June 22, 2000
Xx. Xxxxx X. Xxxxxxx
Fairfield Communities, Inc.
0000 Xxxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxx 00000
Dear Xxxxx:
Re: Amendment to Employment Agreement
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Reference is made to an Employment Agreement between Fairfield Communities,
Inc. (the "Company") and you ("Executive") executed on October 23, 1998 (the
"Agreement"). This letter agreement is an amendment to the Agreement. The terms
of the amendment are as follows:
I. The description of your position in the Agreement is changed to be
"Executive Vice President and Chief Operating Officer" of the Company.
II. This confirms that, effective January 1, 2000, your Salary was
increased to $385,000 per annum.
III. Section 2 of the Agreement is amended in its entirety as follows:
"2. Term. The term of this Agreement shall be the period commencing as of
----
the date set forth above and continuing thereafter through a date eighteen
months following the date either the Company or Executive, as the case may be,
gives termination notice (the "Notice") hereunder (the "Term"); provided that
the minimum Term shall be automatically extended (regardless of whether or not
the "Notice" has previously been given by the Company) through a date thirty
months following the date on which a "Change in Control" occurs; and further
provided, that it is understood that if Executive remains employed by the
Company after the Term, such employment shall be "at-will" unless different
terms are established in writing.
The term "Change in Control" shall mean the happening of any of the
following:
(a) During any period of 24 consecutive months, ending after the date
hereof:
(i) individuals who were directors of the Company at the
beginning of such 24-month period, and
(ii) any new director whose election or nomination for election
by the Board of Directors was approved by a vote of the greater of (A)
at least two-thirds (2/3), or (B) four affirmative votes, in each
case, of the directors then still in office who were
either directors at the beginning of such 24-month period or whose
election or nomination for election was previously so approved
cease for any reason to constitute a majority of the Board of Directors of the
Company;
(b) Any person or entity (other than the Company or its Subsidiary employee
benefit plan or plans or any trustee of or fiduciary with respect to such plan
or plans when acting in such capacity), or any group acting in concert, shall
beneficially own, directly or indirectly, more than fifty percent (50%) of the
total voting power represented by the then outstanding securities of the Company
entitled to vote generally in the election of directors ("Voting Securities");
(c) Upon a merger, combination, consolidation or reorganization of the
Company, other than a merger, combination, consolidation or reorganization which
would result in (i) the Voting Securities of the Company outstanding immediately
prior thereto continuing to represent (either by remaining outstanding or by
being converted into Voting Securities of the surviving entity) at least 50% of
the voting power represented by the Voting Securities of the Company or such
surviving entity outstanding immediately after such transaction and (ii) at
least such 50% of voting power continuing to be held in the aggregate by the
holders of the Voting Securities of the Company immediately prior to such
transaction (conditions (i) and (ii) are referred to as the "Continuance
Conditions"); or
(d) All or substantially all of the assets of the Company are sold or
otherwise disposed of, whether in one transaction or a series of transactions,
unless the Continuance Conditions shall have been satisfied with respect to the
purchaser of such assets."
IV. The following sentence is added to the end of Section 5 of the
Agreement:
"In the event that Executive remains employed by the Company on the
first anniversary of a "Change in Control", then he shall, within five (5)
calendar days from such anniversary date, be paid a one time transition payment
(in addition to any incentive compensation plan which may then be in effect)
equal to 100% of his Salary."
V. Section 7 of the Agreement is amended in its entirety to read as
follows:
"7. Termination Without Cause. Either the Company or Executive may
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terminate Executive's employment without Cause, but only upon delivery to the
other party of a written notice of termination specifying a termination date, in
the case of a notice by Executive, of 30 days after the date of delivery of such
notice. In the event of a notice by Executive, the Company may, at any time
thereafter, notify Executive that he is excused from working for the remaining
duration of the 30 day notice period, without incurring any liability for
termination compensation as a result thereof, provided, however, that the
Company shall continue to pay Executive's Salary during the remainder of the 30
day notice period. Notwithstanding the Term of this Agreement and Section 4
hereof relating to the annual salary to be paid to Executive
during Executive's employment by the Company, nothing in this Agreement should
be construed as conferring any right of Executive to be employed by the Company
for a fixed or definite term. Subject to Section 8 hereof, Executive agrees that
the Company may dismiss Executive under this Section without regard to (a) any
general or specific policies (whether written or oral) of the Company relating
to the employment or termination of employment of Company employees; or (b) any
statements made to Executive, whether made orally or contained in any document
or instrument, pertaining to Executive's relationship with the Company.
Notwithstanding anything to the contrary contained herein, Executive's
employment by the Company is not for any specified term, is at-will and may be
terminated by the Company pursuant to this Section at any time by delivery of
the notice referred to herein, for any reason, without any liability whatsoever,
except with respect to the payment provided for in Section 8."
VI. Section 8 of the Agreement is amended in its entirety to read as
follows:
"8. Termination Compensation.
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(a) If, during the Term, Executive's employment is terminated (i) for any
reason other than (A) pursuant to Section 6(a), (B) by reason of death, (C) by
reason of "Disability" or (D) by notice by Executive pursuant to Section 7
hereof or (ii) by Executive due to "Constructive Discharge" (the occurrence of
(a)(i) or (a)(ii) being referred to as being "Terminated Without Cause"), then
Executive shall receive termination pay in an amount equal to 150% of his
Salary. Unless the Company elects, in its sole discretion, to pay such amount in
a lump sum, the termination pay shall be payable in accordance with the
Company's standard payroll practices for executives, but payable in not less
than monthly installments, it being understood that such payments may extend
beyond the expiration of the Term hereof. The obligation of the Company to make
continuing payments of termination pay to Executive is expressly conditioned
upon Executive complying in all respects, and continuing to comply in all
respects, with Executive's obligations under Sections 9, 10, 11 and 16 hereof
following the termination of Executive's employment.
(b) In the event that Executive is Terminated Without Cause prior to the
first anniversary following a Change in Control, then in addition to the
termination pay provided in Section 8(a) above, Executive shall be paid an
amount equal to 100% of his Salary. Such amount shall be paid in a lump sum
within ten (10) calendar days following his termination date.
(c) For the purposes of this Agreement, "Constructive Discharge" shall
mean:
(i) any reduction in Salary;
(ii) a material reduction in Executive's job function, duties or
responsibilities, or a similar change in Executive's reporting
relationships, provided, however, that Executive is aware that the Company
may from time to time change the current executive structure so that the
positions of Chief Executive Officer, President and Chairman may be held by
different persons, and that it shall not be considered a "Constructive
Discharge"
for Executive to report to any of the Chairman, the President or the Chief
Executive Officer of the Company;
(iii) a required relocation of Executive of more than thirty five (35)
miles from Executive's current job location, provided that, it is
understood that Executive's job responsibilities will require that he
travel extensively to other locations on the Company's business; or
(iv) any breach of any of the material terms of this Agreement by the
Company which is not cured within 15 days following written notice thereof
by Executive to the Company;
provided, however, that the term "Constructive Discharge" shall not include a
specific event described in the preceding clause (i), (ii), (iii) or (iv) unless
Executive actually terminates his employment with the Company within 60 days
after the occurrence of such event.
(d) The amount of compensation payable pursuant to this Section 8 is not
subject to any deduction (except for withholding taxes), reduction, offset or
counterclaim, and the Company may not give advance notice of termination in lieu
of the payment provided for in this Section 8.
(e) For purposes of this Agreement, "Disability" shall mean an illness or
accident which prevents Executive, for a continuous period lasting six months,
from performing the material job duties normally associated with his position.
In the event that any disagreement or dispute arises between the Company and
Executive as to whether Executive has incurred a "Disability", then, in any such
event, Executive shall submit to a physical and/or mental examination by a
competent and qualified physician licensed under the laws of the State of
Florida who shall be mutually selected by the Company and Executive, and such
physician shall make the determination of whether Executive suffers from any
"Disability". In the absence of fraud or bad faith, the determination of such
physician as to Executive's condition at such time shall be final and binding
upon both the Company and Executive. The entire cost of any such examination
shall be borne solely by the Company.
(f) Notwithstanding any provision of this Agreement to the contrary, if any
amount or benefit to be paid or provided under this Agreement would be an
"Excess Parachute Payment", within the meaning of Section 280G of the Internal
Revenue Code of 1986, as amended (the "Code"), or any successor provision
thereto, but for the application of this sentence, then the payments and
benefits to be paid or provided under this Agreement shall be reduced to the
minimum extent necessary (but in no event to less than zero) so that no portion
of any such payment or benefit, as so reduced, constitutes an Excess Parachute
Payment; provided, however, that the foregoing reduction shall be made only if
and to the extent that such reduction would result in an increase in the
aggregate payment and benefits to be provided, determined on an after-tax basis
(taking into account the excise tax imposed pursuant to Section 4999 of the
Code, or any successor provision thereto, any tax imposed by any comparable
provision of state
law, and any applicable federal, state and local income taxes). The
determination of whether any reduction in such payments or benefits to be
provided under this Agreement or otherwise is required pursuant to the preceding
sentence shall be made at the expense of the Company, if requested by Executive
or the Company, by the Company's independent accountants. The fact that
Executive's right to payments or benefits may be reduced by reason of the
limitations contained in this Section 8(f) shall not of itself limit or
otherwise affect any other rights of Executive other than pursuant to this
Agreement. In the event that any payment or benefit intended to be provided
under this Agreement or otherwise is required to be reduced pursuant to this
Section 8(f), Executive shall be entitled to designate the payments and/or
benefits to be so reduced in order to give effect to this Section 8(f). The
Company shall provide Executive with all information reasonably requested by
Executive to permit Executive to make such designation. In the event that
Executive fails to make such designation within 10 business days following the
date Executive ceases to be employed by the Company, the Company may effect such
reduction in any manner it deems appropriate."
VII. Executive's address for notice under Section 20 of the Agreement is
hereby changed to 0000 Xxxxxxxxxx Xxxxx, Xxxxxxxxxx, Xxxxxxx 00000.
Except as expressly modified by the letter agreement, the Agreement shall
remain in full force and effect and the parties hereby ratify and reaffirm the
provisions thereof, as hereby amended.
If the foregoing correctly reflects our understanding, please so indicate
by signing the enclosed duplicate original of this letter agreement at the place
indicated and return it to me.
FAIRFIELD COMMUNITIES, INC.
By: /s/ Xxxxx X. Xxxx
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Xxxxx X. Xxxx
President and
Chief Executive Officer
AGREED TO AND ACCEPTED:
/s/ Xxxxx X. Xxxxxxx
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Xxxxx X. Xxxxxxx, Individually
