EXHIBIT 10.22
EMPLOYMENT TERMINATION AGREEMENT
THIS AGREEMENT, dated as of the 1st day of April 1998, is by and between
Silverado Foods, Inc., an Oklahoma corporation ("Silverado"), and Xxxxx Xxxxxxxx
("Xxxxxxxx").
R E C I T A L S
A. Silverado and Xxxxxxxx entered an Employment Agreement dated December
31, 1993, which was amended pursuant to an agreement dated March 21, 1995 (as
amended, the "Employment Agreement").
B. Silverado and Xxxxxxxx are parties to a Royalty Termination Agreement
dated November 8, 1996 (the "Royalty Termination Agreement").
C. Silverado and Xxxxxxxx desire to resolve certain issues relating to
the Employment Agreement and the Royalty Termination Agreement.
D. Pursuant to the Royalty Termination Agreement, Silverado issued to
Xxxxxxxx the Primary Shares and the Contingent Shares (as such terms are defined
in the Royalty Termination Agreement). As of the date of this Agreement,
Xxxxxxxx owns 34 shares of the original Primary Shares and Contingent Shares.
NOW, THEREFORE, in consideration of the mutual promises and covenants
herein contained, the parties agree as follows:
1. Effective Date. The Effective Date of this Agreement shall be
September 1, 1997 (the "Effective Date").
2. Termination of Employment Agreement. The Employment Agreement and
Xxxxxxxx'x employment with Silverado are hereby terminated as of the Effective
Date. Accordingly, all rights, duties and obligations of Silverado and Xxxxxxxx
relating to the Employment Agreement are hereby terminated.
3. Payment to Xxxxxxxx. Silverado shall pay to Xxxxxxxx the amount of
$425,000.00. Such amount shall accrue interest at the rate of $16,000 payable
each month from the Effective Date until the date on which the total $425,000 is
paid to Xxxxxxxx with a pro rata portion of the $16,000 being paid during the
month the $425,000 is paid.
4. Issuance of Stock. Silverado shall issue to Xxxxxxxx 240,000 shares of
Silverado's common stock (the "Settlement Shares"). Following the execution of
this Agreement, Silverado shall make application to the American Stock Exchange
for the listing of such shares and deliver instructions to its transfer agent
for the issuance of such shares. In addition, Silverado will, after receiving
approval of listing by the American Stock Exchange, prepare a registration
statement with the Securities and Exchange Commission to register these
shares.
5. Waiver of Interest.
(a) Amendments. Section 4(c) of the Royalty Termination Agreement
provided for interest charges on amounts due under the stock price
guarantee provision (the "Price Guarantee") by Silverado with respect to
the Primary Shares and the Contingent Shares. Of the $425,000 due Sirianni
in Section 3 of this agreement, $75,000 is in lieu of Xxxxxxxx waiving
interest due him under the Royalty Termination Agreement. This Settlement
of Employment Agreement terminates such provision for interest payments or
the accruing of interest on amounts due to Xxxxxxxx for the period of time
from the effective date of this agreement until 45 days after the next
shareholders meeting of Silverado Foods, Inc. scheduled to be on or about
May 8, 1998.
(b) Guarantee of Settlement Shares. In addition, the parties agree
that Silverado shall guarantee the stock price of the Settlement Shares on
the same terms as the Price Guarantee, except as follows: (i) the
guaranteed Net Sales Price (as defined in the Royalty Termination
Agreement) for the Settlement Shares shall be $1.25 per share, and (ii) the
period of time in which sales must occur to be eligible for such guarantee
shall commence on September 1, 1998 and end on August 31, 1999, and (iii)
any amounts due under this guarantee for the Settlement shares shall be
payable in cash. Xxxxxxxx must notify Silverado of his intent to sell these
shares at least 10 days prior to the date of the sale of such shares. If
Silverado fails to pay any amount under this cash guarantee provision
within 60 days from the date of sale of such shares, Xxxxxxxx shall give
written notice to Silverado of such failure to pay. If Silverado does not
cure such failure to pay within 15 days after receipt of such notice,
Silverado shall thereupon be deemed to be in default, and such amount in
default shall bear interest from the end of the 15 day cure period until
paid at the rate of 18% per annum paid monthly.
6. Investment Representations. Xxxxxxxx represents and warrants as
follows:
(a) Access to Information. Respecting Silverado, its business, plans
and financial condition, the terms of this transaction, and any other
matters relating to this transaction: Xxxxxxxx has received all materials
which have been requested by Sirianni; Xxxxxxxx has had a reasonable
opportunity to ask questions of Silverado and its representatives; and
Silverado has answered all inquiries that Sirianni or Xxxxxxxx'x
representatives have put to it. Xxxxxxxx has had access to all additional
information necessary to verify the accuracy of the information set forth
in this Agreement and any other materials furnished herewith and has taken
all the steps necessary to evaluate the merits and risks of an investment
as proposed hereunder.
(b) Experience. Sirianni or his representatives have such knowledge
and
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experience in finance, securities, investments and other business matters
so as to be able to protect the interest of Xxxxxxxx in connection with
this transaction.
(c) Risks. Xxxxxxxx understands the various risks of an investment in
Silverado as proposed herein and can afford to bear such risks, including,
but not limited to, the risks of losing the entire investment.
(d) No Registration. Xxxxxxxx has been advised by Silverado that none
of the shares of common stock of Silverado issuable hereunder
(collectively, the "Securities") have been registered under the Act, that
the Securities will be issued on the basis of the statutory exemption
provided by Section 4(2) of the Securities Act of 1933, as amended (the
"Act") or Regulation D promulgated thereunder, or both, relating to
transactions by an issuer not involving any public offering and under
similar exemptions under certain state securities laws, that this
transaction has not been reviewed by, passed on or submitted to any Federal
or state agency or self-regulatory organization where an exemption is being
relied upon, and that Silverado's reliance thereon is based in part upon
the representations made by Xxxxxxxx in this Agreement. Xxxxxxxx
acknowledges that Xxxxxxxx has been informed by Silverado of, or is
otherwise familiar with, the nature of the limitations imposed by the Act
and the rules and regulations thereunder on the transfer of securities. In
particular, Xxxxxxxx agrees that no sale, assignment, or transfer of any of
the Securities shall be valid or effective, and Silverado shall not be
required to give any effect to any such sale, assignment or transfer,
unless (i) the sale, assignment or transfer of such Securities is
registered under the Act, it being understood that the Securities are not
currently registered but it is the intention of Silverado to register these
shares and will use its best efforts to register these Securities or (ii)
such Securities are sold, assigned or transferred in accordance with all
the requirements and limitations of Rule 144 under the Act, it being
understood that Rule 144 is not available at the present time for the sale
of the Securities, or (iii) such sale, assignment or transfer is otherwise
exempt from registration under the Act. Xxxxxxxx further understands that
an opinion of counsel and other documents may be required to transfer the
Securities. Xxxxxxxx acknowledges that the Securities shall be subject to a
stop transfer order and the certificate or certificates evidencing any
Securities shall bear the following legend or a substantially similar
legend and such other legends as may be required by state blue sky laws:
"The securities represented by this certificate have not been
registered under the Securities Act of 1933, as amended (the "Act"),
or any state securities laws and neither such securities nor any
interest therein may be offered, sold, pledged, assigned, or otherwise
transferred unless (1) a registration statement with respect thereto
is effective under the Act and any applicable state securities laws or
(2) Silverado receives an opinion of counsel to the holder of such
securities, which counsel and opinion are reasonably satisfactory to
Silverado, that such securities may be offered, sold, pledged,
assigned, or transferred in the manner contemplated without an
effective registration statement under the Act or applicable state
securities laws."
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(e) Investment Intent. Xxxxxxxx will acquire the Securities for his
own account for investment and not with a view to the sale or distribution
thereof or the granting of any participation therein, and has no present
intention of distributing or selling to others any of such interest or
granting any participation therein except in the event when said shares are
registered.
(f) Blue Sky Legends. Xxxxxxxx understands and agrees that certain
legends required by the laws of the State of California may be placed on
certificates representing the Securities.
(g) Survival. Xxxxxxxx acknowledges that the representations,
warranties and Agreements made by him herein shall survive the execution
and delivery of this Agreement and the issuance of the Securities
hereunder.
7. Release by Silverado. Except as to any and all of Silverado's and its
agents, employees, officers, directors and shareholders obligations dealing with
the Royalty Termination Agreement dated November 8, 1996 Silverado hereby
releases and forever discharges Sirianni from any and all claims, rights, causes
of action, suits, demands, costs and expenses (including, without limitation,
reasonable attorneys' fees) of any nature whatsoever, whether presently known or
unknown, whether the same be upon statute, contract or tort, to the fullest
extent permitted by law, which it has or may have, against Xxxxxxxx.
8. Release by Sirianni. Except as to any and all of Silverado's and its
agents, employees, officers, directors and shareholders obligations dealing with
the Royalty Termination Agreement dated November 8, 1996 (as amended) and as to
the Registration Rights Agreement dated November 8, 1996, and as to any claims
arising under this Agreement, Xxxxxxxx hereby releases and forever discharges
Silverado and its agents, employees, officers, directors and shareholders from
any and all claims, rights, causes of action, suits, demands, costs and expenses
(including, without limitation, reasonable attorneys' fees) of any nature
whatsoever, whether presently known, whether the same be upon statute, contract
or tort, to the fullest extent permitted by law, which he has or may have,
against.
9. Restrictive Covenants. In the course of his employment with Silverado,
Xxxxxxxx has had access to proprietary information regarding Silverado, its
customers and its business. Accordingly, the parties agree as follows:
(a) Confidentiality. Xxxxxxxx agrees that he will not divulge to
anyone (other than Silverado or any persons employed or designated by
Silverado) any knowledge or information of any type whatsoever of a
confidential nature relating to the business of Silverado or any of its
subsidiaries or affiliates, including without limitation all types of trade
secrets (unless readily ascertainable from public or published information
or trade sources). Xxxxxxxx further agrees not to at any time
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disclose, publish or make use of any such knowledge or information of a
confidential nature without the prior written consent of Silverado.
(b) Diversion of Employees or Clients. Xxxxxxxx agrees that during
the period of three years following the Effective Date he shall not in any
manner, directly or indirectly:
(i) Entice, encourage or influence, or attempt to entice,
encourage or influence, anyone who is an employee of Silverado at the
time of such termination to quit or leave the employ of Silverado, or
(ii) Solicit, induce or attempt to induce any person or entity
who is a client or customer of Silverado at the time of such
termination to cease being a client or customer of Silverado or divert
or take away, or attempt to divert or take away, from Silverado the
business or patronage of such clients or customers,
it being the general intent hereof that during such three year period after
the Effective Date Xxxxxxxx will maintain a "hands off" policy with regard
to Silverado's employees, clients and customers.
(c) Noncompetition. Xxxxxxxx covenants and agrees with Silverado that
during the period commencing on the Effective Date and ending on the date
three years after the Effective Date, he will not, either directly or
indirectly, whether as agent or principal, or on his own, or with any other
person, firm or company, or in any other capacity, in any manner engage
within the United States of America in any business which involves the
development, manufacture, sale or distribution of biscotti or similar
products.
(d) Silverado's Remedies. In the event of an actual or threatened
breach by Sirianni of the provisions of this Section 10, Silverado shall be
entitled to an injunction restraining Sirianni from breaching or continuing
to breach the same; provided, however, that nothing herein stated shall be
construed as prohibiting Silverado from pursuing any other remedies
available to it for such breach or threatened breach, including but not
limited to the recovery of damages from Xxxxxxxx.
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10. Miscellaneous.
(a) Notices. All notices and other communications required or
permitted to be given hereunder shall be in writing and shall be deemed to
have been duly given, delivered and received (a) if delivered personally,
or (b) if sent by facsimile, registered or certified mail (return receipt
requested) postage prepaid, or by courier guaranteeing next day delivery,
in each case to the party to whom it is directed at the addresses set forth
below (or at such other address for any party as shall be specified by
notice given in accordance with the provisions hereof, provided that
notices of a change of address shall be effective only upon receipt
thereof). Notices delivered personally shall be effective on the day so
delivered; notices sent by registered or certified mail shall be effective
on the third day after mailing; notices sent by facsimile shall be
effective when receipt is acknowledged; and notices sent by courier
guaranteeing next day delivery shall be effective on the earlier of the
second business day after timely delivery to the courier or the day of
actual delivery by the courier:
(i) if to Silverado:
Silverado Foods, Inc.
0000 Xxxxx Xxxxxx, Xxxxx 000
Xxxxx, Xxxxxxxx 00000
Fax: (000) 000-0000
Attention: President
(ii) if to Xxxxxxxx:
Xxxxx Xxxxxxxx
000 Xxx Xxxxxx Xxxx
Xxxxxx Xxxx, Xxxxxxxxxx 00000
Fax: (000) 000-0000
(b) Agreement Binding on Successors. This Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective
heirs, successors and assigns.
(c) Headings. The headings in this Agreement are solely for
convenience of reference and shall be given no effect in the construction
or interpretation of this Agreement.
(d) Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
(e) Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of California, without giving
effect to conflict
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of laws.
(f) Entire Agreement. This Agreement and the exhibits hereto set
forth the entire understanding of the parties with respect to the subject
matter hereof, supersede all existing Agreements among them concerning such
subject matter may be modified only by a written instrument duly executed
by the party to be charged. No party has made any representations with
respect hereto, other than those contained herein.
(g) Attorneys' Fees. In the event of any litigation arising out of
this Agreement, the party not prevailing in such proceedings shall pay the
reasonable costs of the prevailing party in connection with such
proceedings, including but not limited to attorneys' fees and expenses,
witness fees and expenses and court costs.
(h) Authority. Each of the parties represents and warrants to the
other that (i) such party has the power and authority to enter this
Agreement, and (ii) such party has been represented by counsel in
connection with this Agreement and has carefully read and fully understands
all aspects of this Agreement. Silverado's Board of Directors has taken all
action necessary to approve the execution, delivery and performance of this
Agreement, and the person signing below on behalf of Silverado is duly
authorized to execute this Agreement.
(i) Changes in Stock. In the event Silverado issues any shares of its
capital stock as a stock dividend or subdivides the number of its
outstanding shares through means such as a stock split, or in the event
Silverado combines its outstanding shares through means such as a reverse
stock split, then the amount repayable upon a sale of stock pursuant to
Section 5 hereof and the amount of the Price Guarantee pursuant to the
Royalty Termination Agreement shall be proportionately adjusted to reflect
the original intent of the applicable agreements.
IN WITNESS WHEREOF, this Agreement was executed by the parties as of the
date first above written.
SILVERADO FOODS, INC.
By:/s/ XXXXXX X. XXXXXX
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Name: Xxxxxx X. Xxxxxx
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Title: Chief Financial Officer
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/s/ XXXXX XXXXXXXX
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Xxxxx Xxxxxxxx
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