This SEPARATION AND CONSULTING AGREEMENT
(the Agreement) is made and entered into on the
9th day of May, 2008, by and between GREAT WOLF RESORTS, INC.,
a Delaware corporation (the
Company), and JOHN EMERY
WHEREAS, the Company and the Executive are parties to an Employment Agreement dated December
13, 2004 (the Employment Agreement); and
WHEREAS, the Executive hereby tenders his resignation as an officer, director and employee of
the Company, and the Company hereby accepts such resignation effective as of the date specified
WHEREAS, the Company and the Executive desire to memorialize the terms of the Executives
termination of employment in this Agreement and completely resolve all matters arising out of the
Executives employment with the Company or the termination of that employment, as well as all
matters arising out of or related to the Employment Agreement.
NOW, THEREFORE, in consideration of the premises and mutual covenants contained herein, and
intending to be legally bound hereby, the parties hereto agree as follows:
1. Termination of the Employment Agreement; Resignation as an Officer and Director and
Termination of Employment. The Executive and the Company hereby mutually terminate, revoke and
rescind the Employment Agreement and all rights and obligations either party has or may be entitled
to under the Employment Agreement. The Executive and the Company agree further that the Executives
status as an officer, director and employee of the Company terminates as of the date specified
2. Consulting Services and Ongoing Cooperation. The Executive agrees to use his best
efforts to assist, advise and cooperate with the Company if the Company so requests on issues that
arose or were in any way developing during his employment with the Company, subject to Executives
availability given his employment obligations, if any, at that time. For a period of sixty (60)
days, the Executive shall furnish such assistance, advice or cooperation to the Company as the
Company shall reasonably request and as is within the Executives reasonable capability. Such
assistance, advice and cooperation may include, but shall not be limited to the preparation for, or
the conduct of, any litigation, investigation or proceeding involving matters or events which
occurred during the Executives employment by the Company as to which the Executives knowledge or
testimony may be important to the Company. In connection with the preparation for, or the conduct
of such litigation, investigation or proceeding as described in the preceding sentence, the
Executive shall promptly provide the Company with any records or other materials in his possession
that the Company shall request in connection with the defense or prosecution of such litigation,
investigation or proceeding. If and to the extent that the Company requests that the Executive
attend a meeting, deposition or trial, the
Company shall compensate Executive for his time at the rate of $750 per day or portion thereof
during which Executive complies with such request. The Company shall also pay or reimburse the
Executive for his travel expenses reasonably incurred in the course of providing such cooperation.
The Company shall make such payment or reimbursement within thirty (30) days of receipt of
reasonable substantiating documentation from the Executive but in no event later than the end of
the calendar year following the year in which such expenses were incurred.
3. Covenants as to Confidential Information, Competitive Conduct and Solicitation.
The Executive hereby acknowledges and agrees as follows: (a) this Section 3 is necessary for the
protection of the legitimate business interests of the Company, (b) the restrictions contained in
this Section 3 with regard to geographical scope, length of term and types of restricted activities
are reasonable; (c) the Executive has received adequate and valuable consideration for entering
into this Agreement, and (d) the Executives expertise and capabilities are such that his
obligations hereunder and the enforcement hereof by injunction or otherwise will not adversely
affect the Executives ability to earn a livelihood.
a. Confidentiality Information. The Executive agrees that the Executive will not,
directly or indirectly, without the express written approval of the Company, unless directed by
applicable legal authority (including any court of competent jurisdiction, governmental agency
having supervisory authority over the business of the Company or its subsidiaries, or any
legislative or administrative body having supervisory authority over the business of the Company or
its subsidiaries) having jurisdiction over the Executive, disclose to or use, or knowingly permit
to be so disclosed or used, for the benefit of himself, any person, corporation or other entity
other than the Company, (i) any non-public information concerning any financial matters, customer
relationships, competitive status, supplier matters, internal organizational matters, current or
future plans, or other business affairs of or relating to the Company, its subsidiaries or
affiliated or related parties, (ii) any proprietary management, operational, trade, technical or
other secrets or any other proprietary information or other data of the Company, its subsidiaries
or affiliated or related parties, or (iii) any other information related to the Company, its
subsidiaries or affiliated or related parties, or which the Executive should reasonably believe
will be damaging to the Company, its subsidiaries or affiliated or related parties, which has not
been published and is not generally known outside of the Company. The Executive acknowledges that
all of the foregoing constitutes confidential and proprietary information, which is the exclusive
property of the Company.
b. Restrictive Period. The term Restricted Period for purposes of this Agreement
shall mean the one-year period following the date of this Agreement.
c. Nonsolicitation of Customers and Employees.
i. Customers. The Executive, during the Restricted Period, shall not, on the
Executives own behalf or on behalf of any person, firm partnership, association, corporation or
business organization, entity or enterprise, call on or solicit for the purpose of competing with
the Company or its affiliates any customers of the Company or its affiliates with whom the
Executive had contact, knowledge, or association at any time during the twelve (12) month period
immediately preceding the beginning of the Restricted Period.
ii. Employees. The Executive, during the Restricted Period, shall not, either
directly or indirectly, call on, solicit or attempt to induce any other officer, employee or
independent contractor of the Company or its affiliates with whom the Executive had contact,
knowledge of, or association at any time during the twelve (12) month period immediately preceding
the beginning of the Restricted Period, to terminate his or her employment or business relationship
with the Company or its affiliates and shall not assist any other person or entity in such a
d. Non-Compete. The Executive and the Company agree that (a) the Company is engaged
in the family entertainment resort business featuring indoor waterparks, which shall be referred to
as the Business, (b) the Business can be conducted anywhere, (c) the Business can be and is
available to any person or entity with access to sufficient capital, (d) the Business consequently
has no geographic boundary or limitation, (e) the Executive was intimately involved in the Business
wherever it operates, and (f) this Section 3(d) is intended to provide fair and reasonable
protection to the Company in light of the unique circumstances of the Business. The Executive
therefore agrees that the Executive shall not, for the one (1) year period which starts on the date
of this Agreement, compete with the Company within fifty (50) miles of a location where the Company
conducts its Business or is planning to conduct its Business; provided, however, the Executive may
own up to five percent (5%) of the stock of a publicly traded company that engages in such
competitive business so long as the Executive is only a passive investor and is not actively
involved in the company in any way.
e. Remedy for Breach. The Executive agrees that the remedies at law of the Company
for any actual or threatened breach by Executive of the covenants in this Section 3 would be
inadequate and that the Company shall be entitled to specific performance of the covenants in this
Section 3, including entry of an ex parte, temporary restraining order in state or federal court,
preliminary and permanent injunctive relief against activities in violation of this Section 3, or
both, or other appropriate judicial remedy, writ or order, in addition to any damages and legal
expenses which the Company may be legally entitled to recover. The Executive acknowledges and
agrees that the covenants in this Section 3 shall be construed as agreements independent of any
other provision of this or any other agreement between the Company and the Executive, and that the
existence of any claim or cause of action by the Executive against the Company, whether predicated
upon this Agreement or any other agreement, shall not constitute a defense to the enforcement by
the Company of such covenants.
a. In consideration of the execution and performance of this Agreement by the Executive, and
subject to the remaining provisions of this Section 4, the Executive will receive from the Company
the following severance payments and benefits. The Company shall pay to the Executive cash
totaling $825,000, payable in a lump sum within five days of expiration of the 7-day revocation
period referred to in Section 6 hereof.
b. All payments under this Section 4 shall be subject to applicable deductions. For the
purposes of this Agreement, applicable deductions shall include, but shall not be limited to, any
federal, state, or local taxes determined by the Company to be required to be withheld from amounts
paid to the Executive pursuant to this Agreement or otherwise due from the Company, and any other
amounts that the Company may be legally required to deduct from his earnings.
c. Any date specified as a payment date under this Section 4 shall be construed as meaning any
date on or about the specified date; provided, however, that the Company shall make payment as soon
as practicable after the specified date without, to the extent possible, incurring any tax
penalties on either the Executive or the Company.
d. Except as provided in this Agreement, the Executive agrees that he is not entitled to any
other compensation (including, but not limited to, salary or bonuses), perquisites, or benefits of
any kind or description from the Company, or from or under any employee benefit plan or fringe
benefit plan sponsored by the Company or under the Employment Agreement, other than as described
above and other than his regular salary through the Effective Date, as defined in Section 6(f). The
consideration paid by the Company to the Executive pursuant to this Agreement shall be in
compromise, settlement and full satisfaction of any and all Claims, as defined in Section 5 of this
Agreement, that the Executive has, or may have, against the Company or other Releasees, as defined
in Section 5 of this Agreement, arising out of the Executives employment with the Company or its
affiliates, the termination of such employment and any and all matters related to the Executives
employment and termination, or to his Employment Agreement.
5. Mutual Release.
a. The Executive, for himself, his heirs, successors and assigns and in consideration of the
payments to be made by or on behalf of the Company pursuant to Section 4 of this Agreement, does
hereby forever discharge and release the Company, any subsidiaries, affiliated companies, companies
with common management, ownership or control, successors, assigns, insurers and reinsurers,
attorneys, and franchisees, and all of their officers, directors, shareholders, employees, agents
and representatives, in their official and individual capacities (collectively referred to as
Releasees), from any and all claims, demands, causes of action, damages, charges, complaints,
grievances, expenses, compensation and remedies which the Executive now has or may in the future
have on account of or arising out of any matter or thing which has happened, developed or occurred
before the date of this Agreement (collectively Claims), including, but not limited to, all
Claims arising from the Executives employment with the Company or any of its affiliated companies,
the termination of such employment, any and all relationships or dealings between the Executive and
the Company or any of the other Releasees, the termination of any such relationships and dealings,
and any and all other Claims the Executive may have against the Company or any of the other
Releasees, and the Executive hereby waives any and all such Claims including, all charges or
complaints that were or could have been filed with any other court, tribunal or governmental
agency, and any and all Claims not previously alleged, including, but not limited to, any Claims
under the following: (a) Title VII of the Civil Rights Act of 1964, as amended; (b) the Age
Discrimination in Employment Act
(ADEA), as amended; (c) the Federal Employee Retirement Income Security Act of 1974 (ERISA),
as amended; (d) the Americans With Disabilities Act (ADA), as amended; (e) the Consolidated Omnibus
Budget Reconciliation Act of 1985 (COBRA), as amended; (f) Section 806 of the Sarbanes-Oxley Act of
2002, as amended; (g) any and all statutes of similar nature or purpose under Delaware or Wisconsin
law, or the law of any other state; and (h) any federal, state or local law, rule, regulation,
constitution, executive order or guideline of any description, including, but not limited to, those
laws described above, or any rule or principle of equity or common law, or any Claim of defamation,
conversion, interference with a contract or business relationship, or any other intentional or
unintentional tort, or any Claim of loss of consortium, or any Claim of harassment or retaliation,
or breach of contract or implied contract, or breach of covenant of good faith and fair dealing, or
any whistle-blower Claim. This release, discharge and waiver shall be hereinafter referred to as
Notwithstanding the foregoing, Executive shall have the right to assert defenses and
counterclaims against any individuals referenced in this subparagraph in connection with any claim
that might be asserted against Executive by any of them, in which case this Release shall not
preclude the assertion of any defenses or counterclaims that are otherwise the subject of this
b. The Company similarly agrees to release the Executive and his agents, attorneys, heirs and
assigns from any and all Claims as defined above, whether known or unknown, which the Company has,
had or might have been able to assert or make based on any action, omission or conduct of any kind
on the part of the Executive or his agents, attorneys, heirs or assigns from the beginning of time
up to the execution of this Agreement.
c. The Executive agrees that this Release may be enforced in federal, state or local court,
and before any federal, state or local administrative agency or body.
d. This Release does not prohibit the Executive from filing an administrative charge of
alleged employment discrimination, harassment or retaliation under Title VII of the Civil Rights
Act of 1964, the Age Discrimination in Employment Act of 1967, the Americans With Disabilities Act
or the Equal Pay Act of 1963; however, the Executive represents that he has not to date filed or
cause to be filed any such administrative charge, and further agrees that he hereby waives any
right to monetary or other recovery should any federal, state or local administrative agency pursue
any Claim on his behalf and will immediately request in writing that the Claim or matter on his
behalf be withdrawn. Thus by signing this Agreement, the Executive waives any right he had to
obtain a recovery if an administrative agency pursues a Claim against the Company or any of the
other Releasees based on any action taken by the Company or any of the other Releasees up to the
date of this Agreement, and that he will have released the Company and the other Releasees of any
and all Claims, and the continuing effect of any and all Claims of any nature up to the date of
e. The Executive specifically understands and agrees that the termination of his employment
does not violate or disregard any oral or written promise or agreement, of any nature whatsoever,
express or implied. If any contract or agreement of employment exists concerning the employment of
the Executive by the Company or the terms and conditions of
such employment or the termination of such employment, whether oral or written, express or
implied, that contract or agreement (including the Employment Agreement) is hereby terminated and
is null and void.
6. Compliance with OWBPA. It is the mutual intent of the parties that this Agreement,
as it applies to claims under the ADEA, fully complies with the Older Worker Benefit Protection Act
(OWBPA). Accordingly, this Agreement requires, and Executive agrees, as follows:
a. Executive has read this Agreement, understands its contents and agrees to its terms and
conditions of his own free will. He understands this Agreement and its language.
b. Executive acknowledges that this Agreement provides him with pay and benefits to which he
would not otherwise be entitled.
c. Executive is hereby advised to consult with an attorney prior to signing this Agreement.
d. Executive has twenty-one (21) days in which to consider whether to sign this Agreement.
e. After Executive signs this Agreement, he shall have seven (7) days in which to revoke his
acceptance of this Agreement by delivering written notice to the Company.
f. This Agreement is not enforceable and effective until the seven (7) day revocation period
has expired without revocation (Effective Date). In computing this seven-day period, the day the
Agreement is executed by Executive shall not be included, and the last day of the seven-day period
shall be included.
7. Additional Terms.
a. Nothing contained in this Agreement prohibits the Executive from seeking a determination by
a court of competent jurisdiction that the Release is, in whole or in part, invalid under
applicable law. To the extent of such determination, the Executive may assert Claims or other
matters included in the Release, subject to final determination on appeal.
b. The Executive agrees that he has not sustained any disabling personal injury and/or
occupational disease which has resulted in a loss of wage earning capacity during his employment
with the Company, and that he has no personal injury and/or occupational disease which has been
contributed to, or aggravated or accelerated in a significant manner by his employment with the
c. The Executive represents and warrants that the Company has encouraged and advised the
Executive in writing, prior to signing this Agreement, to consult with an attorney of the
Executives choosing concerning all of the terms of this Agreement.
d. Nothing contained in this Agreement is intended to be an admission of any fault,
wrongdoing, or liability on the part of any of the parties hereto, and nothing contained in this
Agreement may be deemed, construed, or treated in any respect as such an admission. The Company
specifically denies any fault, wrongdoing or liability toward the Executive. This Agreement was
reached by the parties as a mutual compromise of their respective positions, in order to avoid the
costs and inconvenience of litigation and for other reasons deemed good and sufficient by the
8. Indemnification. The Executive shall be entitled to be indemnified by the Company
to the same extent and subject to the same limitations as the Company provides indemnification
generally to its officers and directors. The Company agrees to maintain in force a policy of
directors and officers liability coverage in such amounts as the Companys Board of Directors deems
reasonable and to cover the Executive under such policy, for acts occurring prior to the date of
this Agreement, subject to any such insurance being available on commercially reasonable terms.
9. Non-Disparagement. The Executive shall not disparage the Company or other
Releasees, or its officers, directors or employees in any way orally or in writing. The Company
shall, and the Company shall take reasonable measures to cause its directors and officers to,
refrain from disparaging the Executive in any way, orally or in writing.
10. Statements Concerning Executives Resignation. Executive and the Company agree
that, in response to inquiries concerning the reasons for Executives resignation, the statement
attached hereto as Exhibit A shall be used by the Company and its officers and directors.
Unless approved in writing in advance by the other party, no party shall make additional statements
in connection therewith to unrelated third parties.
11. Employment References. Nothing in this Agreement shall prevent either party from
stating the fact that Executive was employed by the Company, the address of his work location, the
dates of his employment, his job titles and job duties, his rate of pay, or that he resigned from
his position as an officer of the Company on or about the Effective Date. The Company will provide
employment references upon Executives request on the condition that Executive sign a notice and
release provided by the Company.
12. Breach of Agreement. The Executive agrees that if he violates any of the terms of
this Agreement, the Company may pursue whatever rights it has under this Agreement, whether in law
or in equity, without affecting the validity and enforceability of the Release contained in this
13. Company Property, Records, Files and Equipment. The Executive will return all
Company property, records, files, or any other Company owned equipment in his possession within ten
(10) days after the execution of this Agreement.
14. Certain Additional Payments by the Company. Notwithstanding anything in this
Agreement to the contrary, in the event it is determined by the Company that any payment or
distribution by the Company to or for the benefit of the Executive, whether paid or payable or
distributed or distributable pursuant to the terms of this Agreement, or otherwise, is subject to
the excise tax imposed by Section 4999 of the Internal Revenue Code of 1986, as amended (the
Code), or any successor provision, on excess parachute payments, as that term is used and defined
in Sections 4999 and 280G of the Code, then the Executive shall be entitled to receive an
additional payment (a Gross-Up Payment) in an amount equal to the then current rate of tax under
said Section 4999 multiplied by the total of the amounts so paid or payable, including the Gross-Up
Payment, which are deemed to be a part of an excess parachute payment.
15. Governing Law
. This Agreement shall be governed by and construed in accordance
with the laws of the State of Wisconsin
applicable to contracts executed in and to be performed in
that state without regard to its conflicts of laws provisions. Each of the parties hereby
irrevocably and unconditionally consents to submit to the exclusive jurisdiction of the courts of
the State of Wisconsin
located in the County of Milwaukee, Wisconsin
, and of the United States for
the Eastern District of Wisconsin
for any litigation arising out of or relating to this Agreement
or the transactions contemplated hereby. Each of the parties hereby irrevocably and unconditionally
acknowledges that service of any process, summons, notice or document by United States registered
mail to the respective addresses set forth herein shall be effective service of process for any
litigation brought against a party in any such court. Any legal action relating to this Agreement
shall be brought in the courts of the State of Wisconsin
located in the County of Milwaukee,
, and of the United States for the Eastern District of Wisconsin
and the parties
irrevocably and unconditionally waive and will not plead or claim in any such court that venue is
improper or that such litigation has been brought in an inconvenient forum.
16. Waiver. The waiver by a party hereto of any breach by the other party hereto of
any provision of this Agreement shall not operate or be construed as a waiver of any other or
subsequent breach by a party hereto.
17. Assignment. This Agreement shall be binding upon and inure to the benefit of the
successors and assigns of the Company, and the Company shall be obligated to require any successor
to expressly acknowledge and assume its obligations hereunder. This Agreement shall inure to the
extent provided hereunder to the benefit of and be enforceable by the Executive or the Executives
legal representatives, executors, administrators, successors, heirs, distributees, devisees and
legatees. The Executive may not delegate any of the Executives duties, responsibilities,
obligations or positions hereunder to any person and any such purported delegation shall be void
and of no force and effect.
18. Severability. Whenever possible, each provision of this Agreement shall be
interpreted in such a manner as to be effective and valid under applicable law, but if any
provision of this Agreement is held to be invalid under applicable law, such provision shall be
ineffective only to the extent of such prohibition or invalidity, without invalidating the
remainder of such provision or the remaining provisions of this Agreement.
19. Notices. Any notices required or permitted to be given under this Agreement shall
be sufficient if in writing, and if personally delivered or when sent by first class certified or
registered mail, postage prepaid, return receipt requested in the case of the Executive, to his
principal residence address, and in the case of the Company, to the address of its principal place
of business as set forth above, to the attention of the Chairman of the Board of the Company.
20. Defined Terms. Any terms not specifically defined herein have the meanings set
forth in the Employment Agreement.
21. Entire Agreement. This Agreement constitutes the entire agreement of the parties
relating to the subject matter hereof, and supersedes any obligations of the Company and the other
Releasees under any previous agreements or arrangements (including the Employment Agreement),
except as otherwise provided in this Agreement. The provisions of this Agreement may not be
amended, modified, repealed, waived, extended or discharged except by an agreement in writing
signed by the party against whom enforcement of any amendment, modification, repeal, waiver,
extension or discharge is sought. No person acting other than pursuant to a resolution of the
Companys Board of Directors shall have authority on behalf of the Company to agree to amend,
modify, repeal, waive, extend or discharge any provision of this Agreement or anything in reference
thereto. This Agreement may be executed in one or more counterparts (including by facsimile
signature), all of which shall be considered one and the same instrument, and shall be fully
executed when one or more counterparts have been signed by and delivered to each party.
22. Headings. The descriptive headings used herein are used for convenience of
reference only and shall not constitute a part of this Agreement.
THE EXECUTIVE HEREBY EXPRESSLY WARRANTS AND REPRESENTS THAT, BEFORE ENTERING INTO THIS
AGREEMENT, HE HAS RECEIVED A REASONABLE PERIOD OF TIME WITHIN WHICH TO CONSIDER ALL OF THE
PROVISIONS CONTAINED IN THIS AGREEMENT, THAT HE HAS FULLY READ, INFORMED HIMSELF OF AND UNDERSTANDS
ALL THE TERMS, CONTENTS, CONDITIONS AND EFFECTS OF ALL PROVISIONS OF THIS AGREEMENT, AND THAT HE
CONSIDERS ALL SUCH PROVISIONS TO BE SATISFACTORY.
THE EXECUTIVE FURTHER EXPRESSLY WARRANTS AND REPRESENTS THAT NO PROMISE OR REPRESENTATION OF
ANY KIND HAS BEEN MADE, EXCEPT THOSE EXPRESSLY STATED IN THIS AGREEMENT.
THE EXECUTIVE FURTHER EXPRESSLY WARRANTS AND REPRESENTS THAT HE ENTERS INTO THIS AGREEMENT
KNOWINGLY AND VOLUNTARILY.
IN WITNESS WHEREOF, the Executive and the Company, by its duly authorized representative, have
signed this Agreement as of the date set forth above.
||/s/ John Emery
||Name: John Emery
||GREAT WOLF RESORTS, INC.
||/s/ James A. Calder
||Name: James A. Calder, CFO
Great Wolf Resorts also reported that John Emery
has announced his intention to step down as
chief executive officer and a director of the company. Mr. Emery is leaving the company to pursue
an opportunity in the private equity sector which will allow him to spend the majority of his time
at his home in Virginia after more than four years of weekly commuting between Virginia and the
companys headquarters in Madison, Wisconsin
. With the companys continued strong operating
results and the recent successful resort openings, I am comfortable choosing this time to make my
transition, Emery said. We have a strong management team in place, headed up by Kim Schaefer,
our chief operating officer; Jim Calder, our chief financial officer; and Hernan Martinez
president of development. Mr. Emery will be available to assist the company as necessary during
the transition of his responsibilities.
As a result of Mr. Emerys decision, the Board of Directors will appoint Randy Churchey
director of the company, as interim chief executive officer. Commenting on both developments,
Chairman of the Board Joe Vittoria stated, We thank John for his more than four years of
leadership and service to the company and wish him the best of luck in all his future endeavors.
Randy has been a director of the company since our IPO in 2004 and has extensive public company
experience, formerly serving as president and chief executive officer of RFS Hotel Investors, Inc.
We believe Randy will provide solid leadership on an interim basis as we begin our search for a
permanent chief executive officer.