INCOME CONTINUANCE AGREEMENT
This Income Continuance Agreement ("Agreement") is made and entered into
this 10 day of March, 1997, by and between Xxxxxx X. Xxxxxxx ("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 suchassumption by the date the Change in Control becomes
effective will constitute Good Reason for termination of the Officer's
2.
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.
3.
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/ Xxxxxx X. Xxxxxxx
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Xxxxxx X. Xxxxxxx
STATE OF MINNESOTA
ss.
COUNTY OF HENNEPIN
The foregoing instrument was acknowledged before me this 10 day of March
1997, by Xxxxxx X. Xxxxxxx.
/s/ Xxxxx X. Xxxxx
------------------
Notary Public
4.
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 March
1997 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
5.
EXHIBIT A TO XXXXXX X. XXXXXXX'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, Xxxxxx X., Xxxxxxx, 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/ Xxxxxx X. Xxxxxxx
---------------------
Xxxxxx X. Xxxxxxx
Subscribed and sworn to before me this
10 day of March 1997.
/s/ Xxxxx X. Xxxxx
------------------
Notary
7.
XXXXXX XXXXXXX
COMPENSATION SCHEDULE
BASE SALARY BONUS TOTAL
----------- ----- -----
1997 $ 72,500 $14,500 $ 87,000
1998 79,750 15,950 95,700
1999 87,725 17,545 105,270
2000 96,498 19,300 115,798
2001 106,147 21,229 127,376
THE COMPANY: THE OFFICER:
Timber Lodge Steakhouse, Inc. /s/ Xxxxxx X. Xxxxxxx
By: /s/ X. X. XxXxxxx /s/ Chief Financial Officer
------------------------ ----------------------------
Its: Chairman Title
