Vaughan Foods Inc (OTCBB:FOOD) has reached an agreement in principle to settle the class action lawsuit challenging the proposed merger of Vaughan and Reser’s Fine Foods Inc.
As previously disclosed, Vaughan, Reser’s, and Reser’s Acquisition Inc—an Oklahoma corporation and a wholly owned subsidiary of Reser’s—entered into an agreement and plan of merger dated July 6, 2011, pursuant to which Reser’s would acquire Vaughan for an aggregate purchase price of $18.25 million. This would be payable to shareholders of Vaughan and certain holders of options and warrants to purchase shares of Vaughan common stock, as a result of a merger of acquisition with and into Vaughan.
In conjunction with the merger, Vaughan filed proxy material with the Securities Exchange Commission (SEC) containing detailed information and relevant documents relating to the merger. Included in this proxy statement was a brief description of a putative shareholder lawsuit, styled as Kevin Wolters vs Herbert Grimes et al, filed against individual members of the board of directors of Vaughan, Vaughan, Reser’s, and the acquisition entity in the US District Court of Cleveland County, Oklahoma.
Effective September 9, 2011, parties to the action entered into a memorandum of agreement, pursuant to which the action would be settled in consideration for Vaughan having made certain additional disclosures relating to the merger. These were included in a current report on Form 8-K filed September 9 with the SEC. The defendants also agreed to pay plaintiff’s reasonable legal counsel’s fees and disbursements in an amount to be negotiated, or if no agreement can be reached, an amount to be determined by the court. The settlement is subject to the parties agreeing on, executing, and presenting to the court within 60 days a formal stipulation of settlement that will dismiss the action with prejudice against all the defendants.
Vaughan Foods manufactures and distributes refrigerated foods and fresh-cut produce items to both foodservice and retail sectors. Its products consist of fresh-cut vegetables, fresh-cut fruits, salad kits, prepared salads, dips, spreads, soups, sauces, and side dishes.
