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EXHIBIT 10.16
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT ("Agreement") is made and entered into to be
effective as of October 1, 1998 (the "Effective Date"), by and between TIMBER
LODGE STEAKHOUSE, INC., a Minnesota corporation (the "Company"), GB FOODS
CORPORATION, a Delaware corporation ("GBFC"), and XXXXXX X. XXXXXXX, a Minnesota
resident (the "Employee"). In consideration of the mutual covenants and
agreements set forth herein, the parties hereto agree as follows:
l. Employment and Duties. Subject to the terms and conditions of this
Agreement, the Company employs the Employee to serve as an Executive Vice
President of the Company, and the Employee accepts such employment. In addition,
the Employee shall serve on the Board of Directors of the Company for each year
during the Term. Notwithstanding anything to the contrary above, however, the
Company and GBFC expressly acknowledge and agree that the Employee is
semi-retired and that his duties as an employee hereunder shall be limited to
providing consultation and advice to the Company from time to time.
2. Term. The term of employment under this Agreement shall be for a
period of three (3) years (the "Term") commencing on the Effective Date, subject
to termination pursuant to Section 4, below. The Term may be extended upon
mutual agreement of the parties.
3. Compensation.
3.1 Annual Salary. During the Term of this Agreement, the Company
shall pay the Employee a base annual salary, before deducting all applicable
withholdings, of Thirty-Six Thousand Dollars ($36,000) per year (the "Base
Salary"), payable at the times and in the manner dictated by the Company's
standard payroll policies.
3.2. Benefits. During the Term, the Employee shall be entitled to
participate in and receive all benefits under any Company benefit plan or
program (including, without limitation, medical, health, dental, disability, and
group life), any retirement savings plan or program (including, without
limitation, 401(k) and employee stock purchase plan), and such other perquisites
of office maintained by the Company immediately prior to the Effective Time (the
"Company Benefit Plans"). If, at any time after the Effective Time, GBFC elects
to consolidate the Company Benefit Plans into similar plans and arrangements
provided by GBFC (the "GBFC Benefit Plans"), then the Employee shall (i) be
credited for all prior service with the Company to be applied against all
service and waiting periods under the GBFC Benefit Plans; (ii) be credited for
any deductibles paid for the plan year under the Company Benefit Plans to be
applied against any deductibles under the GBFC Benefit Plans; and (iii) not
excluded from any GBFC Benefit Plan for any pre-existing condition if the
Employee was entitled to coverage under the Company Benefit Plans immediately
prior to the Effective Time.
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3.3 Expense Reimbursement. In addition to the compensation and
benefits provided herein, the Company shall, upon receipt and approval of
appropriate documentation, reimburse the Employee each month for his reasonable
travel, lodging, entertainment, promotion and other ordinary and necessary
business expenses. The arrangement set forth in this Section 3.4 is intended to
constitute an accountable plan within the meaning of Section 162 of the Code and
the accompanying regulations, and the Employee agrees to comply with all
reasonable guidelines established by the Company from time to time to meet the
requirements of Section 162 of the Code and the accompanying regulations.
4. Termination.
4.1 Termination by Employee or the Company. The Employee may
terminate this Agreement at any time and for any reason. The Company may only
terminate this Agreement for "cause" upon written notice to the Employee. For
purposes of this Agreement, "cause" shall mean: misconduct, dishonesty,
insubordination, or other act by Employee that in any way has a direct,
substantial and adverse effect on the Company's reputation or its relationship
with its customers or employees, including, without limitation, (i) use of
alcohol such as to interfere with the Employee's obligations hereunder, (ii) the
use of illegal drugs; (iii) conviction of a felony or of any crime involving
moral turpitude or theft, and (iv) material failure by Employee to comply with
applicable laws or governmental regulations pertaining to Employee's employment
hereunder. In the event of a termination of this Agreement pursuant to this
Section 4.1, the Company shall only be obligated to pay to the Employee the Base
Salary due him through the date of termination.
4.2 Death. Notwithstanding any other provisions to the contrary
contained herein, if the Employee dies during the Term of this Agreement, this
Agreement shall terminate immediately, and the Employee's legal representatives
or designated beneficiary shall be entitled to receive the unpaid Base Salary
earned through the date of the Employee's death.
4.3 Effect of Termination. Termination for any cause or without
cause shall not constitute a waiver of the Company's rights under this Agreement
as specified in Section 6 nor a release of the Employee from any obligation
hereunder except his obligation to perform his day-to-day duties as an employee.
5. Non-Delegation of Employee's Rights. The obligations, rights and
benefits of the Employee hereunder are personal and may not be assigned or
transferred in any manner whatsoever, nor are such obligations, rights or
benefits subject to involuntary alienation, assignment or transfer.
6. Covenants of Employee.
6.1 Confidentiality. The Employee acknowledges that in his
capacity as an employee of the Company he will occupy a position of trust and
confidence, and he further acknowledges that he will have access to and learn
substantial information about the Company and its operations that is
confidential or not generally known in the industry including, without
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limitation, information that relates to purchasing, sales, customers, marketing,
the Company's financial position and financing arrangements. The Employee agrees
that all such information is proprietary or confidential or constitutes trade
secrets and is the sole property of the Company. Accordingly, during the
Employee's employment by the Company and for a period of two (2) years
thereafter, the Employee will keep confidential, and will not without the
Company's permission reproduce, copy or disclose to any other person or firm,
any such information or any documents or information relating to the Company's
methods, processes, customers, accounts, analyses, systems, charts, programs,
procedures, correspondence, or records, or any other documents used or owned by
the Company, nor will the Employee advise, discuss with or in any way assist any
other person or firm in obtaining or learning about any of the items described
in this Section 6.1, either alone or with others, outside the scope of his
duties and responsibilities with the Company unless otherwise required by law or
court ordered subpoena.
6.2 Competitive Activities During Employment The Employee will
not, during his employment by the Company, engage in any way whatsoever,
directly or indirectly, in any business that is competitive with the Company,
nor solicit, or in any other manner work for or assist any business which is
competitive with the Company. During his employment by the Company, the Employee
will undertake no planning for or organization of any business activity
competitive with the work he performs as an employee of the Company, and the
Employee will not, during his employment by the Company, combine or conspire
with any other employee of the Company or any other person for the purpose of
organizing any such competitive business activity.
6.3 Non-Competition After Employment. For a period of two (2)
years from and after the expiration of the Term or the prior termination of this
Agreement, the Employee will not, for any reason whatsoever, directly or
indirectly, for the Employee or on behalf of or in conjunction with any other
person, persons, company, partnership, corporation or business of whatever
nature:
(a) engage as an officer, director, stockholder, owner,
partner, joint venturer, or in a managerial capacity, whether as an employee,
independent contractor, consultant or advisor in any business in direct
competition with the current business or any related business of the Company,
within 50 miles of where the Company anywhere conducts such business (the
"Territory");
(b) call upon any person who is, at that time, within the
Territory, an employee of the Company in a managerial capacity for the purpose
or with the intent of enticing such employee away from or out of the employ of
the Company;
(c) call upon any person or entity which is, at that time,
or which has been within one (1) year prior to that time, a customer of the
Company within the Territory for the purpose of soliciting or selling products
or services in competition with the Company within the Territory; or
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(d) call upon any prospective acquisition candidate, on
the Employees own behalf or on behalf of any competitor, which candidate was
either called upon by the Company or for which the Company made an acquisition
analysis.
Notwithstanding the above, the foregoing covenant shall not be deemed to
prohibit the Employee from acquiring as an investment not more than one percent
(1%) of the capital stock of a competing business whose stock is traded on a
national securities exchange or over-the-counter.
The Employee expressly agrees that the foregoing covenants impose a reasonable
restraint on the Employee in light of the activities and business of the Company
on the date of the execution of this Agreement and the current plans of the
Company. The covenants in this Section 6.3 are severable and separate, and the
unenforceability of any specific covenant shall not affect the provisions of any
other covenant. Moreover, in the event any court of competent jurisdiction shall
determine that the scope, time or territorial restrictions set forth are
unreasonable, then it is the intention of the parties that such restrictions be
enforced to the fullest extent which the court deems reasonable, and this
Section 6.3 shall thereby be reformed. All of the covenants in this Section 6.3
shall be construed as an agreement independent of any other provision of this
Agreement, and the existence of any claim or cause of action by the Employee
against the Company, whether predicated on this Agreement or otherwise, shall
not constitute a defense to the enforcement by the Company of such covenants.
The Employee specifically agrees that the duration of the covenants stated at
the beginning of this Section 6.3 shall be computed by adding to such time
periods any time during which the Employee is found by a court of competent
jurisdiction to have been in violation of any provision of this Section 6.3. The
Employee expressly agrees that the covenants set forth in this Section 6.3 are a
material and substantial part of this Agreement and that certain Agreement and
Plan of Merger, dated January 16, 1998, by and among GBFC, TLS Acquisition Corp.
and the Company.
6.4 Remedy for Breach. The Employee acknowledges that the Company
will be irrevocably damaged if all of the provisions of this Section 6 are not
specifically enforced. Accordingly, the Employee agrees that, in addition to any
other relief to which the Company may be entitled, the Company will be entitled
to seek and obtain injunctive relief without bond from a court of competent
jurisdiction for the purpose of restraining the Employee from any actual or
threatened breach of this Section 6. The Employee's obligations under this
Section 6 shall survive the Employee's termination of employment with the
Company for the periods of time specified in this Section 6.
7. Return of Company Documents. Upon termination of this Agreement, the
Employee shall return immediately to the Company all records and documents of or
pertaining to the Company and shall not make or retain any copy or extract of
any such record or document.
8. Florida Restaurants. If, during the Term of this Agreement, the
Company determines to open Timber Lodge Steakhouse restaurants in the greater
metropolitan areas of Sarasota, Naples or Fort Xxxxxx, Florida, then, with
respect to the first three (3) such restaurants, the Company shall either (i)
franchise such restaurants to the Employee; or (ii) enter into a joint venture
or similar
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relationship with the Employee with respect to the ownership and operation of
such restaurants, in each case on terms and conditions mutually agreed upon by
the Employee and the Company. The obligations of the Company under this Section
8 shall not survive the prior termination of this Agreement, provided, however,
that the terms and conditions of any franchise, joint venture or similar
agreement entered into between the Employee and the Company prior to such
termination shall survive.
9. Miscellaneous.
9.1 Entire Agreement; Amendment. This Agreement constitutes the
entire agreement between the parties with respect to the Employee's employment
with the Company and supersedes any and all prior or contemporaneous agreements
or understandings, whether oral or written, relating to the Employee's
employment. This Agreement may be amended, modified, supplemented, or changed
only by a written document signed by all parties to this Agreement.
9.2 Governing Law and Venue. This Agreement, and any dispute
arising from the relationship between the parties to this Agreement, shall be
governed by California law. Venue for any dispute arising from the relationship
between the parties to this Agreement or for any action to enforce or defend the
terms of this Agreement shall be in Santa Xxxxxxx County, California.
9.3 Attorneys' Fees. In any arbitration or other proceeding by
which one party either seeks to enforce its rights under this Agreement (whether
in contract, tort, or both) or seeks a declaration of any rights or obligations
under this Agreement, the prevailing party shall be entitled to recover from the
non-prevailing party reasonable attorney fees, together with any costs and
expenses, to resolve the dispute and to enforce the final judgment.
9.4 Severability. If any section, subsection or provision hereof
is found for any reason whatsoever to be invalid or inoperative, that section,
subsection or provision shall be deemed severable and shall not affect the force
and validity of any other provision of this Agreement. If any covenant herein is
determined by a court to be overly broad thereby making the covenant
unenforceable, the parties agree and it is their desire that such court shall
substitute a reasonable judicially enforceable limitation in place of the
offensive part of the covenant and that as so modified the covenant shall be as
fully enforceable as if set forth herein by the parties themselves in the
modified form. The covenants of the Company and the Employee in this Agreement
shall each be construed as an agreement independent of any other provision in
this Agreement, and the existence of any claim or cause of action of the
Employee against the Company or of the Company against the Employee, whether
predicated on this Agreement or otherwise, shall not constitute a defense to the
enforcement by the Company or the Employee of the covenants in this Agreement.
9.5 Notices. Any notice, request, or instruction to be given
hereunder shall be in writing and shall be deemed given when personally
delivered or three (3) days after being sent by United States certified mail,
postage prepaid, with return receipt requested, to the parties at their
respective addresses set forth below:
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To the Company:
Timber Lodge Steakhouse, Inc.
0000 Xxxxxx Xxxxxx Xxxxx
Xxxxxxxxxxx, Xxxxxxxxx 00000
Attention: President
With a Copy to:
GB Foods Corporation
0000 Xxxxx Xxxxxx
Xxxxx Xxxxxxx, Xxxxxxxxxx 00000
Attn: Xxxxxx X. Xxxxxx
Chief Executive Officer
To the Employee:
Xxxxxx X. Xxxxxxx
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9.6 Waiver. The failure of a party to insist upon strict
adherence to any term of this Agreement on any occasion shall not be considered
a waiver thereof or deprive that party of the right thereafter to insist upon
strict adherence to that term or any other term of this Agreement.
9.7 Assignment. This Agreement shall be binding upon and inure to
the benefit of the parties and their permitted assigns. Neither this Agreement
nor any of the rights of the parties hereunder may be transferred or assigned by
either party without the consent of the other party. Notwithstanding the
preceding sentence, the Company may assign this agreement without the consent of
the Employee to any related entity in connection with a reorganization or
restructuring of the Company or GBFC. Any assignment or transfer in violation of
this Section 9.7 shall be void.
9.8 Captions and Headings. The captions and headings are for
convenience of reference only and shall not be used to construe the terms or
meaning of any provisions of this Agreement.
9.9 Legal Counsel/Mutual Drafting. Each party hereto acknowledges
and represents that it has been represented by its own legal counsel in
connection with the terms and conditions of this Agreement, with the opportunity
to seek advice as to its legal rights and obligations from such counsel. This
Agreement is the mutual product of the parties hereto, and each provision hereof
has been subject to the mutual consultation, negotiation and agreement of each
of the parties, and shall not be construed for or against any party hereto.
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IN WITNESS WHEREOF the parties have executed this Employment
Agreement as of the date set forth above.
COMPANY:
TIMBER LODGE STEAKHOUSE, INC.,
a Minnesota corporation
By:
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Its:
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GBFC:
GB FOODS CORPORATION,
a Delaware corporation
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Xxxxxx X. Xxxxxx, Chief Executive Officer
EMPLOYEE:
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Xxxxxx X. Xxxxxxx
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