EXECUTIVE EMPLOYMENT AGREEMENT
EXECUTIVE EMPLOYMENT AGREEMENT, effective as of March 23, 2005 by and
between AMERICAN SKIING COMPANY, a Delaware corporation (the "Company"), and
Xxxxxxx X. Fair (the "Executive").
WHEREAS, the Company desires to continue to employ the Executive and
the Executive desires to continue to be so employed, on the terms and subject to
the terms and conditions set forth in this agreement (the "Agreement");
NOW, THEREFORE, in consideration of the mutual covenants set forth
herein and for other good and valuable consideration the parties hereto hereby
agree as follows:
1. Employment: Term. The Company hereby agrees to continue to
employ the Executive, and the Executive agrees to continue to be so employed by
the Company, upon the terms and subject to the conditions set forth herein,
commencing as of September 1, 2003 (the "Commencement Date") and ending on
August 31, 2006 (the "Initial Term"); provided, however, that such term shall be
automatically extended for successive twelve (12) month periods unless, no later
than sixty (60) days prior to the expiration of the Initial Term or any
extension thereof, either party hereto shall provide written notice (a
"Non-Renewal Notice") to the other party hereto of its or his desire not to
extend the term hereof (the Initial Term together with any extension shall be
referred to hereinafter as the "Term"). Notwithstanding the foregoing, this
Agreement may be terminated prior to the expiration of the Term in accordance
with Section 4 of this Agreement.
2. Position: Conduct.
(a) During the Term, the Executive shall hold the title and
office of, and serve as the Chief Executive Officer of the Company. The
Executive shall undertake the responsibilities and exercise the authority
customarily performed, undertaken and exercised by persons situated in a similar
executive capacity, and shall perform such other specific duties and services
(including service as an officer, director or equivalent position of any direct
or indirect subsidiary without additional compensation) as the Board of
Directors of the Company (the "Board") shall reasonably request. The Executive
shall report solely to the Board. During the Term, the Company shall provide the
Executive with executive office space and administrative and secretarial
assistance and other support services consistent with his position and past
practice.
(b) During the Term, the Executive agrees to devote his full
business time and best efforts and attention to the business and affairs of the
Company and to faithfully and diligently perform, to the best of his ability,
all of his duties and responsibilities hereunder. Nothing in this Agreement
shall preclude the Executive from devoting reasonable time and attention to (i)
serving, with the approval of the Board, as a director, trustee or member of any
committee of any organization, (ii) engaging in charitable and community
activities and (iii) managing his personal investments and affairs; provided
that such activities do not involve any material conflict of interest with the
interests of the Company or, individually or collectively interfere materially
with the performance by the Executive of his duties and responsibilities under
this Agreement. Notwithstanding the foregoing and except as expressly provided
herein, during the Term, the Executive may not accept employment with any other
individual or entity, or engage in any other venture which is directly in
conflict or competition with the business of the Company. The Executive will
promptly disclose to the Board any membership on any board of or any investment
in any recreation related industry, service or product or any real estate within
five (5) miles of any property of the Company or any of its affiliates.
(c) The Executive's office and primary place of rendering his
services under this Agreement shall be at the Company's headquarters. The
Executive shall not be required to relocate under this Agreement, but shall be
required to undertake reasonable and customary business travel.
3. Salary: Additional Consideration: Perquisites and Benefits.
(a) Salary. During the Term, the Company shall pay the Executive
a base salary (the "Base Salary") at an annual rate of not less than $400,000.
Subject to annual review, such Base Salary may be increased from time to time
but in no event shall be decreased from the highest Base Salary received by the
Executive during the Term without the prior consent of the Executive. Base
Salary shall be paid in periodic installments in accordance with the Company's
standard practice, but not less frequently than semi-monthly.
(b) Bonus.
(i) For each fiscal year (August 1st through July 31st)
during the Term, the Executive shall be eligible to participate in the Company's
bonus plan ("Bonus Plan") and to receive a bonus from the Company (the "Annual
Bonus") pursuant to and in accordance with the terms of the Bonus Plan as in
effect from time to time and as determined by the Compensation Committee of the
Board. The Executive's target Annual Bonus under the Bonus Plan shall not be
less than one hundred percent (100%) of the Executive's Base Salary.
(ii) In addition, within five (5) business days following the
Executive's execution of this Agreement, the Company shall pay to the Executive
a one-time renewal bonus equal to the product of (A) $900.00 and (B) the number
of full months between October, 2002 and the date hereof.
(c) Employee Benefits.
During the Term, the Executive shall participate in all plans
now existing or hereafter adopted by the Company for its management employees or
the general benefit of its employees, such as profit-sharing, bonuses, stock
option or other incentive compensation plans, life and health insurance plans,
or other insurance plans and benefits on the same basis and subject to the same
qualifications as other senior executive officers.
(d) Incentives. The Executive shall be eligible for participation
in the Company's Phantom Equity Plan, as amended from time to time by the
Compensation Committee of the Board and as approved by the Board and currently
in effect (the "Equity Plan") at a participation percentage equal to twenty-five
percent (25%) of the Total Plan Pool (as defined in the Equity Plan). The terms
of such participation shall be governed by the Equity Plan and an award
agreement entered into by and between the Executive and the Company.
(e) Expenses. The Company shall reimburse the Executive, in
accordance with its standard policies from time to time as in effect, for all
out-of-pocket business expenses as may be incurred by the Executive in the
performance of his duties under this Agreement. The Company will also reimburse
the Executive for vehicle leasing and operating costs not to exceed $900 per
month.
(f) Vacation. The Executive shall be entitled to vacation time to
be credited and taken in accordance with the Company's policy from time to time
as in effect for senior executives, which in any event shall not be less than a
total of four (4) weeks per calendar year.
(g) Indemnification. To the fullest extent permitted by
applicable law, the Executive shall be indemnified and held harmless by the
Company against any and all judgments, penalties, fines, amounts paid in
settlements, and other reasonable expenses (including, without limitation,
reasonable attorney's fees and disbursements) actually incurred by the Executive
in connection with any threatened, pending or completed action, suit or
proceeding (whether civil, criminal, administrative, investigative or otherwise)
relating to or in connection with any action or omission in his capacity as a
director, officer or employee of the Company except any action which would
otherwise constitute "Cause" (as such term is defined in Section 4(b)(ii) or
4(b)(iii) of this Agreement). The Company shall use reasonable best efforts to
maintain Directors and Officers Insurance in accordance with past practices.
Indemnification under this Section 3(g) shall be in addition to, and not in lieu
of, any other indemnification by the Company of it's officers and directors.
4. Termination and Severance.
(a) Death or Disability. The Term shall terminate immediately
upon the Executive's death or, upon thirty (30) days prior written notice by the
Company, in the case of a determination of the Executive's Disability. As used
herein the term "Disability" means the Executive's inability to perform his
duties and responsibilities under this Agreement for a period of more than 120
consecutive days, or for more than 180 days, whether or not continuous, during
any 365-day period, due to physical or mental incapacity or impairment. A
determination of Disability will be made by a physician reasonably satisfactory
to both the Executive and the Company and paid for by the Company whose decision
shall be final and binding on the Executive and the Company; provided that if
the parties cannot agree as to a physician, then each shall select and pay for a
physician and these two together shall select a third physician whose fee shall
be borne equally by the Executive and the Company and whose determination of
Disability shall be binding on the Executive and the Company.
If the Term is terminated upon the Executive's death or Disability, the
Company shall pay to the Executive's estate or the Executive, as the case may
be, a lump sum payment equal to one times the sum of (i) the Executive's annual
Base Salary as in effect on the date of such termination and (ii) any accrued
but unpaid vacation through the date of such termination. In addition to the
foregoing, the Executive shall be entitled to receive a pro rata portion of the
Executive's Annual Bonus with respect to the fiscal year in which the
termination occurred, which pro rata Annual Bonus shall be paid at the same time
bonuses are normally paid to senior management of the Company pursuant to the
Bonus Plan. The Company may, at its election, satisfy all or a portion of its
payment obligations of this Section 4(a) through the purchase of insurance.
(b) Termination for Cause. The Term may be terminated by the
Company upon notice (as set forth in this Section 4(b)) to the Executive upon
the occurrence of any event constituting "Cause" as defined below. If the Term
is terminated by the Company for Cause, the Company will pay the Executive an
aggregate amount equal to the Executive's accrued and unpaid Base Salary and
vacation pay through the date of such termination. For purposes of this
Agreement, "Cause" shall mean the Executive's: (i) willful and intentional
failure or refusal to perform or observe any of his material duties,
responsibilities or obligations set forth in this Agreement; provided, however,
that the Company shall not be deemed to have Cause pursuant to this clause (i)
unless the Company gives the Executive written notice that the specified conduct
has occurred and making specific reference to this Section 4(b)(i) and the
Executive fails to cure the conduct within thirty (30) days after receipt of
such notice; (ii) any willful and intentional act of the Executive involving
malfeasance, fraud, theft, misappropriation of funds, embezzlement or dishonesty
relating to the Company; or (iii) the Executive's conviction of, or a plea of
guilty or nolo contendere to, an offense which is a felony in the jurisdiction
involved or any felony or misdemeanor involving misappropriation of Company
property.
Termination of the Executive for Cause shall be communicated by a
Notice of Termination. For purposes of this Agreement, a "Notice of Termination"
shall mean delivery to the Executive of a copy of a resolution duly adopted by
the affirmative vote of the majority of the Board that the Executive has engaged
in conduct constituting Cause and with respect to any termination based upon
conduct described in clause (i) above, that the Executive failed to cure such
conduct during the thirty-day period following the date on which the Company
gave written notice of the conduct referred to in such clause (i). For purposes
of this Agreement, no such purported termination of the Executive's employment
shall be effective without such Notice of Termination.
(c) Termination by the Executive without Good Reason. If the Term
is terminated by the Executive other than because of death, Disability or for
Good Reason (as such term is defined in Section 4(d) hereof), the Company shall
pay to the Executive an aggregate amount equal to the Executive's accrued and
unpaid Base Salary and vacation through the date of such termination.
(d) Termination By the Company without Cause other than on
account of death or Disability or by the Executive for Good Reason. If the Term
is terminated by the Company without Cause (other than by reason of death or
Disability), or if the Executive terminates the Term for Good Reason (as defined
below), (i) the Company shall pay to the Executive a lump sum payment equal to
the sum of one times (A) the Executive's Base Salary at the rate in effect on
the date of such termination, (B) an amount equal to the Executive's Annual
Bonus paid pursuant to the Bonus Plan for the fiscal year preceding such
termination and (C) any accrued, but unpaid vacation through the date of such
termination; (ii) Awards made to the Executive pursuant to the Company's stock
option plan and Phantom Equity Plan shall vest as if the Executive remained
employed with the Company through the next applicable vesting date immediately
following such termination; and (iii) the Company shall continue in effect the
Executive's health benefits at the Company's expense until the earlier of: (A)
one year following such termination or (B) the date on which the Executive
obtains comparable or superior health coverage from a subsequent employer.
For purposes of this Agreement, "Good Reason" shall mean the occurrence
of any of the following without the prior written consent of the Executive: (I)
assignment of the Executive of duties materially inconsistent with the
Executive's position as described in Section 2(a) hereof, (II) any material
diminution in the Executive's duties or responsibilities, other than in
connection with the termination of the Executive's employment for Cause,
Disability or as a result of the Executive's death or by the Executive other
than for Good Reason, (III) the material breach by the Company of this
Agreement, or (IV) the provision by the Company of a Non-Renewal Notice pursuant
to Section 1 hereof; provided, however, that Good Reason shall not exist (x)
pursuant to clause (III) unless the Executive gives the Company written notice
that the specified conduct or breach has occurred and the Company fails to cure
the conduct or breach within thirty (30) days of receipt of such notice and (y)
under the circumstances and conditions described in Exhibit B annexed hereto.
(e) Termination By the Company without Cause other than on
account of death or Disability or by the Executive for Good Reason following a
Change in Control. If the Term is terminated by the Company without Cause (other
than by reason of death or Disability), or if the Executive terminates the Term
for Good Reason (as defined below) within one year following a "Change in
Control" (as defined below), the Company shall pay to the Executive in a lump
sum an amount equal to (i) 1.5 times the Executive's Base Salary at the rate in
effect on the date of such termination, (ii) any earned but unpaid Annual Bonus
and (iii) any accrued, but unpaid vacation through the date of such termination.
In addition, Awards made to the Executive under the Company's stock option plan
and Phantom Equity Plan shall vest as if the Executive remained employed with
the Company through the next applicable vesting date immediately following such
termination. In addition, the Company shall continue in effect the Executive's
health benefits at the Company's expense until the earlier of: (A) 18 months
following such termination or (B) the date on which the Executive obtains
comparable or superior health coverage from a subsequent employer.
Solely for purposes of this Agreement, the term "Change in
Control" shall mean the first to occur of the consummation by the Company of (i)
a merger or consolidation involving the Company in which Oak Hill Capital
Partners, L.P. and/or its affiliates do not as a result of such merger or
consolidation own, directly or indirectly, more than thirty five percent (35%)
of the combined voting power of the then outstanding voting securities of the
corporation resulting from such merger of consolidation or (ii) a complete
liquidation or dissolution of the Company or an agreement for the sale or other
disposition of all or substantially all of the assets of the Company.
(f) Mitigation. Under no circumstances shall the Executive, upon
termination of his employment hereunder, be required to seek alternative
employment and, in the event the Executive does secure other employment, no
other compensation or other benefits (other than with respect to the
continuation of health benefits described in Section 4(d)) received in respect
of such employment shall be set-off or in any other way limit or reduce the
obligations of the Company under this Section 4.
5. Confidential Information.
The Executive acknowledges that the Company and its subsidiaries
or affiliated ventures ("Company Affiliates") own and have developed and
compiled, and will in the future own, develop and compile certain Confidential
Information and that during the course of his rendering services hereunder,
Confidential Information will be disclosed to the Executive by the Company
Affiliates. The Executive hereby agrees that, during the Term and thereafter, he
will not use or disclose, furnish or make accessible to anyone, directly or
indirectly, any Confidential Information of Company Affiliates.
As used herein, the term "Confidential Information" means any
trade secrets, confidential or proprietary information, or other knowledge,
information, documents or materials, owned, developed or possessed by Company
Affiliate pertaining to its businesses, the confidentiality of which the Company
Affiliate takes reasonable measures to protect, including, but not limited to,
techniques, know-how (including designs, plans, procedures, processes and
research records), software, computer programs, innovations, discoveries,
improvements, research, developments, test results, reports, specifications,
data, formats, marketing data and business plans and strategies, agreements and
other forms of documents, expansion plans, budgets, projections, and salary,
staffing and employment information. Notwithstanding the foregoing, Confidential
Information shall not in any event include information which (i) was generally
known or generally available to the public prior to disclosure to the Executive,
(ii) becomes generally known or generally available to the public subsequent to
its disclosure to the Executive through no wrongful act of the Executive, (iii)
is or becomes available to the Executive from sources other than the Company
Affiliates which sources are not known to the Executive to be under any duty of
confidentiality with respect thereto, (iv) the Executive is required to disclose
by applicable law or regulation or by order of any court or federal, state or
local regulatory or administrative body (provided that the Executive provides
the Company with prior notice of the contemplated disclosure and reasonably
cooperates with the Company, at the Company's sole expense, in seeking a
protective order or other appropriate protection of such information) or (v)
known to the Executive prior to his employment with the Company.
6. Nonsolicitation and Noncompetition.
(a) The Executive recognizes and acknowledges that the services
to be performed by him hereunder are special, unique and extraordinary and the
Executive further acknowledges and recognizes the highly competitive nature of
the business of the Company. The Executive understands that the provisions of
this Section 6 may limit the Executive's ability to earn a livelihood in a
business similar to the business of the Company but nevertheless agrees and
hereby acknowledges that (i) such provisions do not impose a greater restraint
than is necessary to protect the goodwill or other business interests of the
Company, (ii) such provisions contain reasonable limitations as to time and
scope of activity to be restrained, (iii) such provisions are not harmful to the
general public, (iv) such provisions are not unduly burdensome to the Executive,
and (v) the consideration provided hereunder is sufficient to compensate the
Executive for the restrictions contained in such provisions. In consideration
thereof and in light of the Executive's education, skills and liabilities, the
Executive agrees that the Executive will not assert in any forum that such
provisions prevent the Executive from earning a living or otherwise are void or
unenforceable or should be held unenforceable.
(b) Accordingly, the Executive agrees that during the Term and
for a period of twelve (12) months following termination of employment (the
"Restrictive Period"), the Executive will not (i) directly or indirectly (A)
solicit or encourage any employee of the Company to leave the employment of the
Company or (B) hire any such employee who has left the employment of the Company
within one year after termination of such employee's employment with the Company
and (ii) directly or indirectly, solicit or encourage to cease to work with the
Company any consultant then under contract with the Company.
(c) During the Term and the Restricted Period, the Executive will
not, directly or indirectly, as an officer, director, stockholder, partner,
member, associate, employee, consultant, owner, agent, director, co-venturer or
otherwise, become or be financially interested in or be associated with any
other person or entity, in any state in the United States in which the Company
has operations at the date of his termination of employment, in a "Competitive
Business" with that of the Company at such time. For purposes of the Agreement,
a Competitive Business shall mean any business which derives 25% or more of its
revenue directly or indirectly from skiing, other winter recreation resorts,
winter recreation real estate development and related activities which involve
skiing and winter recreation resorts as its primary business. The Executive's
ownership of shares in the Company and the ownership, directly or indirectly, of
not more than five percent (5%) of the issued and outstanding stock of any
corporation, the shares of which are regularly traded on a national securities
exchange or in the over-the-counter market, shall not in any event be deemed to
be a violation of the provisions of this Section 6.
(d) It is expressly understood and agreed that although the
Executive and the Company consider the restrictions contained in this Section 6
to be reasonable, if a final judicial determination is made by a court of
competent jurisdiction that the time or territory or any other restriction
contained in this Agreement is an unenforceable restriction against the
Executive, the provisions of this Agreement shall not be rendered void but shall
be deemed amended to apply as to such maximum time and territory and to such
maximum extent as such court may judicially determine or indicate to be
enforceable. Alternatively, if any court of competent jurisdiction finds that
any restriction contained in this Agreement is unenforceable, and such
restriction cannot be amended so as to make it enforceable, such finding shall
not affect the enforceability of any of the other restrictions contained herein.
7. Specific Performance.
(a) The Executive acknowledges that the services to be rendered
by him hereunder are of a special, unique, extraordinary and personal character
and that the Company would sustain irreparable harm in the event of a violation
by the Executive of Section 5 or 6 of this Agreement. Therefore, in addition to
any other remedies available, the Company shall be entitled to specific
enforcement and/or injunction from any court of competent jurisdiction
restraining the Executive from committing or continuing any such violation of
this Agreement without proving actual damages or posting a bond or other
security. Nothing herein shall be construed as prohibiting the Company from
pursuing any other remedies available to it for such breach or threatened
breach, including the recovery of damages.
(b) If any of the restrictions on activities of the Executive
contained in Section 6 hereof shall for any reason be held by a court of
competent jurisdiction to be excessively broad, such restrictions shall be
construed so as thereafter to be limited or reduced to be enforceable to the
maximum extent comparable with the applicable law as it shall then appear; it
being understood that by the execution of this Agreement the parties hereto
regard such restrictions as reasonable and compatible with their respective
rights.
8. Withholding. The parties agree that all payments to be made to
the Executive by the Company pursuant to this Agreement shall be subject to all
applicable withholding obligations of the Company.
9. Notices. All notices required or permitted hereunder shall be in
writing and shall be deemed given and received when delivered personally, four
(4) days after being mailed if sent by registered or certified mail, postage
pre-paid, or by one (1) day after delivery if sent by air courier (for next-day
delivery) with evidence or receipt thereof or by facsimile with receipt
confirmed by the addressee. Such notices shall be addressed as follows: (i) if
to the Executive, to the address of the Executive on file with the personnel
records of the Company; (ii) if to the Company, at the principal executive
offices of the Company, to the attention of the General Counsel of the Company;
or (iii) to any other address of which such party may have given notice to the
other parties in the manner specified above.
10. Miscellaneous.
(a) This Agreement is a personal contract calling for the
provisions of unique services by the Executive, and the Executive's rights and
obligations hereunder may not be sold, transferred, assigned, pledged or
hypothecated by the Executive. The rights and obligations of the Company
hereunder will be binding upon and run in favor of its respective successors and
assigns.
(b) This Agreement shall be governed by and construed and
enforced in accordance with the internal laws of the State of Utah, without
regard to conflict of laws principles.
(c) Any controversy arising out of or relating to this
Agreement or any breach hereof shall be settled by arbitration in Salt Lake
City, Utah by a single neutral arbitrator in accordance with the Commercial
Arbitration Rules of the American Arbitration Association. Judgment upon any
award rendered may be entered in any court having jurisdiction thereof, except
in the event of a controversy relating to any alleged violation by the Executive
of Section 6 or 7 hereof, in which case the Company shall be entitled to seek
injunction relief from a court of competent jurisdiction without the requirement
to seek arbitration.
(d) The headings of the various sections of this Agreement are
for convenience of reference only and shall not define or limit any of the terms
or provisions hereof.
(e) The provisions of this Agreement which by their terms call
for performance subsequent to the expiration or termination of the Term shall
survive such expiration or termination.
(f) This Agreement constitutes the entire agreement of the
parties hereto with respect to the subject matter hereof (other than any Stock
Option Agreement entered into by and between the Executive and the Company, the
Phantom Equity Award Agreement entered into by and between the Executive and the
Company and the side letter attached hereto as Exhibit A) and supersedes all
other prior agreements and undertakings, both written and oral, among the
parties with respect to the subject matter hereof, all of which shall be
terminated on the Commencement Date. In addition, that parties hereto hereby
waive all rights such party may have under all other prior agreements and hereto
hereby waive all rights such party may have under all other prior agreements and
undertakings, both written and oral, among the parties hereto, or among the
Executive, with respect to the subject matter hereof.
* * * * * *
EXECUTIVE
/s/Xxxxxxx X. Fair
-------------------------------------
Xxxxxxx X. Fair
AMERICAN SKIING COMPANY
/s/Xxxxxx X. Xxxxxxx, Xx.
-------------------------------------
By: Xxxxxx X. Xxxxxxx, Xx., a member
of the Compensation Committee of
the Board of Directors
EXHIBIT A
March 16, 2005
Xx. Xxxxxxx X. Fair
Chief Executive Officer
PO Box 4552
000 Xxxxx Xxxxxx, Number 303
Park City, Utah 84060
Dear BJ:
This letter confirms that, as of the date hereof, any award
granted to you under the Equity Plan referenced in Section 3(d) of your
Employment Agreement with the Company is 75% vested and will be 100% vested on
April 1, 2005. Furthermore, this letter confirms that, if your employment is
terminated pursuant to Sections 4(b) or (c) of your Employment Agreement, your
entitlement to exercise and/or continue to hold (i) options to purchase the
Common Stock of the Company or (ii) any awards under the Equity Plan previously
granted to you shall be as set forth in the respective plans under which such
awards were made.
Sincerely,
Xxxxxx X. Xxxxxxx, Xx.
