June 22, 2000
Xx. Xxxxxx X. Xxxxxx
Fairfield Communities, Inc.
0000 Xxxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxx 00000
Dear Marcel:
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") dated as of September 20, 1991, as
amended by Amendment Number One, dated as of July 30, 1992 (as so amended, 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, General Counsel and Secretary" of the Company.
II. This confirms that, effective January 1, 2000, your Salary was
increased to $236,250 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
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September 1, 1992 (the "Confirmation Date") 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. Section 5 of the Agreement is amended in its entirety to read as
follows::
"5. Incentive and Transition Compensation. The Company may, in its sole
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discretion, establish incentive compensation programs applicable to Executive
from time to time during the Term hereof. The incentive compensation program
previously established for 2000 shall remain unaffected by this 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 9(a) of the Agreement is amended by adding the following two
sentences to the end of the existing Section 9(a) (which shall otherwise remain
unchanged):
"In the event that Executive is terminated under the circumstances
described in Section 9(a)(i) or Section 9(a)(ii) hereof prior to the first
anniversary following a Change in Control, then in addition to the termination
pay provided in Section 9(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."
VI. Section 9(e) of the Agreement is amended in its entirety as follows:
"(e) 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 9(e) 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 9(e), Executive shall be entitled to designate the payments and/or
benefits to be so reduced in order to give effect to this Section 9(e). 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. A new Section 9(f) is added to the Agreement, providing as follows:
"(f) Covenant Against Solicitation of Employees and Contractors. Executive
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shall not, directly or indirectly or on behalf of any person, organization,
business or enterprise with which Executive may become associated in any
capacity (whether as an employee, officer, director, consultant, investor (debt
or equity) or otherwise), during the Term of this Agreement
and for a period of time equal to two (2) years extending from the date
Executive ceases to be employed by the Company (regardless of the reason for
such change in Executive's employment status), (a) solicit or cause or suggest
there be solicited for employment or as an independent contractor, consultant or
other service provider, or hire, any people then serving, or serving within the
180 days prior thereto, as employees of the Company or any of its subsidiaries
or affiliates or (b) contact or solicit or attempt to establish a commercial
relationship with any of the Company's or its subsidiaries' or affiliates'
outside providers of information systems, marketing services, OPC locations or
sales prospects."
Except as expressly modified by this letter agreement, the Agreement shall
remain in full force and effect and the parties hereby ratify and reaffirm the
provisions thereof, as hereby amended. The terms of this letter agreement have
been duly approved and authorized by action of the Company's Board of Directors
or Compensation Committee.
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 by July 12, 2000. If not returned by that date,
then this letter agreement shall thereafter be void and of no effect.
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/ Xxxxxx X. Xxxxxx
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Xxxxxx X. Xxxxxx, Individually
