TRANSITION AND RETIREMENT AGREEMENT
THIS TRANSITION AND RETIREMENT AGREEMENT (“Transition Agreement” or “Agreement”) is made and entered into by and between Winmark Corporation, a Minnesota corporation (“Company”) and Mr. John L. Morgan (“you”) and will be effective as of January 29, 2020 (“Effective Date”).
WHEREAS, you are currently the Executive Chairman of the Company, a party to that certain employment Agreement with the Company dated as of March 22, 2000 as amended (“Employment Agreement”), and currently serve as a duly elected Director of the Board of Directors of the Company; and
WHEREAS, you have disclosed your intention to retire from the Company and resign from the Board of Directors; and
WHEREAS, you and the Company mutually terminate the Employment Agreement and to set forth in this Agreement the terms and conditions of transition and retirement from the Company, including certain transition payments to you and your continued availability for certain services to the Company;
NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties agrees as follows:
1. Transition Date; Termination Date. You will continue to perform your current duties as Executive Chairman of the Company until March 1, 2020 (the “Transition Date”) and on that date, you will cease to be Executive Chairman and will be deemed to have resigned as an officer, employee, board member and from any fiduciary position of any employee benefit plan with the Company or any of its subsidiaries.
2. Transition Services. From the Transition Date until February 28, 2021 (the “Termination Date”), you agree to cooperate with the Company in connection with any transition services that the Company may reasonably request, and be available to the Company to serve as a senior adviser. Following the Transition Date, you will cease to be an employee of the Company and any subsidiary.
3. Transition Payment. In consideration for your obligations under this Agreement, the Company will pay you a lump sum of $667,000 (the “Transition Payment”) on or before March 2, 2020. Notwithstanding anything to the contrary, during the period from the Transition Date to the Termination Date, you agree that you shall not be eligible for, and will not receive, any compensation other than the payment set forth in this Section 3, the benefits set forth in Section 4 or any indemnification obligations of the Company.
4. Payment of Benefits; Covenants.
a. Health and Dental Insurance. The Company will continue to make contributions to your Company-sponsored medical and dental insurance plans at the same rate applying as of March 1, 2020, through March 31, 2020. Effective April 1, 2020, you will have the option to continue your own benefit coverage under COBRA. You acknowledge that $42,000 of the Transition Payment is for the purpose of continuation of medical and dental coverage should you choose to use it.