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 Xxxxxx X. Xxxxxxx ("Employee").
W I T N E S S E T H:
A. Employer desires to continue the services of Employee as its Executive
Vice President - Chief Investment 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 Executive Vice President - Chief Investment 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 Chairman or Board.
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$282,000 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 $250,000 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 two times his then annual Base Salary, (ii)
an amount equal to 75% of 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 30 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).
2
(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 Chief
Investment 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).
(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 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
3
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 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
4
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 Xxxxxx County, Texas, for the enforcement of this covenant.
8. Miscellaneous.
(a) Definitions. The following terms have the indicated meanings.
(i) Base Salary - defined in Section 4(a).
(ii) Cause -
5
(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 Chief Investment 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.
(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.
6
(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.
(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.
7
(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 Xxxxxx 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 Xxxxxx 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.
(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.
8
(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]
9
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
RAINTREE RESORTS INTERNATIONAL, INC.
By: /s/ Xxxxxxx X. Xxxx
-----------------------------------
Xxxxxxx X. Xxxx
Chairman
Xxxxxx X. Xxxxxxx
By: /s/ Xxxxxx X. Xxxxxxx
----------------------------------
Name: Xxxxxx X. Xxxxxxx,
Personally
Schedule A
1. Three weeks annual vacation which shall not accrue from year to year.
2. Reasonable use of office supplies, computers, copying and fax machines,
telephones and secretarial services.
3. Medical insurance fully paid for Employee and Employee's family pursuant to
the Employer's plan and $2,400 per year towards Employer's plan deductible
and health/medical expenses not covered by the Plan.
4. Payment of dues of $2,400 per month for automobile expenses, club dues and
usage and other discretionary expenses of Employee's choice.
