INCOME CONTINUANCE AGREEMENT
This Income Continuance Agreement ("Agreement") is made and entered into
this 10 day of March 1997, by and between Xxxxx X. Xxxxxx ("Officer") and
Timber Lodge Steakhouse, Inc., a Minnesota Corporation ("Company").
WHEREAS, the Company is in the business of owning and managing
restaurants including the restaurant chain doing business as Timber Lodge
Steakhouse; and
WHEREAS, the Company may in the future receive offers to purchase its
restaurant chain which does business as Timber Lodge Steakhouse.
WHEREAS, the Company desires to provide Officer with temporary financial
support if his employment is terminated as a result of Company's sale,
exchange or other transfer of all or substantially all of the assets of the
Company's restaurant chain doing business as Timber Lodge Steakhouse.
NOW, THEREFORE, in consideration of the promises and the mutual
agreements, covenants, and provisions contained in this Agreement, the
Company and the Officer agree as follows:
1. DEFINITIONS.
a. CAUSE. "Cause" shall mean any one or more of the following: (i) the
Officer's dishonesty or theft of the Company's property; (ii) the
gross negligence or inefficiency in execution of the Officer's duties;
(iii) the Officer's material violation of the Company's rules,
regulations, instructions or policies; (iv) the Company is adjudicated
bankrupt; or (v) the Officer's commission of an act which is a crime
or which materially damages the reputation of the Company, including
but not limited to fraud.
b. CHANGE IN CONTROL. "Change in Control" is the sale, lease, exchange
or other transfer, directly or indirectly, of all or substantially all
of the assets of the Company's restaurant chain doing business as
Timber Lodge Steakhouse, to any person or entity.
c. CONFIDENTIAL INFORMATION. "Confidential Information" means any
information or compilation of information possessed by the Company
that derives independent economic value, actual or potential, from not
being generally known to, and not being readily ascertainable by
proper means by other persons who can obtain economic value from its
disclosure or use, including but not limited to: (a) any information
not generally known in the restaurant industry regarding the Company's
products, formulas, recipes, pricing of products, research,
development, marketing, servicing, operational methods and
instructions; (b) financial information concerning the Company and its
customers, including, but not limited to, information concerning sales
figures, projections, and estimates; (c) customer lists or identifying
information; and (d) any information that the
Company may from time designate as "confidential," "proprietary," or
"trade secrets" which is not generally known in the restaurant
industry.
d. GOOD REASON. (A) Subject to Subsection (B), "Good Reason" with
respect to an Officer is any of the following:
(1) An adverse change in the Officer's status or position as a result
of a Change in Control, including, without limitation, any adverse
change in the Officer's status or position as a result of a material
diminution in his duties or responsibilities; however, Good Reason
does not include, without more, the sale of the Company's restaurant
chain doing business as Timber Lodge Steakhouse, nor does Good Reason
including an adverse change in Officer's status or position caused by
an insubstantial or inadvertent action that is remedied by the Company
promptly after receipt of notice of such change is given by the
Officer;
(2) A reduction by the Successor in the Officer's Base Pay, or an
adverse change in the form or timing of the payment thereof, as in
effect immediately prior to the Change in Control;
e. SUCCESSOR. A "Successor" is any person or entity that succeeds to, or
has the practical ability to control the Company's restaurant chain
doing business as Timber Lodge Steakhouse by purchases, merger,
consolidation or other form of business combination.
2. ELIGIBILITY FOR BENEFITS. Officer will become eligible for the benefits
provided in paragraph 3 herein, if (a) there is a Change In Control; if (b)
(i) his employment is terminated for any reason other than his death or
cause or (ii) Officer terminates his employment with the Successor for Good
Reason; (c) such termination occurs within the period beginning on the date
of a Change in Control (subject to such Change in Control occurring prior
to December 31, 2001) and ending on the last day of the twelve month that
begins after the month in which the Change in Control occurs; and (c)
Officer signs the General Release attached hereto as Exhibit A.
3. BENEFITS. The Company will make a cash lump sum payment to Officer in an
amount equal to 24 months of his base pay plus a 20% bonus based upon two
years of his base pay, less applicable, federal state and FICA tax
deductions. The calculation of this amount will be based upon the
compensation schedule attached hereto as Exhibit B. Such benefits will be
paid to Officer provided he has become eligible for benefits as set forth
in paragraph 2 herein, and provided he has not rescinded his General
Release, fifteen days after Officer has signed the General Release in the
form attached hereto as Exhibit A.
4. SUCCESSOR RESPONSIBILITY. The Company will require any Successor to
expressly assume and agree to perform the obligations of this Agreement in
the same manner and to the same extent that the Company would be required
to perform if no such succession had taken place. Failure of the Company
to obtain such assumption by the date the Change in
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Control becomes effective will constitute Good Reason for termination of
the Officer's employment. However, in order to receive benefits under
the circumstances set forth in this paragraph, employee must terminate his
employment within thirty days after the Change in Control becomes
effective.
5. NON-COMPETITION AGREEMENT IN EXCHANGE FOR BENEFITS. Officer agrees that
for a period of two (2) years after the termination of his employment, for
any reason which entitles him to receive the benefits set forth at
paragraph 3, he will not directly or indirectly own, manage, operate,
control, consult with, become employed by, or render services to or for any
person, firm, corporation, or other entity which operates a steak
restaurant which has a concept (e.g. price, theme, menu) similar to Timber
Lodge Steakhouse within a radius of 20 miles from any Timber Lodge
Steakhouse. The Company or its Successor may agree to waive these
restrictions in its sole discretion.
Officer further agrees that he will not directly or indirectly disclose any
Confidential Information to any other person, firm or company, or in any
way use for his benefit, or to the detriment of the Company or its
Successor, any information or knowledge obtained during the course of his
employment with the Company or its Successor except as required in the
conduct of the Company's or Successor's business.
6. NO EMPLOYMENT OR SERVICE CONTRACT. Nothing in this Plan is intended to
provide Officer with any right to continue in the employ of the Company for
any period of specific duration or interfere with or otherwise restrict in
any way Officer's rights or the rights of the Company, which rights are
hereby expressly reserved, to terminate Officer's employment at any time
for any reason or no reason whatsoever, with or without cause.
7. INVALIDITY. In case any one or more of the provisions of this Agreement
shall be invalid, illegal, or unenforceable in any respect, the validity,
legality, and enforceability of the remaining provisions contained in this
Agreement will not in any way be affected or impaired thereby.
8. VOLUNTARY AND KNOWING ACTION. Officer acknowledges that he has had twenty-
one days in which to consider this Agreement, that he has been advised of
his right to seek counsel, that he has had an opportunity to review this
Agreement with his own attorney, that he has read and understands the terms
of this Agreement, and that he is voluntarily entering into the Agreement.
9. NOTICES. For the purposes of this Agreement, notices and all other
communications provided for in, or required under, this Agreement must be
in writing and will be deemed to have been duly given when personally
delivered or when mailed by United States registered or certified mail,
return receipt requested, postage prepaid and addressed to Officer or the
Company's (as the case may be) respective address (provided that all
notices to the Company must be directed to the attention of the chair of
the Board). For purposes of any such notice requirement, the Company will
use the Officer's most current address on file in the Company's personnel
records. Any notice of a Officer's change of address will be effective
only upon receipt by the Company.
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10. ENTIRE AGREEMENT. This Agreement sets forth the entire understanding
between the parties, there being no terms, conditions, warranties, or
representations other than those contained herein, and no amendment hereto
shall be valid unless made in writing and signed by the parties. This
Agreement replaces, supersedes, and nullifies all prior agreements or
arrangements between the parties relating to Officer's employment or
termination from employment with Company or any of its affiliated or
Successor entities.
11. SEVERABILITY. In the event any portion of this Agreement is held to be
invalid, the same shall not affect in any respect whatsoever the validity
of the remainder of this Agreement.
12. GOVERNING LAWS. This Agreement shall be construed and enforced in
accordance with the laws of the State of Minnesota.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
Dated: MARCH 10, 1997 /s/ XXXXX X. XXXXXX
-------------- --------------------
Xxxxx X. Xxxxxx
STATE OF MINNESOTA
ss.
COUNTY OF HENNEPIN
The foregoing instrument was acknowledged before me this 10 day of March
1997, by Xxxxx X. Xxxxxx.
---------------
/s/ Xxxxx X. Xxxxxx
--------------------
Notary Public
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TIMBER LODGE STEAKHOUSE, INC.
By: /s/ X. X. XxXxxxx
------------------
Its: Chairman
STATE OF MINNESOTA )
) ss.
COUNTY OF HENNEPIN )
The foregoing instrument was acknowledged before me this 10 day of
May, by X. X. XxXxxxx, the Chairman of Timber Lodge Steakhouse, Inc., a
Minnesota corporation, on behalf of the corporation.
/s/ Xxxxx X. Xxxxxxxx
----------------------
Notary Public
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EXHIBIT A TO XXXXX X. XXXXXX'X INCOME CONTINUANCE AGREEMENT
RELEASE
DEFINITIONS. I intend all words used in this Release to have their plain
meanings in ordinary English. Technical legal words are not needed to describe
what I mean. Specific terms I use in this Release have the following meanings:
A. I, me, and my include both me and anyone who has or obtains any legal
rights or claims through me.
B. Company, as used herein, shall at all times mean Timber Lodge
Steakhouse, Inc. its parent, subsidiaries, successors and assigns, its
affiliated and predecessor companies, their successors and assigns,
their affiliated and predecessor companies and the present or former
officers, employees and agents of any of them, whether in their
individual or official capacities, and the current and former trustees
or administrators of any pension or other benefit plan applicable to
the employees or former employees of the Company, in their official
and individual capacities.
C. MY CLAIMS means all of the rights I have now to any relief of any kind
from the Company, whether or not I now know about those rights,
arising out of my employment with the Company, and my employment
termination, including, but not limited to, claims for breach of
contract; fraud or misrepresentation; violation of the Minnesota Human
Rights Act, or other federal, state, or local civil rights laws based
on age, disability or other protected class status; defamation;
intentional or negligent infliction of emotional distress; breach of
the covenant of good faith and fair dealing; promissory estoppel;
negligence; wrongful termination of employment; and any other claims
for unlawful employment practices. However, this release shall not
affect any claims which could be made under any welfare benefit plan
or any pension or retirement plan through the Company.
AGREEMENT TO RELEASE MY CLAIMS. I am receiving a substantial amount of money
paid by the Company. I agree to give up all My Claims against the Company in
exchange for this payment. I will not bring any lawsuits, file any charges,
complaints, or notices, or make any other demands against the Company based on
My Claims. The money I am receiving is a full and fair payment for the release
of all My Claims. The Company does not owe me anything in addition to what I
will be receiving.
ADDITIONAL AGREEMENTS AND UNDERSTANDINGS. Even though the Company is paying me
to release My Claim, the Company does not admit that it may be responsible or
legally obligated to me. In fact, the Company denies that it is responsible or
legally obligated for My Claims or that it has engaged in any wrongdoing.
I understand that I may rescind (that is, cancel) this Release within seven
(7) calendar days of signing it to reinstate federal claims and within fifteen
(15) calendar days of signing it to reinstate state claims. To be effective, my
rescission must be in writing and delivered to the
Company in care of, XXXXX X., XXXXXX, Timber Lodge Steakhouse, Inc. 0000
Xxxxxx Xxx. So. (address), either by hand or by mail within the 15-day
period. If sent by mail, the rescission must be:
1. Postmarked within the 15-day period;
2. Properly addressed to the Company; and
3. Sent by certified mail, return receipt requested.
I have read this Release carefully and understand all its terms. I have
had an opportunity to discuss this Release with my own attorney. In agreeing
to sign this Release, I have not relied on any statements or explanations
made by the Company or its attorney.
I understand and agree that this Release, the Separation Agreement to which it
is attached, and the Company employee benefit plans in which I am a participant
contain all the agreements between the Company and me. We have no other written
or oral agreements.
Dated: /s/ March 10, 1997.
--------------------
/s/ Xxxxx X. Xxxxxx
--------------------
Xxxxx X. Xxxxxx
Subscribed and sworn to before me this
10 day of March 1997.
/s/ Xxxxx X. Xxxxxx
--------------------------------------
Notary
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XXXXX X. XXXXXX
COMPENSATION SCHEDULE
BASE SALARY BONUS TOTAL
----------- ----- -----
1997 $ 87,500 $17,500 $105,000
1998 96,250 19,250 115,500
1999 105,825 21,175 127,050
2000 116,463 23,293 139,756
2001 128,109 25,622 153,731
THE COMPANY: THE OFFICER:
Timber Lodge Steakhouse, Inc. /s/ Xxxxx X. Xxxxxx
By: /s/ X. X. XxXxxxx Chief Operating Officer
------------------- -----------------------
Its: Chairman Title
