EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT (this "Agreement"), dated as of January 1, 1999, is by
and between Raintree Resorts International, Inc., a Nevada corporation
("Employer"), and Xxxxxxx X. Xxxx ("Employee").
W I T N E S S E T H:
A. Employer desires to continues the services of Employee as its Chairman
and Chief Executive Officer.
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 January 1, 1999
(the "Commencement Date") and shall remain in effect from the
Commencement Date through December 31, 2001 (the "Employment Term").
Beginning on January 1, 2002, 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 will receive an initial base cash salary at
the aggregate rate of US$260,000 per annum commencing January 1,
1999. (the "Base Salary"). The Base Salary then in effect 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 one times his then annual Base
Salary multiplied by the number of years or fractions
thereof Employee has been employed by Employer not to exceed
three (which for purposes hereof commenced on December 20,
1996), 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 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).
(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 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
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 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 -
(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.
(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.
(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
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.
(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]
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
RAINTREE RESORTS INTERNATIONAL, INC.
By: /s/ Xxxx XxXxxxxx
--------------------
Xxxx XxXxxxxx
President
Xxxxxxx X. Xxxx
By: /s/ Xxxxxxx X. Xxxx
----------------------
Name: Xxxxxxx X. Xxxx, Personally
