EXHIBIT 10.21
EMPLOYMENT TERMINATION AGREEMENT
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THIS AGREEMENT, dated as of the 1st day of April, 1998, is by and between
Silverado Foods, Inc., an Oklahoma corporation ("Silverado"), and Xxxx Xxxxxx
("Xxxxxx").
R E C I T A L S
A. Silverado and Xxxxxx 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 Xxxxxx are parties to a Royalty Termination Agreement dated
November 8, 1996 (the "Royalty Termination Agreement").
C. Silverado and Xxxxxx 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 Xxxxxx
the Primary Shares and the Contingent Shares (as such terms are defined in the
Royalty Termination Agreement).
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
30, 1997 (the "Effective Date").
2. Termination of Employment Agreement. The Employment Agreement and
Xxxxxx'x employment with Silverado are hereby terminated as of the Effective
Date. Accordingly, all rights, duties and obligations of Silverado and Xxxxxx
relating to the Employment Agreement are hereby terminated.
3. Payment to Xxxxxx. Silverado shall pay to Xxxxxx $90,000 on October 30,
1997 and $350,000 on May 1, 1998. Should this amount not be paid within 45 days
of the date due, interest will accrue from May 1, 1998 at the rate of 9%.
4. Issuance of Stock. Silverado shall issue to Xxxxxx 300,000 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. Xxxxxx agrees to waive any interest charges due him
under the provision of the Royalty Termination Agreement 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 May 1, 1999 and
end on April 30, 2000, and (iii) any amounts due under this guarantee for the
Settlement shares shall be payable in cash. Xxxxxx 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 30 days from the date of sale of such shares, Xxxxxx 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 9% per annum paid monthly.
6. Investment Representations. Xxxxxx 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: Xxxxxx has received all materials which have
been requested by Xxxxxx; Xxxxxx has had a reasonable opportunity to ask
questions of Silverado and its representatives; and Silverado has answered all
inquiries that Xxxxxx or Xxxxxx'x representatives have put to it. Xxxxxx 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. Xxxxxx or his representatives have such knowledge and
experience in finance, securities, investments and other business matters so
as to be able to protect the interest of Xxxxxx in connection with this
transaction.
(c) Risks. Xxxxxx understands the various risks of an investment in
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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. Xxxxxx 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 Xxxxxx in this Agreement. Xxxxxx
acknowledges that Xxxxxx 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,
Xxxxxx 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 for sale but
that it is Silverado's intent to register these shares as discussed in Section
4 of this agreement, 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. Xxxxxx further understands
that an opinion of counsel and other documents may be required to transfer the
Securities. Xxxxxx 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."
(e) Investment Intent. Xxxxxx will acquire the Securities for his own
account for investment and not with a view to the sale or distribution thereof
or the
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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. Xxxxxx 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. Xxxxxx 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 claims arising under this
Agreement, Silverado hereby releases and forever discharges Xxxxxx xxxx 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 Xxxxxx.
8. Release by Xxxxxx. 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 as to the
Registration Rights Agreement dated November 8, 1996, and except as to any
claims arising under this Agreement, Xxxxxx 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 Silverado.
9. Restrictive Covenants. In the course of his employment with Silverado,
Xxxxxx has had access to proprietary information regarding Silverado, its
customers and its business. Accordingly, the parties agree as follows:
(a) Confidentiality. Xxxxxx agrees as an employee 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). Xxxxxx further agrees not to at any time 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. Xxxxxx agrees that during the
period of two years following the Effective Date he shall not in any manner,
directly
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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
two year period after the Effective Date Xxxxxx will maintain a "hands
off" policy with regard to Silverado's employees, clients and customers.
(c) Noncompetition. Xxxxxx covenants and agrees with Silverado that during
the period commencing on the Effective Date and ending on the date two 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 Xxxxxx of the provisions of this Section 10, Silverado shall be entitled to
an injunction restraining Xxxxxx xxxx 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 Xxxxxx.
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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 Xxxxxx:
Xxxx Xxxxxx
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Fax: ( )
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(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
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construed in accordance with the laws of the State of California, without
giving effect to conflict 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/ XXXX XXXXXX
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Xxxx Xxxxxx
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