EMPLOYMENT AGREEMENT WITH SILVERLEAF RESORTS, INC.
Ex.
10.3
WITH
SILVERLEAF RESORTS, INC.
THIS
EMPLOYMENT AGREEMENT (the "Agreement") is made between SILVERLEAF RESORTS,
INC.,
a Texas corporation ("Silverleaf"), and XXX X. XXXXXX (the
"Employee").
R
E
C
I
T A
L
S:
| A. |
Employee
is a key executive officer and employee of Silverleaf;
and
|
|
B.
|
Silverleaf
and Employee desire to continue the employment of Employee and to
agree on
the terms of Employee's continued
employment.
|
NOW,
THEREFORE, in consideration of the premises and terms hereinafter set forth,
the
parties agree as follows:
A
G R
E
E M
E
N
T:
Section
1. Employment.
Employee's employment with Silverleaf as Chief Operating Officer is hereby
continued, effective as of the Effective Date and for an initial period of
three
(3) years from the Effective Date (the "Term"), unless sooner terminated
pursuant to the termination provisions of this Agreement. Employee may not
engage in other employment while he or she is in the employ of Silverleaf
pursuant to this Agreement.
Section
2. Duties.
Employee
agrees to devote such time, attention and energies as are necessary to fulfill
his or her duties as reasonably specified by the Board of Directors of
Silverleaf from time to time for an employee of Employee’s position. Employee
further agrees that he or she will promote the best interests and welfare of
Silverleaf and shall perform any and all duties to the best of his or her
abilities. The Employee shall:
(a) Non-Competition:
Not
render to others, during his or her employment with Silverleaf, service of
any
kind for compensation or promote, participate or engage in any other business
activity which would conflict or interfere with the performance of his or her
duties or loyalty under this Agreement, including, but not limited to,
participating in the promotion or sale of products or services for a competitor
of Silverleaf or otherwise engage in business with such competitor;
(b) Regulatory
Laws:
Abide by
all applicable statutes, rules and regulations of each State in which services
may be rendered; and
(c) Silverleaf
Rules:
Abide by
all rules, regulations and policies issued by Silverleaf, which are pertinent
to
Employee's duties and obligations.
Section
3. Compensation.
As
compensation for the services rendered pursuant to this Agreement:
(a) Base
Compensation:
Silverleaf shall pay Employee base compensation computed at the annual rate
of
Three Hundred, Twenty-Five Thousand and No/100 Dollars ($325,000.00) payable
in
semi-monthly payments on the 15th day and the last day of each
month.
(b) Incentive
Compensation:
Employee
shall be entitled to participate in any bonus, incentive, stock option or other
compensation plans of Silverleaf only to the extent the Board of Directors
of
Silverleaf may deem appropriate from time to time.
(c) Fringe
Benefits:
Silverleaf shall provide Employee health and life insurance under its group
plans as they may exist from time to time. The cost of any coverage of any
of
the Employee's family members under Silverleaf's group plans shall be paid
by
the Employee. The Employee shall also be entitled to such vacation time, sick
leave and other fringe benefits as may be specified by the Board of Directors
of
Silverleaf from time to time for its executive personnel
Section
4. Termination
Payments.
If
Employee’s employment with Silverleaf is terminated prior to a Change of
Control, the payment to Employee of all compensation earned to the date of
termination (the “Earned Compensation”) shall be in full satisfaction of all of
Employee’s claims against Silverleaf under this Agreement and Employee shall be
entitled to no other termination pay. If Employee’s employment is terminated
after a Change of Control and during the Term or any extended Term of this
Agreement, then the following provisions shall apply:
(a) Good
Cause or Voluntary Termination:
If
Silverleaf terminates Employee’s employment for Good Cause, or if Employee
voluntarily terminates Employee’s employment other than for Good Reason, then
Employee shall be entitled to the Earned Compensation only.
(b) No
Good Cause or Good Reason:
If
Silverleaf terminates Employee’s employment other than for Good Cause, or if
Employee terminates Employee’s employment for Good Reason, then Employee shall
be entitled to the Earned Compensation and to Severance Pay. For this purpose,
Severance Pay means an amount of compensation equal to two (2) times the sum
of
the total cash compensation received by the Employee for the immediately
preceding calendar year, including but not limited to any base compensation,
commissions, bonuses, and similar cash items, but exclusive of any fringe
benefits, vehicle usage and similar non-cash items. The Severance Pay shall
be
payable in a lump sum within thirty (30) days after the termination of
employment. As a condition precedent to the payment of the Severance Pay,
Employee agrees to execute and deliver to Silverleaf a general release of
Silverleaf and its affiliates from any and all other claims that Employee might
have against Silverleaf and its affiliates, the form of which will be provided
by Silverleaf.
2
(c) Death
or Incapacity:
If
Employee’s employment is terminated because of Employee’s death, or Employee’s
incapacity and inability to perform Employee’s duties hereunder due to
Employee’s physical or mental illness, then Employee shall be entitled to the
Earned Compensation only.
Section
5. Termination
Payment Definitions.
For
purposes of Section 4, the following definitions shall apply:
(a) Change
of Control:“Change
of Control” shall mean the occurrence of any of the following events after the
Effective Date:
[1] Individuals
who, on the Effective Date, constitute the Board of Directors (the “Board”) of
Silverleaf (the “Incumbent Directors”) cease for any reason to constitute at
least a majority of the Board, provided that any person becoming a director
subsequent to such date, whose election or nomination for election was approved
by a vote of at least two-thirds of the Incumbent Directors then on the Board
(either by a specific vote or by approval of the proxy statement of Silverleaf
in which such person is named as a nominee for director, without written
objection to such nomination) shall be an Incumbent Director; provided, however,
that no individual initially elected or nominated as a director of Silverleaf
as
a result of an actual or threatened election contest with respect to directors
or as a result of any other actual or threatened solicitation of proxies or
consents by or on behalf of any person other than the Board shall be deemed
to
be an Incumbent Director;
[2] The
consummation of any sale, transfer or other disposition of all or substantially
all of the assets of the business of Silverleaf through one transaction or
a
series of related transactions to one or more persons or entities;
[3] Any
“Person” (as such term is defined in Section 3(a)(9) of the Securities Exchange
Act of 1934 (the “Exchange Act”) and as used in Sections 13(d)(3) and 14 (d)(2)
of the Exchange Act), other than Xxxxxx X. Xxxx, is or becomes a “beneficial
owner” (as defined in Rule 13d-3 under the Exchange Act), directly or
indirectly, of securities of Silverleaf representing more than 50% of the
combined voting power of Silverleaf’s then outstanding securities eligible to
vote for the election of the Board;
[4] The
consummation of a merger, consolidation, reorganization, statutory share
exchange or similar form of corporate transaction involving Silverleaf or any
of
its subsidiaries that requires the approval of Silverleaf’s stockholders,
whether for such transaction or the issuance of securities in the transaction;
or
3
[5] The
stockholders of Silverleaf approve a plan of complete liquidation or
dissolution.
(b) Good
Cause:“Good
Cause” shall be deemed to exist if Employee:
[1] Willfully
breaches or habitually neglects the duties that the Employee is required to
perform under the terms of this Agreement;
[2] Willfully
violates reasonable and substantial rules, regulations or policies governing
employee performance;
[3] Willfully
refuses to obey reasonable orders in a manner that amounts to insubordination;
or
[4] Willfully
commits clearly dishonest acts toward Silverleaf.
For
such
purposes, no act or failure to act by Employee shall be considered “willful”
unless done or omitted to be done by Employee in bad faith and without
reasonable belief that Employee’s action or omission was in the best interests
of Silverleaf or its affiliates. Any act, or failure to act, based upon
authority given pursuant to a resolution duly adopted by the Board or based
upon
the advice of counsel for Silverleaf shall be conclusively presumed to be done,
or omitted to be done, by Employee in good faith and in the best interests
of
Silverleaf. Good Cause shall also not exist pursuant to clause [1], [2] or
[3],
unless Employee has failed to correct the activity alleged to constitute Good
Cause within thirty (30) days following written notice from Silverleaf of such
activity, which notice shall specifically set forth the nature of such activity
and the corrective action reasonably sought by Silverleaf. Notwithstanding
the
foregoing, the termination of the Employee’s employment for Good Cause shall be
pursuant to the action of the Board, taken in conformity with the By-laws of
Silverleaf.
(c) Good
Reason:“Good
Reason” shall mean the occurrence of any of the following events after a Change
of Control:
[1] The
failure by Silverleaf to pay Employee the compensation and benefits due Employee
under Section 3;
[2] A
material diminution in Employee’s responsibilities or authority, or a diminution
of Employee’s title;
[3] Employee
is required to relocate for purposes of Employee’s employment with
Silverleaf;
[4] Any
material breach of this Agreement by Silverleaf; or
4
[5] The
failure of any successor to all or substantially all of the business and/or
assets of Silverleaf to assume this Agreement.
Provided,
however, Employee must give written notice to Silverleaf of the event
constituting Good Reason within thirty (30) days of Employee’s knowledge of the
event, or such event shall not constitute Good Reason. Provided, further, Good
Reason shall not be deemed to exist unless Silverleaf fails to cure the event
giving rise to Good Reason within thirty (30) days after receipt of the written
notice from Employee.
Section
6. Confidentiality.
(a) Nondisclosure
and Nonuse:
Employee
acknowledges that during his or her employment with Silverleaf, he or she may
have access to and become acquainted with Silverleaf Confidential Information,
as defined below. Except as Employee's duties during his or her employment
with
Silverleaf may require or Silverleaf may otherwise consent in writing, Employee
agrees that he or she shall not at any time disclose or use, directly or
indirectly, either during or subsequent to his or her employment with
Silverleaf, any Silverleaf Confidential Information.
(b) Confidential
Information:
For
purposes of the foregoing provisions, "Silverleaf Confidential Information"
shall mean (1) any and all confidential and proprietary business information
and
trade secrets concerning the business and affairs of Silverleaf and its
affiliates, including but not limited to all marketing, sales and lead
generation techniques, know-how and studies, timeshare member lists, other
customer and lead lists, current and anticipated customer requirements, price
lists, business plans, training programs, computer software and programs, and
computer software and data-base technologies, systems, structures and
architectures (and related processes, formulae, compositions, improvements,
devices, know-how, inventions, discoveries, concepts, ideas, designs, methods
and information), (2) any and all information concerning the business and
affairs of Silverleaf and its affiliates (including but not limited to their
historical financial statements, financial projections and budgets, historical
and projected sales, capital spending budgets and plans, the names and
backgrounds of key personnel, personnel training and techniques and materials,
however documented), and (3) any and all notes, analysis, compilations, studies,
summaries, and other material prepared by or for Silverleaf and its affiliates
containing or based, in whole or in part, on any information included in the
foregoing.
Section
7. Non-Interference.
Employee
further agrees that during his or her employment and for a period of two (2)
years after the effective date of any Termination, Employee shall not, either
on
his or her own account or jointly with or as a manager, agent, officer,
employee, consultant, partner, joint venturer, owner or shareholder or otherwise
on behalf of any other person, firm or corporation: (1) carry on or be engaged
or interested directly or indirectly in, or solicit, the manufacture or sale
of
goods or provision of services to any person, firm or corporation which, at
any
time during his or her employment has been or is a customer or in the habit
of
dealing with Silverleaf or its affiliates in their business if it would
adversely affect Silverleaf’s business, (2) endeavor, directly or indirectly, to
canvas or solicit in competition with Silverleaf or its affiliates or to
interfere with the supply of orders for goods or services from or by any person,
firm or corporation which during this or her employment has been or is a
supplier of goods or services to Silverleaf or its affiliates if it would
adversely affect Silverleaf’s business, or (3) directly or indirectly solicit or
attempt to solicit away from Silverleaf or its affiliates any of its officers,
employees or independent contractors or offer employment or business to any
person who, on or during the 6 months immediately preceding the date of such
solicitation or offer, is or was an officer, employee or independent contractor
of Silverleaf or its affiliates.
5
Section
8. Noncompetition.
If
the
Employee’s employment is terminated after a Change of Control and during the
Term or any extended Term of this Agreement:
(a) Covenant:
Employee
covenants and agrees that he or she shall not, for a period of two (2) years
after the effective date of the Termination, working alone or in conjunction
with one or more other persons or entities, for compensation or not, permit
his
or her name to be used by or engage in or carry on, directly or indirectly,
either for himself or herself or as a member of a partnership or other entity
or
as a stockholder, investor, officer or director of a corporation or as an
employee, agent, associate or contractor of any person, partnership, corporation
or other entity, any business in competition with the business of Silverleaf
or
its affiliates, as carried on by Silverleaf or its affiliates immediately prior
to the effective date of the Termination, but only for as long as such business
is carried on by (1) Silverleaf or its affiliates or (2) any person,
corporation, partnership, trust or other organization or entity deriving title
from Silverleaf or its affiliates to the assets and goodwill of the business
being carried on by Silverleaf or its affiliates immediately prior to the
effective date of the Termination, in any county of any state of the United
States in which Silverleaf or its affiliates conducts such business or markets
the products of such business immediately prior to the effective date of the
Termination.
(b) Tolling.
If
Employee violates any covenant contained in this Section, then the term of
such
violated covenant shall be tolled for the period commencing on the commencement
of such violation and ending upon the earlier of (1) such time as such violation
shall be cured by Employee to the reasonable satisfaction of Silverleaf, (2)
final adjudication (including appeals) of any action filed for injunctive relief
or damages arising out of such violation, and (3) the expiration of 24 months
after Termination during which no violation of the covenant has
occurred.
(c) Reformation.
If, in
any judicial proceeding, the court shall refuse to enforce any covenant
contained in this Section because the time limit is too long, it is expressly
understood and agreed between Silverleaf and Employee that for purposes of
such
proceeding such time limitation shall be deemed reduced to the extent necessary
to permit enforcement of such covenant. If, in any judicial proceeding, the
court shall refuse to enforce any covenant contained in this Section because
it
is more extensive (whether as to geographic area, scope of business or
otherwise) than necessary to protect the business and goodwill of Silverleaf
and/or its affiliates, it is expressly understood and agreed between Silverleaf
and Employee that for purposes of such proceeding the geographic area, scope
of
business or other aspect shall be deemed reduced to the extent necessary to
permit enforcement of such covenant.
6
Section
9. Injunctive
Relief.
Employee
acknowledges that a breach of Sections 6, 7, or 8 hereof would cause irreparable
damage to Silverleaf and/or its affiliates, and in the event of Employee's
breach of the provisions of Sections 6, 7 or 8 hereof, Silverleaf shall be
entitled to a temporary restraining order and an injunction restraining Employee
from breaching such Sections without the necessity of posting bond or proving
irreparable harm, such being conclusively admitted by Employee. Nothing shall
be
construed as prohibiting Silverleaf from pursuing any other available remedies
for such breach, including the recovery of damages from Employee. Employee
acknowledges that the restrictions set forth in Sections 6, 7 and 8 hereof
are
reasonable in scope and duration, given the nature of the business of Silverleaf
and its affiliates. Employee agrees that issuance of an injunction restraining
Employee from breaching such Sections in accordance with their terms will not
pose an unreasonable restriction on Employee's ability to obtain employment
or
other work following the effective date of any Termination.
Section
10. Employee
Investments.
Anything
to the contrary herein notwithstanding, Employee: (1) shall not be prohibited
from investing his or her assets in such form or such manner as will not, in
the
aggregate, detract from the performance by Employee of his or her duties
hereunder and will not violate the provisions of Sections 6, 7 or 8 hereof;
and
(2) shall not be prohibited from purchasing stock in any publicly traded company
solely as a stockholder so long as Employee does not own (together or separately
or through his or her affiliates) more than two percent (2%) of the stock in
any
company, other than Silverleaf, which is engaged in the timeshare
business.
Section
11. Employee's
Representations.
Employee
represents and warrants that he or she is free to enter into and perform each
of
the terms and conditions hereof, and that his or her execution and performance
of this Agreement does not and will not violate or breach any other Agreement
between Employee and any other person or entity.
Section
12. Termination.
Employee’s employment shall
terminate upon the expiration of the Term of this Agreement, or prior thereto:
(1) upon written notice by either party, at any time and for any or no reason
whatsoever, at least thirty (30) days prior to the effective date of the
termination; or (2) as of the end of the month of Employee’s death, or
incapacity and inability to perform Employee’s duties hereunder due to
Employee’s physical or mental illness (the “Termination”).
The Term
of this Agreement may be extended only: (1) by the written agreement of Employee
and Silverleaf; or (2) by Silverleaf, in its sole discretion, by the giving
of
written notice to Employee of a one (1) year extension of the then Term of
this
Agreement, provided that Silverleaf may only exercise this option within sixty
(60) days before or after each anniversary of the Effective Date of this
Agreement, the option may be exercised only once for each anniversary of the
Effective Date and the exercise must be prior to the expiration of the then
Term
of this Agreement. If Silverleaf unilaterally extends the Term as provided
above, Employee, in Employee’s sole discretion, may reject the extension by
giving written notice to Silverleaf within thirty (30) days of the date of
Silverleaf’s notice of the extension, in which event the Term shall not be
extended.
7
Section
13. Return
of Materials and Vehicles:
Employee
understands and agrees that any training manuals, sales and promotional
material, vehicles or other equipment provided to him or her by Silverleaf
in
connection with this Agreement shall remain the sole property of Silverleaf,
and
shall be used by the Employee exclusively for Silverleaf's benefit. Upon
termination of this Agreement, any such material, vehicles or other equipment
shall be immediately returned to Silverleaf.
Section
14. Non-Binding
Alternate Dispute Resolution.
Except
for actions brought by Silverleaf pursuant to Section 9 hereof:
(a) Agreement
to Utilize:
The
parties shall attempt to settle any claim or controversy arising from this
Agreement through consultation and negotiation in good faith and a spirit of
mutual cooperation prior to the commencement of any legal action. If such
attempts fail, then the dispute shall be mediated by a mutually-accepted
mediator to be chosen by the parties within forty-five (45) days after written
notice demanding mediation is sent by one party to the other party. Neither
party may unreasonably withhold consent to the selection of a mediator, and
the
parties shall share the costs of the mediation equally. By mutual written
agreement, however, the parties may postpone mediation until they have completed
some specified but limited discovery regarding the dispute. The parties may
also
agree to replace mediation with any other form of alternate dispute resolution
("ADR") available in Texas, such as a mini-trial or arbitration.
(b) Failure
to Resolve:
Any
dispute which the Parties cannot resolve through negotiation, mediation or
any
other form of ADR, within six (6) months of the date of the initial demand
for
mediation, may then be submitted to the appropriate court for resolution. The
use of negotiation, mediation, or any other form of ADR procedures will not
be
construed under the doctrines of laches, waiver or estoppel to affect adversely
the rights of either party.
Section
15. Waiver.
Silverleaf's failure at any time to require performance by Employee of any
of
the provisions hereof shall not be deemed to be a waiver of any kind nor in
any
way affect the rights of Silverleaf thereafter to enforce the provisions hereof.
In the event that either party to this Agreement waives any provision of this
Agreement or any rights concerning any breach or default of the other party
hereto, such waiver shall not constitute a continuing waiver of any such
provision or breach or default of the other party hereto.
Section
16. Successors,
Assignability.
(a) Silverleaf
Successors:
The
provisions of this Agreement shall inure to the benefit of and be binding upon
Silverleaf, its successors, assigns and other affiliated entities, including,
but not limited to, any corporation or other entity which may acquire all or
substantially all of Silverleaf's assets or with or into which Silverleaf may
be
consolidated, merged or reorganized. Upon any such merger, consolidation or
reorganization, the term "Silverleaf" as used herein shall be deemed to refer
to
any such successor.
8
(b) No
Assignment by Employee:
The
parties hereto agree that Employee's services hereunder are personal and unique,
and that Silverleaf is executing this Agreement in reliance thereon. This
Agreement shall not be assignable by Employee.
Section
17. Severability.
If one
or more of the provisions contained in this Agreement shall for any reason
be
held to be invalid, illegal or unenforceable in any respect, such invalidity,
illegality or unenforceability shall not affect any other provision of this
Agreement, but shall be deemed stricken and severed from this Agreement and
the
remaining terms of this Agreement shall continue in full force and
effect.
Section
18. Governing
Law and Venue.
This
Agreement shall be deemed to have been made and entered into in the State of
Texas and its validity, construction, breach, performance and operation shall
be
governed by the laws of that state. The obligations hereunder of Silverleaf
shall be performable in Dallas County, Texas, and venue for any suit involving
this Agreement shall lie exclusively in Dallas County, Texas.
Section
19. Entire
Understanding.
This
Agreement sets forth the entire understanding between the parties with respect
to the employment of Employee, and no other representations, warranties or
agreements whatsoever have been made by Silverleaf to Employee. Further, this
Agreement may not be modified or amended except by another instrument in writing
executed by both of the parties.
Section
20. Notices.
All
notices and communications under this Agreement shall be sent to the parties
at
the following addresses or such other addresses that the parties may
subsequently designate in writing.
| (a) |
Silverleaf:
|
Silverleaf
Resorts, Inc.
Attention:
Xxxxxx X. Xxxx, Chief Executive Officer
0000
Xxxxx Xxxx, Xxxxx 000
Xxxxxx,
Xxxxx 00000
| (b) |
Employee:
|
Xxx
X.
Xxxxxx
000
Xxxxxxx Xxxx
Xxxxxxx,
XX 00000
Section
21. Section
Headings.
Section
and paragraph headings are inserted herein only for convenience and shall not
be
used to interpret any of the provisions hereof.
Section
22. Counterparts.
This
Agreement may be executed in counterparts, each of which shall be an original,
but all of which together shall constitute one and the same
original.
9
Section
23. Effective
Date.
This
Agreement is executed on the date set forth below, but shall be effective as
of
January 1, 2007 (the "Effective Date").
|
Dates
of Execution:
|
"SILVERLEAF"
|
|
SILVERLEAF
RESORTS, INC.
|
|
|
March
8, 2007
|
By:
/S/ XXXXXX X.
XXXX
|
|
XXXXXX
X. XXXX, Chief Executive Officer
|
|
|
"EMPLOYEE"
|
|
|
March
7, 2007
|
/S/
XXX X.
XXXXXX
|
|
XXX
X. XXXXXX
|
10
