EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT (this "Agreement"), dated as of October 16, 1998,
is by and between Raintree Resorts International, Inc., a Nevada corporation
("Employer"), and Xxxxx X. XxxXxxxxx ("Employee").
W I T N E S S E T H:
A. Employer desires to retain the services of Employee as its Senior Vice
President-Chief Operating Officer-Raintree Owner's Club.
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 October 16, 1998
(the "Commencement Date") and shall remain in effect for three (3) years from
the Commencement Date (the "Employment Term"). Beginning on the third
anniversary of the Commencement Date, and upon each anniversary of the
Commencement Date thereafter, 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 60 days in advance of the renewal date; provided that
there shall be no such renewal after the year in which Employee turns 63.
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2. Responsibilities and Authority. Employer hereby employs Employee to
serve as Senior Vice President-Chief Operating Officer-Raintree Owner's Club of
Employer. During the Employment Term, Employee will have the responsibility and
authority to administer and coordinate the activities of Employer and its
subsidiaries relating to the Raintree Owners' Club in accordance with the policy
guidelines as established by Employer's management.
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. Without Employer's Board's approval, Employee will not serve on the
Board of Directors of any non-affiliate of Employer that is not controlled by
Employee's family.
4. Compensation and Benefits. As compensation for his services hereunder,
Employee will be entitled to the following amounts.
(a) Base Salary. Employee will receive a base cash salary at the
aggregate rate of US$120,000.00 per annum (the "Base Salary"). The Base
Salary will be paid in 24 substantially equal installments with the first
installment to be on October 31, 1998, and thereafter in accordance with
normal payroll practices of the Company twice each month.
(b) Bonus. Employee will be paid a two part bonus (the "Bonus")
determined as follows: (i) a service based bonus in the amount of $30,000
which will be paid in 24 equal monthly installments with the first
installment to be paid on October 31, 1998 and thereafter in accordance
with normal payroll practices of the Company twice each month, (ii) a merit
based bonus to be authorized by the Compensation Committee of the Company's
Board of Directors and (iii) a one time signing bonus in the amount of
$30,000 to be paid on October 31, 1998.
(c) Benifits and Productivity Aids. Employee will be entitled to
receive the benefits (the "Benefits") listed on Schedule A.
(d) Beneficiaries. Employee will have the absolute right to designate
the beneficiaries to receive the proceeds, if any, of all Benefits upon
Employee's death.
(e) 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 Base Salary and (ii) earned Bonuses,
any vested stock options and any other sums due him.
(ii) Time of Payment. All accelerated payments of Base Salary,
Bonuses and Benefits to Employee pursuant to this Section 4(e) shall
be paid as promptly as possible but in any event within 30 days after
Employee provides notice of a Triggering Event.
(iii) Reimbursement of Expenses. Employee will be promptly
reimbursed for Reimbursable Expenses.
(f) Consideration. Employee's covenants contained in Sections 6 and 7
are in return for the consideration - Employee is to receive under Section
4(e).
(g) Employer will provide all compensation and benefits listed above.
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5. Termination. This Agreement may be terminated upon the following terms:
(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 30 days' notice to
Employee; provided that (i) Employer will pay Employee his Base Salary for
the lesser of (A) period from such notice until the date on which the
disability benefits contemplated by the Benefits begin accruing and (B) 120
days from such notice, and (ii) Employer shall pay all other Benefits and
Reimbursable Expenses owed Employee.
(c) Termination by Employer Without Cause. If terminated without
Cause, Employee shall be entitled to receive six months Base Salary.
(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.
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(b) Solicitation. During the Employment Term and three years
thereafter, 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 one year period immediately
preceding such solicitation of employment; 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
three years from the termination of his employment with Employer (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 venturer, 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; or
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(iv) directly or indirectly employ, or knowingly permit any
Person, directly or indirectly, controlled by him, to employ, any
Person who was employed by Employer or its affiliates at or
within the prior one year.
(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.
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8. Miscellaneous.
(a) Definitions. The following terms have the indicated meanings.
(ii) 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);
(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) Employee shall resign or otherwise terminate his
employment with Employer for any reason other than by mutual
written agreement with Employer.
(iii) Change of Control - is deemed to have occurred 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, other than a
shareholder or its beneficiary on the date hereof or any "person" who
on the date of determination is a Director or Officer of Employer, is
or becomes the "beneficial owner" as defined in Rule 13d-3 under such
Act, directly or indirectly, of securities of Employer representing
51% or more of the combined voting power of Employer's then
outstanding equity securities.
(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.
(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.
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(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
45 consecutive days or three 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). In addition, any
combination of features disclosed in the course of Employee's
employment shall not be deemed to be within the exceptions listed
above merely because individual features are separately in the public
domain or in a Person's possession, but shall be within the exceptions
only if the combination itself and its principle of operation are in
the public domain or in a Person's possession as provided in the
exceptions listed above.
(xi) Triggering Event. - Following a Change of Control (A) if
Employee terminates employment with Employer; (B) the actual
termination of this Agreement by Employer; 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;
(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 Xxxxxx County, Texas.
(g) Modification. No amendment, modification or waiver of any
provision hereof shall be made unless it be 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.
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(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/ Xxxxxxx Xxxx
----------------------------------
Xxxxxxx X. Xxxx
Chairman
XXXXX X. XXXXXXXXX
By: /S/ Xxxxx XxxXxxxxx
---------------------------------
Name: Xxxxx X. XxxXxxxxx,
personally
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Schedule A
1. Two weeks annual vacation which shall not accrue from year to year.
2. Life insurance in the amount of two times Base Salary.
3. Disability insurance for Employee pursuant to Employer's plan.
4. Medical insurance for Employee and Employee's family pursuant to the
Employer's plan.
5. Reasonable use of office supplies, computers, copying and fax machines,
telephones and secretarial services.
6. Reasonable membership dues for one airline club of Employee's choice and a
corporate American Express card for corporate travel and other proper business
purposes which shall also provide for membership in one or more airline clubs.
7. If terminated pursuant to Sections 4(e)(i) or 5(c), reasonable expenses of
reasonable and customary outplacement services not to exceed $5,000.
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