1
EXHIBIT 10.3
EMPLOYMENT AGREEMENT
This Agreement is entered into effective as of this ____ day of
____________ , 1997, by and between Total Entertainment Restaurant Corp., a
Delaware corporation (the "Corporation"), and Xxxxx X. Xxxxxx ("Employee").
RECITALS
WHEREAS, Employee is currently serving as Chief Financial 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;
WHEREAS, 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, 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.
NOW THEREFORE, it is agreed as follows:
ARTICLE I
1.1 Term of Employment. The Corporation shall initially employ
Employee for a period of five years from the date hereof (the "Initial Term").
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 90 days prior to the annual anniversary date
thereof.
ARTICLE II
Duties of Employee
General Duties. Employee shall serve as Chief Financial Officer of the
Corporation. He shall do and perform all services, acts, or things necessary or
advisable to manage and conduct
2
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 Article 8.
ARTICLE III
Compensation
3.1 Salary. For Employee's services to the Corporation as Chief
Financial Officer, from ____________, 1997 until the termination of this
Agreement, Employee shall be paid a salary at the annual rate of $125,000
(herein referred to as "Salary") payable in twenty-four equal installments on
the first and fifteenth day of each month. On the first day of each calendar
year 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.
3.2 Stock Options. The Corporation shall grant to Employee options (the
"Options") to purchase 50,000 shares of common stock, $0.01 par value per share
(the "Common Stock"), pursuant to the Corporation's 1997 Incentive and
Nonqualified Stock Option Plan (the "Plan"), subject to stockholder approval of
the Plan. The grant date of the Options shall be the effective date of the
Corporation's initial public offering of its Common Stock (the "Grant Date").
Twenty percent (20%) of the Options shall vest per year, for the first five
years on the first five anniversaries of the Grant Date. The Options shall
expire on the tenth anniversary of the Grant Date. The exercise price of the
Options shall be the initial public offering price of the Corporation's Common
Stock.
3.3 Bonus. In addition to participation in the 1997 Incentive and
Nonqualified Stock Option Plan of the Corporation, Employee is eligible to
participate in all bonus compensation plans, if any, which may be offered from
time to time.
ARTICLE IV
Employee Benefits
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.
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
-2-
3
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.
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.
4.4 Disability. Upon Disability (as defined herein) of Employee, Employee
shall be entitled to receive an amount equal to 50% of his salary (in addition
to any disability insurance benefits received pursuant to Section 4.2 herein),
such amount being paid semi-monthly in twelve equal installments.
ARTICLE V
Termination
5.1 Death. Employee's employment hereunder shall be terminated upon
Employee's death.
5.2 Disability. The Corporation may terminate Employee's employment
hereunder in the event Employee is disabled and such disability continues for
more than 180 days. "Disability" shall be defined as the inability of Employee
to render the services required of him under this Agreement as a result of
physical or mental incapacity.
5.3 Cause.
(a) The Corporation may terminate Employee's employment hereunder for
Cause. For the purposes of this Agreement, "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 paragraph, 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 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.
5.4 Compensation Upon Termination for Cause or Upon Resignation by
Employee. Except as otherwise set forth in Section 5.6 hereof, if Employee's
employment shall be terminated for Cause or if Employee shall resign his
position with the Corporation, the Corporation shall pay Employee's compensation
only through the last day of Employee's
-3-
4
employment by the Corporation. The Corporation shall then have no further
obligation to Employee under this Agreement.
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 1.2 herein, that this Agreement will
not be renewed:
Employee shall be paid, over the ensuing six (6) month period, a sum
equal to the cash compensation paid to him excluding all bonuses of any
kind by the Corporation for the six (6) month period immediately
preceding such termination or non-renewal. Such six (6) 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.
ARTICLE VI
No Obligation to Mitigate Damages; No Effect
on Other Contractual Rights
6.1 No Mitigation. Employee shall not be required to mitigate
damages or the amount of any payment provided for under this Agreement by
seeking other employment or otherwise, nor shall the amount of any payment
provided for under this Agreement be reduced by any compensation earned by
Employee as the result of employment by another employer after Employee's
termination or resignation.
6.2. 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.
ARTICLE VII
Successors to the Corporation
7.1 Employee's Successors and Assigns. This Agreement shall inure
to the benefit of and be enforceable by Employee's personal and legal
representatives, executors, administrators, successors, heirs, distributees,
devisees and legatees. If Employee should die while any amounts are still
payable to him hereunder, all such amounts, unless otherwise provided herein,
shall be
-4-
5
paid in accordance with the terms of this Agreement to Employee's devisee,
legatee or other designee or, if there be no such designee, to Employee's
estate.
ARTICLE VIII
Restrictions on Employee
------------------------
8.1 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.
8.2 Non-Competition. During the Initial Term or any additional
term and for twenty-four (24) months thereafter, regardless of any termination
pursuant to Section 6 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 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, enteractive or passive video games of multiple
television sets.
ARTICLE IX
Miscellaneous
-------------
9.1 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.
9.2 Notices. Any notices required or permitted to be given under
this Agreement shall be sufficient if in writing and sent by mail to his
residence, in the case of Employee, or to its principal office, in the case of
the Corporation.
-5-
6
9.3 Waiver of Breach. The waiver by any party hereto of a breach of
any provision of this Agreement shall not operate or be construed as a waiver
of any subsequent breach by any party.
9.4 Amendment. No amendment or modification of this Agreement shall
be deemed effective unless or until executed in writing by the parties hereto.
9.5 Validity. This Agreement, having been executed and delivered in
the State of Texas, its validity, interpretation, performance and enforcement
will be governed by the laws of that state, without giving effect to conflict
of laws rules of such state.
9.6 Section Headings. Section and other headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.
9.7 Counterpart Execution. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute but one and the same instrument.
9.8 Legal Fees. Except in the event of termination for Cause, and
only in the event a change of control of the Corporation has occurred, the
Corporation shall pay all legal fees and expenses which Employee may incur as a
result of the Corporation's contesting the validity, enforceability or
Employee's interpretation of, or determination under, this Agreement.
9.9 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.
9.10 Partial Invalidity. If any provision in this Agreement is held
by a court of competent jurisdiction to be invalid, void, or unenforceable, the
remaining provisions shall nevertheless continue in full force without being
impaired or invalidated in any way.
-6-
7
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.
"CORPORATION" TOTAL ENTERTAINMENT RESTAURANT
CORP.
By _______________________________________
Xxxxx X. Xxxxxxx, Chairman of the Board
ATTEST:
__________________________________
Xxxx X. Xxxx, President
"EMPLOYEE" __________________________________________
Xxxxx X. Xxxxxx
