budd

  
						

 

7Exhibit 10.2

 

AMENDMENT
TO EMPLOYMENT AGREEMENT

 

This
Amendment to Employment Agreement (“Agreement”)
is made as of March      , 2003, by The Halifax Group,
Inc., a Georgia corporation (“Halifax”),
and Robert J. Budd (“Budd”).

 

RECITALS

 

A.            The parties have
previously entered into an Employment Agreement dated as of November 1, 2002 (the
“Employment
Agreement”) relating to the employment of Budd by Halifax.

 

B.            The parties now desire
to change the description of Budd’s duties with Halifax and Vita Specialty
Foods, Inc. (f/k/a Vita Holdings, Inc.). 
Accordingly, Budd and Halifax desire to amend the Employment Agreement as
set forth herein.

 

In consideration of the preceding, the parties agree as follows:

 

1.             Amendments.  Exhibit A to the Employment Agreement is
hereby deleted and replaced in its entirety with new Exhibit A attached hereto.

 

2.             Ratification.  The terms
of the Employment Agreement, as amended by this Amendment, are hereby ratified
and confirmed.

 

IN
WITNESS WHEREOF, the parties have executed this Amendment as of the date first
stated above.

 

 

	
   

  	
   

  	
   

  	
  THE HALIFAX GROUP, INC.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Robert J. Budd

  	
   

  	
  By:

  	
  /s/ Terry W. Hess

  	
   

  
	
   

  	
  Robert
  J. Budd

  	
  Its:

  	
  Chairman and CEO

  	
   

  
							

 

 

Exhibit A

to Employment Agreement

 

Duties of Budd as President
of Halifax:

 

Budd will direct product
development for Halifax and will perform such other sales, marketing, licensing
and other duties which are assigned to him by the Chief Executive Officer
and/or Board of Directors of Halifax and as are customary of the President.

 

Duties of Budd as President
of the Vita Specialty Foods, Inc. (f/k/a Vita Holdings, Inc.):

 

Budd’s
position will be primarily ceremonial. 
Budd will perform only such product development, sales, marketing,
licensing or other duties for Vita Specialty Foods, Inc. or its subsidiaries as
are assigned to him by the Chief Executive Officer and/or Board of Directors of
Vita Specialty Foods, Inc.

 

2

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