ESCROW AGREEMENT
THIS ESCROW AGREEMENT (this "Agreement") is made and entered
into as of December 19, 1997, by and among Fairfield Communities, Inc., a
Delaware corporation ("Fairfield"), Xxxxx X. Xxxxxx ("RM"), R & A Partnership,
Ltd., a Texas limited partnership ("R&A"), and Xxxxx Xxxxxxx ("KS" and together
with RM and R&A, the "Stockholders"), and Mercantile Bank of Arkansas, as Escrow
Agent ("Escrow Agent").
RECITALS
A. Fairfield, FCVB Corp., a Florida corporation and wholly owned
subsidiary of Fairfield ("Merger Sub") and Vacation Break USA, Inc., a Florida
corporation ("Vacation Break"), have entered into an Agreement and Plan of
Merger (as the same may be amended or modified from time to time, the "Merger
Agreement"), pursuant to which and upon the terms and subject to the conditions
thereof, Merger Sub will be merged with and into Vacation Break and shares of
Common Stock, par value $.01 per share, of Vacation Break outstanding
immediately prior to the effective time of the Merger (the "Effective Time")
will be converted into and represent the right to receive, among other things, a
number of shares of Common Stock, par value $.01 per share, of Fairfield
("Fairfield Common Stock").
B. Concurrently with the execution of the Merger Agreement, Fairfield,
Merger Sub, and the Stockholders entered into a Principal Stockholders Agreement
(as the same may be amended or modified from time to time, the "Principal
Stockholders Agreement"), pursuant to which and upon the terms and conditions
thereof, RM and R&A, jointly and severally as a group, and KS, severally and not
jointly, will indemnify and hold Fairfield and its subsidiaries (including
Vacation Break and its subsidiaries) (each an "Indemnified Person") harmless
from and against certain liabilities.
C. As security for the respective obligations of RM and R&A, as a
group, and KS, to indemnify and hold the Indemnified Persons harmless as
described in Section 5 of the Principal Stockholders Agreement, RM and R&A have
given irrevocable instructions to cause to be deposited 222,287 shares of
Fairfield Common Stock (the "RM/RA Shares") with the Escrow Agent and KS has
given irrevocable instructions to cause to be deposited 55,572 shares of
Fairfield Common Stock (the "KS Shares") with the Escrow Agent.
NOW, THEREFORE, in consideration of the foregoing and the
mutual covenants and agreements contained herein, and intending to be legally
bound hereby, the parties agree as follows:
1. Certain Definitions.
For the purposes of this Agreement, the following terms shall
have the following meanings:
"Additional Matter" shall mean the matter described in Section
5(a)(iii) of the Principal Stockholders Agreement.
"Disbursement Notice" shall mean any notice delivered pursuant
to Section 7(a) or 7(b) instructing the Escrow Agent to release any Escrow
Shares or Escrow Funds from the escrow under this Agreement.
"Escrow Funds" shall mean any and all proceeds of Escrow
Shares sold or disposed of in accordance with Section 4(c) of this Agreement,
any interest or increase received on the investment of such proceeds, and any
cash dividends paid on Escrow Shares held in escrow.
"Escrow Shares" shall mean (i) the shares of Fairfield Common
Stock, deposited in escrow as provided in Section 4 together with all rights
associated with such shares, plus (ii) subject to Section 4(b), all shares or
other securities or property (other than cash) paid as a dividend on or issued
or distributed in respect of such deposited shares, and any shares or other
securities into which such deposited shares may be changed or for which they may
be exchanged pursuant to any stock split, dividend, combination,
reclassification or other corporate action of Fairfield affecting shares of
Fairfield Common Stock generally.
"Indemnified Matter" shall mean each matter that is the
subject of the proceedings described on Schedule 1 hereto.
"KS Indemnified Matter Escrow Amount" shall mean (i) the
number of KS Shares that have on the date of this Agreement an aggregate Share
Value equal to the KS Indemnified Matter Maximum Amount for a particular
Indemnified Matter less the number of those shares sold or disposed of in
accordance with Section 4(c), plus (ii) the Escrow Funds directly attributable
to that number of KS Shares, such KS Shares and Escrow Funds being allocated
under this Agreement to be released under Sections 7(a) and 7(b) in respect of
that Indemnified Matter.
"KS Indemnified Matter Maximum Amount" shall mean with respect
to each Indemnified Matter the amount listed opposite such Indemnified Matter in
the column so named on Schedule 1.
"RM/RA Indemnified Matter Escrow Amount" shall mean (i) the
number of RM/RA Shares that have on the date of this Agreement an aggregate
Share Value equal to the RM/RA Indemnified Matter Maximum Amount for a
particular Indemnified Matter less the number of those shares sold or disposed
of in accordance with Section 4(c), plus (ii) the Escrow Funds directly
attributable to that number of RM/RA Shares, such RM/RA Shares and Escrow Funds
being allocated under this Agreement to be released under Sections 7(a) and 7(b)
in respect of that Indemnified Matter.
"RM/RA Indemnified Matter Maximum Amount" shall mean with
respect to each Indemnified Matter the amount listed opposite such Indemnified
Matter in the column so named on Schedule 1.
"Share Value" shall mean $43 3/16 per share of Fairfield
Common Stock, subject to equitable adjustment by Fairfield to give effect to any
stock split, stock dividend or combination or reclassification of or in respect
of Fairfield Common Stock.
"Stockholder Percentage" shall mean 80% in the case of RM and R&A, as a
group, and 20% in the case of KS.
"Stockholder Sub-account" shall mean the separate sub-account
for each of RM and R&A, as a group, and KS established and maintained by the
Escrow Agent in which the RM/RA Shares and KS Shares deposited on behalf of RM
and R&A, as a group, and KS, respectively, and the Escrow Funds derived
therefrom, shall be held on deposit in escrow as provided in this Agreement.
2. Appointment of Escrow Agent. The Stockholders and Fairfield
hereby appoint Mercantile Bank of Arkansas as Escrow Agent for the purposes set
forth in this Agreement, and the Escrow Agent hereby accepts that appointment
and agrees to be bound by the terms and conditions of this Agreement.
3. Deposit in Escrow. The Stockholders have, pursuant to
irrevocable instructions, directed the Exchange Agent (as defined in the Merger
Agreement) to deposit on behalf of RM and R&A, as a group, and KS in escrow with
the Escrow Agent a certificate or certificates representing the RM/RA Shares and
the KS Shares, respectively, registered in the name of the Escrow Agent or the
nominee or nominees of the Escrow Agent. The Escrow Agent shall issue an
appropriate receipt for the RM/RA Shares and the KS Shares so deposited on
behalf of RM and R&A, and KS upon delivery of such certificate or certificates
and shall hold the RM/RA Shares and the KS Shares and any and all Escrow Funds
derived therefrom in separate Stockholder Sub-accounts for the benefit of
Fairfield and the applicable Stockholder as the source of payment to Fairfield
of any amount owed by the Stockholders under Section 5 of the Principal
Stockholders Agreement (an "Indemnifiable Loss").
4. Voting Rights and Distributions; Conversion of Escrow Shares.
(a) Voting Rights of Escrow Shares. All voting rights with
respect to the Escrow Shares held in each Stockholder Sub-account may be
exercised by the applicable Stockholder and the Escrow Agent shall from time to
time execute and deliver to the Stockholders such proxies, consents or other
documents as may be necessary to enable the Stockholders to exercise such
rights.
(b) Distributions on Escrow Shares. All cash and non-cash
dividends and other distributions paid or made with respect to or on the Escrow
Shares held in the Stockholder Sub-account for each Stockholder from time to
time, including, without limitation, all shares or other securities or property
paid as a dividend on or distributed in respect of such Escrow Shares, shall be
received by the Escrow Agent and held in the same Stockholder Sub-account as the
Escrow Shares on which or in respect of which they were paid, pending
disbursement or distribution thereof in accordance with this Agreement.
(c) Conversion of Escrow Shares. The Escrow Agent shall be
entitled, upon the written direction of each Stockholder, to effect the sale,
for cash, of any or all of the Escrow Shares held in the Stockholder Sub-account
for such Stockholder in market transactions with unrelated third parties at
market prices reflecting arm's-length negotiation, provided that all proceeds of
any such sale of Escrow Shares are held as Escrow Funds, pending disbursement or
distribution thereof in accordance with this Agreement. All Escrow Funds may be
invested exclusively in one or more of the investments described in Schedule 2
hereto as each Stockholder shall direct in writing with respect to the Escrow
Funds held in the Stockholder Sub-account for such Stockholder and any interest
or increase received in respect of any investment will be held as Escrow Funds
pending disbursement or distribution thereof in accordance with this Agreement.
(d) Reliance on Stockholder Action. The applicable Stockholder
for the Stockholder Sub-account in which the RM/RA Shares are deposited is RM
and R&A, as a group, and the Escrow Agent shall be entitled to rely on
directions from either RM or R&A with respect to any action, consent or
directive to be taken or given in respect of the Escrow Shares and Escrow Funds
in that Stockholder Sub-account.
(e) Release of Excess Escrow Funds. If at the time of payment
of any cash dividend on or distribution in respect of any Escrow Shares held in
any Stockholder Sub-account, the receipt of proceeds from the sale of any Escrow
Shares in accordance with Section 4(c) or receipt of any interest on or increase
in respect of any investment of the proceeds thereof held in any Stockholder
Sub-account, the sum of (i) the aggregate value of the Escrow Shares (based upon
the Share Value) and the Escrow Funds held in such Stockholder Sub-account
comprising the KS Indemnified Matter Escrow Amount or the RM/RA Indemnified
Matter Escrow Amount, as applicable, for each Indemnified Matter, plus (ii) the
aggregate value of the Escrow Shares and Escrow Funds theretofore disbursed from
such Stockholder Sub-account to Fairfield for application against Indemnifiable
Losses in respect of each Indemnified Matter, exceeds the corresponding KS
Indemnified Matter Maximum Amount or RM/RA Indemnified Matter Maximum Amount for
each Indemnified Matter, then, to the extent of such excess, the Escrow Agent
shall distribute the cash dividends, distributions, sale proceeds or interest
payments to the applicable Stockholder.
5. Assessments on Escrow Shares and Escrow Funds. Each of the
Stockholders shall be liable for, and shall from time to time when due and
payable, pay and discharge all taxes, assessments and governmental charges,
including, without limitation, income taxes assessed on dividends and
distributions on the Escrow Shares and Escrow Funds held in the Stockholder
Sub-account for such Stockholder or any sale or other disposition of any Escrow
Shares, imposed on the Escrow Shares and Escrow Funds in such Stockholder
Sub-account, or on any cash, securities or other property then held in escrow
hereunder or on any dividends or interest or other income arising therefrom
payable to such Stockholder under this Agreement. If the Escrow Agent is
obligated to withhold any amount of any cash dividend or cash distribution or
sale proceeds, interest thereon or other amount for payment of a Stockholder's
taxes, the Stockholder upon 2 business days' notice from the Escrow Agent will
promptly pay that amount to the Escrow Agent or deposit an equal amount of funds
in the escrow.
6. Beneficial Ownership; No Liens or Encumbrances. Except to
the extent otherwise contemplated by this Agreement, each Stockholder shall, at
all times, beneficially own all Escrow Shares and Escrow Funds on deposit with
the Escrow Agent in the applicable Stockholder Sub-account. The Stockholders
shall not pledge, encumber or permit the imposition of any pledge, claim, lien,
charge, encumbrance or security interest of any kind or nature on, the Escrow
Shares or Escrow Funds or any rights of the Stockholders in, to, or under the
Escrow Shares, Escrow Funds or this Agreement in any manner whatsoever.
7. Release of Escrow Shares and Escrow Funds.
(a) Litigation Expenses. Promptly following receipt of a
Disbursement Notice in the form of Exhibit A signed by Fairfield and specifying
the amount of the Indemnified Matter Escrow Amount to be released, the Escrow
Agent will release Escrow Shares or Escrow Funds or both in accordance with
Sections 7(c), 7(d) and 7(e) equal to the amount set forth in the Disbursement
Notice. A Disbursement Notice under this Section 7(a) may be delivered at any
time and the Escrow Agent will release the specified amount within 5 business
days after receipt of that Disbursement Notice.
(b) Settlements; Other Releases.
(i) If Fairfield is required under Section 5(g) of the
Principal Stockholders Agreement to obtain the Stockholders' approval
of a settlement of an Indemnified Matter, Fairfield, KS, and RM or R&A
will deliver a Disbursement Notice in the form of Exhibit B specifying
the amounts of the Indemnified Matter Escrow Amount to be released from
the escrow. The Escrow Agent will release Escrow Shares or Escrow Funds
or both in accordance with Sections 7(c), 7(d) and 7(e) equal to the
amount specified in the Disbursement Notice.
(ii) If Fairfield is not required under Section 5(g) of the
Principal Stockholders Agreement to obtain the Stockholders' approval
(or the Stockholders are deemed to have approved) of a settlement of an
Indemnified Matter or a final, nonappealable judgment or order of a
court has been entered in respect of a Indemnified Matter, Fairfield
may deliver to the Escrow Agent a Disbursement Notice in the form of
Exhibit C specifying the amounts of the Indemnified Matter Escrow
Amount to be released. The Escrow Agent will release Escrow Shares or
Escrow Funds or both in accordance with Sections 7(c), 7(d) and 7(e)
equal to the amount specified in the Disbursement Notice.
(iii) Promptly following the full and final settlement of, or
the entry of a final, nonappealable judgment or order in respect of, an
Indemnified Matter and the payment of all Indemnifiable Losses in
connection therewith, Fairfield shall deliver to the Escrow Agent a
Disbursement Notice in the form of Exhibit B, directing the Escrow
Agent release to KS the remaining portion of the KS Indemnified Matter
Escrow Amount and to release to RM and R&A the remaining portion of the
RM/RA Indemnified Matter Escrow Amount in respect of that Indemnified
Matter.
(iv) If permitted under Section 5(k) of the Principal
Stockholders Agreement, Fairfield and the Stockholders may deliver to
the Escrow Agent a Disbursement Notice in the form of Exhibit D
specifying the amounts of the Indemnified Matter Escrow Amount to be
released. The Escrow Agent will release Escrow Shares or Escrow Funds
or both in accordance with Sections 7(c), 7(d) and 7(e) equal to the
amount specified in the Disbursement Notice.
(v) A Disbursement Notice may be delivered under this Section
7(b) at any time, and the Escrow Agent will release the specified
amount within 5 business days after receipt of the Disbursement Notice.
(c) Priority. The Escrow Agent shall release to each Person
specified in a Disbursement Notice the required amount of each of the KS
Indemnified Matter Escrow Amount and the RM/RA Indemnified Matter Escrow Amount
from the Escrow Funds and/or Escrow Shares that comprise that KS Indemnified
Matter Escrow Amount and RM/RA Indemnified Matter Escrow Amount for the
applicable Indemnified Matter up to the corresponding KS Indemnified Matter
Maximum Amount and RM/RA Indemnified Matter Maximum Amount for the Indemnified
Matter. The number of Escrow Shares to be released will be based on the Share
Value.
(d) Certificates. Certificates and other evidence of Escrow
Shares delivered to Fairfield pursuant to this Agreement shall be duly endorsed
(with signature guaranteed) by the Escrow Agent for transfer to Fairfield or its
nominee or designee. Certificates and other evidence of Escrow Shares delivered
to the Stockholders shall be duly endorsed (with signature guaranteed) by the
Escrow Agent for transfer in such name or names as they shall direct.
(e) Allocation Among Sub-accounts. The Escrow Shares and
Escrow Funds to be released under Sections 7(a) and 7(b) shall be withdrawn by
the Escrow Agent from the Escrow Shares and Escrow Funds that comprise the
appropriate KS Indemnified Matter Escrow Amount and RM/RA Indemnified Matter
Escrow Amount in the Stockholder Sub-accounts in the following manner: first,
Escrow Funds to the extent thereof, and, second, such number of Escrow Shares
(to the nearest whole Escrow Share). In no event will the sum of (i) the amount
of Escrow Funds and value of Escrow Shares to be released from each Stockholder
Sub-account pursuant to a Disbursement Notice, plus (ii) the aggregate amount of
Escrow Funds and value of Escrow Shares theretofore released from such
Stockholder Sub-account and delivered to Fairfield with respect to the
particular Indemnified Matter to which that Disbursement Notice relates, exceed
the applicable KS Indemnified Matter Maximum Amount or RM/RA Indemnified Matter
Maximum Amount for such Indemnified Matter. Of any amount to be released under
Sections 7(a) or 7(b) to satisfy a Stockholder's obligation under Section 5(a)
of the Principal Stockholders Agreement, an amount equal to 20% and 80%,
respectively, of that amount shall be withdrawn (to the extent of the balance
thereof) from Escrow Funds and/or Escrow Shares then held in each Stockholder
Sub-account that comprise such KS Indemnified Matter Escrow Amount and such
RM/RA Indemnified Matter Escrow Amount. No fractional Escrow Shares shall be
created or released under this Section 7.
8. Escrow Agent.
(a) Agreements to Govern. The duties and obligations of the
Escrow Agent hereunder shall be determined solely by the express provisions of
this Agreement.
(b) Liability. The Escrow Agent shall not be liable to anyone
whatsoever by reason of any error of judgment or for any act done or step taken
or omitted by it in good faith or any mistake of fact or law or for anything
which it may do or refrain from doing in connection herewith, unless caused by
or arising out of its own gross negligence or willful misconduct. Fairfield and
the Stockholders shall, jointly and severally, indemnify and hold the Escrow
Agent harmless from any and all liability and expense which may arise out of any
action taken or omitted by it as Escrow Agent in accordance with this Agreement,
as the same may be amended, modified or supplemented, except such liability and
expense as may result from the gross negligence or willful misconduct of the
Escrow Agent.
(c) Reliance on Instructions. The Escrow Agent shall be
entitled to rely and shall be protected in acting in reliance upon any
instructions or directions furnished to it in writing by Fairfield or the
Stockholders, or pursuant to any provision of this Agreement and shall be
entitled to treat as genuine, and as the document it purports to be, any letter,
paper or other document furnished to it by Fairfield or the Stockholders and
believed by it to be genuine and to have been signed and presented by the proper
party or parties.
(d) Resignation of Escrow Agent; Appointment of Successor. The
Escrow Agent, or any successor to it hereafter appointed, may at any time resign
by giving notice in writing to Fairfield and the Stockholders and shall be
discharged from its duties hereunder upon the acceptance of appointment of a
successor Escrow Agent as hereinafter provided. In the event of any such
resignation, a successor Escrow Agent, which shall be a title insurance company
or financial institution acceptable to Fairfield, shall be appointed by
Fairfield. Any such successor Escrow Agent shall deliver to Fairfield and the
Stockholders a written instrument accepting such appointment hereunder, and
thereupon it shall succeed to all the rights and duties of the Escrow Agent
hereunder and shall be entitled to receive all the Escrow Shares and Escrow
Funds held by the predecessor Escrow Agent hereunder.
(e) Consultation with Counsel. The Escrow Agent may consult
with counsel to be selected and employed by it and shall be fully protected with
respect to any action under this Agreement taken or suffered in good faith by
the Escrow Agent in accordance with the opinion of such counsel.
(f) Compensation and Expenses. The Escrow Agent shall receive
compensation for its services at its customary rates as in effect from time to
time, together with reimbursement of out-of-pocket expenses incurred by Escrow
Agent in connection with this Agreement, including reasonable attorneys' fees
incurred pursuant to Section 9(e). Fairfield shall pay such compensation and
expenses to the Escrow Agent and shall be reimbursed by RM and R&A, as a group,
and KS, in accordance with their respective Stockholder Percentages, up to 50%
of the aggregate amount thereof that Fairfield has paid at the time of each
distribution to any of the Stockholders under this Agreement, such reimbursement
to be payable solely from amounts that would have been otherwise distributed to
the Stockholders.
(g) Records; Reports. The Escrow Agent will maintain
sufficient records to determine the Indemnified Matter Escrow Amount for each
Indemnified Matter and will provide monthly reports in reasonable detail of the
Indemnified Matter Escrow Amount and its components for each Indemnified Matter.
The Escrow Agent will also provide a monthly report of any amounts released from
the escrow in respect of each Indemnified Matter.
9. Miscellaneous.
(a) Amendment. This Agreement may be amended only by a writing
executed by Fairfield, each of the Stockholders, and the Escrow Agent.
(b) Entire Agreement. This Agreement and the other agreements
expressly referred to herein set forth the entire understanding of the parties
hereto regarding the subject matter hereof and supersede all prior contracts,
agreements, arrangements, communications, discussions, representations and
warranties, whether oral or written, between the parties regarding the subject
matter hereof.
(c) Notices.
If to Fairfield:
Fairfield Communities, Inc.
00000 Xxxxxxxxx Xxxxxx Xxxxx
Xxxxxx Xxxx, Xxxxxxxx 00000
Attention: Xx. Xxxx X. XxXxxxxxx
with a copy to:
Xxxxx, Day, Xxxxxx & Xxxxx
0000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attention: Xxxx X. Xxxxxx, Esq.
If to RM:
Xx. Xxxxx X. Xxxxxx
Vacation Break USA, Inc.
0000 X. Xxxxxxx Xxxxxx
Xxxx Xxxxx, Xxxxx 000
Ft. Xxxxxxxxxx, Xxxxxxx 00000
with a copy to:
Greenberg, Traurig, Hoffman,
Lipoff, Xxxxx & Xxxxxxx, P.A.
0000 Xxxxxxxx Xxxxxx
Xxxxx, Xxxxxxx 00000
Attention: Xxxx X. Xxxxxxx, Esq.
If to R&A:
R & A Partnership, Ltd.
0000 X. Xxxxx Xxxxxxxxx
Xxxxxxxx Xxxxx, Xxxxxxx 00000
Attention: Xx. Xxxxx X. Xxxxxx
with a copy to:
Xxxxx & XxXxxxxx
Xxxxxxx Tower
000 Xxxxxxxx Xxxxxx
Xxxxx 0000
Xxxxx, Xxxxxxx 00000-0000
Attention: Xxxxxxxx XxXxxxx, Esq.
If to KS:
Mr. Xxxxx Xxxxxxx
Vacation Break USA, Inc.
0000 X. Xxxxxxx Xxxxxx
Xxxx Xxxxx, Xxxxx 000
Ft. Xxxxxxxxxx, Xxxxxxx 00000
with a copy to:
Greenberg, Traurig, Hoffman,
Lipoff, Xxxxx & Xxxxxxx, P.A.
0000 Xxxxxxxx Xxxxxx
Xxxxx, Xxxxxxx 00000
Attention: Xxxx X. Xxxxxxx, Esq.
If to the Escrow Agent:
Mercantile Bank of Arkansas
Xxx Xxxxxxxxxx Xxxxx
Xxxxx Xxxxxx Xxxx, Xxxxxxxx 00000
Attention: Xxxxx X. Xxxx
(d) Governing Law. This Agreement shall in all respects be
governed by, and construed in accordance with, the laws of the State of Florida,
regardless of the laws that might otherwise govern under applicable principles
of conflicts of laws thereof.
(e) Severability. Each section and subsection of this
Agreement constitutes a separate and distinct provision hereof. It is the intent
of the parties hereto that the provisions of this Agreement be enforced to the
fullest extent permissible under the laws and public policies applicable in each
jurisdiction in which enforcement is sought. Accordingly, if any provision of
this Agreement shall be adjudicated to be invalid, ineffective or unenforceable,
the remaining provisions shall not be affected thereby. The invalid, ineffective
or unenforceable provision shall, without further action by the parties, be
automatically amended to effect the original purpose and intent of the invalid,
ineffective or unenforceable provision; provided, however, that such amendment
shall apply only with respect to the operation of such provision in the
particular jurisdiction with respect to which such adjudication is made.
(f) Waivers. Any waiver by any party of any violation of,
breach of or default under any provision of this Agreement, by the other party
shall not be construed as, or constitute, a continuing waiver of such provision,
or waiver of any other violation of, breach of or default under any other
provision of this Agreement or any other agreements provided for herein.
(g) Headings. The headings in this Agreement are solely for
convenience of reference and shall not be given any effect in the construction
or interpretation of this Agreement.
(h) Counterparts. This Agreement may be executed in any number
of counterparts, each of which shall be deemed to be an original, and all of
which together will constitute one and the same instrument.
(i) Third Parties. Nothing expressed or implied in this
Agreement is intended, or shall be construed, to confer upon or give any person
or entity other than Fairfield, the Stockholders, and the Escrow Agent any
rights or remedies under, or by reason of, this Agreement.
(j) Assignment. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned, in whole or in part, by
operation of law or otherwise by any of the parties without the prior written
consent of the other parties. This Agreement will be binding upon, inure to the
benefit of, and be enforceable by, the parties and their respective heirs, legal
representatives, successors and assigns.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, the parties have signed this Agreement personally
or by their respective officers thereunto duly authorized, all as of the date
first written above.
FAIRFIELD COMMUNITIES, INC.
By:/s/Xxxxxx X. Xxxxxx
---------------------------------
Name: Xxxxxx X. Xxxxxx
-------------------------------
Title:Sr. Vice President and CFO
-----------------------------
R & A PARTNERSHIP, LTD., a Texas limited partnership
By:RPM Investments, Inc., General Partner
-------------------------------------
By:/s/Xxxxx X. Xxxxxx , as General Partner
---------------------------------------
Name: Xxxxx X. Xxxxxx
-------------------------------------
Title: President
------------------------------------
Xxxxx X. Xxxxxx
Xxxxx Xxxxxxx
MERCANTILE BANK OF ARKANSAS,
as Escrow Agent
By:/s/ Xxxxx X. Xxxx
-------------------------
Name: Xxxxx X. Xxxx
----------------------
Title: Vice President
---------------------
SCHEDULE 1
----------------------------------- ---------------------------------------------------------
Indemnified Matters KS Indemnified Matter RM/RA Indemnified Matter
Maximum Amount Maximum Amount
----------------------------------- ------------------------ ---------------------------
----------------------------------- ------------------------ ---------------------------
1. Market Response Group and Laser $ 1,200,000 $4,800,000
Company, Inc. v. Vacation Break
USA, Inc.
----------------------------------- ------------------------ ---------------------------
------------------------------------ ----------------------- ---------------------------
2. Global Marketing & Travel, Inc. v. 100,000 400,000
Vacation Break USA, Inc.
----------------------------------- ------------------------ ---------------------------
----------------------------------- ------------------------ ---------------------------
3. Xxxxx Xxxxxxx, et al. v. Vacation 100,000 400,000
Break USA, Inc.
----------------------------------- ------------------------ ---------------------------
----------------------------------- ------------------------ ---------------------------
4. Additional Matter 1,000,000 4,000,000
----------------------------------- ------------------------ ---------------------------
SCHEDULE 2
Obligations issued or unconditionally guaranteed by the United States
government, or issued by any agency or instrumentality thereof and backed by the
full faith and credit of the United States government, which obligations mature
within one year from the date of investment.
EXHIBIT A
Mercantile Bank of Arkansas
Xxx Xxxxxxxxxx Xxxxx
Xxxxx Xxxxxx Xxxx, Xxxxxxxx 00000
Attention: Xxxx Xxxx
Re: Escrow Agreement, dated as of December 19, 0000, xxxxx Xxxxxxxxx, XX, X&X,
XX and Mercantile Bank of Arkansas, as escrow agent (the "Escrow Agreement")
Gentlemen/Ladies:
Unless otherwise defined in this Disbursement Notice, all terms used
with initial capital letters will have the meanings ascribed to those terms in
the Escrow Agreement. This Disbursement Notice is delivered pursuant to Section
7(a) of the Escrow Agreement. Attached is a reasonably detailed schedule of
litigation expenses incurred which constitute Indemnifiable Losses. The
undersigned hereby certifies that it is entitled pursuant to the terms of
Section 5(d) of the Principal Stockholders Agreement to the release of
$___________ of the Indemnified Matter Escrow Amount in respect of the
[first/second/third/fourth] Indemnified Matter identified on Schedule 1 to the
Escrow Agreement. Release that amount to Fairfield. A copy of this Disbursement
Notice has been sent to the Stockholders.
Very truly yours,
Fairfield Communities, Inc.
By:
Name:
Title:
EXHIBIT B
Mercantile Bank of Arkansas
Xxx Xxxxxxxxxx Xxxxx
Xxxxx Xxxxxx Xxxx, Xxxxxxxx 00000
Attention: Xxxx Xxxx
Re: Escrow Agreement, dated as of December 19, 0000, xxxxx Xxxxxxxxx, XX, X&X,
XX and Mercantile Bank of Arkansas, as escrow agent (the "Escrow Agreement")
Gentlemen/Ladies:
Unless otherwise defined in this Disbursement Notice, all terms used
with initial capital letters will have the meanings ascribed to those terms in
the Escrow Agreement. This Disbursement Notice is delivered pursuant to Section
7(b)(i) or (iii) of the Escrow Agreement in respect of the
[first/second/third/fourth] Indemnified Matter on Schedule 1 to the Escrow
Agreement. Of the KS Indemnified Matter Escrow Amount in respect of that
Indemnified Matter, release $_________ of that amount to Fairfield. Of the RM/RA
Indemnified Matter Escrow Amount in respect of that Indemnified Matter, release
$_________ of that amount to Fairfield.
Very truly yours,
Fairfield Communities, Inc.
By:
Name:
Title:
Xxxxx X. Xxxxxx
Xxxxx Xxxxxxx
R & A Partnership, Ltd.
By:
By: , as General Partner
EXHIBIT C
Mercantile Bank of Arkansas
Xxx Xxxxxxxxxx Xxxxx
Xxxxx Xxxxxx Xxxx, Xxxxxxxx 00000
Attention: Xxxx Xxxx
Re: Escrow Agreement, dated as of December 19, 0000, xxxxx Xxxxxxxxx, XX, X&X,
XX and Mercantile Bank of Arkansas, as escrow agent (the "Escrow Agreement")
Gentlemen/Ladies:
Unless otherwise defined in this Disbursement Notice, all terms used
with initial capital letters will have the meanings ascribed to those terms in
the Escrow Agreement. This Disbursement Notice is delivered pursuant to Section
7(b)(ii) of the Escrow Agreement in respect of the [first/second/third/fourth]
Indemnified Matter on Schedule 1 to the Escrow Agreement. [Attached is a
reasonably detailed schedule of amounts paid or payable which constitute
Indemnifiable Losses.] Of the KS Indemnified Matter Escrow Amount in respect of
that Indemnified Matter, release $_______________ of that amount to
[Fairfield/KS]. Of the RM/RA Indemnified Matter Escrow Amount in respect of that
Indemnified Matter release $_____________ to [Fairfield/RM]. All payments and
deliveries should be made at the addresses identified in the Escrow Agreement
[or identified as the attached Schedule 1.].
A copy of this Disbursement Notice has been sent to the Stockholders.
Very truly yours,
Fairfield Communities, Inc.
By:
Name:
Title:
EXHIBIT D
Mercantile Bank of Arkansas
Xxx Xxxxxxxxxx Xxxxx
Xxxxx Xxxxxx Xxxx, Xxxxxxxx 00000
Attention: Xxxx Xxxx
Re: Escrow Agreement, dated as of December 19, 0000, xxxxx Xxxxxxxxx, XX, X&X,
XX and Mercantile Bank of Arkansas, as escrow agent (the "Escrow Agreement")
Gentlemen/Ladies:
Unless otherwise defined in this Disbursement Notice, all terms used
with initial capital letters will have the meanings ascribed to those terms in
the Escrow Agreement. This Disbursement Notice is delivered pursuant to Section
7(b)(iv) of the Escrow Agreement in respect of the fourth Indemnified Matter on
Schedule 1 to the Escrow Agreement. Of the KS Indemnified Matter Escrow Amount
in respect of that Indemnified Matter, release $_________ of that amount to KS.
Of the RM/RA Indemnified Matter Escrow Amount in respect of that Indemnified
Matter, release $_________ of that amount to RM.
Very truly yours,
Fairfield Communities, Inc.
By:
Name:
Title:
Xxxxx X. Xxxxxx
Xxxxx Xxxxxxx
R & A Partnership, Ltd.
By:
By: , as General Partner
