[EXHIBIT 10.3]
EXECUTION COPY
EXECUTIVE EMPLOYMENT AGREEMENT
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THIS EXECUTIVE EMPLOYMENT AGREEMENT (this "Agreement") made as of
the 1st day of July 2007 by and between SIX DIAMOND RESORTS
INTERNATIONAL, S.A., a Panamanian corporation (the "Company"), and
▇▇▇▇▇ ▇▇▇▇▇▇ (the "Executive").
W I T N E S S E T H :
WHEREAS, the Company desires to employ Executive as the Chairman
of its Board of Directors (the "Board"); and
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WHEREAS, Executive desires to accept such employment and serve
the Company as its Chairman of the Board, all on and subject to the
terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the mutual covenants herein
and other good and valuable consideration, the receipt and sufficiency
of which are hereby unconditionally acknowledged, the parties hereto
do hereby agree as follows:
1. Term. This Agreement shall commence as of July 1, 2007 and
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continue in effect through and including December 31, 2010 (the
"Term"), subject to earlier termination as hereinafter provided in
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Section 6 hereof. This Agreement may be renewed for an additional one
(1) year period, upon and subject to the mutual written agreement of
Executive and the Company entered into at least thirty (30) days prior
to December 31, 2010. Any such renewal period shall also, for
purposes of this Agreement, be considered part of the "Term".
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2. Employment.
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(a) The Company hereby employs the Executive as its most
senior executive officer with the title of Chairman of the Board (the
"Chairman"), and Executive hereby accepts such employment, upon and
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subject to the terms and conditions set forth in this Agreement. The
Company will, at all times during the Term hereof, cause Executive to
be elected as a member of its Board. Executive acknowledges that the
Company plans to hereafter merge with and into a publicly owned
company ("Pubco") and, subject to and after the effectiveness of any
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such merger (the "Merger"), references herein to the Company in all
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instances and with respect to all of the provisions of this Agreement
shall be to Pubco, unless and to the extent expressly provided
otherwise. Following any such Merger, Executive will also serve as
the Chairman of the Board of Directors of Six Diamond Resorts
International, S.A., a then wholly owned subsidiary of Pubco (and the
Company shall, at all times during the Term hereof, cause Pubco to
elect Executive as a member of such subsidiary's Board of Directors).
(b) Executive will, during the Term of this Agreement,
have all of the duties, powers and authority, and will perform all
services customarily associated with, the position of Chairman,
including those duties and responsibilities prescribed for such office
in the By-Laws of the Company and such additional duties and
responsibilities consistent with such position as may from time to
time be assigned to Executive by the Board and agreed to by Executive,
in writing. Executive agrees to perform such services and discharge
such responsibilities during the Term hereof in accordance with the
terms of this Agreement.
(c) The Executive shall be required to devote such portion
of his working time to the business and affairs of the Company (other
than during vacations and periods of illness or incapacity), as he
shall determine is reasonably necessary to perform his services and
discharge his responsibilities under this Agreement. The Company
understands and acknowledges that the Executive has substantial other
business and personal investment interests and executive positions and
directorships, in addition to his position hereunder as Chairman. In
order to fulfill his obligations under this Agreement, the Company
acknowledges and agrees that Executive is not expected to devote his
full or a material portion of his business time and attention to the
Company, nor is he required to provide such services from the
Company's principal executive offices. The Company acknowledges that
Executive resides in Houston, Texas and may render his services
hereunder from Texas (or any other location selected by Executive) and
will not be required to relocate his residence in order to perform his
services hereunder. The Executive anticipates that, given the
Company's development stage, it is expected that he will devote more
of his time to the performance of his services hereunder during the
first year of the Term hereof than he will in subsequent years. For
the avoidance of doubt, nothing in this Agreement shall preclude the
Executive from devoting time required for, among other things: (i)
his service as a director or officer of any other organization or
entity that does not result in a breach of Section 8 hereof; (ii)
delivering lectures or fulfilling speaking engagements; (iii) engaging
in charitable and community activities; or (iv) managing his personal
and business investments and pursuing his personal and other business
investment opportunities.
3. Compensation. In consideration of the performance by
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Executive of his services as Chairman during the Term hereof, the
Company shall pay Executive the following compensation:
(a) Base Salary. The Company shall pay Executive a fixed
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salary (the "Base Salary") at a rate of no less than Three Hundred
Fifty Thousand Dollars ($350,000) during each year of the Term hereof.
Notwithstanding the foregoing, the Board may periodically review the
Executive's Base Salary and may determine to increase the Base Salary
on such terms as the Board may prescribe from time to time during the
Term hereof. The Base Salary will be payable in accordance with the
customary payroll practices of the Company.
(b) Bonus. Executive will be entitled to receive an
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annual bonus (the "Annual Bonus") in each calendar year during the
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Term hereof, if and to the extent determined by the Board or the
Compensation Committee of the Board. The targeted amount of the
Annual Bonus shall be seventy-five percent (75%) of the Executive's
then-current Base Salary.
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(c) Withholding and Employment Taxes. Payment of all
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compensation hereunder shall be subject to such withholding and other
employment taxes as may be required with respect to the compensation
paid to Executive.
4. Executive Benefits.
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(a) General. The Executive shall be entitled to
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participate in all such benefit and other compensatory and non-
compensatory fringe benefit plans or programs that officers and
executives of the Company and its subsidiaries are permitted to
participate in, including disability, health and life insurance, stock
option, professional liability, pension, and Section 401(k) or other
retirement plans, whether now existing or subsequently established
from time to time by the Board, subject to the rules and regulations
applicable thereto. If, for any reason as a result of the Executive's
non full-time status, he is not be permitted to participate in any
such plan or program pursuant to the eligibility requirements thereof,
the Company will promptly advise the Executive in writing of such fact
and the reasons therefor. In such event, the Company will provide
(and/or cause its subsidiaries to provide) an alternate or standalone
plan or other arrangement with the same or substantially similar
benefits to Executive, at no cost to Executive. The Company agrees
that nothing contained in this Agreement is intended to, or shall be
deemed to be granted to Executive in lieu of, or as a limitation upon,
any rights and privileges to which Executive may otherwise be entitled
as an executive employee of the Company under any employment benefit
plan or program of the Company or any subsidiary thereof, it being
understood that Executive shall have the same rights and privileges to
participate in such Company (and subsidiary) employee benefit plans
and programs as any officer or executive employee of the Company or
any subsidiary thereof.
(b) Stock Option. As an inducement to the Executive
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entering into this Agreement, the Company will, contemporaneously with
the execution of this Agreement, issue to Executive a qualified stock
option (the "Option") to purchase up to 1,200,000 shares of the
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Company's common stock (the "Option Shares") at an exercise price of
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$2.00 per share. The Option Shares will vest as follows:
(i) 400,000 Option Shares on July 1, 2008;
(ii) 400,000 Option Shares on July 1, 2009; and
(iii) 400,000 Option Shares on July 1, 2010.
Notwithstanding the foregoing, or any other provision in this
Agreement to the contrary, upon a Change of Control (hereinafter
defined) or in the event that this Agreement is terminated pursuant to
Sections 6(a)(i), 6(a)(ii), 6(b)(i), 6(b)(ii) or 6(b)(iii) hereof, all
unvested Option Shares shall immediately vest and become exercisable
in full. The term of the Option will be ten (10) years from the date
hereof;
(iv) For purposes of this Agreement, a "Change
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in Control" shall mean and be deemed to have taken place:
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(A) the acquisition by any Person (i.e., an
individual, entity or group, within the meaning of Section 13(d)(3) or
14(d)(2) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act")) of "beneficial ownership" (within the meaning of Rule
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13d-3 promulgated under the Exchange Act) of twenty-five percent (25%)
or more of (I) the then-outstanding shares of common stock of the
Company (the "Outstanding Company Common Stock"), or (II) the combined
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voting power of the then-outstanding voting securities of the Company
which are entitled to vote in the election of members of the Board
(the "Outstanding Company Voting Securities"), regardless of whether
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the acquisition of such shares is as a result of the issuance of
securities by the Company to such Person, or by such Person acquiring
such shares publicly or in private sales (or in any combination
thereof, or otherwise); provided, however, that the following shall
not constitute a Change in Control: (a) any issuance or acquisition
of securities of the Company whereby Executive (including his
affiliates) by virtue of such issuance or acquisition reaches or
exceeds such twenty-five percent (25%) threshold, or (b) any
acquisition of such shares by any employee benefit plan (or related
trust) sponsored or maintained by the Company or any entity controlled
by the Company, or (c) the issuance of such shares by virtue of the
Merger; or
(B) if individuals who, as of the date of
the consummation of the Merger, constitute the Board (the "Incumbent
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Board"), cease for any reason to constitute at least a majority of the
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Board, provided, however, that any individual becoming a member of the
Board subsequent to the date of the consummation of the Merger whose
election, or nomination, was approved by a vote of at least two-thirds
of the directors then constituting the Incumbent Board, shall be
considered as though such individual were a member of the Incumbent
Board; or
(C) approval by the stockholders of the
Company of a cash tender offer, exchange offer, reorganization, merger
(other than the Merger), consolidation or other business combination
(collectively, a "Business Combination"), unless following such
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Business Combination the twenty-five percent (25%) threshold provided
for in Section 4(b)(iv)(A) has not been met or exceeded; or
(D) (i) approval by the stockholders of the
Company of a liquidation or dissolution of the Company, or (ii) the
first to occur of (a) the sale or other disposition (in one
transaction or a series of related transactions) of all or
substantially all of the assets of the Company, or (b) the approval by
the stockholders of the Company of any such sale or disposition; or
(E) any other event shall have occurred which
constitutes an effective change of control of the Company.
(c) Disability Insurance. In the event of any Disability
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(hereinafter defined), the Company shall continue to pay Executive the
Base Salary, until such time, if any, that this Agreement is
terminated pursuant to the applicable provisions hereof. The Company
shall provide the Executive with a disability insurance policy with
disability insurance benefits of at least eighty percent (80%) of
Executive's Base Salary. In the event of the termination of this
Agreement as a result of a Disability, the Executive (and his family,
as applicable) shall continue to be covered by such insurance, at the
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Company's expense, for forty-eight (48) months after any such
termination.
(d) Life Insurance. The Company shall, at its expense,
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provide the Executive with a life insurance policy upon the life of
Executive (the "Life Insurance Policy"), providing for death benefits
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in the amount of at least Ten Million Dollars ($10,000,000), the
proceeds of which will be payable to such beneficiary(ies) as shall be
designated by Executive from time to time during the Term hereof, or,
in the absence thereof, Executive's estate. In the event of the
termination of this Agreement pursuant to Sections 6(a)(ii), 6(b)(i),
6(b)(ii), 6(b)(iii), and/or 6(b)(iv) hereof, the Company will continue
to pay the premiums on such life insurance policy for forty-eight (48)
months following any such termination. In addition, the Company may,
at its election at any time during the Term hereof, obtain and
maintain at its cost, a key man life insurance policy on Executive's
life, with the Company as the beneficiary thereof. Executive will
cooperate with the Company and its insurer with respect to obtaining
and maintaining in force all such life insurance coverages.
(e) Medical Insurance. The Company shall, at its
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expense, provide the Executive with family plan medical insurance
coverage during the Term of this Agreement, and for a period of
twenty-four months thereafter (the "Termination Period"), such policy
to have customary co-payment and other provisions.
(f) Vacation. Executive shall be entitled
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to four (4) weeks of paid vacation and all holidays and sick days per
year as shall be determined from time to time by the Board. Executive
may, to the extent that there are unused vacation days at the end of
any such year, transfer such unused vacation days to the following
year in the Term hereof.
(g) Housing Allowance; Secretary. The Company will
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provide the Executive with professional office space and a
secretary/administrative assistant designated by and acceptable to
Executive in Houston, Texas or, at the election of Executive,
reimburse him for the expenses incurred by Executive in obtaining and
maintaining such office space and engaging such
secretary/administrative assistant. In addition, the Company will
provide Executive with housing or lodging while performing his
services in Panama on behalf of the Company (and/or any subsidiary
thereof) and with an office and a secretary/administrative assistant
designated by and acceptable to the Executive who shall perform his or
her services in the aforementioned office in Panama. The Company
shall pay all costs relating to the employment of such
secretaries/administrative assistants, including salary, benefits,
bonus and office equipment and materials utilized by them and
Executive in connection therewith.
(h) Equity Rights. Executive will be entitled to
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receive all of the same demand and piggy-back registration rights, anti-
dilution, tagalong, and other rights and privileges with respect to
the Option Shares and any other shares of the Company's (or any
subsidiary thereof) common stock now or hereafter owned by Executive,
that are granted by the Company or any subsidiary thereof to any other
officer, director or stockholder of the Company and/or any such
subsidiary, as applicable.
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(i) Automobile Allowance. The Company shall also pay
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Executive on the first day of each month during the Term hereof, a car
allowance of $1,500 per month for Executive's automobile (as well as
payment of the costs of insurance, gas and oil, cleaning, tires and
the maintenance and repair thereof).
(j) Registration Rights.
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(aa) Piggy-Back Registration.
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(A) If, at any time during the Term hereof,
the Company proposes to register any of its securities under the Act
(other than in connection with an initial public offering, or pursuant
to a registration statement on Form S-8 or any successor form), it
will give notice to Executive of its intention to do so, by registered
or certified mail, return receipt requested, at least thirty (30)
business days prior to the filing of each such registration statement.
If Executive notifies the Company within ten (10) business days after
receipt of any such notice of his desire to include any or all of the
Registrable Securities in such registration statement, the Company
shall afford Executive the opportunity to have any or all of the
Registrable Securities included in and registered under such
registration statement, all at the Company's sole cost and expense,
except for the fees of any counsel retained by Executive in connection
therewith and any transfer taxes or underwriting discounts or
commissions applicable to the Registrable Securities sold by Executive
pursuant thereto. Notwithstanding the foregoing, if in the written
opinion of the Company's underwriter in connection with an
underwritten public offering, the inclusion of all, or any portion of
the Registrable Securities requested to be so registered by Executive,
when added to the securities being registered by the Company (or any
selling shareholder), will exceed the maximum amount of the Company's
securities which the underwriter believes can be marketed (x) at a
price reasonably related to their then current market value, or (y)
without otherwise materially adversely affecting the offering, then
the Company may exclude from such offering all, or any portion of the
Registrable Securities requested by Executive to be registered.
(B) If securities proposed to be offered for
sale pursuant to such registration statement are securities owned by
other security holders of the Company and the total number of
Registrable Securities to be offered by Executive and such other
selling security holders are required to be reduced pursuant to a
written request from the underwriter (which request shall be made only
for the reasons set forth in subsection (A) above) the aggregate
number of Registrable Securities to be included by the Company for
Executive in such registration statement shall equal the number of
shares which bears the same ratio to the maximum number of securities
that the underwriter believes may be included for all the selling
security holders (including Executive) as the original number of
Registrable Securities proposed to be included therein by Executive
bears to the total original number of securities proposed to be
included therein by Executive and the other selling security holders.
(C) If any Registrable Securities requested
by Executive to be included in a registration statement under this
subsection are not so included because of the operation of the
provision of subsection (B) above, then Executive shall have the right
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to require the Company, at the Company's sole cost and expense, to
prepare and file one or more registration statements under the Act
covering such Registrable Securities, provided that if the underwriter
so requests, such Registrable Securities shall not be sold until the
expiration of one-hundred-twenty (120) days from the closing date of
the offering that gives rise to the "piggy-back" registration rights
that are the subject of this Section 4(j)(aa).
(D) Notwithstanding the provisions of this
Section, the Company shall have the right at any time after it shall
have given written notice pursuant to this Section 4(j)(aa)
(irrespective of whether a written request for inclusion of any such
securities shall have been made by Executive) to elect not to file any
such proposed registration statement, or to withdraw the same after
the filing but prior to the effective date thereof.
(bb) Effectiveness. The Company will use its
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best efforts to cause any such registration statement(s) covering all
or any portion of the Registrable Securities to become effective as
promptly as possible and, if any stop order shall be issued by the
Securities and Exchange Commission (the "Commission") in connection
therewith, the Company will use its best efforts to obtain the removal
of such order. Executive agrees to cooperate in all respects with the
Company in effectuating the foregoing.
(cc) Blue Sky. While any registration
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statement covering all or any portion of the Registrable Securities is
effective, the Company will take all necessary action which may be
required in qualifying or registering the Registrable Securities for
offering and sale under the Blue Sky laws of such number of states as
are reasonably requested by Executive, provided that the Company shall
not be obligated to qualify to do business as a foreign corporation
under the laws of any such jurisdiction.
(dd) Continuation. The Company shall be required
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to maintain the effectiveness of any registration statement registering
Registrable Securities under this Section 4(j) until the earlier of
(i) the eligibility of the Registrable Securities for public sale
under Rule 144(k) under the Act, or (ii) the public sale of all of the
Registrable Securities.
(ee) Resales. The giving of any notice by
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Executive under this Section 4(j) shall not impose upon Executive any
obligation to sell any Registrable Securities.
(ff) Current Filings. The Company agrees that
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until all the Registrable Securities have been sold under a
registration statement pursuant to this Section 4(j) or pursuant to
Rule 144 under the Act, it will keep current in filing all materials
required to be filed with the Commission in order to permit Executive
to sell the same under Rule 144.
(gg) Cooperation. Executive shall provide the
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Company with all such information necessary for the compliance by the
Company with its obligations under this Section 4(j), as shall from
time to time be reasonably requested by the Company.
5. Business Expenses. The Company shall pay or reimburse the
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Executive for all travel, business, entertainment and other expenses
incurred by or necessary for the Executive to perform his services
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under this Agreement, including reimbursement for attending out-of-
town meetings of the Board, in accordance with such policies and
procedures as the Company may from time to time establish for its
senior officers and executives and subject to the Company's normal
requirements with respect to the documentation of such expenses.
Further, the Company will reimburse Executive for all office expenses
incurred by Executive for maintaining his office and for otherwise
performing his services hereunder, including, without limitation,
reimbursement for all office supplies and equipment, telephone charges
(cellular or otherwise), equipment for text messaging, paging,
computing, Internet connectivity and use of wireless communications
devices (including monthly service charges, equipment purchases and
maintenance). The Company will reimburse Executive for all costs
associated with his computer equipment and peripherals including both
laptop and desktop computers, including the repair and replacement of
such equipment and for all private club membership fees and costs.
Due to limited flight schedules and remote destinations in Panama or
other locations that Executive will be required to travel to on behalf
of the Company, the Company will provide Executive with an allowance
of $1,800 per flight hour (plus fuel and related expenses) to the
extent Executive is required to avail himself of private or other non-
commercial air travel service, and to the extent any such travel
expenses are related to the performance of Executive's services
hereunder.
6. Termination of Agreement. Notwithstanding any other
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provision of this Agreement, this Agreement may be terminated as
follows and with such other requirements as are set forth below:
(a) By the Company. Notwithstanding the provisions of
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Section 1 hereof, the Company may terminate this Agreement upon the
occurrence of any of the following events:
(i) The death of Executive; or
(ii) the Disability of Executive. For purposes of
this Agreement, "Disability" shall mean the inability of Executive, in
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the reasonable judgment of a physician selected by the Company and
Executive, to perform a material portion of Executive's services
because of any physical or mental disability or incapacity, where such
disability shall exist for an aggregate period of more than one-
hundred-fifty (150) days in any year during the Term hereof or for any
period of one hundred twenty (120) consecutive days; or
(iii) following the delivery of notice to Executive
by the Company of any material breach or default by Executive of any of
Executive's representations, warranties, obligations or covenants
under this Agreement, provided that, with respect to any such breach
or default, any such breach or default is not cured within thirty (30)
days after receipt of such notice from the Company (or any such
additional period of time that may be reasonably required to cure any
such breach or default, provided that, Executive diligently pursues
such cure). Any such notice shall be shall be communicated by
delivery to Executive of a copy of a resolution duly adopted by the
affirmative vote of not less than a majority of the entire membership
of the Board at a meeting of the Board called and held for such
purpose (after reasonable advance written notice to Executive and a
reasonable opportunity for Executive, together with Executive's
counsel, to be heard before the Board prior to such vote), stating
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that in the good faith opinion of the Board, an event constituting a
basis for termination of this Agreement in accordance with this clause
(a)(iii) has occurred and specifying the particulars thereof.
Executive must be advised within thirty (30) days of the occurrence of
any event under this clause (a)(iii) in order for the Company to
terminate this Agreement hereunder; or
(iv) a final conviction of Executive for a felony
involving embezzlement, fraud or misappropriation of funds, in all of
such instances to the extent such crimes involve the Company or its
parent or subsidiaries.
(b) By Executive. Notwithstanding the provisions of
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Section 1 hereof, Executive may terminate this Agreement upon the
occurrence of any of the following events:
(i) upon five (5) days notice from Executive in
the event of an assignment for the benefit of the Company's creditors
or a final adjudication of bankruptcy, insolvency, receivership, or any
such similar action against the Company; or
(ii) following the delivery of notice to the
Company by Executive of any material breach or default by the Company
of any of its representations, warranties, obligations or covenants
under this Agreement, provided that, with respect to any such breach
or default, any such breach or default is not cured within thirty (30)
days after such notice from Executive (or within ten (10) days with
respect to any payment obligations of the Company); or
(iii) upon a Change of Control; or
(iv) upon notice from Executive, without cause.
On the date of termination, all unvested options or similar rights of
any kind (including restricted stock) granted to Executive, whether
under this Agreement or otherwise, shall accelerate and immediately
vest and become exercisable (or, with respect to restricted stock,
owned in full) during the then remaining term of each relevant option
or other such similar rights. Finally, during the Termination Period
(or such longer period as provided elsewhere in this Agreement), the
Company shall continue the benefits for the Executive and his family
provided for under Section 4 at no cost to the Executive, as well as
the secretarial services and offices provided for elsewhere herein, as
if the Executive remained employed by the Company through the end of
the Termination Period.
(c) During any period in which Executive is obligated
not to compete with the Company pursuant to Section 8 hereof, Executive
(and his family, as applicable), shall continue to be covered by all
of the benefits provided under Section 4 hereof. This subsection (c)
shall not limit any greater rights granted to Executive under Section
4 hereof or elsewhere in this Agreement. Such benefits shall be
provided to Executive at the Company's expense to the same extent as
if Executive were still employed by the Company during such periods.
7. Severance Payments. In the event of the expiration,
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termination or non-renewal of this Agreement under the circumstances
set forth below, Executive shall be entitled to receive from the
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Company, in addition to any amounts and other compensation provided
for elsewhere in this Agreement, severance compensation in the
following amounts:
(a) Life Insurance Benefits. In the event of any
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termination of this Agreement under Section 6(a)(i), Executive's
beneficiaries or estate, as applicable, shall be entitled to receive
an amount equal to the face value of the Life Insurance Policy to be
maintained by the Company pursuant to Section 4(d) hereof. In the
event the Company fails to maintain such insurance, the Company shall
pay an amount equal to the face value of such policy to Executive's
beneficiaries or estate, as applicable, upon any such termination of
this Agreement.
(b) Breach by the Company or Change of Control. In the
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event of any termination of this Agreement under Sections 6(b)(i),
6(b)(ii) or 6(b)(iii) hereof, Executive shall receive an amount equal
to the product of (i) one-twelfth (1/12th) of the greater of the
aggregate amount of the Base Salary and Annual Bonus paid or payable
to Executive with respect to the year prior to any such termination,
or the aggregate amount of the Base Salary and Annual Bonus paid or
payable to Executive in the year of any such termination times (ii)
the number of months then remaining in the Term of this Agreement,
subject to a minimum payment in an amount equal to twenty-four (24)
months of the Base Salary and Annual Bonus calculated in accordance
with clause (i) herein, such amount to be paid to Executive in a lump
sum on the first day of the first month following any such
termination.
(c) Loans. In the event of the termination of this
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Agreement, for any reason, or upon the expiration of the Term hereof,
all loans, indebtedness and other amounts owed to Executive by the
Company shall, notwithstanding anything in this Agreement to the
contrary (or in any contrary provision of any promissory note or other
evidence of any such loan or indebtedness), become immediately due and
payable to Executive.
8. Non-Competition. During the Term of this Agreement and for
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a period of twelve (12) months thereafter (but only if during such
time, the Company has timely paid Executive, in full, all amounts due
to Executive under the applicable provisions of this Agreement and
continues to otherwise timely make all other payments and provide all
benefits payable or due to Executive under the applicable provisions
of this Agreement), Executive shall not, within a one hundred (100)
mile radius of any property owned and operated by the Company, own any
interest in, manage, control, participate in, consult with, render
services for a public company engaged in land acquisition and
development in Panama or own an interest in any land developed as a
five star or higher grade residential or hotel property (unless the
Board of Directors shall have authorized such activity and the Company
shall have consented thereto in writing). Notwithstanding the
foregoing, (a) investments in less than ten percent (10%) of the
outstanding securities of any entity subject to the reporting
requirements of Section 13 or Section 15(d) of the Securities Exchange
Act of 1934, as amended, or (b) personal real estate investments in
any area where the Company conducts its business shall not be
prohibited by this Section 8, and, furthermore, (c) Executive shall
not have any obligations under this Section 8 if the Company fails to
timely pay to Executive any amounts required to be paid, or benefits
required to be provided, to Executive pursuant to this Agreement upon
the expiration or termination of this Agreement or during the period
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of this covenant or if this Agreement is terminated by Executive
(other than a termination pursuant to Section 6(b)(iv) hereof).
9. Confidential Information. The parties hereto recognize
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that it is important for the Company to preserve its specialized
knowledge, trade secrets, and confidential information and that the
strength and goodwill of the Company is derived from such specialized
knowledge, trade secrets, and confidential information generated from
experience obtained from the activities undertaken by the Company.
The unauthorized disclosure of such information and knowledge to
competitors would be beneficial to them and detrimental to the
Company, as would the disclosure of information concerning the
marketing practices, pricing practices, costs, profit margins, design
specifications, analytical techniques, and similar items of the
Company. Executive acknowledges that the specific proprietary
information and non-published data obtained by him while employed by
the Company concerning the business or affairs of the Company are the
property of the Company. By reason of his being an officer of the
Company, the Executive has, or will have access to, and has obtained
or will obtain trade secrets and confidential information about the
Company's operations. Therefore, Executive hereby agrees as follows:
(a) During the Term of this Agreement and for three (3)
years thereafter, the Executive will not use, disclose to others, or
publish or otherwise make available to any other party (other than in
connection with the performance of his services hereunder) any non-
publicly disclosed material confidential business information about
the affairs of the Company, including but not limited to, material
confidential information concerning the Company's properties,
construction costs, pricing and marketing strategies, property
acquisitions, plans and strategies, customer information, and other
material confidential information acquired by him in the course of
performing his services for the Company during the Term hereof.
Executive agrees, on demand of the Company at any time after the
termination or expiration of this Agreement, to deliver to the
Company all books, records, papers, documents and reports then in
Executive's possession (containing any such confidential information;
provided, however, the Executive shall be permitted to retain one
archival copy for himself, including for use in any proceeding
involving his employment with the Company; and provided, further, that
no information shall be considered confidential information of the
Company or otherwise subject to this Section 9 if such information (i)
is known to the Executive prior to the time of disclosure to him by
the Company, (ii) has become publicly known and made generally
available, (iii) has been received by the Executive from a third party
not bound by any confidential agreement with the Company, (iv) is
independently developed by the Executive without use of such
confidential information, (v) is required to be disclosed by law or
court order or otherwise requires disclosure in a legal proceeding, or
(vi) is not likely to cause material damage to the Company.
(b) During the Term hereof and for eighteen (18) months
thereafter, (i) the Executive will not induce or subject any employee
of the Company to leave the Company's employ, (ii) the Executive will
not materially interfere to the detriment of the Company, with the
relationship between the Company and any employee thereof and (iii)
the Executive will not induce any customer, supplier, licensee,
licensor or other vendor of the Company to cease doing business with
the Company. The foregoing covenant shall not extend to employees of
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the Company who respond to general inquiries or advertisements (e.g.,
classified ads, internet job postings or the like) or other persons
who approach the Executive independently about a possible business
relationship with the Executive without him having caused such
approach.
10. Indemnification.
---------------
(a) General. Executive will be entitled to all of the
-------
rights of indemnification granted by the Company to its officers and
directors during the Term hereof (including all indemnification rights
and privileges pursuant to the Company's Certificate of Incorporation,
By-Laws and any professional liability insurance policy obtained and
maintained by the Company during the Term hereof).
(b) Indemnification Rights. It is the intent of this
----------------------
Section 10 to secure for Executive indemnification rights that are as
favorable as may be permitted by applicable law and public policy.
Without limiting the provisions of subsection (a) hereof, the Company
shall indemnify and fully defend, save and hold Executive harmless
from any damage, liability, loss, cost or expense (including all
reasonable attorneys' fees and expenses of counsel) (collectively, the
"Losses") arising out of or resulting from:
(i) any untruth or inaccuracy in any representation
or warranty of the Company, or the breach of any representation or
warranty of the Company, contained in this Agreement; or
(ii) any failure of the Company to perform or
observe any term, provision, covenant or obligation contained in this
Agreement; or
(iii) any action or proceeding commenced against
Executive based upon or arising out of the performance of Executive's
services under this Agreement, or services otherwise provided to the
Company and/or its affiliates, including, without limitation, any
services heretofore or hereafter rendered by the Executive in seeking
to locate property acquisitions for the Company.
(c) Costs and Expenses. All costs and expenses incurred
------------------
by Executive in defense of any litigation, including attorneys' fees
and expenses, shall be paid from time to time by the Company in
advance of the final disposition of such litigation promptly upon
receipt by the Company of (i) a written request from Executive for
payment given from time to time, (ii) appropriate documentation
evidencing the incurrence, amount and nature of the costs and expenses
for which payment is being sought, and (iii) if required under
applicable law an undertaking made by or on behalf of Executive to
repay the amounts so paid if it shall ultimately be determined that
Executive is not entitled to be indemnified by the Company under this
Agreement.
(d) Procedures. If, with respect to a third party, an
----------
event occurs or is alleged to have occurred and Executive asserts that
the Company has become obligated to provide indemnification to him
under this Section 10 (an "Indemnity Claim"), Executive (the
---------------
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"Indemnitee") shall give written notice to the Company (the
----------
"Indemnitor"). The failure to so notify Indemnitor shall not,
----------
however, release Indemnitor from any obligation or liability it may
have to Indemnitee under this Section except to the extent such
failure materially prejudices Indemnitor. Indemnitor agrees to
defend, contest or otherwise protect Indemnitee against any Indemnity
Claim at Indemnitor's sole cost and expense. Indemnitee shall have
the right, but not the obligation, to participate at the Company's
expense in the defense thereof by counsel of Indemnitee's choice and
shall in any event cooperate with and assist Indemnitor to the extent
reasonably possible. If Indemnitor fails to timely defend, contest or
otherwise protect against such Indemnity Claim, Indemnitee shall have
the right to do so, with counsel of his choice, including, without
limitation, the right to make any compromise or settlement thereof,
and the Indemnitee shall be entitled to recover the entire cost
thereof from Indemnitor, including, without limitation, attorneys'
fees, disbursements and all amounts paid as the result of such
Indemnity Claim. Indemnitor shall be bound by any determination made
as to such Indemnity Claim or any compromise or settlement effected by
the Indemnitee. If Indemnitor assumes the defense of any Indemnity
Claim, (a) such will conclusively establish, for purposes of this
Agreement, that the claims made in that Indemnity Claim are within
the scope of and subject to indemnification hereunder, (b) no
compromise or settlement of such claims may be effected by Indemnitor
without Indemnitee's written consent unless (i) there is no finding or
admission of any violation of federal, state, local, municipal,
foreign, international, multinational or other administrative order,
law, ordinance, principal of common law, regulation, statute or treaty
or any violation of the rights of any person and no effect on any
other claims that may be made against Indemnitee and (ii) the sole
relief provided is monetary damages that are paid in full by
Indemnitor; and (c) Indemnitee will have no liability with respect to
any compromise or settlement of such claims effected without his
written consent. Notwithstanding anything to the contrary contained
in this Section 10, if Indemnitee settles or compromises any Indemnity
Claim without Indemnitor=s prior written consent, Indemnitor shall have
no obligation for indemnification under this Section 10.
(e) Non-Exclusion Remedy. The provisions of this Section
--------------------
10 shall not be an exclusive remedy for the Executive and shall
survive the expiration or termination of this Agreement until the
expiration of all applicable statutes of limitation.
(f) Insurance. The Company shall procure and maintain a
---------
directors and officers' liability insurance policy covering Executive
in amounts and on terms approved by Executive. Such insurance
coverage shall continue as to Executive even if he has ceased to be a
director, officer, employee or agent of the Company with respect to
acts or omissions which occurred prior to his cessation of employment
with the Company, for a period not less than the expiration of all
applicable statutes of limitations. Notwithstanding the foregoing,
however, if the Company ceases to maintain a directors' and officers'
liability insurance policy covering Executive by reason of a Change of
Control, then Executive shall be entitled to coverage under any run-
off policy that would extend the period during which the Company or
Executive may give the insurers notice of a claim under the
termination provisions of the prior directors' and officers' liability
insurance policy. The Company shall use its best efforts to obtain
such run-off policy to include an extension of the claims reporting
period through any applicable statutes of limitations. The insurance
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contemplated under this Section 10.5 shall inure to the benefit of
Executive's heirs, executors, personal representatives and
administrators.
11. Survival of Obligations. Sections 4(c), 4(d), 4(e), 8,
-----------------------
9(a), 9(b), 10(e) and 14(f) shall survive the termination or
expiration of this Agreement.
12. Representations and Warranties. The Company and Executive
------------------------------
hereby represent and warrant to each other as follows:
(a) Binding Agreement. All action on the part of the
-----------------
Company and Executive necessary for the authorization, execution,
delivery and performance of this Agreement and the consummation of the
transactions contemplated hereby, has been taken and this Agreement
constitutes a valid and legally binding obligation of the Company and
Executive, as applicable, enforceable in accordance with its terms,
except as the same may be limited by bankruptcy, insolvency,
reorganization, moratorium, or other laws affecting generally the
enforcement of creditors' rights and by general principles of equity.
(b) No Conflict. The authorization, execution, delivery
-----------
and performance of this Agreement, and the consummation of the
transactions contemplated hereby, will not result in any violation or
be in conflict with or constitute, with or without the passage of time
and giving of notice, a breach or default under any provision of any
instrument, judgment, order, writ, decree or agreement to which the
Company or Executive, as applicable, is a party or by which it or he
is bound.
(c) Absence of Litigation. There is no action, suit,
---------------------
proceeding, or investigation pending, or to the knowledge of the
Company or Executive, as applicable, currently threatened against the
Company or Executive, as applicable, in any way relating to the
validity of this Agreement or the right of the Company or Executive,
as applicable, to enter into or to perform under this Agreement or
consummate the transactions contemplated hereby.
13. No Mitigation; No Offset. In the event of any termination
------------------------
of this Agreement, Executive shall be under no obligation to seek
other employment and the Company shall have no right to offset against
amounts due the Executive under this Agreement on account of any
remuneration attributable to any subsequent employment or self-
employment that he may obtain.
14. Miscellaneous.
-------------
(a) Sole and Entire Agreement. This Agreement constitutes
-------------------------
the sole and entire agreement between the parties hereto with respect
to the subject matter hereof and supersedes all prior agreements,
representations, warranties, statements, promises, information,
arrangements and understandings, whether oral or written, express or
implied, between the parties hereto with respect to the subject matter
hereof. This Agreement may not be changed or modified except by an
instrument in writing signed by the party to be bound thereby.
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(b) Notices. All notices, consents, requests, demands
-------
and other communications required or permitted to be given under this
Agreement shall be in writing and delivered personally, receipt
acknowledged, or mailed by registered or certified mail, postage
prepaid, return receipt requested, addressed to the parties hereto as
follows (or to such other address and/or to such other persons as
either of the parties hereto shall specify by notice given in
accordance with this provision):
(i) If to the Company:
Six Diamond Resorts International, S.A.
c/o Benchmark Equity Group
▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
(ii) If to Executive:
▇▇▇▇▇ ▇▇▇▇▇▇
c/o Benchmark Equity Group
▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
with a copy to:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Except as otherwise expressly provided elsewhere in this Agreement,
all such notices, consents, requests, demands and other communications
shall be deemed given when personally delivered as aforesaid, or, if
mailed as aforesaid, on the earlier of (i) the date of receipt or
rejection by the addressee, or (ii) the third business day after the
date of mailing thereof, except for a notice of a change of address
which shall be effective only upon receipt.
(c) Assignment. Neither party hereto may assign this
----------
Agreement or their respective rights, benefits or obligations
hereunder without the written consent of the other party hereto,
except that if the Company consummates the merger, this Agreement will
be assigned to and assumed by the Pubco, on and subject to all of the
terms and conditions contained in this Agreement. The foregoing shall
not affect or limit Executive's Change of Control termination rights
under this Agreement.
(d) Binding Effect. This Agreement shall be binding upon
--------------
and inure to the benefit of the parties hereto and their respective
successors, heirs, personal representatives, administrators, executors
and permitted assigns. Nothing contained herein is intended to confer
upon any person or entity, other than the parties hereto (and Pubco),
and their respective successors, heirs, personal representatives,
administrators, executors or permitted assigns, any rights, benefits,
obligations, remedies or liabilities under or by reason of this
Agreement.
(e) Waiver. No waiver of this Agreement shall be
------
effective unless in writing and signed by the party to be bound
thereby. The waiver by either party hereto of a breach of any
provision of this Agreement, or of any representation, warranty, or
covenant in this Agreement by the other party hereto shall not be
construed as a waiver of any subsequent breach or of any other
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provision, representation, warranty, or covenant of such other party,
unless the instrument of waiver expressly so provides.
(f) Governing Law. This Agreement shall be governed by
-------------
and construed in accordance with the laws of the State of Texas with
respect to contracts made and to be fully performed therein, without
regard to the conflicts of laws principles thereof. The parties
hereto hereby agree that, in the event of any action or proceeding
brought by the Company against Executive to enforce the provisions of
this Agreement, such action or proceeding may be brought in a Federal
or state court located in ▇▇▇▇▇▇, Texas. By their execution hereof,
each of the Company and Executive hereby consent and irrevocably
submit to the in personam jurisdiction of such Federal and state
courts and agree that any process in any such action or proceeding
commenced in any such court under this Agreement may be served upon
him, or it, as applicable, personally, by certified or registered
mail, return receipt requested, or by Federal Express or other courier
service, with the same full force and effect as if personally served
upon him or it in ▇▇▇▇▇▇, Texas, as applicable. Each of the parties
hereto hereby waive any claim that the jurisdiction of any such court
is not a convenient forum for any such action or proceeding and any
defense of lack of in personam jurisdiction with respect thereto. In
the event of any action or proceeding under this Agreement, the party
prevailing therein shall be entitled to payment from the other party
hereto of all of its costs in connection therewith, including its
counsel fees and disbursements.
(g) Further Assurances. The parties hereto hereby agree
------------------
that, at any time and from time to time during the Term hereof, upon
the reasonable request of the other party hereto, they shall do,
execute, acknowledge and deliver, or cause to be done, executed,
acknowledged and delivered, such further acts, deeds, assignments,
transfers, conveyances and assurances as may be reasonably required to
more effectively consummate this Agreement and the transactions
contemplated thereby or to confirm or otherwise effectuate the
provisions of this Agreement.
(h) Severability. If any term or provision of this
------------
Agreement, or the application thereof to any person or circumstance,
is finally determined by a court or to any extent to be illegal,
invalid or unenforceable, the remainder of this Agreement, or the
application of such term or provision to persons or circumstances
other than those as to which it is held illegal, invalid or
unenforceable, shall not be affected thereby and each term and
provision of this Agreement shall be valid and shall be enforced to
the fullest extent permitted hereunder and by law.
(i) Counsel. The parties to this Agreement hereby
-------
acknowledge that they have been represented by separate counsel in
connection with the negotiations and execution of this Agreement.
Notwithstanding the foregoing, the Company hereby acknowledges that
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq. is Of Counsel to Gusrae ▇▇▇▇▇▇ ▇▇▇▇▇ &
▇▇▇▇▇▇▇, PLLC, counsel to the Company, and the Company has waived any
conflict of interest with respect to ▇▇. ▇▇▇▇▇▇▇'▇ representation of
Executive in connection with the negotiation and consummation of this
Agreement. The Company will pay Executive's legal fees in connection
with the foregoing.
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(j) Headings. The Section headings contained in this
--------
Agreement are for the purpose of convenience only and are not intended
to define or limit the contents of said Sections.
(k) Counterparts. This Agreement may be executed in
------------
one or more counterparts, each of which, when executed and delivered,
shall be deemed an original, but all of which when taken together,
shall constitute one and the same instrument, and this Agreement may
be completed by facsimile transmission, which transmission will be
deemed to be an original and considered fully legal and binding on
each of the signatories hereto.
IN WITNESS WHEREOF, the parties hereto have executed this
Employment Agreement as of the date first above written.
SIX DIAMOND RESORTS INTERNATIONAL, S.A.
By:
------------------------------------
▇▇▇▇▇ ▇▇▇▇, Chief Operating Officer
------------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇
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