EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT (this "Agreement"), dated as of November 1, 2001, is
by and between Raintree Resorts International, Inc., a Nevada corporation
("Employer"), and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇ ("Employee").
W I T N E S S E T H:
A. Employer desires to continue the services of Employee as its Chairman
and Chief Executive Officer and continues and extends the Employment
Agreement dated as of January 1, 1999 between Employer and Employee.
B. Employer considers the employment of Employee pursuant to the terms of
this Agreement to be in the best interests of Employer and its equity
holders to facilitate continuity of experienced management and wishes
to assure that Employee serves Employer on an objective and impartial
basis and without distraction or conflict of interest upon the
potential termination of Employee's employment under certain
circumstances.
C. Employee is willing, on the terms and subject to the conditions
provided in this Agreement, to undertake the responsibilities
contemplated herein, furnish services to Employer as provided herein
and be subject to certain employment restrictions and obligations.
D. Undefined capitalized terms are defined in Section 8(a).
NOW THEREFORE, in consideration of the premises, the covenants,
representations and warranties herein contained and other good, valuable and
binding consideration, the receipt and sufficiency of which are hereby
acknowledged by the parties hereto, the parties hereby agree:
1. Employment Term. This Agreement shall commence as of November 1, 2001
(the "Commencement Date") and shall remain in effect from the Commencement Date
through December 31, 2004 (the "Employment Term"). Beginning on January 1, 2005,
and upon each anniversary, this agreement will be automatically renewed and the
Employment Term shall be extended for successive one year periods unless
terminated by either the Employee or Employer by giving written notice of
termination not less than 120 days in advance of the renewal date; provided that
there shall be no such renewal after the year in which Employee turns 63.
2. Responsibilities and Authority. Employer hereby employs Employee to
serve as Chairman and Chief Executive Officer of Employer. During the Employment
Term, Employee will have the responsibility and authority to administer and
coordinate the activities of Employer and its subsidiaries in accordance with
the policy guidelines as established by Employer's Board. Employer shall
maintain its principal executive offices in Houston, Texas at a location
satisfactory to Employee and Employee shall not be required to conduct his
duties and responsibilities from any location other than the principal executive
offices in Houston, Texas.
3. Acceptance of Employment. Employee accepts employment by Employer on the
terms and conditions herein provided and agrees, subject to the terms of this
Agreement, to devote all of his full business time to advance the business of
Employer.
4. Compensation and Benefits. As compensation for his services hereunder,
Employee will be entitled to the following amounts.
(a) Base Salary. Employee's current base cash salary of aggregate rate
of US$326,500 per annum shall continue through the year 2002, (the "Base
Salary"). The Base Salary as in effect from time to time will be paid in
accordance with its Company's customary payroll practices. The Base Salary
shall not be reduced below US $310,000 per annum.
(b) Bonus. Employee will be entitled to participate in any bonus
program established by the Employer's Board, the amount and determination
of which as applicable to Employee shall be fully discretionary by the
Compensation Committee of Employer's Board.
(c) Benefits. Employee will be entitled to receive the benefits (the
"Benefits") listed on Schedule A.
(d) Acceleration of Payments.
(i) Occurrence of Triggering Event. Upon the occurrence of a
Triggering Event, Employee shall receive from Employer (i) a lump sum
payment equal to three times his then annual Base Salary, and (ii) an
amount equal to one times his then Base Salary in lieu of any Bonuses,
whether or not earned or to be earned at the time of a Triggering
Event, (iii) all stock options granted to Employee, which shall
automatically be vested at an exercise price equal to the lowest
exercise or purchase price of any then outstanding stock options or
warrants to purchase Common Stock issued by Employer, (iv) an amount
equal to three times the dollar value of all Benefits to be received
by Employee on annual basis, and (v) any other sums due him. Upon the
occurrence of a change of Control, Employer shall provide Employee
with continued access to his offices and reasonable use of the office
and items specified in Exhibit A for a 90 day period.
(ii) Time of Payment. All accelerated payments of Base Salary,
Bonuses and Benefits to Employee pursuant to this Section 4(d) shall
be paid by Employer as promptly as possible but in any event prior to
or on the effective date of any termination without cause within 30
days after Employee provides notice of a Triggering Event.
(iii) Reimbursement of Expenses. Employee will be promptly
reimbursed for Reimbursable Expenses.
(e) Consideration. Employee's covenants contained in Sections 6 and 7
are in return for the consideration Employee is to receive under Section
4(d).
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(f) Employer will provide all compensation and benefits listed above.
5. Termination. This Agreement may be terminated upon the following term:
(a) Termination Upon Death. This Agreement will terminate upon the
first day of the month following Employee's date of death during the
Employment Term and, other than Benefits and Reimbursable Expenses, no
further amounts will be due hereunder.
(b) Termination Upon Total Disability. Employer may terminate this
Agreement because of Total Disability upon at least 120 days' notice to
Employee; provided that (i) Employer will pay Employee his Base Salary for
one year from such notice, and (ii) Employer shall pay all other Benefits
and Reimbursable Expenses owed Employee and continue such Benefits for an
additional one year period.
(c) Termination by Employer Without Cause. Termination without Cause
shall be deemed to be a Change of Control constituting a Triggering Event
as defined in Section 8. If terminated without Cause or if Employer's Board
terminates Employee's services as Chairman and Chief Executive Officer or
otherwise substantially reduced or curtails his responsibilities, power and
authority to act in such capacity ("Deemed Termination Without Cause"),
Employee shall be entitled to receive the payments specified in Section
4(d)(i). Employee shall also be entitled to receive, at the then
depreciated value thereof, the office computer equipment he is then using
and the Bear Sculpture he acquired in Whistler, B.C. in 1998 for the
reception room. Employer shall also continue to provide fully paid medical
and dental insurance pursuant to Employer's Plan or the Plan of Employer's
successor in interest for a period of five years.
(d) Termination by Employer With Cause. Employer shall be entitled to
terminate Employee's employment at any time for Cause. Upon such
termination for Cause, all of Employee's rights and benefits provided for
in this Agreement shall terminate immediately, except as to any accrued and
unpaid Base Salary prorated through the date of termination and any
Benefits or amounts owed for Reimbursable Expenses incurred by Employee
prior to such termination. Employee will not be deemed to have been
terminated for Cause until there has been delivered to him a termination
notice by Employer's Board.
6. Confidentiality and Solicitation.
(a) Confidentiality.
(i) Confidentiality of Information. Employee recognizes and
acknowledges that he will have access to the Trade Secrets, access to
and knowledge of which are essential to the performance of Employee's
duties hereunder. Employee will not, during the term of his employment
by Employer or thereafter, either (A) disclose such Trade Secrets to
any Person for any reason or purpose whatsoever, except on behalf of
Employer for its business purposes during the term of this Agreement,
or (B) make use of any Trade
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Secrets for his own purposes or for the benefit of any Person, except
to the extent authorized by an agreement between Employer and any such
Person.
(ii) Return of Confidential Information. All samples and copies
of Trade Secrets prepared or obtained by Employee during his
employment shall at all times be the property of Employer and Employee
shall deliver the same to Employer at any time upon Employer's
request, and in any event shall deliver the same to Employer upon the
termination of his employment whether or not he has been requested to
do so.
(b) Solicitation. During the Employment Term and one year thereafter
if and only if Employee were Terminated with Cause, Employee will not, and
will cause his affiliates to not, directly or indirectly, (i) solicit for
employment by any Person, its affiliates or anyone else, any employee or
then currently active independent contractor of Employer or its affiliates,
or any person who was an employee or then currently active independent
contractor of Employer or its affiliates, within the six-month period
immediately preceding such solicitation of employment, other than such
person (a) whose employment or independent contractor relationship was
terminated by Employer or its affiliate, or (b) who independently responded
to a general solicitation for employment by Employee or his affiliates; or
(ii) induce or attempt to induce, any employee or independent contractor of
Employer or its affiliates, to terminate such employee's employment or
independent contractor's active contractual relationship.
(c) Specific Performance. If there is a breach or threatened breach of
the provisions of this Section 6, Employer shall be entitled to an
injunction restraining Employee from such breach, without bond or other
security. Nothing herein shall be construed as prohibiting Employer from
pursuing any other remedies for such breach or threatened breach.
7. Covenant Not to Compete.
(a) Non-Competition Covenant. In return for the consideration
described in Section 4, Employee agrees that he shall not for a period of
one year from the termination of his employment with Employer if and only
if Employee were terminated with Cause, (the "Non-Competition Term") in any
manner whatsoever, either directly or indirectly, with any Person in each
case, within the Geographic Area:
(i) provide or offer to provide to any Person any services,
information or other assistance relating to the business of Employer
or of any of its affiliates (as of the date of termination of
Employee's employment) or with respect to any customer, client or
prospective customer or client, of Employer or of any of its
affiliates in each case, within the Geographic Area;
(ii) own, operate, engage in, participate in, or contribute to,
alone or as a partner, joint venture, officer, director, member,
employee, consultant, agent, independent contractor or stockholder of,
or lender to, or in any other capacity, in each case, any real estate,
timeshare product, service or product, or other which is the same as,
similar to, or competes with Employer or its
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affiliate's services or products or which compete with Employer or its
affiliate's business;
(iii) (A) call on any Acquisition Candidate with the knowledge of
such Acquisition Candidate's status as such, for the purpose of
acquiring, or arranging the acquisition of, that Acquisition Candidate
by any Person other than Employer or its affiliates, (B) induce any
Person which is a customer of Employer or its affiliates to patronize
any business directly or indirectly in competition with the business
conducted by Employer or its affiliates; (C) canvass, solicit or
accept from any Person which is a customer of Employer or its
affiliates, any such competitive business; or (D) request or advise
any Person which is a customer of Employer or its affiliates, or its
or their successors; "Acquisition Candidate" means (I) any Person
engaged in the Timeshare Business, or the purchase or development of
real estate with the purpose of engaging in the Timeshare Business or
(II) any project with respect to the Timeshare Business, and in either
case (i) which was called on by Employer or its affiliates, in
connection with the possible acquisition by Employer or its affiliates
of that Person or project, or (ii) with respect which Employer or its
affiliates has made an acquisition analysis.
(b) Employee agrees and understands that Employer's business is highly
competitive and that Employer has invested considerable sums of money in
developing real estate and timeshare properties and services, training
programs, sales programs, pricing and marketing formulas and programs, and
account records for the proper servicing of its clients and potential
clients.
(c) Employee further agrees and understands that this covenant is
necessary for the protection of Employer due to its legitimate interest in
protecting its business goodwill and Trade Secrets. Employee further agrees
and understands that, because of the legitimate interest of Employer in
protecting its business goodwill and Trade Secrets as well as the extensive
confidential information and special knowledge received by Employee from
Employer, the restrictions enumerated in Section 7(a) are not oppressive
and are, in fact, reasonable. Employee also agrees and understands that,
due to the necessity of this covenant and the adequate consideration
supporting it, this covenant does not prevent competition, and in fact, it
encourages Employer to entrust Employee with Trade Secrets.
(d) If a court of competent jurisdiction determines that the scope of
any provision of this Section 7 is too broad to be enforced as written, the
parties intended that the court reform the provision to such narrower scope
as it determines to be reasonable and enforceable.
(e) Employee agrees that if he breaches this covenant he will submit
to the rendition of a temporary restraining order, without prior notice,
and thereafter to a temporary and permanent injunction. Further, Employee
agrees to the jurisdiction of an appropriate court in ▇▇▇▇▇▇ County, Texas,
for the enforcement of this covenant.
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8. Miscellaneous.
(a) Definitions. The following terms have the indicated meanings.
(i) Base Salary - defined in Section 4(a).
(ii) Cause -
(A) the failure of Employee to substantially perform his
covenants and duties described herein (other than any such
failure resulting from Total Disability); provided that Employee
has been notified in writing of such failure and in which notice
the specific details of such failures are provided to Employee
with reasonable and adequate time to remedy the failures as
specified; provided that in the event the parties cannot agree to
a reasonable time period, the period shall be 90 days;
(B) the engaging by Employee in willful, reckless or grossly
negligent misconduct which is materially injurious to Employer or
any of its affiliates, monetarily or otherwise;
(C) the misappropriation of Employer funds;
(D) Employee's commission of an act of dishonesty, affecting
Employer or its affiliates, or the commission of an act
constituting common law fraud or a felony; or
(E) A determination of "Cause" shall require Employee's
Board of Directors to make such a determination at a Regular
Meeting or Special Meeting held for such purpose by a vote of
two-thirds of the disinterested Directors.
(iii) Change of Control - is deemed to have occurred (A) if any
"person" as such term is used in Sections 13(d) and 14(d) of the
Securities Exchange Act of 1934, as then in effect, is or becomes the
"beneficial owner" as defined in Rule 13d-3 under such Act, directly
or indirectly, of securities of Employer representing 50% or more of
the combined voting power of Employer's then outstanding equity
securities, (B) if any Change of Control as defined in the Option
Agreement dated as of December 1, 1998 between the Company and
Employee occurs, or (C) the date on which Employer's Board terminates
Employee's services as Chairman and Chief Executive Officer or
otherwise substantially reduces or curtails his responsibilities,
power and authority to act in such capacity ("Deemed Termination
Without Cause").
(iv) Geographic Area - the geographic market areas (and the
specific countries and states located therein) of Employer or its
affiliates in which Employer is conducting business at the time of the
expiration of Employee's employment with Employer or its affiliates,
specifically including, without limitation, the United Mexican States.
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(v) Person - a natural person, firm, corporation, association,
partnership (general or limited), limited liability corporation,
syndicate, governmental body, or any other entity.
(vi) Reimbursable Expenses - all properly documented, reasonable
and necessary expenses incurred by Employee on behalf of and in
connection with the business of Employer.
(vii) Termination Notice - notice under Sections 1(a) or 1(b).
(viii) Total Disability - illness or other physical or mental
disability of Employee which shall continue for a period of at least
60 consecutive days or four months in the aggregate during any
12-month period during the Employment Term, which such illness or
disability shall make it impossible or impracticable for Employee to
perform any of his duties and responsibilities hereunder.
(ix) Timeshare Business - the business of purchasing, developing,
marketing, selling and financing timeshare vacation intervals.
(x) Trade Secrets - Employer and its affiliates' proprietary or
confidential information, including but not limited to the following:
trade secret information, ideas, concepts, software, designs,
drawings, techniques, models, data, documentation, research,
development, processes, procedures, business acquisition or
disposition plans, "know how," marketing techniques and materials,
marketing and development plans, customer names and other information
related to customers, price lists, pricing policies, details of
customer, distributor, agency or consultant contracts, financial
information and any other information relating to the business,
customers, trade, trade secrets or industrial practices of Employer;
provided that, "Trade Secrets" shall not include information that: (A)
at the time of disclosure is in the public domain; or (B) after
disclosure is published or otherwise becomes a part of the public
domain through no act or omission of Employee or his affiliates (but
only after, and only to the extent that, such information is published
or otherwise becomes part of the public domain).
(xi) Triggering Event. - Following a Change of Control, (A) if
Employee terminates employment with Employer within nine (9) months
after such Change of Control; (B) the actual termination of this
Agreement by Employer without Cause; or (C) except as expressly
provided herein, Employer's refusal to renew this Agreement for any
one-year term for any reason, in each case, other than:
(1) Employee's voluntary termination other than under
proviso (A) above;
(2) Termination of employment for Cause; or
(3) Termination of employment upon the death or Total
Disability.
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(b) Severability. To the extent that any provision of this Agreement
may be deemed or determined to be unenforceable for any reason, such
unenforceability shall not impair or affect any other provision, and this
Agreement shall be interpreted so as to most fully give effect to its terms
and still be enforceable.
(c) Scope of Agreement. This Agreement constitutes the whole of the
agreement between the parties on the subject matter, superseding all prior
oral and written conversations, negotiations, understandings, and
agreements in effect as of the date of this Agreement.
(d) Notices. Any notice or request to be given hereunder to either
party hereto shall be deemed effective only if in writing and either (i)
delivered personally to Employee (in the case of a notice to Employee) or
to the Board of Employer, or (ii) sent by certified or registered mail,
postage prepaid, to the addresses set forth on the signature page hereof or
to such other address as either party may hereafter specify to the other by
notice similarly served.
(e) Assignment. This Agreement and the rights and obligations of the
parties hereto shall bind and inure to the benefit of each of the parties
hereto, and shall also bind and inure to the benefit of Employee's heirs
and legal representatives and any successor or successors of Employer by
merger or consolidation and any assignee of all or substantially all of
Employer's business and properties; except as to any such successor or
assignee of Employer, neither this Agreement nor any duties, rights or
benefits hereunder may be assigned by Employer or by Employee without the
express written consent of Employee or Employer, as the case may be.
(f) Governing Law, Construction and Submission to Jurisdiction. This
Agreement shall be construed and enforced in accordance with the laws of
the State of Texas without reference to its choice-of-law principles. Each
party hereto has had adequate opportunity to be represented by qualified
counsel and, accordingly, this Agreement shall not be interpreted against
either party. If any action is brought to enforce or interpret this
Agreement, venue for such action will be in ▇▇▇▇▇▇ County, Texas. In the
event that Employee shall not be paid by Employer any payments required
hereunder as a result of a Change of Control, Employee shall be entitled to
bring an action for such purpose in ▇▇▇▇▇▇ County, Texas and if it is
proven that he is entitled to such payments he shall be entitled to
reasonable attorney's fees and expenses as well as additional damages equal
to his Base Salary for the period in which the action is pending and
unresolved.
(g) Modification. No amendment, modification or waiver of any
provision hereof shall be made unless it is in writing and signed by both
of the parties hereto.
(h) Termination of Prior Agreements. When this Agreement becomes
effective it shall supersede all prior arrangements or understandings
concerning Employee's employment by Employer or Employer.
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(i) Headings. The headings in this Agreement are solely for
convenience of reference and shall not affect its interpretation.
(j) No Waiver. No failure on the part of any party hereto at any time
to require the performance by any other party of any term of this Agreement
shall be taken or held to be a waiver of such term or in any way affect
such party's right to enforce such term, and no waiver on the part of
either party of any term of this Agreement shall be taken or held to be a
waiver of any other term hereof or the breach thereof.
(k) Counterparts. This Agreement may be executed in separate
counterparts, each of which when so executed shall be an original but all
of such counterparts shall together constitute but one and the same
instrument.
[NEXT PAGE IS SIGNATURE PAGE]
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
RAINTREE RESORTS INTERNATIONAL, INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Executive Vice President
and By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Senior Vice President,
Chief Financial Officer
▇▇▇▇▇▇▇ ▇. ▇▇▇▇
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
-----------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇, Personally
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Schedule A
1. Four weeks annual vacation which shall not accrue from year to year.
2. Life insurance in the amount of $500,000.
3. Disability insurance for Employee pursuant to Employer's plan.
4. Medical and dental insurance and expenses fully paid for Employee and
Employee's family.
5. Reasonable use of office supplies, computers, copying and fax
machines, telephones and secretarial services.
6. All reasonable continuing education and other requirements to maintain
license to practice law in Texas and New York shall be paid. In
addition, Employer will pay the annual membership bar and section dues
and fees in the Texas, New York and American Bar Associations.
7. Payment of expenses of up to $2,400 per month for (i) automobile
expenses, including insurance, (ii) club dues and usage, (iii) tax
preparation services and (iv) other discretionary expenses.