EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT (this "Agreement"), dated and effective as of August
18, 1997, by and between Club Xxxxxx Resorts, Inc., a Nevada corporation
("Employer"), and Xxxx XxXxxxxx ("Employee").
W I T N E S S E T H:
A. Employer desires to retain the services of Employee as its President
and Chief Executive Officer.
B. Employee has been Director General of the business acquired by
Employer as of August 18, 1997 since 1993.
C. 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.
D. 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.
E. 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 August 18, 1997
(the "Commencement Date") and shall remain in effect for three years
from the (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.
2. Responsibilities and Authority. Employer hereby employs Employee to
serve as Holding's President and Chief Executive Officer of Employer
reporting to its Board. 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
management. In addition, Employee will also serve in compliance with
this Agreement as Director General of C.R. Resorts Holdings, S.A. de
C.V. ("Holding").
The parties agree that Employee will not report nor will he be submitted to
Holding, because all order to Employee will come directly from Employer, which
Employee recognizes as the only employer and source of his rights hereunder.
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 and Holding. Employee understands he
may serve on Employer's Board and that without Employer's Board's
approval, he 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 an initial base cash salary at
the aggregate rate of US$250,000 per annum (the "Base Salary").
The Base Salary will be paid in substantially equal bi-monthly
installments on the first and 15th day of each month.
(b) Bonus. Based (i) 50% on the achievement of the performance goals
approved by Employer's Board from time-to-time and (ii) 50% on
the discretion of Employer's Board taking into account such goals
and other factors the Board may determine to be appropriate,
Employee will be entitled to receive an annual be entitled to
receive an annual Bonus (the "Bonus") equal to the amount of up
to 50% of the Base Salary.
(c) Benefits and Productivity Aids. Employee will be entitled to
receive the benefits (the "Benefits") and the personal
productivity aids (the "Personal Productivity Aids") 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; but if the full amount of such accelerated
payments is not paid within 20 business days after the date
of the Triggering Event, such amounts shall be evidenced by
a promissory note from Employer bearing interest at the rate
of 7% per annum from the date of the Triggering Event until
paid. If Employee files an action against Employer, Holding
or any of their affiliates arising from the performance of
his services under this Agreement, submitting himself to the
jurisdiction of any other court, tribunal or conciliation
and arbitration board, other than the courts of Texas,
Employee expressly agrees to waive his right to receive
payments under Section 4(e)(i). Should any court, tribunal
or conciliation or arbitration board issue any ruling
against Employer, Holding or any of their affiliates,
amounts obtained therefrom will be offset against any amount
owed to Employee under this Agreement.
(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.
However, should it be more practical or advantageous for employer
or Employee to provide or to receive a benefit through Holding,
the latter will act merely as a channel of Employer and any
compensation or benefit that Employee may receive directly from
Holding will be deemed to have been granted on account of and in
the name of Employer since Employer shall be the only party
liable for the employment relationship of Employee with Employer
and its affiliates.
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. In addition to actual
termination by Employer of Employee's employment without Cause,
if Employee's employment is Constructively Terminated by
Employer, or if Employee terminates hisi employment because he
has been Constructively Terminated, Employee's employment shall
be deemed to have been terminated without cause.
(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 two 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, 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 (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; or (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 six months, or in any manner seek to induce any such
Person to leave their employment.
(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);
(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 for any reason other than by mutual written
agreement with Employer or because Employee has been
Constructively Terminated.
(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) Constructive Termination - the occurrence of any of the
following events without Employee's express written consent:
(A) a reduction by Employer in Employee's Base Salary;
(B) any material breach by Employer or of any material
provision of this Agreement; or
(C) Employer should hire an executive officer to whom
Employee is required to report.
(v) 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.
(ivi)Person - a natural person, firm, corporation, association,
partnership (general or limited), limited liability
corporation, syndicate, governmental body, or any other
entity.
(v) Reimbursable Expenses - all properly documented, reasonable
and necessary expenses incurred by Employee on behalf of and
in connection with the business of Employer.
(vi) Termination Notice - notice under Sections 1(a) or 1(b).
(ix) 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.
(vii)Timeshare Business - the business of purchasing,
developing, marketing, selling and financing timeshare
vacation intervals.
(viiii) 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). For this Agreement, specific disclosures
made, e.g. ("640 F to 650 F" or $50,000" shall not be deemed
to be within the exceptions listed above merely because such
specific disclosure is embraced by a general disclosure,
e.g. "600 F to 800 F" or $40,000 to $80,000", which general
disclosure is in the public domain or in a Person's
possession. 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.
(ix) Triggering Event. - (A) a Change of Control, (B) the
Constructive Termination of Employee; (C) the actual
termination of this Agreement; or (D) except as expressly
provided herein, Employer's refusal to renew for any
one-year term for any reason, in each case, other than:
(1) Employee's voluntary termination (except a voluntary
termination because of Constructive Termination); or
(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. If any
action is brought to enforce or interpret this Agreement, venue
for such action will be in Xxxxxx County, Texas.
(g) Modification. No 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.
CLUB XXXXXX RESORTS, INC.
By: /s/ Xxxxxxx X. Xxxx
-------------------
Xxxxxxx X. Xxxx
Chairman of the Board
XXXX XxXXXXXX XXXXXXXX
By: /s/ Xxxx XxXxxxxx Xxxxxxxx
----------------------------
Name: Xxxx XxXxxxxx Xxxxxxxx,
Personally
