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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) December 23, 1998
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SILVERADO FOODS, INC.
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(Exact name of registrant as specified in its charter)
Oklahoma 1-13260 73-1369218
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(State or other jurisdiction (Commission File (I.R.S. Employer
of incorporation) Number) Identification No.)
5727 South Lewis, Suite 125, Tulsa, Oklahoma 74105
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code 918/742-4295
6846 S. Canton, Suite 110, Tulsa, Oklahoma 74136
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(Former name or former address, if changed since last report)
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Item 2. Acquisition or Disposition of Assets
On December 23, 1998, the Registrant disposed of substantially all of
the business, operations and assets of its Nonni's Biscotti business
to Swander Pace Capital Fund, L.P., SPC GP Fund, LLC, SPC Executive
Advisers Fund, LLC, SPC Associates Fund, LLC, Silver Brands Partners,
L.P., Rodney James Sands, Timothy G. Bruer, Albert Lee Story, and Jan
R. Grywczynski (collectively, "Buyer") through a recapitalization. The
recapitalization was effected through the Registrant's wholly-owned
subsidiary, Nonni's Food Company, Inc. (formerly known as Mom's Best
Services, Inc., "Existing Sub"). The transaction included certain
receivables, inventories, manufacturing equipment, and the assumption
of certain liabilities. The Registrant's Nonni's biscotti business
total revenues in 1997 were $14.8 million ( 62% of total Registrant
revenues).
The value realizable by the Registrant pursuant to the
recapitalization is approximately $28 million. The Buyer paid cash at
closing of $15.4 million, which amount had been adjusted from cash to
be received at closing to reflect the assumption of an additional
$500,000 of payables. The Registrant has the opportunity to realize an
additional $11,000,000 in three earnout payments in 1999, based upon
the Nonni's biscotti business achieving certain earnings before
interest, taxes, depreciation and amortization targets. The Registrant
also retained a 10% minority investment in the common equity of the
Existing Sub.
Prior to the recapitalization Timothy G. Bruer was the president and
chief executive officer and a director of the Registrant and Albert
Lee Story and Jan R. Grywczynski were employees of the Registrant.
Following the recapitalization Messrs. Bruer, Story and Grywczynski
will no longer be employed by the Registrant; however Mr. Bruer will
remain a director of the Registrant.
The recapitalization was described in the Registrant's Proxy Statement
for Annual Meeting of Shareholders (the "Proxy Statement"), which was
filed with the Commission on November 27, 1998. For further
information with respect to the recapitalization, see the Proxy
Statement.
Item 7. Financial Statements and Exhibits
Pro forma condensed consolidated financial statements of the
Registrant required pursuant to Article 11 of Regulation S-X, which
present the pro forma effects of the transactions described in Item 2
above are included in the Proxy Statement.
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The following is a list of all exhibits filed as part of this Form
8-K.
Exhibit No. Description of Exhibit
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10.1 Agreement Relating to Agreement of Stock Purchase and
Sale dated December 23, 1998.
10.2 Second Agreement Relating to Agreement of Stock Purchase
and Sale dated January 5, 1999
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SIGNATURES
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Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
SILVERADO FOODS, INC.
By: /s/ Jason Bryan
________________________________________
Jason Bryan
Vice President & Chief Financial Officer
Date: January 7, 1999
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EXHIBIT 10.1
AGREEMENT RELATING TO
AGREEMENT OF STOCK PURCHASE AND SALE
This Agreement Relating to Agreement of Stock Purchase and Sale (this
"Agreement") is made and entered into as of this 23rd day of December, 1998, by
and among Silverado Foods, Inc., an Oklahoma corporation ("Silverado"), Nonni's
Food Company, Inc. (formerly known as Mom's Best Services, Inc.), a Florida
corporation ("Nonni's"), and the entities and persons (the "Buyers") set forth
on Exhibit A hereto.
Whereas, Silverado, Nonni's and certain of the Buyers entered into the
Agreement of Stock Purchase and Sale dated as of August 14, 1998, as amended on
October 28, 1998, (as amended, the "Purchase Agreement") (certain terms used and
not otherwise defined herein have the meanings ascribed to such terms in the
Agreement);
Whereas, on this date, upon the satisfaction or waiver of certain
conditions set forth in the Purchase Agreement, the parties hereto intend to
consummate the transactions contemplated in the Purchase Agreement;
Whereas, the parties hereto desire that certain further understandings
related to the consummation of the transactions contemplated in the Purchase
Agreement be set forth and agreed in writing prior to the Closing, and therefore
desire to enter into this Agreement setting forth such further understandings
and agreements;
Now, Therefore, in consideration of the premises herein contained and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, and intending to be legally bound hereby, each of the
parties hereto agrees as follows:
1. Section 13.5 of the Purchase Agreement provides that Exhibit A to
the Purchase Agreement may be amended by Swander Pace Capital Fund, L.P. at any
time prior to the Closing without the consent of any other party, so long as,
among other things, any parties added as parties to the Purchase Agreement
pursuant to Section 13.5 shall sign a counterpart signature page to the
Agreement. The parties hereto hereby agree that Exhibit A to the Purchase
Agreement shall be amended by replacing Exhibit A to the Purchase Agreement with
Exhibit A to this Agreement. The parties further agree that execution of this
Agreement shall be accepted as a counterpart signature page to both the Purchase
Agreement and to this Agreement. All parties hereto shall be deemed to be a
party to the Purchase Agreement, as amended by this Agreement.
2. Notwithstanding anything to the contrary contained in the Purchase
Agreement, the parties hereto hereby agree that the trade payables of Silverado
listed on Exhibit B attached hereto (the "Retained Trade Payables") are not
assumed, transferred, assigned or conveyed to Nonni's pursuant to the Purchase
Agreement, but rather are retained by Silverado and in all respects considered
to be part of the Retained Liabilities. Silverado agrees that, to the extent any
1.
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Year-End Payment, Initial Earn-Out Payment or Additional Earn-Out Payment is due
to be paid by Nonni's to Silverado pursuant to the Purchase Agreement, Silverado
shall apply such Year-End Payment, Initial Earn-Out Payment or Additional Earn-
Out Payment (a) first, to amounts currently due up to $2.25 million plus
interest under any bridge loan obtained by Silverado on or about the date hereof
in connection with the consummation of the transactions contemplated in the
Purchase Agreement, and (b) second, to payment of the Retained Trade Payables in
the order specified by Swander Pace Capital Fund, L.P., and that the Year-End
Payment, Initial Earn-Out Payment and Additional Earn-Out Payment shall not be
applied for any payment prior to the payments made in (a) and (b). The parties
hereto hereby agree that any Losses incurred by the Buyer Indemnitees in
connection with the Retained Trade Payables shall be indemnifiable pursuant to
Article 12 of the Purchase Agreement and shall not be subject to any limitation
on indemnification, including the limitation set forth in Section 12.7 of the
Purchase Agreement.
3. The parties hereby agree that the Right of Set-Off under Section
12.4 of the Purchase Agreement shall not apply to the Year-End Payment.
4. The parties hereby acknowledge that Silverado may pay up to $1000
per Silverado plant employee for an aggregate amount not to exceed $250,000 to
its plant employees as a bonus in connection with work performed in connection
with the sale of the Business to the Buyers pursuant to the Purchase Agreement
(the "Plant Bonus"). The parties hereby acknowledge and agree that the Plant
Bonus shall be the responsibility of, and paid by, Silverado and Plant Bonus
amounts paid will not appear on the Form W-2 for Nonni's employees. The Buyers
hereby consent to the Plant Bonus. No waiver or consent is intended or granted
and every other aspect of the Purchase Agreement, including all of the covenants
contained in Article 7 therein, shall remain in full force and effect. The
parties further agree that the Plant Bonus shall not be considered an expense in
connection with the calculation of EBITDA or Plant-Level EBITDA described in
Section 3.5 of the Purchase Agreement.
5. Nonni's and certain of the Buyers intend to enter into a Management
Agreement on this date, pursuant to which such Buyers will render certain
management services to Nonni's in exchange for periodic payments in cash. The
parties hereby agree that such payments in cash shall not be considered an
expense in connection with the calculation of EBITDA or Plant-Level EBITDA
described in Section 3.5 of the Purchase Agreement.
6. The parties hereby agree that Exhibit C attached hereto constitutes
a corrected Schedule 5.11 to the Purchase Agreement and replaces Schedule 5.11
in its entirety.
This Agreement may be executed in several counterparts, each of which shall
constitute an original and all of which, when taken together, shall constitute
one agreement.
This Agreement shall be construed in accordance with, and governed in all
respects by, the internal laws of the State of Delaware (without giving effect
to principles of conflicts of laws).
2.
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Except as otherwise agreed to herein, the Purchase Agreement shall remain
in full force and effect.
The parties hereto have caused this Agreement Relating to Agreement of
Stock Purchase and Sale to be executed and delivered as of the date first
written above.
Silverado Foods, Inc.
By: /s/ Lawrence D. Field
Name: Lawrence D. Field
Title: Chairman of the Board of Directors
Nonni's Food Company, Inc.
By: /s/ Timothy G. Bruer
Name: Timothy G. Bruer
Title: President
Swander Pace Capital Fund, L.P.,
a Delaware limited partnership
By: Swander Pace Capital, L.L.C.,
a Delaware limited liability company, its general partner
By: /s/ Andrew H. Richards
Andrew H. Richards
SPC Executive Advisers Fund, LLC,
a Delaware limited liability company
By: Swander Pace Capital L.L.C.,
a Delaware limited liability company, its manager
By: /s/ Andrew H. Richards
Andrew H. Richards
3.
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SPC GP Fund, LLC,
a Delaware limited liability company
By: Swander Pace Capital L.L.C.,
a Delaware limited liability company, its manager
By: /s/ Andrew H. Richards
Andrew H. Richards
SPC Associates Fund, LLC,
a Delaware limited liability company
By: Swander Pace Capital L.L.C.,
a Delaware limited liability company, its manager
By: /s/ Andrew H. Richards
Andrew H. Richards
Silver Brands Partners,
By: Silver Brands Inc.
By: /s/ Rodney James Sands
Rodney James Sands
/s/ Rodney James Sands
Rodney James Sands
/s/ Timothy G. Bruer
Timothy G. Bruer
/s/ Albert Lee Story
Albert Lee Story
/s/ Jan R. Grywczynski
Jan R. Grywczynski
4.
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The following exhibits to the Agreement Relating to Agreement of Stock
Purchase and Sale have been omitted from this filing. Copies of such exhibits
will be furnished supplementally to the Securities and Exchange Commission upon
request.
Exhibit A - List of Buyers
Exhibit B - Retained Trade Payables
Exhibit C - Revised Schedule 5.11 - Agreements, Plans & Arrangements, Etc.
5.
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EXHIBIT 10.2
SECOND AGREEMENT RELATING TO
AGREEMENT OF STOCK PURCHASE AND SALE
THIS SECOND AGREEMENT RELATING TO AGREEMENT OF STOCK PURCHASE AND SALE
(this "AGREEMENT") is made and entered into as of this 5/th/ day of January,
1999, by and among SILVERADO FOODS, INC., an Oklahoma corporation ("SILVERADO"),
NONNI'S FOOD COMPANY, INC., a Florida corporation ("NONNI'S"), and the other
entities and persons (the "BUYERS") set forth on the signature pages attached
hereto.
WHEREAS, Silverado, Nonni's and the Buyers entered into an Agreement of
Stock Purchase and Sale dated as of August 14, 1998, as amended on October 28,
1998 and December 23/rd/, 1998 (as amended, the "PURCHASE AGREEMENT") (certain
terms used and not otherwise defined herein have the meanings ascribed to such
terms in the Agreement);
WHEREAS, the parties hereto desire that certain further understandings
related to the consummation of the transactions contemplated in the Purchase
Agreement be set forth and agreed in writing and therefore desire to enter into
this Agreement setting forth such further understandings and agreements;
NOW, THEREFORE, in consideration of the premises herein contained and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, and intending to be legally bound hereby, each of the
parties hereto agrees that, notwithstanding anything to the contrary contained
in the Purchase Agreement or the Agreement relating to the Agreement of Stock
Purchase and Sale dated December 23, 1998, the Year-End Holdback Amount, as
defined and described in Section 2.1(d)(ii) of the Purchase Agreement, as well
as the Right of Set-Off under Section 12.4 thereof shall not reduce or in any
manner apply to the Year-End Payment, unless and until all amounts due up to
$2.25 million plus interest under any bridge loan with Stillwater National Bank
& Trust Company (or its affiliates) obtained by Silverado on or about the date
hereof in connection with the consummation of the transactions contemplated in
the Purchase Agreement, are paid.
This Agreement may be executed in several counterparts, each of which shall
constitute an original and all of which, when taken together, shall constitute
one agreement.
This Agreement shall be construed in accordance with, and governed in all
respects by, the internal laws of the State of Delaware (without giving effect
to principles of conflicts of laws).
Except as otherwise agreed to herein, the Purchase Agreement shall remain
in full force and effect.
[The remainder of this page intentionally left blank]
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The parties hereto have caused this SECOND AGREEMENT RELATING TO
AGREEMENT OF STOCK PURCHASE AND SALE to be executed and delivered as of the date
first written above.
SILVERADO FOODS, INC.
By: /s/ Lawrence D. Field
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Name: Lawrence D. Field
Title: Chairman of the Board of Directors
NONNI'S FOOD COMPANY, INC.
By: /s/ Timothy Bruer
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Name: Timothy Bruer
Title: President
SWANDER PACE CAPITAL FUND, L.P.,
a Delaware limited partnership
By: SWANDER PACE CAPITAL, L.L.C.,
a Delaware limited liability company, its general partner
By: /s/ Andrew H. Richards
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Andrew H. Richards
SPC EXECUTIVE ADVISERS FUND, LLC,
a Delaware limited liability company
By: SWANDER PACE CAPITAL L.L.C.,
a Delaware limited liability company, its manager
By: /s/ Andrew H. Richards
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Andrew H. Richards
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SPC GP FUND, LLC,
a Delaware limited liability company
By: SWANDER PACE CAPITAL L.L.C.,
a Delaware limited liability company, its manager
By: /s/ Andrew H. Richards
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Andrew H. Richards
SPC ASSOCIATES FUND, LLC,
a Delaware limited liability company
By: SWANDER PACE CAPITAL L.L.C.,
a Delaware limited liability company, its manager
By: /s/ Andrew H. Richards
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Andrew H. Richards
SILVER BRANDS PARTNERS, L.P.
By: Silver Brands Inc.
By: /s/ Rodney James Sands
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RODNEY JAMES SANDS
/s/ Rodney James Sands
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RODNEY JAMES SANDS
/s/ Timothy G. Bruer
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TIMOTHY G. BRUER
/s/ Albert Lee Story
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ALBERT LEE STORY
/s/ Jan R. Grywczynski
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JAN R. GRYWCZYNSKI
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