MONTEREY PASTA CO
EX-10.42
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<TYPE>EX-10.42
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<FILENAME>a2088414zex-10_42.htm
<DESCRIPTION>EX-10.42
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<P ALIGN="RIGHT"><FONT SIZE=2><A
NAME="kc2116_exhibit_10.42"> </A>
<A NAME="toc_kc2116_1"> </A>
<BR></FONT><FONT SIZE=2><B>Exhibit 10.42    <BR>  </B></FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2><A
NAME="kc2116_asset_purchase_agreement"> </A>
<A NAME="toc_kc2116_2"> </A>
<BR></FONT><FONT SIZE=2><B>ASSET PURCHASE AGREEMENT    <BR>  </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This ASSET PURCHASE AGREEMENT (this "Agreement") is made as of August&nbsp;23, 2002, by and among (1)&nbsp;Emerald Valley Kitchen,&nbsp;Inc., an Oregon
corporation whose principal office is located at 90472 Woodruff, Eugene, Oregon 97402 ("Emerald Valley"), and Mel Bankoff, an individual and president and majority owner of Emerald Valley ("Bankoff")
(Emerald Valley and Bankoff together, the "Sellers"), and (2)&nbsp;Monterey Pasta Company ("Buyer"), a Delaware corporation, whose principal office is located at 1528 Moffett Street, Salinas,
California 93905. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This
Agreement is made in conjunction with a Royalty Agreement and Employment Agreement of even date also made by and among the parties. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This
Agreement is made under the following circumstances: </FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2><I><U>RECITALS:</U>  </I></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A.&nbsp;&nbsp;&nbsp;&nbsp;Sellers
are the owners of certain assets more particularly described below. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;B.&nbsp;&nbsp;&nbsp;&nbsp;Sellers
and Buyer desire that Buyer purchase and acquire from Sellers all of Sellers' respective rights, title and interest in such assets on the terms and conditions set
forth in this Agreement. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;C.&nbsp;&nbsp;&nbsp;&nbsp;Sellers
and Buyer agree that Buyer has the capital and resources to promote and expand Seller's business of creating, manufacturing and distributing organic food
products, and that the promotion and
expansion of organic food product sales is the primary reason for Seller's agreement to sell its business to Buyer. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;D.&nbsp;&nbsp;&nbsp;&nbsp;Sellers
and Buyer acknowledge that the improper disclosure or misuse of trade secrets and confidential information related to such assets would materially adversely
affect the assets, their transfer to Buyer, and Buyer's business subsequent to such transfer. </FONT></P>


<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;E.&nbsp;&nbsp;&nbsp;&nbsp;In
order therefore to protect the value of such transfer for the benefit of Buyer, Sellers are willing to enter into certain covenants and agreements respecting the
confidentiality of such information. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;THEREFORE,
in consideration of the mutual covenants, agreements, representations and warranties contained in this Agreement, the parties agree as follows: </FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2><I><U>AGREEMENT:</U>  </I></FONT></P>

<P><FONT SIZE=2>1.&nbsp;&nbsp;&nbsp;&nbsp;PURCHASE AND SALE OF ASSETS </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><I>(a)&nbsp;&nbsp;&nbsp;&nbsp;The Assets and Excluded Assets; Purchase Price</I></FONT><FONT SIZE=2>.&nbsp;&nbsp;&nbsp;&nbsp;Subject to all of the terms and conditions set forth in this
Agreement, at the Closing of the Agreement as defined below Buyer agrees to purchase from Sellers, and Sellers agree to sell, convey, assign and deliver to Buyer, all of Sellers' right, title and
interest in and to certain tangible and intangible property owned or used by Sellers (collectively the "Assets"). The total price to be paid for the Assets shall be $5,500,000 plus the cost of
accepted inventory as specified below, to be paid in cash at the Closing, provided that the total calculated purchase price to Sellers, including the cash consideration paid at Closing and the net
value of the Excluded Assets (as defined below) less liabilities of Emerald Valley at Closing other than the Lease described in subsection 1(c) below (the "Purchase price") shall not be less than
$6,000,000. The Assets and the estimated portion of the Purchase Price to be paid to Emerald Valley for each of them at the Closing are set forth below; all assets of Emerald Valley not listed below
are excluded from the sale to Buyer (the "Excluded Assets"). The Assets include: </FONT></P>

<UL>
<UL>
<DL compact>
<DT style='margin-bottom:-11pt;'><FONT SIZE=2>(i)</FONT></DT><DD><FONT SIZE=2>All
inventory of Emerald Valley acceptable to Buyer at book cost equal to $243,991 on the date of closing.
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>(ii)</FONT></DT><DD><FONT SIZE=2>All
equipment used in the business of Emerald Valley: $75,000.00. </FONT></DD></DL>
</UL>
</UL>
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<UL>
<UL>
<DL compact>
<DT style='margin-bottom:-11pt;'><FONT SIZE=2>(iii)</FONT></DT><DD><FONT SIZE=2>All
trademark and trade name rights to incorporating the name "Emerald Valley Kitchen": $25,000.00.
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>(iv)</FONT></DT><DD><FONT SIZE=2>Recipes,
formulas and processing technology for Emerald Valley products: $25,000.00.
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>(v)</FONT></DT><DD><FONT SIZE=2>All
customer lists of Emerald Valley: $10,000.00.
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>(vi)</FONT></DT><DD><FONT SIZE=2>Non-competition
and confidentiality agreements set forth in section&nbsp;6 below: $25,000.00.
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>(vii)</FONT></DT><DD><FONT SIZE=2>Goodwill:
$5,340,000.00. </FONT></DD></DL>
</UL>
</UL>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><I>(b)&nbsp;&nbsp;&nbsp;&nbsp;Conditions to Payment</I></FONT><FONT SIZE=2>.&nbsp;&nbsp;&nbsp;&nbsp;Payment by Buyer of the purchase price of the Assets is conditioned upon the
satisfaction of the following conditions (the "Conditions to Payment") at the time of the Closing: </FONT></P>

<UL>
<UL>
<DL compact>
<DT style='margin-bottom:-11pt;'><FONT SIZE=2>(i)</FONT></DT><DD><FONT SIZE=2>All
representations and warranties of Sellers made herein shall be true and correct as if made at the closing.
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>(ii)</FONT></DT><DD><FONT SIZE=2>Sellers
shall have provided all necessary technology and know-how pertaining to the Assets. All recipes shall be provided to Buyer at the time of closing.
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>(iii)</FONT></DT><DD><FONT SIZE=2>There
shall have been no breach by Sellers of Sellers' covenants hereunder.
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>(iv)</FONT></DT><DD><FONT SIZE=2>Emerald
Valley shall have taken all steps required by applicable law to approve the Agreement. The Board of Directors of Buyer and shareholders of Emerald Valley shall have approved
the Agreement.
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>(v)</FONT></DT><DD><FONT SIZE=2>Sellers
shall have obtained all required approvals, consents and authorizations of third parties to the transaction.
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>(vi)</FONT></DT><DD><FONT SIZE=2>Buyer
and Sellers shall have entered into the Royalty Agreement and Employment Agreement referred to in the second paragraph hereof.
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>(vii)</FONT></DT><DD><FONT SIZE=2>Buyer
shall have completed a due diligence review of the Assets and business of Sellers satisfactory to Buyer in its sole discretion. </FONT></DD></DL>
</UL>
</UL>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><I>(c)&nbsp;&nbsp;&nbsp;&nbsp;No Assumption of Liabilities</I></FONT><FONT SIZE=2>; </FONT><FONT SIZE=2><I>Lease</I></FONT><FONT SIZE=2>.&nbsp;&nbsp;&nbsp;&nbsp;Buyer does not assume
any liabilities and/or contracts associated with Sellers or any of the Assets, other than the existing building and land lease at 90472 Woodruff, Eugene, Oregon at its current terms (the "Lease"); any
future modifications of the Lease shall be mutually agreed to by Buyer and Bankoff. Any and all other liabilities and obligations of Sellers, or related to the Assets, shall remain the liabilities and
obligations of Sellers, and Sellers shall pay, perform or discharge such liabilities and obligations, and remain solely responsible for their payment and performance when due. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
foregoing notwithstanding, Buyer agrees to honor Sellers' purchase orders for ingredients and supplies entered into in the ordinary course of Sellers' business for delivery after
Closing and which have not been included in inventory. Buyer also agrees to honor Sellers' sale orders for deliveries to Sellers' customers entered into in the ordinary course of Sellers' business in
accordance with the agreed upon terms. Buyer shall have the right to inspect Sellers' books and records prior to Closing relating to unfilled sales and purchase orders. </FONT></P>


<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><I>(d)&nbsp;&nbsp;&nbsp;&nbsp;Taxes</I></FONT><FONT SIZE=2>.&nbsp;&nbsp;&nbsp;&nbsp;</FONT></P>

<UL>
<UL>
<DL compact>
<DT style='margin-bottom:-11pt;'><FONT SIZE=2>(i)</FONT></DT><DD><FONT SIZE=2>Sellers
shall pay any and all of Sellers' federal, state and local taxes which result from the transactions contemplated by this Agreement, including all items of depreciation
recapture and investment tax credit recapture, all state or local sales or use taxes which may be due, and Sellers' share, prorated as of date of Closing, of state and local personal property taxes
pertaining to the Assets. </FONT></DD></DL>
</UL>
</UL>
<P ALIGN="CENTER"><FONT SIZE=2>2</FONT></P>

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<UL>
<UL>
<DL compact>
<DT style='margin-bottom:-11pt;'><FONT SIZE=2>(ii)</FONT></DT><DD><FONT SIZE=2>Buyer
shall not be responsible for any business, occupation, withholding or similar tax, or any taxes of any kind with respect to the Assets or Sellers' business relating to the
period before the date of closing. </FONT></DD></DL>
</UL>
</UL>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><I>(e)&nbsp;&nbsp;&nbsp;&nbsp;Additional Consideration.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Buyer agrees to pay additional consideration to the Sellers for the Assets as
follows: </FONT></P>

<UL>
<UL>
<DL compact>
<DT style='margin-bottom:-11pt;'><FONT SIZE=2>(i)</FONT></DT><DD><FONT SIZE=2>Pursuant
to the terms of the Royalty Agreement.
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>(ii)</FONT></DT><DD><FONT SIZE=2>For
the five years following Closing at the rate of 50% of excess </FONT><FONT SIZE=2><I>actual</I></FONT><FONT SIZE=2> Earnings Before Interest, Taxes, Depreciation and
Amortization ("EBITDA") from the Organic Business Segment, that is, all organic product produced at the Emerald Valley facility in Eugene, Oregon, or its co-packer(s) ("Segment") above
each annual </FONT><FONT SIZE=2><I>estimate</I></FONT><FONT SIZE=2> provided in Exhibit "A" attached hereto. Sales of organic products produced at another packing plant pursuant to a production
contract using the Emerald Valley Kitchen's label shall be included in the Segment. For purposes of calculation, each of the first through fifth years after Closing will be examined as a discrete
period, with no accumulation of results from prior years. Each calculation will take place within 30&nbsp;days after the end of each such 12&nbsp;month period and any payment due will be payable
within ten days after the calculation date. For purposes of measurement, the first 12&nbsp;month period will begin August&nbsp;26, 2002, the first day of Buyer's ninth accounting period and will
end with the last day of the Buyer's accounting period 52 weeks afterward. Future measurement periods beyond the first year calculation will be based on the Buyer's 52 or 53 week accounting cycle as
it varies from time to time. </FONT></DD></DL>
</UL>
</UL>

<P><FONT SIZE=2>2.&nbsp;&nbsp;&nbsp;&nbsp;CLOSING </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><I>(a)&nbsp;&nbsp;&nbsp;&nbsp;Time and Place</I></FONT><FONT SIZE=2>.&nbsp;&nbsp;&nbsp;&nbsp;The closing of the sale of the Assets shall take place August&nbsp;23, 2002 at 90472
Woodruff, Eugene, Oregon 97402, upon the satisfaction of the Conditions to Payment (the "Closing"). Upon satisfaction of the Conditions to Payment, the Buyer shall pay to Sellers the Purchase Price
specified in subsection 1(a). </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><I>(b)&nbsp;&nbsp;&nbsp;&nbsp;Brokers' Fees</I></FONT><FONT SIZE=2>.&nbsp;&nbsp;&nbsp;&nbsp;Buyer shall be responsible for payment of the fees of Monterey Bay Corporate Development.
Sellers shall be responsible for payment of the fees of MergeWest Capital, LLC. Except for such fees, Sellers and Buyer, and each of them, hereby represent that they have not dealt with any broker or
salesperson in connection with this transaction and no commission is payable or shall be paid as a result of this Agreement. Sellers shall indemnify, defend, and hold Buyer, and Buyer shall indemnify,
defend and hold Sellers, free and harmless from any liability for any claims for commissions, referral fees, or finder's fees asserted by any third party with respect to the Agreement. </FONT></P>

<P><FONT SIZE=2>3.&nbsp;&nbsp;&nbsp;&nbsp;TERMINATION OF AGREEMENT </FONT></P>


<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;&nbsp;This
Agreement shall terminate automatically, unless otherwise agreed to in writing by the parties, in the event the Conditions to Payment are not satisfied and the
Closing has not occurred, on or before August&nbsp;23, 2002. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;&nbsp;In
the event of a termination of this Agreement as provided above, neither Buyer nor Sellers thereafter shall have any responsibility under this Agreement to the other
except the duty to maintain confidentiality of information exchanged by the parties, and any documents or other things delivered by any party that are in the possession of another party shall be
immediately returned. </FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2>3</FONT></P>

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<P><FONT SIZE=2>4.&nbsp;&nbsp;&nbsp;&nbsp;REPRESENTATIONS AND WARRANTIES OF SELLERS </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Sellers
represent and warrant to Buyer as follows: </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><I>(a)&nbsp;&nbsp;&nbsp;&nbsp;Ownership of Assets</I></FONT><FONT SIZE=2>.&nbsp;&nbsp;&nbsp;&nbsp;Sellers have good and marketable title to the Assets, including any contract rights
included therein, subject to no lien, third party right or claim, charge, security interest, liability, obligation, restriction, encumbrance or title defect of any kind, and all right, claim, title
and interest in and to the Assets is being sold, assigned, transferred and conveyed to Buyer effective as of the Closing, free of any and all such interests. Except as provided in this Agreement,
Sellers have full power and authority to sell and transfer the Assets without the consent or approval of any other person or authority, and, subject to the provisions of this Agreement, will transfer
the Assets to Buyer at the Closing free of liens, encumbrances, restrictions or adverse claims or interests. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><I>(b)&nbsp;&nbsp;&nbsp;&nbsp;Organization and Authority</I></FONT><FONT SIZE=2>.&nbsp;&nbsp;&nbsp;&nbsp;Emerald Valley is a corporation duly organized, validly existing and in good
standing under the laws of Oregon. Sellers have all necessary power and authority to own, use and convey the Assets. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><I>(c)&nbsp;&nbsp;&nbsp;&nbsp;Enforceability</I></FONT><FONT SIZE=2>.&nbsp;&nbsp;&nbsp;&nbsp;This Agreement and any documents referenced in it to be delivered by Sellers shall be duly
executed and, when delivered as provided in this Agreement: (i)&nbsp;will constitute the legal, valid and binding obligations of Sellers, enforceable in accordance with their respective terms;
(ii)&nbsp;do not and will not violate or conflict with, result in a breach or default under, or give any person or entity any right to terminate or modify any contract, agreement or commitment of
any kind applicable to Sellers or to any of the Assets; (iii)&nbsp;do not and will not violate, conflict with, result in a breach or default under, or give any person or entity any right to
terminate or modify any order, writ, judgment, decree, license, permit, approval, or authorization of any kind applicable to Sellers, or to any of the Assets; (iv)&nbsp;do not and will
not violate or conflict with any law, statute, rule, or regulation of any kind applicable to Sellers or to any of the Assets; and (v)&nbsp;do not and will not result in the creation or imposition of
any lien, third party right or claim, charge, security interest, liability, restriction, encumbrance or title defect of any kind against or with respect to any of the rights, properties, and assets of
Sellers, including the Assets. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><I>(d)&nbsp;&nbsp;&nbsp;&nbsp;No Undisclosed Liabilities</I></FONT><FONT SIZE=2>.&nbsp;&nbsp;&nbsp;&nbsp;Sellers (i)&nbsp;did not have, as of the date of this Agreement, any debts,
liabilities or obligations, whether accrued, absolute, contingent or otherwise, which are material to the condition, title or operation of the Assets purchase orders for ingredients and supplies
incurred in the ordinary course of Sellers' business; (ii)&nbsp;shall not incur following the date of this Agreement, any such debts, liabilities or obligations; and (iii)&nbsp;were not, as of
the date of this Agreement, or since such date have not become, a party to any contract or agreement that may materially adversely affect the condition, title or operation of the Assets. </FONT></P>


<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><I>(e)&nbsp;&nbsp;&nbsp;&nbsp;Transactions Not Prohibited</I></FONT><FONT SIZE=2>.&nbsp;&nbsp;&nbsp;&nbsp;The consummation of the transactions contemplated by this Agreement will not
result in the breach of, or constitute a default (or an event which, with notice or lapse of time or both, would constitute a default) or allow the acceleration of the obligations of Sellers under,
any lease, license, promissory note, indenture, mortgage, deed of trust, insurance policy or other instrument, arrangement, or agreement to which Sellers are parties or to which Sellers or any of the
Assets is subject, nor will such consummation conflict with any license, certificate, permit or franchise held by Sellers. The use of the Assets by Buyer will not violate, conflict with or infringe
any intellectual property or other rights of any third party. </FONT></P>


<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><I>(f)&nbsp;&nbsp;&nbsp;&nbsp;Compliance with Laws</I></FONT><FONT SIZE=2>.&nbsp;&nbsp;&nbsp;&nbsp;Sellers have all licenses, permits and authorizations necessary for the lawful
operation or use of the Assets pursuant to all applicable statutes, laws, ordinances, rules and regulations of all governmental bodies, agencies and divisions having, asserting or claiming
jurisdiction over the Assets. Sellers are not in violation of any laws or regulations, the violation of which would have a material adverse effect on the Assets. </FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2>4</FONT></P>

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<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><I>(g)&nbsp;&nbsp;&nbsp;&nbsp;Legal Proceedings</I></FONT><FONT SIZE=2>.&nbsp;&nbsp;&nbsp;&nbsp;There is no pending or threatened action, suit, proceeding, claim or arbitration, nor any
pending or threatened investigation by any governmental agency, affecting the Assets, or relating to the transactions contemplated by this Agreement. There is no outstanding order, writ, injunction or
decree of any court, government or governmental agency affecting the Assets. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><I>(h)&nbsp;&nbsp;&nbsp;&nbsp;Employment Matters.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Sellers shall pay all payroll obligations owing or accruing to Emerald Valley's
employees through Closing, including employment taxes, retirement contributions, accrued sick leave and/or vacation pay, or other benefits owing to Emerald Valley's employees. Emerald Valley's
employees shall be notified of this sale as of the date of Closing and that the employees may apply for employment with Buyer upon the terms described in section&nbsp;7(c). </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><I>(i)&nbsp;&nbsp;&nbsp;&nbsp;Truth at Closing</I></FONT><FONT SIZE=2>.&nbsp;&nbsp;&nbsp;&nbsp;All representations and warranties contained in this Section&nbsp;4 will be true at the
Closing, as if made as of the date of Closing, except to the extent of any changes or events specifically authorized by this Agreement. There is no fact, event or circumstance known to Sellers and not
fully, accurately and completely disclosed to Buyer which may reasonably be anticipated to have a material adverse effect on the Assets. </FONT></P>

<P><FONT SIZE=2>5.&nbsp;&nbsp;&nbsp;&nbsp;REPRESENTATIONS AND WARRANTIES OF BUYER </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Buyer
represents and warrants to Sellers as follows: </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><I>(a)&nbsp;&nbsp;&nbsp;&nbsp;Organization</I></FONT><FONT SIZE=2>.&nbsp;&nbsp;&nbsp;&nbsp;Buyer is a corporation duly organized, validly existing and in good standing under the laws of
Delaware and qualified to do business in the State of California. </FONT></P>


<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><I>(b)&nbsp;&nbsp;&nbsp;&nbsp;Authority</I></FONT><FONT SIZE=2>.&nbsp;&nbsp;&nbsp;&nbsp;Buyer has the power and authority to enter into and perform its obligations under this Agreement
and to own, use and operate its rights, properties and assets and to conduct its business. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><I>(c)&nbsp;&nbsp;&nbsp;&nbsp;Transactions Not Prohibited</I></FONT><FONT SIZE=2>.&nbsp;&nbsp;&nbsp;&nbsp;The consummation of the transactions contemplated by this Agreement will not
result in the breach of, or constitute a default (or an event which, with notice or lapse of time or both, would constitute a default) or allow the acceleration of the obligations of Buyer under any
lease, license, promissory note, indenture, mortgage, deed of trust, insurance policy or other instrument, arrangement, or agreement to which Buyer is a party or to which Buyer or any of its assets is
subject, nor will such consummation conflict with any license, certificate, permit or franchise of any public authority held by Buyer. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><I>(d)&nbsp;&nbsp;&nbsp;&nbsp;Enforceability</I></FONT><FONT SIZE=2>.&nbsp;&nbsp;&nbsp;&nbsp;This Agreement and any documents described herein to be delivered by Buyer at the Closing
shall be duly executed and, when delivered as provided in this Agreement: (i)&nbsp;will constitute the legal, valid and binding obligations of Buyer, enforceable in accordance with their respective
terms; (ii)&nbsp;do not and will not violate or conflict with, or result in a breach or default under any contract, agreement, writ, judgment, decree, license, permit, approval or authorization of
any kind applicable to Buyer. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><I>(e)&nbsp;&nbsp;&nbsp;&nbsp;Truth at Closing</I></FONT><FONT SIZE=2>.&nbsp;&nbsp;&nbsp;&nbsp;All representations and warranties contained in this Section&nbsp;5 will be true the
Closing, as if made on the date of Closing, except to the extent of any changes or events specifically authorized by this Agreement. </FONT></P>

<P><FONT SIZE=2>6.&nbsp;&nbsp;&nbsp;&nbsp;COVENANTS OF SELLERS </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Sellers
make the following covenants to and for the benefit of Buyer: </FONT></P>


<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><I>(a)&nbsp;&nbsp;&nbsp;&nbsp;Covenant Not to Compete</I></FONT><FONT SIZE=2>.&nbsp;&nbsp;&nbsp;&nbsp;Sellers jointly and severally covenant and agree that they will not, for a
five-year period commencing on the date of this Agreement, directly or indirectly, engage in, own, manage, operate, finance, participate in, provide services for, have an interest in, or
otherwise be involved in any business arrangement with any person, firm, partnership, corporation, or business, whether as an employee, officer, director, agent, security holder, creditor, consultant,
shareholder, </FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2>5</FONT></P>

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partner, trustee, joint venturer, broker, distributor, sales representative or in any other capacity, that engages in the production, sale, or distribution of product lines now produced by the Buyer
or the Sellers. The foregoing notwithstanding, Sellers shall not be prohibited from owning debt or equity instruments issued by a publicly traded company so long as Sellers' total interests in such
entity do not exceed 5-percent of any class of stock (including conversion rights) of such publicly traded company. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><I>(b)&nbsp;&nbsp;&nbsp;&nbsp;Confidential Information</I></FONT><FONT SIZE=2>.&nbsp;&nbsp;&nbsp;&nbsp;Sellers acknowledge and agree that they possess confidential information related
to the Buyer and the Assets, the improper disclosure or misuse of which would materially adversely affect the ability of Buyer to make use of the Assets, and that Sellers' covenants and agreements
contained in this section are in furtherance of and ancillary to the purchase and sale transactions contemplated by this Agreement and are reasonable and necessary to preserve and protect the Assets.
The confidentiality provisions of this section shall survive the Closing of this Agreement. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Sellers,
and any agent or representative of them, shall not, without prior permission of the Buyer, disclose any proprietary information relating to the Buyer, the Assets or any product
line now produced by the Buyer or Sellers ("Confidential Information"), such as, but not limited to, formulas, specifications, manufacturing methods, documentation produced, business affairs, future
plans, process information, customer lists, and any other information which is a valuable, special and unique asset of the Buyer or the Assets, and which shall include any other information
represented by the Buyer, its officers or agents to Sellers as confidential. Confidential Information shall not include information that becomes publicly available through no act of the disclosing
party, is received rightfully from a third party without duty of confidentiality, is disclosed under operation of law, or is disclosed with the prior written permission of the Buyer. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Sellers
agree that they will not at any time or in any manner, either directly or indirectly, use any Confidential Information for their own benefit, and that they will protect such
information and treat it as strictly confidential. A violation of this paragraph shall be a material violation of this Agreement. If it appears that Emerald Valley or Bankoff has disclosed (or has
threatened to disclose) Confidential Information in violation of this Agreement, the Buyer shall be entitled to an injunction to restrain any of them from disclosing, in whole or in part, such
information, or from providing any services to any party to whom such information has been disclosed or may be disclosed. The Buyer shall not be prohibited by this provision from pursuing other
remedies, including claims for losses and damages. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
the event Buyer does not purchase the Assets, the provisions of this Paragraph&nbsp;6(b) shall apply only to Confidential Information provided directly or indirectly by Buyer to
Sellers. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><I>(c)&nbsp;&nbsp;&nbsp;&nbsp;No Further Negotiations by Sellers</I></FONT><FONT SIZE=2>.&nbsp;&nbsp;&nbsp;&nbsp;During the pendency of the Closing, so long as this Agreement has not
been terminated as provided in section&nbsp;3, Sellers agree that they will not, directly or indirectly, offer the stock of Emerald Valley or any of the Assets to, solicit or entertain offers for
them from, negotiate for their sale, or make information concerning them available to, any third party, other than sales of completed products in the ordinary course of business. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><I>(d)&nbsp;&nbsp;&nbsp;&nbsp;Emerald Valley Kitchen.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Sellers acknowledge and agree that, from and after the closing of the Agreement,
Buyer will own and retain all trademark and trade name rights in the name "Emerald Valley Kitchen." Sellers covenant and agree that Sellers (i)&nbsp;will not use or attempt to use the name "Emerald
Valley Kitchen" in advertising or marketing, as a trademark or trade name, or in any other manner or for any other purpose not consistent with the rights to such name transferred to the Buyer by this
Agreement, and (ii)&nbsp;within 120&nbsp;days after Closing, will amend the articles of incorporation of Emerald Valley to change its name to a name other than Emerald Valley Kitchen,&nbsp;Inc.
and provide proof of such amendment to Buyer. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><I>(e)&nbsp;&nbsp;&nbsp;&nbsp;Access.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;To permit Buyer to conduct its due diligence investigation, Sellers will permit Buyer and its
representatives to have reasonable access to the Assets, the premises in which Sellers conducts the business of Emerald Valley and all of Emerald Valley's books, records and personnel files, and will </FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2>6</FONT></P>

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furnish to Buyer financial data, operating data, and other information concerning Emerald Valley or its business, as Buyer shall reasonably request. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><I>(f)&nbsp;&nbsp;&nbsp;&nbsp;Conduct of Business; Interim Operations</I></FONT><FONT SIZE=2>.&nbsp;&nbsp;&nbsp;&nbsp;Until the Closing or termination of this Agreement, Sellers will
conduct the business of Emerald Valley in a reasonable and prudent manner in accordance with past practices, preserve its existing business organization and relationships with its employees,
customers, suppliers and others with whom it has a business relationship, preserve and protect the Assets, and conduct the business in compliance with all applicable laws and regulations. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><I>(g)&nbsp;&nbsp;&nbsp;&nbsp;Covenants Reasonable; Remedies for Breach.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;The covenants of Sellers contained in this section&nbsp;6 are
reasonable in duration and scope. In the event of a breach of these covenants by Sellers, or any of them, Buyer shall be entitled to injunctive relief, as well as to damages sustained and the recovery
of actual attorneys' fees and all costs incurred to enforce these covenants. </FONT></P>

<P><FONT SIZE=2>7.&nbsp;&nbsp;&nbsp;&nbsp;COVENANTS OF BUYER </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Buyer
makes the following covenants for the benefit of Sellers each of which shall survive Closing of this Agreement: </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><I>(a)&nbsp;&nbsp;&nbsp;&nbsp;Confidential Information.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Until the Closing has occurred or this Agreement has been terminated, Buyer will
hold in confidence, and will not use to the detriment of Sellers, any data and information obtained from Sellers in connection with this Agreement. Upon termination of this Agreement for any reason,
Buyer shall return promptly to Sellers all printed information received by Buyer from Sellers in connection with the proposed transaction and deliver to Seller or destroy all copies of such printed
material which may have been made by Buyer or its representatives. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
the event Buyer does not purchase the Assets, Buyer shall not, without prior permission of Sellers, disclose any proprietary information relating to Sellers, the Assets or any product
line now produced by Sellers including but not limited to formulas, methods, specifications, manufacturing methods, recipes, documentation produced, business affairs, future plans, process
information, customer lists or any other information which is a valuable, special and unique asset of Sellers or the Assets including any information represented by Sellers, its officers or agents to
Buyer as confidential (collectively, "Sellers' Confidential Information"). Sellers' Confidential Information shall not include any other information that becomes publicly available through no act of
the disclosing party, is received rightfully from a third party without duty of confidentiality, is disclosed under operation of law, or is disclosed with the prior written permission of the Sellers. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Buyer
agrees that it will not at any time or in any manner, either directly or indirectly, use any of Sellers' Confidential Information for its own benefit, and that it will protect such
information and treat it as strictly confidential. A violation of this paragraph shall be a material violation of this Agreement. If it appears that buyer has disclosed (or has threatened to disclose)
Sellers' Confidential Information in violation of this Agreement, Sellers shall be entitled to an injunction to restrain Buyer from disclosing, in whole or in part, such information, or from providing
any services to any party to whom such information has been disclosed or may be disclosed. Sellers shall not be prohibited by this provision from pursuing other remedies, including claims for losses
or damages. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><I>(b)&nbsp;&nbsp;&nbsp;&nbsp;Promotion and Development.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Buyer agrees that it will promote and develop the sales and distribution of
organic food products including those included in the Segment and shall provide sufficient resources to promote and develop the sales of organic food products. </FONT></P>


<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><I>(c)&nbsp;&nbsp;&nbsp;&nbsp;Continued Employment.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Buyer agrees to offer employment to Emerald Valley's current employees in a good faith
attempt to maintain continued employment for as many of Emerald Valley's employees as possible. It is acknowledged that all such employees hired by Buyer shall be hired "at will" and no Emerald Valley
employee shall have any rights to continued employment with Buyer. Subject to this section, Buyer agrees to provide compensation and fringe benefits to Emerald Valley </FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2>7</FONT></P>

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employees retained by Buyer at levels at least as beneficial to such employees as was previously provided by Sellers. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Sellers
have maintained a Self-Directed Employee Plan (SEP) for the benefit of Emerald Valley employees to which Sellers have contributed annually up to 15% of the gross
salaries of Emerald Valley employees entitled to participate in the SEP. Buyer and Sellers mutually covenant and agree that they will in good faith, consistently with the principle expressed in the
preceding paragraph, on or before September&nbsp;30, 2002, negotiate, agree upon and implement a cash bonus program for Emerald Valley employees retained by Buyer which, taken together with the
benefit provided by Buyer's 401k Plan, will replace the dollars associated with the previous SEP benefit provided by Emerald Valley. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><I>(d)&nbsp;&nbsp;&nbsp;&nbsp;Donation for Charitable Causes.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Buyer agrees to continue Emerald Valley's commitment to donate
1-percent of gross sales from the conduct of the Emerald Valley business (Segment) to humanitarian and environmental charities. A committee of four Emerald Valley Segment employees will be
established by October&nbsp;30, 2002 to select the charitable recipients to be reviewed by the Chairman of the Board of Directors of Buyer. </FONT></P>

<P><FONT SIZE=2>8.&nbsp;&nbsp;&nbsp;&nbsp;INDEMNIFICATION </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><I>(a)&nbsp;&nbsp;&nbsp;&nbsp;Sellers</I></FONT><FONT SIZE=2>.&nbsp;&nbsp;&nbsp;&nbsp;Sellers covenant and agree to indemnify, hold harmless and defend Buyer, its successors in interest
and assigns and their respective shareholders, partners, members, directors, officers, managers, employees, agents and representatives from and against (i)&nbsp;all liabilities, losses, claims,
demands, suits, judgments, damages and expenses (including reasonable legal expenses) resulting from a breach or nonfulfillment of any of the representations, warranties, covenants and agreements of
Sellers set forth in this Agreement; (ii)&nbsp;all losses, damages, costs and expenses relating to, arising out of or attributable to any lien, third party right, third party claim, charge, security
interest, liability, obligation, restriction, encumbrance or title defect of any kind with respect to any of the Assets; (iii)&nbsp;all liabilities of Sellers; and (iv)&nbsp;attorneys' fees and
other costs and expenses, judgments and amounts paid in settlement or compromise of any third party action, lawsuit, proceeding, citation or investigation relating to, arising out of or attributable
to any matter referred to in clauses (i)-(iii)&nbsp;of this subsection 8(a). In the event that Buyer sustains any liability, loss, damage or expense which is covered by Sellers' indemnification
under this paragraph, Buyer may elect to offset the same against any amount then payable to Sellers under this Agreement or the Royalty Agreement. </FONT></P>


<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><I>(b)&nbsp;&nbsp;&nbsp;&nbsp;Buyer</I></FONT><FONT SIZE=2>.&nbsp;&nbsp;&nbsp;&nbsp;Except as otherwise provided in this Agreement, Buyer agrees to defend, indemnify and hold harmless
the Sellers against all liabilities, losses, claims, demands, suits, judgments, damages and expenses (including reasonable legal expenses) resulting from a breach or nonfulfillment of any of the
representations, warranties, agreements and covenants of Buyer set forth in this Agreement. Buyer agrees, in addition to any other rights or remedies of Sellers, to defend, indemnify and hold Sellers
harmless from any and all losses, damages, liabilities or expenses (including reasonable attorneys' fees and court costs) arising out of or resulting from, or in connection with any complaint, claim
or legal action whatsoever, whether foreseen or unforeseen, alleging damages, death, illness, injury or damage to property, resulting from any use of the Assets by Buyer after the date of Closing of
this Agreement. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><I>(c)&nbsp;&nbsp;&nbsp;&nbsp;Notice of Claims.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;If any third party claim is asserted relating to any liability specified in Sections 8(a)
or 8(b), the party against which such claim is made shall promptly give notice of such claim to the indemnifying party and the indemnifying party shall have the sole right, at its, his or her own
expense, to contest or to compromise and settle such claim. </FONT></P>

<P><FONT SIZE=2>9.&nbsp;&nbsp;&nbsp;&nbsp;MISCELLANEOUS </FONT></P>


<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><I>(a)&nbsp;&nbsp;&nbsp;&nbsp;Professional Expenses.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Buyer and Sellers shall be responsible to pay the fees of their respective attorneys,
accountants and consultants incurred in connection with the Agreement. </FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2>8</FONT></P>

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<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><I>(b)&nbsp;&nbsp;&nbsp;&nbsp;Further Execution and Delivery</I></FONT><FONT SIZE=2>.&nbsp;&nbsp;&nbsp;&nbsp;Sellers shall execute and/or deliver all such items, articles, bills of
sale, assignments, releases and other documents and instruments as Buyer or any of its successors in interest or assigns may at any time request to further and more completely evidence and confirm the
sale, assignment, transfer and conveyance to Buyer pursuant to this Agreement of all of Sellers' right, claim, title and interest in and to the Assets and the Lease, subject to no liens, third party
rights, third party claims, liabilities, encumbrances or title defects of any kind. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><I>(c)&nbsp;&nbsp;&nbsp;&nbsp;Notification.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;All notices required or permitted under this Agreement shall be in writing and shall be deemed
delivered when delivered in person or deposited in the United States mail, postage prepaid, addressed as follows, or when received by confirmed fax as follows: </FONT></P>

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<TD WIDTH="9%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="29%"><FONT SIZE=2>To the Buyer:</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="29%"><FONT SIZE=2>Monterey Pasta Company<BR>
1528 Moffett Street<BR>
Salinas, CA 93905<BR>
Attention: R. Lance Hewitt<BR>
Chief Executive Officer<BR>
Phone: (408)&nbsp;753-6262<BR>
Fax: (408)&nbsp;753-6257</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="29%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="9%"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
<TD WIDTH="29%"><FONT SIZE=2><BR>
To Sellers:</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="29%"><FONT SIZE=2><BR>
Mel Bankoff<BR>
President<BR>
Emerald Valley Kitchen<BR>
90472 Woodruff<BR>
P.O.&nbsp;Box 23236<BR>
Eugene, Oregon 97402<BR>
Phone: (541)&nbsp;688-3297<BR>
Fax: (541)&nbsp;485-2016</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="29%"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
</TR>
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<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><I>(d)&nbsp;&nbsp;&nbsp;&nbsp;Survival of Terms</I></FONT><FONT SIZE=2>.&nbsp;&nbsp;&nbsp;&nbsp;All representations, warranties and covenants (including but not limited to covenants
relating to competition and confidentiality) contained in this Agreement or in any certificate or other instrument delivered by or on behalf of the parties hereto shall be continuous and shall survive
the execution of the Agreement, the Closing and the delivery of any documents transferring title to the Assets and the Lease to Buyer pursuant to the Agreement. </FONT></P>


<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><I>(e)&nbsp;&nbsp;&nbsp;&nbsp;Counterparts</I></FONT><FONT SIZE=2>.&nbsp;&nbsp;&nbsp;&nbsp;This Agreement may be executed in counterparts, each of which shall be deemed an original, and
all of which when taken together shall constitute one and the same instrument. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><I>(f)&nbsp;&nbsp;&nbsp;&nbsp;Captions and Terms</I></FONT><FONT SIZE=2>.&nbsp;&nbsp;&nbsp;&nbsp;The captions used in the Agreement are for convenience of reference only and shall not
be considered part of it nor limit or otherwise affect the meaning of any of its provisions. Usage of the singular or plural number or the masculine, feminine or neuter gender shall include the
others, as the context may require. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><I>(g)&nbsp;&nbsp;&nbsp;&nbsp;Waivers</I></FONT><FONT SIZE=2>.&nbsp;&nbsp;&nbsp;&nbsp;No waiver or failure of enforcement by Sellers or Buyer of any term or condition of this Agreement
shall be effective unless in writing, nor shall it operate as a waiver of any other breach of such term or condition or of any other term or condition. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><I>(h)&nbsp;&nbsp;&nbsp;&nbsp;Binding Effect</I></FONT><FONT SIZE=2>.&nbsp;&nbsp;&nbsp;&nbsp;The terms and conditions of the Agreement shall inure to the benefit of, and be binding
upon, the respective successors and assigns of the parties, but are not intended, nor shall the Agreement be construed, to confer any enforceable rights on any person not a party to the Agreement or
such person's successors or assigns. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><I>(i)&nbsp;&nbsp;&nbsp;&nbsp;Governing Law</I></FONT><FONT SIZE=2>.&nbsp;&nbsp;&nbsp;&nbsp;This Agreement shall be governed by and construed in accordance with the laws of the State of
California. </FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2>9</FONT></P>

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<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><I>(j)&nbsp;&nbsp;&nbsp;&nbsp;Entire Agreement</I></FONT><FONT SIZE=2>.&nbsp;&nbsp;&nbsp;&nbsp;Except for the Royalty and Employment Agreements referred to in the second paragraph
hereof, this Agreement contains the entire agreement of the parties and there are no other promises or conditions in any other agreement whether oral or written. This Agreement supersedes any prior
written or oral agreements between the parties concerning its subject matter, including but not limited to the Letter of Intent dated August&nbsp;1, 2002. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><I>(k)&nbsp;&nbsp;&nbsp;&nbsp;Mediation of Disputes</I></FONT><FONT SIZE=2>.&nbsp;&nbsp;&nbsp;&nbsp;Any controversy arising out of the performance of this Agreement or regarding its
interpretation is subject to a good faith effort at resolution through non-binding mediation before any complaint (whether a civil complaint in court or a complaint in arbitration) may be
filed. Mediation is a process in which parties attempt to resolve a dispute by submitting it to an impartial, neutral mediator who is authorized to facilitate the resolution of the dispute but who is
not empowered to impose a settlement on the parties. The mediation fee, if any, shall be paid one-half by Sellers and one-half by Buyer. The parties agree to limit the
admissibility in any subsequent litigation or proceeding of anything said, any admissions made, and any documents prepared, in the course of mediation, consistent with California Evidence Code
section&nbsp;1152.5. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;IF
ANY PARTY COMMENCES A COURT ACTION OR AN ARBITRATION PROCEEDING BASED ON A DISPUTE OR CLAIM TO WHICH THIS SECTION APPLIES WITHOUT FIRST ATTEMPTING TO RESOLVE THE MATTER IN GOOD FAITH
THROUGH MEDIATION, THEN THAT PARTY SHALL NOT BE ENTITLED TO RECOVER ATTORNEY'S FEES EVEN IF THEY WOULD OTHERWISE BE AVAILABLE TO THAT PARTY IN A SUBSEQUENT COURT ACTION OR ARBITRATION PROCEEDING. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><I>(l)&nbsp;&nbsp;&nbsp;&nbsp;Arbitration of Disputes Following Mediation</I></FONT><FONT SIZE=2>.&nbsp;&nbsp;&nbsp;&nbsp;Any controversy or claim arising out of, or relating to this
Agreement, or its making, performance, or interpretation, which is not resolved through the mediation process required by the preceding section, shall be resolved by arbitration conducted in Monterey
County in accordance with the rules of the American Arbitration Association then existing, and judgment on the arbitration award may be entered in any court having jurisdiction over the subject matter
of the controversy. Such award may be appealed to any appellate court having jurisdiction over the matter to the same extent that an appeal would be permissible from a civil judgment. The arbitrators
selected shall be persons experienced in general corporate matters and business agreements,
and shall make their awards based upon the principles of California law. The parties shall have the right to discovery and the arbitration proceeding shall be reported by a certified court reporter. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;BY
THEIR EXECUTION OF THIS AGREEMENT, THE PARTIES ARE AGREEING TO HAVE ANY DISPUTE ARISING OUT OF THE MATTERS INCLUDED IN THIS ARBITRATION OF DISPUTES PROVISION DECIDED BY NEUTRAL
ARBITRATION. ADDITIONALLY, THE PARTIES ARE GIVING UP ANY RIGHTS THEY OTHERWISE POSSESS TO HAVE THE DISPUTE LITIGATED IN A COURT OR BY JURY TRIAL; PROVIDED, HOWEVER, THE PARTIES ARE NOT GIVING UP THEIR
RIGHT TO APPEAL THE DECISION OF THE ARBITRATOR(S). IF ANY PARTY REFUSES TO SUBMIT TO ARBITRATION AFTER AGREEING TO THIS PROVISION, SUCH PARTY MAY BE COMPELLED TO ARBITRATE UNDER THE AUTHORITY OF THE
CALIFORNIA CODE OF CIVIL PROCEDURE. THE PARTIES' AGREEMENT TO THIS ARBITRATION PROVISION IS VOLUNTARY. THE PARTIES HAVE READ AND UNDERSTAND THE FOREGOING AND AGREE TO SUBMIT DISPUTES ARISING OUT OF
THE MATTERS INCLUDED IN THIS ARBITRATION OF DISPUTES PROVISION TO NEUTRAL ARBITRATION. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><I>(m)&nbsp;&nbsp;&nbsp;&nbsp;Assignment</I></FONT><FONT SIZE=2>.&nbsp;&nbsp;&nbsp;&nbsp;This Agreement will bind and inure to the benefit of each party's permitted successors and
assigns. No party may assign this Agreement, in whole or in part, without the written consent of all other parties, </FONT><FONT SIZE=2><I>provided</I></FONT><FONT SIZE=2>, </FONT> <FONT SIZE=2><I>however</I></FONT><FONT SIZE=2>, that the Buyer may
assign this Agreement without such consent to a successor in interest of the Buyer or in connection with any merger,
consolidation, sale of all or substantially all of the Buyer's assets or any other transaction in which more than fifty percent </FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2>10</FONT></P>

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<P><FONT SIZE=2>
(50%) of the Buyer's voting securities are transferred. Any attempt to assign this Agreement other than in accordance with this provision shall be null and void. </FONT></P>


<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><I>(n)&nbsp;&nbsp;&nbsp;&nbsp;Interpretation.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Sellers have been given the opportunity to retain counsel of their own choosing for purposes
of this Agreement, and either have done so or have elected not to do so, as they see fit. This Agreement shall be construed according to the fair meaning of its language. The rule of construction to
the effect that ambiguities are to be resolved against the drafting party shall not be employed in interpreting this Agreement. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><I>(o)&nbsp;&nbsp;&nbsp;&nbsp;Disclosure.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;The parties mutually agree not to disclose the terms of this Agreement except by news release in
a form mutually agreed to by the parties, by Form&nbsp;8K as required by NASDAQ or Securities and Exchange Commission reporting requirements to which Buyer is subject, or except as required by court
order. If disclosure is required, the disclosing party agrees to notify the other party in advance of the content of the information being disclosed and to whom the disclosure is being made. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;IN
WITNESS WHEREOF, the parties have executed this Agreement effective as of the date set forth above. </FONT></P>

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<TR VALIGN="TOP">
<TD WIDTH="47%"><FONT SIZE=2>Date: August 23, 2002</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=3><FONT SIZE=2>MONTEREY PASTA COMPANY</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="47%"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="5%"><FONT SIZE=2><BR>
By:</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="45%" ALIGN="CENTER"><FONT SIZE=2><BR>
/s/&nbsp;&nbsp;</FONT><FONT SIZE=2>R. LANCE HEWITT</FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><HR NOSHADE><FONT SIZE=2> R. Lance Hewitt<BR></FONT> <FONT SIZE=2><I>Chief Executive Officer</I></FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="47%"><FONT SIZE=2><BR>
Date: August 23, 2002</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD COLSPAN=3><FONT SIZE=2><BR>
EMERALD VALLEY KITCHEN, INC.</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="47%"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="5%"><FONT SIZE=2><BR>
By:</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="45%" ALIGN="CENTER"><FONT SIZE=2><BR>
/s/&nbsp;&nbsp;</FONT><FONT SIZE=2>MEL BANKOFF</FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><HR NOSHADE><FONT SIZE=2> Mel Bankoff<BR></FONT> <FONT SIZE=2><I>President</I></FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="47%"><FONT SIZE=2><BR>
Date: August 23, 2002</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="5%"><FONT SIZE=2><BR>
By:</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="45%" ALIGN="CENTER"><FONT SIZE=2><BR>
/s/&nbsp;&nbsp;</FONT><FONT SIZE=2>MEL BANKOFF</FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><HR NOSHADE><FONT SIZE=2> Mel Bankoff</FONT></TD>
</TR>
</TABLE>
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<P ALIGN="CENTER"><FONT SIZE=2>11</FONT></P>

<HR NOSHADE>
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<P ALIGN="CENTER"><FONT SIZE=2><A
NAME="page_ke2116_1_12"> </A> </FONT></P>

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<P ALIGN="CENTER"><FONT SIZE=2><A
NAME="ke2116_spousal_consent"> </A>
<A NAME="toc_ke2116_1"> </A>
<BR></FONT><FONT SIZE=2><B>SPOUSAL CONSENT    <BR>  </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;I, /s/</FONT><FONT SIZE=2> MARTHA BLANCHET</FONT><FONT SIZE=2>, do hereby acknowledge that I have read the foregoing Asset Purchase Agreement and know of
its contents. I am aware by its provisions that my spouse has agreed to sell to Monterey Pasta Company all right and interest in and to certain assets which may be assets of the marital community and
as to which I therefore may have a community interest. I hereby approve of the terms of the Agreement. </FONT></P>

<P><FONT SIZE=2>Date:
August&nbsp;23, 2002 </FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2>12</FONT></P>

<HR NOSHADE>
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<P ALIGN="RIGHT"><FONT SIZE=2><A
NAME="page_kg2116_1_13"> </A> </FONT></P>

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<P ALIGN="RIGHT"><FONT SIZE=2><A
NAME="kg2116_exhibit_a"> </A>
<A NAME="toc_kg2116_1"> </A>
<BR></FONT><FONT SIZE=2><B>EXHIBIT A    <BR>  </B></FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2><A
NAME="kg2116_estimates_of_earnings_before_t__est03679"> </A>
<A NAME="toc_kg2116_2"> </A>
<BR></FONT><FONT SIZE=2><B>ESTIMATES OF EARNINGS BEFORE TAXES, DEPRECIATION AND AMORTIZATION<BR>  (Subsection 1(e) of the Agreement)    <BR>  </B></FONT></P>

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<TABLE WIDTH="93%" BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR VALIGN="BOTTOM">
<TH WIDTH="46%" ALIGN="LEFT"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="9%" ALIGN="CENTER"><FONT SIZE=1><B>2002&#150;03</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="9%" ALIGN="CENTER"><FONT SIZE=1><B>2003&#150;04</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="9%" ALIGN="CENTER"><FONT SIZE=1><B>2004&#150;05</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="9%" ALIGN="CENTER"><FONT SIZE=1><B>2005&#150;06</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="9%" ALIGN="CENTER"><FONT SIZE=1><B>2006&#150;07</B></FONT><HR NOSHADE></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="46%"><FONT SIZE=2>EBITDA (dollars in 000s)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>979</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>1,178</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>1,404</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>1,675</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>2,001</FONT></TD>
</TR>
</TABLE>
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<P ALIGN="CENTER"><FONT SIZE=2>13</FONT></P>

<HR NOSHADE>
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<BR>
<P><br><A NAME="02PAL2116_2">QuickLinks</A><br></P><!-- TOC_BEGIN -->
<UL>
<FONT SIZE=2><A HREF="#toc_kc2116_1">Exhibit 10.42</A></FONT><BR>
</UL>
<FONT SIZE=2><A HREF="#toc_kc2116_2">ASSET PURCHASE AGREEMENT</A></FONT><BR>
<!-- TOC_BEGIN -->
<FONT SIZE=2><A HREF="#toc_ke2116_1">SPOUSAL CONSENT</A></FONT><BR>
<!-- TOC_BEGIN -->
<UL>
<FONT SIZE=2><A HREF="#toc_kg2116_1">EXHIBIT A</A></FONT><BR>
</UL>
<FONT SIZE=2><A HREF="#toc_kg2116_2">ESTIMATES OF EARNINGS BEFORE TAXES, DEPRECIATION AND AMORTIZATION (Subsection 1(e) of the Agreement)</A></FONT><BR>

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</TEXT>
</DOCUMENT>
