EXHIBIT 10.14
EMPLOYMENT AGREEMENT
This Employment Agreement (this "Agreement") is entered into effective
as of this 12th day of June, 2002, by and between Total Entertainment Restaurant
Corp., a Delaware corporation (the "Corporation"), and Xxxxxx X. Xxxxxxx
("Employee").
RECITALS
WHEREAS, Employee is currently serving as Chief Executive Officer of
the Corporation and various subsidiaries of the Corporation; and
WHEREAS, Employee is a principal officer of the Corporation and an
integral part of its management, and the Corporation desires to continue the
services of Employee, whose experience, knowledge and abilities with respect to
the business and affairs of the Corporation are extremely valuable to the
Corporation; and
WHEREAS, it is expected that the Corporation from time to time will
consider the possibility of an acquisition by another company or other Change of
Control (as hereinafter defined). The Board of Directors of the Corporation
recognizes that such consideration can be a distraction to Employee and can
cause Employee to consider alternative employment opportunities. The Board of
Directors has accordingly determined it to be in the best interest of the
Corporation and its stockholders to assure Employee's continued dedication and
objectivity, notwithstanding the possibility, threat, or occurrence of a Change
of Control of the Corporation; and
WHEREAS, the Board of Directors further believes it is in the best
interests of the Corporation and its stockholders to provide Employee with an
incentive to continue Employee's employment and to motivate Employee to maximize
the value of the Corporation upon a Change of Control for the benefit of its
stockholders, and the Board believes it is imperative Employee is provided with
certain severance benefits upon Employee's termination of employment following a
Change of Control that will provide enhanced financial security, and which will
encourage Employee to remain with the Corporation notwithstanding the
possibility of a Change of Control; and
WHEREAS, the parties hereto desire to enter into this Agreement setting
forth the terms and conditions of the continued employment relationship of the
Corporation and Employee and severance benefits of Employee following a Change
Control.
NOW THEREFORE, it is agreed as follows:
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ARTICLE I
EMPLOYMENT
SECTION 1.1 TERM
I.1.1 Term of Employment. The Corporation shall initially employ Employee from
the date hereof until June 30, 2004 (the "Initial Term").
I.1.2 Extension of Initial Term. Upon each annual anniversary date of this
Agreement, commencing at the last day of the last year of the Initial Term, this
Agreement shall be extended automatically for successive terms of one year each,
unless either the Corporation or Employee gives contrary written notice to the
other not later than ninety (90) days prior to the annual anniversary date
thereof.
SECTION 1.2 DUTIES OF EMPLOYEE
I.2.1 General Duties. Employee shall serve as Chief Executive Officer of the
Corporation. He shall do and perform all services, acts, or things necessary or
advisable to manage and conduct the business of the Corporation consistent with
such position subject to such policies and procedures as may be established by
the Board. Employee shall: (i) devote his entire business time, attention, and
energies to the business of the Corporation, and (ii) faithfully and competently
perform his duties hereunder; and, Employee shall not, during the term of this
Agreement, engage in any other business activity except as permitted by Section
1.7.
SECTION 1.3 COMPENSATION
I.3.1 Salary. For Employee's services to the Corporation as Chief Executive
Officer, from June 12, 2002 until the termination of this Agreement, Employee
shall be paid a salary at the annual rate of $235,000 (herein referred to as
"Salary") payable in twenty-six equal installments. During the term of this
Agreement with the Corporation, Employee shall be eligible for an increase in
Salary based on recommendations made by the Compensation Committee of the Board.
I.3.2 Stock Options. Employee shall be eligible to participate in the
Corporation's 1997 Incentive and Nonqualified Stock Option Plan (the "Plan"), as
determined by the Stock Option Committee of the Board and in accordance with the
provisions of the Plan. Without limiting any provision of the Plan, including by
way of example and without limitation, such provisions concerning the
acceleration of stock options, Employee shall be entitled to (a) automatic
vesting of one hundred percent (100%) of all of Employee's stock options under
the Plan upon Employee become entitled to a Severance Payment under Section
II.2.1 of this Agreement, or (b) automatic vesting of fifty percent (50%) of all
of Employee's stock options under the Plan upon both (i) a Change of Control (as
defined in Section II.1.1(d)) and (ii) Employee's termination for Just Cause (as
defined in Section I.5.3 of this Agreement) within seven hundred thirty (730)
calendar days after such Change of Control.
I.3.3 Bonus. In addition to participation in the Plan, Employee is eligible to
participate in all bonus compensation plans, if any, which may be offered from
time to time.
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SECTION 1.4 EMPLOYEE BENEFITS
I.4.1 Medical, Life and Disability Insurance Benefits. The Corporation shall
provide Employee with the medical, life, and disability insurance benefits in
accordance with the established benefit policies of the Corporation.
I.4.2 Business Expenses. Employee shall be authorized to incur reasonable
expenses for promoting the business of the Corporation including expenses for
entertainment, travel, and similar items. The Corporation shall reimburse
Employee for all such expenses upon the presentation by Employee, from time to
time, of an itemized account of such expenditures.
I.4.3 Vacations. Employee shall be entitled to an annual paid vacation
commensurate with the Corporation's established vacation policy for executive
officers. The timing of paid vacations shall be scheduled in a reasonable manner
by Employee.
I.4.4 Disability. Upon Disability (as defined below) of Employee, Employee shall
be entitled to receive an amount equal to fifty percent (50%) of his salary (in
addition to any disability insurance benefits received pursuant to I.4.1
herein), such amount being paid semi-monthly in twelve equal installments.
SECTION 1.5 TERMINATION
I.5.1 Death. Employee's employment hereunder shall be terminated upon Employee's
death.
I.5.2 Disability. The Corporation may terminate Employee's employment hereunder
in the event Employee is disabled and such disability continues for more than
one hundred eighty (180) days. "Disability" shall have the definition set forth
in Section II.1.1(h).
I.5.3 Cause.
(a) The Corporation may terminate Employee's employment hereunder for
Just Cause. For the purposes of this Agreement, "Just Cause" shall
mean the (i) willful and intentional failure by Employee to
substantially perform his duties hereunder, other than any failure
resulting from Employee's incapacity due to physical or mental
incapacity, or (ii) commission by Employee, in connection with his
employment by the Corporation, of an illegal act or any act (though
not illegal) which is not in the ordinary course of Employee's
responsibilities and which exposes the Corporation to a significant
level of undue liability. For purposes of this definition, no act or
failure to act on Employee's part shall be considered to have met
either of the preceding tests unless done or omitted to be done by
Employee not in good faith without a reasonable belief that his action
or omission was in the best interest of the Corporation.
(b) Notwithstanding the foregoing, Employee shall not be deemed to
have been terminated for Just Cause unless and until there shall have
been delivered to Employee a copy of a resolution, duly adopted by the
majority vote of the Board of Directors.
I.5.4 Compensation Upon Termination for Cause or Upon Resignation by Employee.
Except as otherwise set forth in I.5.5 hereof, if Employee's employment shall be
terminated for Cause or
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if Employee shall resign his position with the Corporation, the Corporation
shall pay Employee's compensation only through the last day of Employee's
employment by the Corporation. The Corporation shall then have no further
obligation to Employee under this ARTICLE I.
I.5.5 Involuntary Termination. If: (i) Employee is terminated by the Corporation
at any time prior to the termination of this Agreement for reasons other than
Cause; or (ii) if the Corporation gives notice to Employee, in accordance with
Section I.1.2 herein, that this Agreement will not be renewed: Employee shall be
paid, over the ensuing twelve (12) month period, a sum equal to Employee's
then-current annual base salary from the Corporation. Such twelve (12) month
period, as the case may be, shall begin: (i) on the date of termination in the
case of termination of Employee's employment; or (ii) on the date notice of
non-renewal is given in the case of termination of this Agreement not
accompanied by simultaneous termination of Employee's employment with the
Corporation.
SECTION 1.6 NO EFFECT ON OTHER CONTRACTUAL RIGHTS
I.6.1 Other Contractual Rights. The provisions of this Agreement, and any
payment provided for hereunder, shall not reduce any amount otherwise payable,
or in any way diminish Employee's existing rights, or rights which would accrue
solely as a result of passage of time under any employee benefit plan or other
contract, plan or arrangement of which Employee is a beneficiary or in which he
participates, except as set forth in ARTICLE II.
I.6.2 Exclusivity. Specific arrangements referred to in this Agreement are not
intended to exclude Employee's participation in any other benefits available to
executive personnel generally or to preclude other compensation or benefits as
may be authorized by the Board from time to time.
SECTION 1.7 RESTRICTIONS ON EMPLOYEE
I.7.1 Non-Disclosure; Non-Solicitation. Except in the performance of his duties
hereunder, at no time during the Term of Employment and for eighteen (18) months
after the termination hereof, shall Employee, individually or jointly with
others, for the benefit of Employee or any third party, publish, disclose, use,
or authorize anyone else to publish, disclose or use, any secret or confidential
material or information relating to any aspect of the business or operations of
the Corporation, including, without limitation, any secret or confidential
information relating to the business, customers, trade or industrial practices,
trade secrets, technology, recipes, or know-how of the Corporation. Except in
the performance of his duties hereunder, at no time during the Initial Term or
any additional term or six (6) months thereafter, shall Employee for himself or
on behalf of any other person or entity contact any employee of the Corporation
for the purpose of hiring, diverting, or otherwise soliciting the employee.
I.7.2 Non-Competition. During the Initial Term or any additional term and for
twenty-four (24) months thereafter, regardless of any termination pursuant to
Section 1.5 or any voluntary termination or resignation by Employee, Employee
shall not, individually or jointly with others, directly or indirectly, whether
for his own account or for that of any other person or entity, own or hold any
ownership interest in any person or entity engaged in a business the same as or
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similar to any Business (as defined herein) of the Corporation without the
Corporation's written consent. For the purposes of this Agreement, "Business"
shall mean a facility or social gathering place which may include restaurant
operations with games of skill, including but not limited to pool, snooker,
billiards, interactive or passive video games, or multiple television sets.
SECTION 1.8 INDEMNIFICATION
I.8.1 Indemnification. To the full extent permitted by law, the Board shall
authorize the payment of expenses incurred by or shall satisfy judgments or
fines rendered or levied against Employee in any action brought by a third-party
against Employee (whether or not the Corporation is joined as a party defendant)
to impose any liability or penalty on Employee for any act alleged to have been
committed by Employee while employed by the Corporation unless Employee was
acting with gross negligence or willful misconduct. Payments authorized
hereunder shall include amounts paid and expenses incurred in settling any such
action or threatened action.
ARTICLE II
CHANGE OF CONTROL
SECTION 2.1 DEFINITIONS
II.1.1 Definitions. Whenever used in this ARTICLE II, the following capitalized
terms shall have the meaning set forth in this Section, certain other
capitalized terms being defined elsewhere in this Agreement:
(a) "Annualized Compensation" means Employee's annual base salary
immediately prior to a Change of Control.
(b) "Beneficial Owner" shall have the meaning ascribed to such term
in Rule 13d-3 promulgated under the Exchange Act.
(c) "Board of Directors" means the Board of Directors of the
Corporation.
(d) "Change of Control" of the Corporation means and includes any of
the following:
(i) Any person or "Group" (as defined in Section 13(d) of the
Exchange Act), excluding for this purpose the Corporation or any
Subsidiary of the Corporation, or any employee benefit plan of the
Corporation or any Subsidiary of the Corporation, or any person or
entity organized, appointed or established by the Corporation for or
pursuant to the terms of such plan which acquires beneficial ownership
of voting securities of the Corporation, is or becomes the Beneficial
Owner directly or indirectly of securities of the Corporation
representing thirty percent (30%) or more of the combined voting power
of the Corporation's then outstanding securities; provided, however,
that no Change of Control shall be deemed to have occurred as the
result of an acquisition of securities of the Corporation by the
Corporation which, by reducing the number of voting securities
outstanding, increases the direct or indirect beneficial ownership
interest of any person to
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thirty percent (30%) or more of the combined voting power of the
Corporation's then outstanding securities, but any subsequent increase
in the direct or indirect beneficial ownership interest of such a
person in the Corporation shall be deemed a Change of Control; and
provided further that if the Board of Directors of the Corporation
determines in good faith that a person who has become the beneficial
owner directly or indirectly of securities of the Corporation
representing thirty percent (30%) or more of the combined voting power
of the Corporation's then outstanding securities has inadvertently
reached that level of ownership interest, and if such person divests
as promptly as practicable a sufficient amount of securities of the
Corporation so that the person no longer has a direct or indirect
beneficial ownership in thirty percent (30%) or more of the combined
voting power of the Corporation's then outstanding securities, then no
Change of Control shall be deemed to have occurred;
(ii) The individuals who, as of May 18, 2002, are members of the
Corporation's Board of Directors (the "Existing Directors"), cease, at
or prior to May 18, 2004, for any reason, to constitute at least a
majority of the number of authorized directors of the Corporation as
determined in the manner prescribed in the Corporation's Certificate
of Incorporation and Bylaws; provided, however, that if the election,
or nomination for election, by the Corporation's stockholders of any
new director was approved by a vote of at least a majority of the
Existing Directors, such new director shall be considered an Existing
Director; provided further, however, that no individual shall be
considered an Existing Director if such individual initially assumed
office as a result of either an actual or threatened election contest
or other actual or threatened solicitation of proxies by or on behalf
of anyone other than the Board of Directors (a "Proxy Contest"),
including by reason of any agreement intended to avoid or settle any
election contest or Proxy Contest.
(iii) Consummation of (1) an agreement for the sale, assignment,
lease conveyance or other disposition of the Corporation of all or
substantially all of the Corporation's assets, (2) a plan of merger,
consolidation or reorganization of the Corporation with any other
corporation whether or not the Corporation is the person surviving or
resulting therefrom, or (3) a similar transaction or series of
transactions involving the Corporation (any transaction described in
parts (1) through (3) of this subparagraph (iii) being referred to as
a "Transaction"), in each case unless after such a Transaction (x) the
shareholders of the Corporation immediately prior to the Transaction
continue to own, directly or indirectly, more than fifty percent (50%)
of the combined voting power of the then outstanding voting securities
entitled to vote generally in the election of directors of the new (or
continued) entity (including, but not by way of limitation, an entity
which as a result of such transaction owns the Corporation or all or
substantially all of the Corporation's former assets either directly
or through one or more subsidiaries) immediately after such
Transaction, in substantially the same proportion as their ownership
of the Corporation immediately prior to such Transaction, (y) no
person (excluding any entity resulting from such Transaction or any
employee benefit plan (or related trust) of the Corporation or of such
entity resulting from such Transaction) beneficially owns, directly or
indirectly, twenty percent (20%) or more of the then combined voting
power of the then outstanding voting securities of such entity, except
to
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the extent that such ownership existed prior to the Transaction, and
(z) at least a majority of the members of the board of directors of
the entity resulting from such Transaction were Existing Directors at
the time of the execution of the initial agreement, or if the
appointment, election, or nomination for election of a majority of the
members of the board of directors of the entity resulting from such
Transaction was approved by a vote of at least a majority of the
Existing Directors providing for such Transaction; or
(iv) Approval by the shareholders of the Corporation of a
complete liquidation or dissolution of the Corporation.
Any other provision of this Agreement to the contrary
notwithstanding, a "Change of Control" shall not include any
transaction described in subparagraph (i) or (iii), above, where, in
connection with such transaction, Employee and/or any party acting in
concert with Employee substantially increases Employee's or its, as
the case may be, ownership interest in the Corporation or a successor
to the Corporation.
(e) "Code" means the Internal Revenue Code of 1986, as amended.
(f) "Corporation" means Total Entertainment Restaurant Corp., a
Delaware corporation, and any successor or assignee as provided in
Section 2.4.
(g) "Compensation" means "includable compensation" under Section 280G
of the Code, and includes all of Employee's base salary attributable
to Employee's employment with the Corporation and/or any of its
Subsidiaries as reported in the W-2 prepared by the Corporation
(excluding income attributable to the taxation of stock options and
bonuses). In addition, Compensation shall include, but not be limited
to, any amounts excludable from Employee's gross income for federal
income tax purposes pursuant to Section 125 or Section 401(k) of the
Code or deferred pursuant to any Corporation or Subsidiary plan or
program including any matching contributions by the Corporation plus
Employee's target cash bonus under all performance-related criteria
(including personal objectives) applicable prior to the Change of
Control and other regular cash compensation or reimbursement of
non-business expenses, if any, including, but not limited to,
unsubstantiated automobile allowance and gasoline reimbursement
payments.
(h) "Disability" means a physical or mental infirmity which
substantially impairs Employee's ability to perform Employee's
material duties for a period of at least one hundred eighty (180)
consecutive calendar days and, as a result of such Disability,
Employee have not returned to Employee's full-time regular employment
or officership prior to termination.
(i) "ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
(j) "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
(k) "Just Cause" shall have the meaning set forth in Section I.5.3.
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(l) "Person" shall have the meaning ascribed to such term in Section
3 of the Exchange Act and the rules and regulations promulgated
thereunder.
(m) "Severance Payment" means the payment of severance compensation
as provided in Section 2.2.
(n) "Subsidiary" means any corporation or other Person, a majority of
the voting power, equity securities or equity interest of which is
owned directly or indirectly by the Corporation.
SECTION 2.2 SEVERANCE PAYMENTS
II.2.1 Right to Severance Payment. If there has been a Change of Control of the
Corporation and Employee is an active employee or an officer of the Corporation
at the time of the Change of Control, and thereafter any of the following occur
within seven hundred thirty (730) calendar days from and including the date of
the Change of Control, (a) Employee's employment or officership is involuntarily
terminated by the Corporation for any reason (other than Just Cause or
Employee's death or Disability), (b) there shall be a reduction in Employee's
base salary or other Compensation as in effect immediately prior to the Change
of Control, (c) Employee is placed in any position of lesser stature than that
of Chief Executive Officer of the Corporation; is assigned duties inconsistent
with the Chief Executive Officer or duties which, if performed, would result in
a significant change in the nature or scope of powers, authority, functions or
duties inherent in such positions on the date hereof; is assigned performance
requirements or working conditions which would result in a significant change in
the nature of Employee's duties or work performance in effect on the date
hereof; or is accorded treatment on a general basis that is in derogation of
Employee's status as Chief Executive Officer, (d) any act by the Corporation
which under Kansas law or statute would constitute a constructive termination of
Employee's employment, or (e) any requirement of the Corporation that the
location at which Employee perform Employee's principal duties for the
Corporation be outside a radius of fifty (50) miles from the location at which
Employee performed such duties immediately prior to the Change of Control; then
the Agreement shall be deemed to have been terminated by the Corporation
otherwise than by reason of Just Cause and the Corporation shall pay to Employee
within thirty (30) days after notice from Employee to such effect a lump sum
cash Severance Payment equal to the amount specified in Section II.2.2 hereof.
For purposes of determining whether Employee is an active employee or an officer
of the Corporation at the time of the Change of Control, Employee will be
considered to be an active employee or officer even if Employee is on sick
leave, military leave, or any other leave of absence approved by the Corporation
or any of its Subsidiaries.
II.2.2 Amount of Severance Payment and Replacement of Options
(a) Subject to subsections (b) and (c) below, if Employee become
entitled to a Severance Payment under Section II.2.1 of this
Agreement, Employee's Severance Payment shall be equal to 2.99 times
Employee's Annualized Compensation.
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(b) The Severance Payment otherwise calculated under Section
II.2.2(a) shall be reduced by the amount of cash severance-type
benefits to which Employee may be entitled pursuant to any other
severance plan, agreement, policy or program of the Corporation or any
of its Subsidiaries, including ARTICLE I, if applicable; provided that
if the amount of cash severance benefits payable under such other
severance plan, agreement, policy or program is greater than the
amount payable pursuant to this Agreement, Employee will be entitled
to receive the amounts payable under such other plan, agreement,
policy or program, subject to the limitations of subsection (c) below.
Other "cash severance-type benefits" shall not include cash settlement
of stock options, accelerated vesting of stock options and retirement,
pension and other similar benefits for purposes of this Section
II.2.2(b), but such items may be included as part of the Annualized
Compensation under Section 280G of the Code.
(c) Anything in this Agreement to the contrary notwithstanding, in
the event it shall be determined that any Severance Payment or any
other payment, distribution, or cash severance type benefit made by
the Corporation to or for Employee's benefit (whether paid or payable
or distributed or distributable pursuant to the terms of this
Agreement or otherwise) (a "Payment") would, in the opinion of the
Advisory Firm (as hereafter defined), be nondeductible (in whole or
part) by the Corporation for federal income tax purposes under Section
280G of the Code, then the aggregate present value of all such
payments or distributions shall not exceed the Reduced Amount. The
"Reduced Amount" shall be an amount, not less than zero, which
maximizes the aggregate present value of Payments that can be deducted
by the Corporation and which would not constitute an "excess parachute
payment" under Section 280G of the Code. For purposes of this Section
II.2.2(c), the present value of a Payment shall be determined in
accordance with Section 280G of the Code. All determinations required
to be made under this Section II.2.2(c) shall be made in good faith by
the Corporation's independent auditors, or at the election of such
auditors by such other firm or individuals of recognized expertise as
such auditors may select (such auditors or, if applicable, such other
firm or individual, are hereinafter referred to as the "Advisory
Firm"). The Advisory Firm shall within ten (10) business days of the
date of notice by Employee under Section II.2.1, or at such earlier
time as is requested by the Corporation, provide to both the
Corporation and Employee, a written calculation of the Reduced Amount.
Employee shall determine the manner by which the Payments shall be
eliminated or reduced to comply with the requirements of this Section
II.2.2(c), provided that, if Employee do not make such determination
within ten (10) business days of the receipt of the calculations made
by the Advisory Firm, the Corporation shall elect which and how much,
if any, of the Payments shall be eliminated or reduced consistent with
the requirements of this Section II.2.2(c) and shall notify Employee
promptly of such election. Within five (5) business days of the
earlier of (i) the Corporation's receipt of Employee's determination
pursuant to the immediately preceding sentence or (ii) the
Corporation's election in lieu of such determination, the Corporation
shall pay to or distribute to or for Employee's benefit such amounts
as are then due Employee under this Agreement. The Corporation and
Employee shall cooperate fully with the Advisory Firm, including
without limitation providing to the Advisory Firm all information and
materials reasonably requested by it, in connection with the making of
the determinations required under this Section II.2.2(c).
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Subject to Section Section 2.8 of this Agreement, all good faith
opinions and determinations of the Advisory Firm shall be binding upon
Employee and Employee's representatives.
II.2.3 Life and Health Insurance; Physical. If Employee entitled to receive a
Severance Payment under Section II.2.1, Employee will also be entitled to
receive the following additional benefits:
(a) Life insurance coverage for Employee and Employee's dependents
having a face amount at least equal to the greater of (i) the amount
in effect for Employee (in Employee's case) and/or Employee's
dependents (in the case of Employee's dependents) on the date of the
Change of Control, or (ii) the amount in effect for Employee (in
Employee's case) and/or Employee's dependents (in the case of
Employee's dependents) on the date of termination of service, such
coverage to be provided under the same plan or plans under which
Employee (in Employee's case) or Employee's dependents (in the case of
Employee's dependents) were covered immediately prior to the
termination of Employee's employment or officership or substantially
similar plan(s) established by the Corporation or any of its
Subsidiaries thereafter. Such life insurance coverage shall be paid
for by the Corporation to the same extent as if Employee was still
employed by the Corporation, and Employee will be required to make
such payments as Employee would be required to make if Employee were
still employed by the Corporation. This coverage will continue for a
period hereafter provided.
(b) Health insurance coverage (including dental coverage, if any) for
Employee and Employee's dependents under the same plan or plans under
which Employee was covered immediately prior to the termination of
Employee's employment or officership or substantially similar plan(s)
established by the Corporation or any of its Subsidiaries thereafter.
Such health insurance coverage shall be paid for by the Corporation to
the same extent as if Employee was still employed by the Corporation,
and Employee will be required to make such payments as Employee would
be required to make if Employee were still employed by the
Corporation. This coverage will continue for the period hereinafter
provided.
(c) Payment for one (1) physical examination, to be performed by a
physician of Employee's choice.
The benefits provided under this Section II.2.3 shall continue for a period
of two (2) years following the date of termination of Employee's employment
or such longer period as provided in any agreement relating to any of such
benefits between Employee and the Corporation, including ARTICLE I, if
applicable; provided, however, that the benefits for medical coverage under
the provision of Section II.2.3(b) shall end as of the date Employee
becomes covered under any other group health plan that Employee does not
have as of the date of the Change of Control and any other group health
plan not maintained by the Corporation or any of its Subsidiaries that
provides equal or greater benefits than such plan and which does not
exclude any pre-existing condition that Employee or Employee's dependents
may have at that time.
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II.2.4 Withholding of Taxes. The Corporation may withhold all federal, state,
local or other taxes required by applicable law to be withheld by the
Corporation from any amounts payable under this Agreement.
II.2.5 No Setoff. The Corporation's obligation to make a Severance Payment to
Employee pursuant to this Agreement, and to otherwise perform its obligations
under ARTICLE II, shall not be affected by any circumstance, including, but not
limited to, any setoff, counterclaim, recoupment, defense or other right which
the Corporation or any of its Subsidiaries may have against Employee or others.
SECTION 2.3 OTHER RIGHTS AND BENEFITS NOT AFFECTED
II.3.1 Other Benefits. This ARTICLE II does not provide a pension for Employee
nor shall any payment hereunder be characterized as deferred compensation.
Except as set forth in Sections II.2.2(b) and II.2.2(c), neither the provisions
of this ARTICLE II nor the Severance Payment provided for hereunder shall reduce
any amounts otherwise payable, or in any way diminish Employee's rights as an
employee, whether existing now or hereafter, under any benefit, incentive,
retirement, stock option, stock bonus or stock purchase plan or any employment
agreement or other plan or arrangement not related to severance, including
ARTICLE I.
SECTION 2.4 SUCCESSOR TO CORPORATION
The Corporation shall require any successor or assignee, whether direct
or indirect, by purchase, merger, consolidation or otherwise, to all or
substantially all the business or assets of the Corporation, expressly and
unconditionally to assume and agree to perform the Corporation's obligations
under this Agreement, in the same manner and to the same extent that the
Corporation would be required to perform if no such succession or assignment had
taken place. In such event, the term "Corporation," as used in this Agreement,
shall mean (from and after, but not before, the occurrence of such event) the
Corporation as herein before defined and any successor or assignee to the
business or assets which by reason hereof becomes bound by the terms and
provisions of this Agreement.
SECTION 2.5 LEGAL FEES AND EXPENSES
Should Employee prevail in an action, the Corporation shall pay as they
become due all legal fees, costs of litigation and other expenses incurred in
good faith by Employee as a result of the Corporation's refusal or failure to
make the Severance Payment or benefits to which Employee become entitled under
this ARTICLE II, as a result of the Corporation's contesting the validity,
enforceability or interpretation of this Agreement or of Employee's right to
benefits hereunder.
SECTION 2.6 NOTICE OF TERMINATION
Following a Change of Control, any purported termination of Employee's
employment by the Corporation or any of its Subsidiaries shall be communicated
by a written notice of
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termination, which such notice shall indicate the specific termination provision
in this Agreement, if any, relied upon and which sets forth in reasonable detail
the facts and circumstances claimed to provide a basis for termination of
Employee's employment under any provision so indicated. The failure to provide
such notice shall create a rebuttable presumption that Employee is entitled to a
Severance Payment and the other benefits provided by this Agreement.
SECTION 2.7 TERM
If a Change of Control has not theretofore occurred, this Agreement
shall expire and be of no further force and effect on May 18, 2002; provided
that the Board of Directors of the Corporation may, at any time prior to the
expiration thereof, unilaterally extend the term of this Agreement for a term of
up to two years, including extending the date set forth in the third line of
Section II.1.1(d)(ii) of the definition of "Change of Control," without any
further action on Employee's part. If a Change of Control occurs, this Agreement
shall continue in full force and effect, and shall not terminate or expire until
the expiration of seven hundred thirty one (731) calendar days from and
including the date of the Change of Control, at which time this Agreement shall
terminate except to the extent Employee become entitled to Severance Payments
hereunder prior to such time. If Employee become so entitled to Severance
Payments hereunder, this Agreement shall continue and be effective until
Employee (or the person(s) specified in Section III.1.2) shall have received in
full all Severance Payments and other benefits to which Employee is entitled
under this Agreement, at which time this Agreement shall terminate for all
purposes.
SECTION 2.8 ADMINISTRATION
The Corporation has entered into agreements similar to this Agreement
herein with other employees and officers of the Corporation or its Subsidiaries.
These agreements, taken together, constitute a welfare benefit plan within the
meaning of Section 3(1) of ERISA. The Administrator of such plan, within the
meaning of Section 3(16) of ERISA, and the Named Fiduciary thereof, within the
meaning of Section 402 of ERISA, is the Corporation. If Employee believe
Employee is entitled to a benefit under this Agreement, Employee may make a
claim for such benefit by filing with the Corporation a written statement
setting forth the amount and type of payment so claimed. The statement shall
also set forth the facts supporting the claim. The claim may be filed by mailing
or delivering it to the Secretary of the Corporation. Within thirty (30)
calendar days after receipt of such a claim, the Corporation shall notify
Employee in writing of its action on such claim and if such claim is not allowed
in full, shall state the following in a manner calculated to be understood by
Employee:
(a) The specific reason or reasons for the denial;
(b) Specific reference to pertinent provisions of this Agreement on
which the denial is based;
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(c) A description of any additional material or information necessary
for Employee to be entitled to the benefits that have been denied and
an explanation of why such material or information is necessary; and
(d) An explanation of this Agreement's claim review procedure.
If Employee disagrees with the action taken by the Corporation,
Employee or Employee's duly authorized representative may apply to the
Corporation for a review of such action. Such application shall be made within
sixty (60) calendar days after receipt by Employee of the notice of the
Corporation's action on Employee's claim. The application for review shall be
filed in the same manner as the claim for benefits. In connection with such
review, Employee may inspect any documents or records pertinent to the matter
and may submit issues and comments in writing to the Corporation. A decision by
the Corporation shall be communicated to Employee within thirty (30) calendar
days after receipt of the application. The decision on review shall be in
writing and shall include specific reasons for the decision, written in a manner
calculated to be understood by Employee, and specific references to the
pertinent provisions of this Agreement on which the decision is based.
ARTICLE III
GENERAL PROVISIONS
III.1.1 No Duty of Mitigation. The Corporation acknowledges that it would be
very difficult and generally impracticable to determine Employee's ability to,
or the extent to which Employee may, mitigate any damages or injuries Employee
may incur by reason of an involuntary termination without Just Cause or Change
of Control. The Corporation has taken this into account in entering into this
Agreement and, accordingly, the Corporation acknowledges and agrees that
Employee shall have no duty to mitigate any such damages and that Employee shall
be entitled to receive Employee's entire Severance Payment (as above determined)
and/or compensation regardless of the existence, amount, or source of any income
which Employee receive from other sources following Employee's termination after
any Change of Control or involuntary termination without Just Cause.
III.1.2 Payment in the Event of Death. If Employee should die before all amounts
payable under this Agreement have been paid, such unpaid amounts shall be paid
to Employee's designated beneficiary under this Agreement or, if Employee have
not designated a beneficiary in writing to the Corporation, to the personal
representative(s) of Employee's estate. For purposes of this Section III.1.2,
Employee may designate an inter vivos revocable living grantor trust as
Employee's beneficiary.
III.1.3 Applicable Law. To the extent not preempted by the laws of the United
States and in the interest of interpreting this Agreement in a uniform manner
with other similar agreements being entered into by the Corporation with other
of its and its Subsidiaries' employees regardless of the jurisdiction in which
Employee is employed or any other factor, the laws of the State of Kansas shall
be the controlling law in all matters relating to this Agreement, regardless of
the choice-of-law rules of the State of Kansas or any other jurisdiction.
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III.1.4 Construction. No term or provision of this Agreement shall be construed
so as to require the commission of any act contrary to law, and wherever there
is any conflict between any provision of this Agreement and any present or
future statute, law, ordinance, or regulation contrary to which the parties have
no legal right to contract, the latter shall prevail, but in such event the
affected provision of this Agreement shall be curtailed and limited only to the
extent necessary to bring such provision within the requirements of the law.
III.1.5 Severability. If a provision of this Agreement shall be held illegal or
invalid, the illegality or invalidity shall not affect the remaining parts of
this Agreement and this Agreement shall be construed and enforced as if the
illegal or invalid provision had not been included.
III.1.6 Headings. The Article and Section headings in this Agreement are
inserted only as a matter of convenience, and in no way define, limit, or extend
or interpret the scope of this Agreement or of any particular Section.
III.1.7 Assignability. Neither this Agreement nor any right or interest therein
shall be assignable or transferrable (whether by pledge, grant of a security
interest, or otherwise) by Employee, Employee's beneficiaries or legal
representatives, except by will, by the laws of descent and distribution or
inter vivos revocable living grantor trust as Employee's beneficiaries. This
Agreement shall be binding upon and shall inure to the benefit of the
Corporation, its successors and assigns, and Employee and shall be enforceable
by them and Employee's legal personal representatives.
III.1.8 Entire Agreement. This Agreement constitutes the entire agreement
between the Corporation and Employee regarding the subject matter hereof and
supersedes all prior agreements, if any, understandings and arrangements,
written or oral, between the Corporation and Employee with respect to the
subject matter hereof.
III.1.9 Amendment. Except as set forth in Section 2.7, no provision of this
Agreement may be modified, waived or discharged unless such waiver, modification
or discharge is agreed to in writing and signed by Employee and the Corporation.
No waiver by the Corporation or Employee at any time or any breach by the other
party of, or compliance with, any condition or provision of this Agreement to be
performed by such other party shall be deemed a waiver of similar or dissimilar
provisions or conditions at the same or any prior or subsequent time. No
agreement or representations, written or oral, express or implied, with respect
to the subject matter hereof, have been made by either party which are not
expressly set forth in this Agreement.
III.1.10 Notices. For purposes of this Agreement, notices and all other
communications provided for herein shall be in writing and shall be deemed to
have been duly given when personally delivered or sent by certified mail, return
receipt requested, postage prepaid, addressed to the respective addresses last
given by each party to the other, provided that all notices to the Corporation
shall be directed to the attention of the Board of Directors. All notices and
communications shall be deemed to have been received on the date of delivery
thereof or on the third business day after the mailing thereof, except that
notice of change of address shall be
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effective only upon actual receipt. No objection to the method of delivery may
be made if the written notice or other communication is actually received.
IN WITNESS WHEREOF, the Corporation has caused this Agreement to be
executed and its seal affixed hereto by its officers thereunto duly authorized;
and Employee has executed this Agreement, as of the day and year first above
written.
TOTAL ENTERTAINMENT RESTAURANT CORP.
ATTEST:
/s/ XXXX X. XXXX By /s/ XXXXX X. XXXXXX
------------------------------ -----------------------------------------
Xxxx X. Xxxx, President Xxxxx X. Xxxxxx, Chief Financial Officer
"Corporation"
/s/ XXXXXX X. XXXXXXX
-------------------------------------------
Xxxxxx X. Xxxxxxx
"Employee"
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