EXHIBIT 10.6
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EMPLOYMENT AGREEMENT
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EMPLOYMENT AGREEMENT, dated as of February 10, 1997 (this "Agreement")
between VISTANA, INC., a Florida corporation (the "Company"), and ▇▇▇▇ ▇. ▇▇▇▇▇
("Employee") (capitalized terms used herein and not otherwise defined shall have
the meanings ascribed thereto in Section 13),
W I T N E S S E T H:
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WHEREAS, the Company, through its Affiliates, is engaged in the business of
timeshare or vacation ownership, development, sales and resort management, as
well as the installation and management of voice, data and cable television
systems, and related operations; and
WHEREAS, the parties hereto desire to enter this Agreement upon the terms
and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the foregoing, of the mutual covenants
and agreements herein contained and for other good and valuable consideration,
the receipt, adequacy and sufficiency of which are hereby acknowledged, the
parties, intending legally to be bound, hereby agree as follows:
1. Employment. The Company hereby employs Employee, and Employee
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hereby accepts such employment, upon the terms and conditions hereinafter set
forth.
2. Position, Duties and Responsibilities.
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(a) Position. Employee's title and primary responsibilities are
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set forth on Schedule A attached hereto and incorporated herein by this
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reference.
(b) Place of Employment. During the term of this Agreement, Employee
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shall perform the services required by this Agreement at the Company's place of
business set forth on Schedule A attached hereto; provided, however, that the
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Company may
at its discretion require Employee to travel extensively to other locations on
the Company's business.
(c) Other Activities. During the term of this Agreement, Employee
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shall be an employee of the Company, shall not be engaged in any other
employment or business activities, shall devote Employee's full business time
and effort to the Company and, except for being a member of the board of
directors of each of Oceanix Biosciences Corporation, Alta Software, Inc. and
Competitive Technologies Corporation, shall not serve as an officer or director
of any public company, other than the Company. Notwithstanding the foregoing,
Employee shall not be prohibited from investing or trading in stocks, bonds,
commodities or other forms of passive investment, including real property
(provided that such investments do not violate Section 10 hereof).
3. Term.
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(a) Effective Date. This Agreement shall become effective as of the
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date hereof (the "Effective Date").
(b) Termination Date. The term of employment under this Agreement
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shall terminate upon the earliest to occur of the following events (the date
specified in each such event is referred to as the "Termination Date"):
(i) the fourth anniversary of the Effective Date;
provided, however, that such period of employment may be extended by
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written agreement of the parties (it being understood that if Employee
remains employed by the Company after the Termination Date described in
this clause (i), such employment shall be "at-will" unless different terms
are established in writing);
(ii) the date upon which the Company terminates Employee's
employment by the Company for Cause or without Cause (it being understood
that the date of termination shall be the date upon which the Company
provides Employee written notice of either such event);
(iii) the date of Employee's death;
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(iv) the date upon which the Company terminates Employee's
employment by the Company as a result of Employee's Permanent Disability
(it being understood that the date of termination shall be the date upon
which the Company provides Employee written notice of such event); or
(v) the date upon which Employee effects a Voluntary
Termination (it being understood that the date of termination shall be the
date upon which the Employee provides the Company written notice of such
event).
(c) Performance of Duties During Notice Period. In the event that
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either (i) the Company terminates Employee's employment by the Company pursuant
to Section 3(b)(ii) hereof or (ii) Employee effects a Voluntary Termination
pursuant to Section 3(b)(v), Employee, if requested by the Company, shall
continue to render services hereunder to the Company for the 30-day notice
period (or, if shorter, until the Termination Date), and shall, in such event,
be paid the compensation and benefits hereunder for the remainder of such
period.
(d) Employment-At-Will/Employee Acknowledgement. Notwithstanding the
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term of this Agreement having a duration of four years and Sections 4(a) and (b)
hereof relating to the annual salary and annual bonus to be paid to Employee
during Employee's employment by the Company, nothing in this Agreement should be
construed as to confer any right of Employee to be employed by the Company for a
fixed or definite term. Subject to Section 8 hereof, Employee agrees that the
Company may dismiss Employee under Section 3(b)(ii) without regard to (i) any
general or specific policies (whether written or oral) of the Company relating
to the employment or termination of employment of the Company employees; or (ii)
any statements made to Employee, whether made orally or contained in any
document or instrument, pertaining to Employee's relationship with the Company.
Notwithstanding anything to the contrary contained herein, Employee's employment
by the Company is not for any specified term, is at-will and may be terminated
by the Company pursuant to Section 3(b)(ii) at any time by delivery of the
notice referred to therein, for any reason, for Cause or without cause, without
any liability whatsoever, except with respect to the payments provided for in
Section 8.
(e) Termination Obligations.
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(i) Employee hereby acknowledges and agrees that all personal
property and equipment, including, without limitation, all books, manuals,
records, reports, notes, contracts, lists, blueprints, and other documents,
or materials, or copies thereof (including computer files), and all other
proprietary information relating to the business of the Company, furnished
to or prepared by Employee in the course of or incident to Employee's
employment, belongs to the Company and shall be promptly returned to the
Company within 10 days after the Termination Date. Following the
Termination Date, Employee will not retain any written or other tangible
material containing any proprietary information of the Company.
(ii) Effective as of the Termination Date, Employee shall be deemed
to have resigned from all offices and directorships then held with the
Company or any Affiliate of the Company.
(iii) The covenants and agreements of Employee contained in Sections
3(e), 9, 10, 11, 12 and 14(b) and (c) shall survive termination of
Employee's employment by the Company and the termination of this Agreement.
(f) Release. In exchange for the Company entering into the Agreement,
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Employee agrees that, at the time of Employee's resignation or termination from
the Company, Employee will execute a release acceptable to the Company of all
liability of the Company and its officers, shareholders, employees, directors
and Affiliates to Employee in connection with or arising out of Employee's
employment by the Company, except with respect to (i) any then-vested rights
under the Company's Stock Plan, (ii) any amounts which may be payable to
Employee pursuant to Section 8 and (iii) any claims Employee may have pursuant
to the Company's disability and workmen's compensation insurance policies (it
being understood that the foregoing is not intended to provide Employee
duplicative rights to those provided for in Section 8(c)(ii)).
4. Compensation.
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(a) Annual Salary. The Company shall pay to Employee an annual salary
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equal to the base salary set forth on Schedule B attached hereto and
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incorporated herein by this reference (the
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"Base Salary"). The Base Salary shall be in effect, on a pro-rated basis, from
and after the Effective Date through December 31, 1997. For each calendar year
during the term of this Agreement commencing with the 1998 calendar year, the
Company shall pay Employee an annual salary (the "Adjusted Base Salary")
determined by the Company's Board of Directors (or the Compensation Committee
thereof); provided, however, that the Adjusted Base Salary shall be no less than
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the product of (i) the Base Salary, multiplied by (ii) a fraction, the numerator
of which shall be the last Consumer Price Index figure published prior to the
December 31st immediately preceding the beginning of such calendar year (the
"Base Salary Adjustment Date") and the denominator of which shall be the most
recent Consumer Price Index figure published prior to December 31, 1996;
provided, further, however, in no event shall the Adjusted Base Salary, as so
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adjusted on such Base Salary Adjustment Date, be less than the Annual Salary for
the preceding calendar year. The Base Salary and the Adjusted Base Salary shall
be paid in equal installments, subject to all applicable withholding and
deductions, in accordance with the usual payroll practices of the Company, but
not less frequently than monthly.
(b) Annual Bonus Amount. Employee shall be entitled to be paid an
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annual bonus amount (the "Annual Bonus Amount") in respect of each calendar year
beginning with the 1997 calendar year as further specified and described on
Schedule B attached hereto. The Annual Bonus Amount shall be deemed earned as
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of December 31 of the applicable calendar year and shall be due and payable,
subject to all applicable withholding and deductions, within 31 days following
the end of the calendar year to which such Annual Bonus Amount relates based
upon the Company's good faith preliminary estimate thereof for such calendar
year; provided, that upon certification by the Company's auditors of the
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Company's consolidated financial statements for such calendar year, the
definitive Annual Bonus Amount for such calendar year shall be determined by the
Company and the Company shall promptly pay to Employee (in the case the
preliminary estimate resulted in an underpayment), or the Employee shall
promptly repay to the Company (in the case the preliminary estimate resulted in
an overpayment), the amount necessary to provide Employee with full payment of
the definitive Annual Bonus Amount as finally determined in accordance with such
audited consolidated financial statements for such calendar year.
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5. Fringe Benefits. During the term of this Agreement, Employee shall be
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entitled to all such employment benefits as may, from time to time, be made
generally available to similar level management employees of the Company
including, without limitation, pension or other retirement benefits, health,
hospitalization and similar insurance and group or individual life insurance,
and Employee's family shall be entitled to participate in the Company's medical
and health insurance plans; provided, however, that such benefits and
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arrangements are made available at the discretion of the Company and nothing in
this Agreement establishes any right of Employee to the availability or
continuance of any such plan or arrangement. In addition, the Company agrees to
reimburse Employee for any COBRA costs incurred by Employee to maintain the
current health insurance coverage for Employee and Employee's dependents through
Employee's prior employer until the date of effectiveness of the Employee's
health insurance coverage provided by the Company.
6. Business Expenses. Except as otherwise provided herein, the Company
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shall pay, either directly or by reimbursement to Employee, such reasonable and
necessary business expenses incurred by Employee, including travel and
entertainment expenses, in the course of employment by the Company as are
consistent with the Company's policies in existence from time to time. Such
expenses shall include, but shall not be limited to, occupational license fees,
membership dues in professional organizations, educational expenses, and
subscriptions to professional journals.
7. Vacation and Sick Leave. Employee shall be entitled to four weeks'
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paid vacation time, in the aggregate, per calendar year, and such paid sick
leave as shall be authorized by the Company pursuant to the Company's written
policies, as determined from time to time. Additionally, Employee may be
entitled to additional paid vacation time to the extent that the operations and
needs of the business permit as determined by the Company. All vacations shall
be taken by Employee at such time or times as may be reasonably approved by the
Company.
8. Compensation Upon Termination of Employment.
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(a) Expiration of Term. If Employee's employment by the Company is
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terminated as a result of the occurrence of the fourth anniversary of the
Effective Date, Employee shall receive the
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compensation and other benefits expressly provided under this Agreement through
the Termination Date.
(b) Death. If Employee's employment by the Company is terminated as a
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result of the occurrence of Employee's death pursuant to Section 3(a)(iii), the
Company shall pay Employee's estate (i) the compensation and other benefits
expressly provided under this Agreement through the Termination Date; and (ii)
an aggregate of the amount set forth on Schedule B attached hereto (the
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"Severance Amount"), payable in 24 equal monthly installments of the amount set
forth on Schedule B attached hereto (the "Monthly Severance Payment") commencing
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with the first calendar month after the Termination Date.
(c) Permanent Disability. If Employee's employment by the Company is
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terminated by the Company as a result of the occurrence of Employee's Permanent
Disability pursuant to Section 3(a)(iv), the Company shall pay Employee (i) the
compensation and other benefits expressly provided under this Agreement through
the Termination Date; and (ii) the Monthly Severance Payment for the lesser of
24 months or the duration of such Permanent Disability; provided, however, that
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the amount of all payments of the Monthly Severance Amount shall be reduced by
the sum of the amount, if any, payable to Employee at or prior to the time of
any such payment under any disability benefit plan of the Company.
(d) Termination by the Company for Cause. If Employee's employment by
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the Company is terminated by the Company for Cause pursuant to Section 3(b)(ii),
Employee shall receive the compensation and other benefits expressly provided
under this Agreement through the Termination Date.
(e) Termination by the Company without Cause. If Employee's
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employment by the Company is terminated by the Company without Cause pursuant to
Section 3(b)(ii), the Company shall pay Employee (i) the compensation and other
benefits expressly provided under this Agreement through the Termination Date;
and (ii) the Severance Amount, payable in 24 equal monthly installments of the
Monthly Severance Payment commencing with the first calendar month after the
Termination Date.
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(f) Termination by Employee for Good Reason. If Employee's employment
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by the Company is terminated by Employee for Good Reason pursuant to Section
3(b)(v), the Company shall pay Employee (i) the compensation and other benefits
expressly provided under this Agreement through the Termination Date; and (ii)
the Severance Amount, payable in 24 equal monthly installments of the Monthly
Severance Payment commencing with the first calendar month after the Termination
Date.
(g) Termination by Employee without Good Reason. If Employee's
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employment by the Company is terminated by Employee without Good Reason pursuant
to Section 3(b)(v), Employee shall receive the compensation and other benefits
expressly provided under this Agreement through the Termination Date.
(h) Continuation of Health Insurance Coverage. At Employee's own
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expense, Employee and Employee's dependents shall also be entitled to any
continuation of health insurance coverage rights under any applicable law.
(i) Right of Offset; Compliance with Covenants.
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(i) If the Employee's employment by the Company is
terminated for any reason, Employee shall be entitled to the compensation
and other benefits expressly provided under this Agreement, subject to the
Company's right of offset for any amounts owed by Employee to the Company
(or to any of its Affiliates).
(ii) The continuing obligation of the Company to make the
Monthly Severance Payment to Employee is expressly conditioned upon the
Employee complying in all respects and continuing to comply in all respects
with Employee's obligations under Sections 9, 10 and 11 hereof following
the Termination Date.
9. Confidential Information and Ownership of Property.
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(a) Confidential Information. Employee agrees to use all Confidential
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Information solely in connection with the performance of services for or on
behalf of the Company. Employee shall not, during the term of this Agreement, or
at any time after the termination of this Agreement, in any manner, either
directly
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or indirectly, (i) disseminate, disclose, use or communicate any Confidential
Information to any person or entity, regardless of whether such Confidential
Information is considered to be confidential by third parties, or (ii) otherwise
directly or indirectly misuse any Confidential Information; provided, however,
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that (y) none of the provisions of this Section 9 shall apply to disclosures
made for valid business purposes of the Company or (z) that Employee shall not
be obligated to treat as confidential any Confidential Information that (I) was
publicly known at the time of disclosure to Employee; (II) becomes publicly
known or available thereafter other than by means in violation of this Agreement
or any other duty owned to the Company or any of its Affiliates by any person or
entity; or (III) is lawfully disclosed to Employee by a third party.
Notwithstanding the foregoing, Employee shall be permitted to disclose
Confidential Information to the extent required to enforce Employee's rights
hereunder in any litigation arising under, or pertaining to, this Agreement
provided that Employee shall give prior written notice to the Company of any
such disclosure so that the Company may have an opportunity to protect the
confidentiality of such Confidential Information in such litigation.
(b) Ownership of Property. Employee agrees that all works of
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authorship developed, authored, written, created or contributed to during the
term of this Agreement for the benefit of the Company, whether solely or jointly
with others, shall be considered works-made-for-hire. Employee agrees that such
works shall be the sole and exclusive property of the Company (or its
appropriate Affiliate) and that all right, title and interest therein or
thereto, including all intellectual property rights existing or obtained in
connection therewith, shall likewise be the sole and exclusive property of the
Company (or its appropriate Affiliate). Employee agrees further that, in the
event that any work is not considered to be work-made-for-hire by operation of
law, Employee will immediately, and without further compensation, assign all of
Employee's right, title and interest therein to the Company (or its designated
Affiliate), its successors and assigns. At the request and expense of the
Company, Employee agrees to perform in a timely manner such further acts as may
be necessary or desirable to transfer, defend or perfect the Company's ownership
of such work and all rights incident thereto.
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10. Covenant Not to Compete. Unless the Company's Board of Directors
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determines that any of the following conduct is in the Company's best interests,
during the term of Employee's employment by the Company and for the Non-Compete
Period, Employee shall not:
(a) directly or indirectly for himself/herself or for any other
person or entity engage, whether as owner, investor, creditor, consultant,
partner, shareholder, director, financial backer, agent, employee or
otherwise, in the business, enterprise or employment of owning, operating,
marketing or selling a time-share, vacation plan, vacation ownership or
interval ownership project within the Territory; or
(b) directly or indirectly for himself/herself or for any other
person or entity sell, or otherwise procure purchasers for, any time-share,
vacation plan, vacation ownership or interval ownership project within the
Territory; or
(c) have any business (as owner, investor, creditor, consultant,
partner, debtor or otherwise) or be employed in any capacity by a person or
entity that is engaged, directly or indirectly, in (i) operating, or
providing sales, marketing or development services to, a time-share,
vacation plan, vacation ownership or interval ownership project within the
Territory, or (ii) in an activity formed or entered into for the primary
purpose of engaging in a time-share, vacation plan, vacation ownership or
interval ownership business within the Territory; or
(d) [INTENTIONALLY OMITTED]
(e) directly or indirectly for himself/herself or for any other
person or entity become employed in any capacity by or otherwise render
services in any capacity to any national enterprise having time-share,
vacation plan, vacation ownership or interval ownership activities,
including, without limitation, ▇▇▇▇ Disney Company, Hilton Hotels
Corporation, Hyatt Corporation, Four Seasons Hotels and Resorts, Inc.,
Marriott International, Inc., Inter-Continental Hotels and Resorts, Inc.,
Promus Hotels, Inc., Fairfield Communities,
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Inc., Signature Resorts, Inc. or Vacation Break U.S.A., Inc. or any of
their respective Affiliates; or
(f) directly or indirectly for himself, herself or for any other
person or entity pursue or consummate or otherwise interfere with any
Existing Project; or
(g) (i) directly or indirectly, for himself, herself, or any other
person or entity, pursue, consummate or otherwise interfere with any
Prospective Project or (ii) directly or indirectly for himself/herself or
for any other person or entity become employed in any capacity by or
otherwise render services in any capacity to any other person or entity
(other than the Company and its Affiliates) described in clause (ii) of the
definition of Prospective Project.
Notwithstanding the foregoing, Employee may purchase stock as a stockholder
in any publicly traded company, including any company engaged in the timeshare
or vacation ownership business; provided, however, that Employee may not own
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(individually or collectively with Employee's family members, trusts for the
benefit of Employee's family members and affiliates of Employee) more than 5% of
any company (other than the Company).
In light of the substantial remuneration provided to Employee
hereunder and Employee's management position with the Company, Employee hereby
specifically acknowledges and agrees that the provisions of this Section 10
(including, without limitation, its time and geographic limits), as well as the
provisions of Sections 9 and 11, are reasonable and appropriate, and that
Employee will not claim to the contrary in any action brought by the Company to
enforce such any of such provisions.
11. Covenant Against Solicitation of Employees. During the term of
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Employee's employment by the Company and for the Non-Compete Period, the
Employee shall not employ employees or agents or former employees or agents of
the Company or its Affiliates or, directly or indirectly, solicit or otherwise
encourage the employment of employees or agents or former employees or agents of
the Company or its Affiliates; provided, however, that this restriction shall
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not apply to former employees or agents who, as of the date of termination of
Employee's employment by the Company,
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have not worked for any of the Company or its Affiliates during the twelve
preceding months.
12. Remedies For Breach. It is understood and agreed by the parties that
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no amount of money would adequately compensate the Company for damages which the
parties acknowledge would be suffered as a result of a violation by the Employee
of the covenants contained in Sections 9, 10 and 11 above, and that, therefore,
the Company shall be entitled, upon application to a court of competent
jurisdiction, to obtain injunctive relief (without the need to post bond) to
enforce the provisions of Sections 9, 10 or 11, which injunctive relief shall be
in addition to any other rights or remedies available to the Company. The
provisions of this Section 12 shall survive the termination of this Agreement.
13. Certain Defined Terms. For purposes of this Agreement the following
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terms and phrases shall have the following meanings:
"Affiliate" means any person or entity who or which, directly or
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indirectly, through one or more intermediaries, controls or is controlled by, or
is under common control with, a specified person or entity (the term "control"
for these purposes meaning the ability, whether by ownership of shares or other
equity interests, by contract or otherwise, to elect a majority of the directors
of a corporation, to act as or select the managing or general partner of a
partnership, or otherwise to select, or have the power to remove and then
select, a majority of those persons exercising governing authority over an
entity).
"Cause", with respect to the termination of Employee's employment by the
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Company, shall mean (a) the commission by Employee of an act of fraud,
embezzlement or willful breach of a fiduciary duty to the Company (including the
unauthorized disclosure of confidential or proprietary material information of
the Company); (b) the commission by Employee of a breach of any material
covenant, provision, term, condition, understanding or undertaking set forth in
this Agreement; (c) the commission by Employee (other than in Employee's
capacity as an agent of the Company) of a crime constituting a felony under
applicable law (or a plea of nolo contendere in lieu thereof); (d) the exposure
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of the Company to any criminal liability substantially caused by the conduct of
Employee which results in a material adverse effect upon the Company's business,
operations, financial condition or results
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of operations or the exposure of the Company to any civil liability caused by
Employee's unlawful harassment in employment; (e) any habitual absenteeism,
gross negligence, bad faith, or willful misconduct by Employee in the
performance of Employee's duties to the Company which such conduct results in a
material detriment to the Company; or (f) Employee's habitual abuse of alcohol
or any controlled substance or Employee's reporting to work under the influence
of alcohol or a controlled substance (other than those for which Employee is
taking under a current prescription).
"Change in Control" means the occurrence of any one of the following
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events:
(i) any (A) consolidation or merger of the Company in which
the Company is not the continuing or surviving corporation or which
contemplates that all or substantially all of the business and/ or assets
of the Company shall be controlled by another corporation or (B) a
recapitalization (including an exchange of Company equity securities by the
holders thereof), in either case, in which any "Person" (as such term is
used in Sections 13(d) and 14(d)(2) of the Exchange Act), other than the
Controlling Shareholders, becomes the beneficial owner (within the meaning
of Rule 13d-3 promulgated under the Exchange Act) of securities of the
Company representing more than 50% of the combined voting power of the
Company's then outstanding securities ordinarily having the right to vote
in the election of directors;
(ii) any sale, lease, exchange or transfer (in one transaction
or series of related transactions) of all or substantially all of the
assets of the Company and its Affiliates;
(iii) approval by the shareholders of the Company of any plan or
proposal for the liquidation or dissolution of the Company, unless such
plan or proposal is abandoned within 60 days following such approval; or
(iv) any "Person" (as such term is used in Sections 13(d) and
14(d)(2) of the Exchange Act), other than the Controlling Shareholders,
shall become the beneficial owner of securities of the Company representing
more than 50%
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of the combined voting power of the Company's then outstanding securities
ordinarily having the right to vote in the election of directors.
"Confidential Information" means all software, trade secrets, work products
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created by Employee for the Company or any of its Affiliates, know-how, ideas,
techniques, theories, discoveries, formulas, plans, charts, designs, drawings,
lists of current or prospective clients, business plans and proposals, current
or prospective business opportunities, financial records, research and
development, marketing strategies and programs (including present and
prospective OPC locations and the terms of leases of similar arrangements) and
reports and other proprietary information created or obtained by Employee for
the benefit of the Company or any of its Affiliates during the course of
employment by the Company.
"Consumer Price Index" means the United States Department of Labor's Bureau
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of Labor Statistics' Consumer Price Index, All Urban Consumers, All Items,
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇ (▇▇▇▇-▇▇ = 100), or the successor of such index (or if the
index is not published for the Orlando, Florida area, a comparable index
applicable to the Tampa, Florida or Jacksonville, Florida area or in the event
they are not available, any other areas as may be reasonably determined by the
Company).
"Controlling Shareholders" means ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇., ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
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and JGG Holdings Trust, in each case together with their respective Affiliates,
family members, former spouses (if applicable) and trusts for the benefit of any
of the foregoing.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
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"Existing Project" means a time-share, vacation plan, vacation ownership or
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interval ownership resort or project which the Company or any of its Affiliates
owns, operates or has commenced to develop, acquire or otherwise undertake as of
the Termination Date.
"Good Reason" shall mean the occurrence, without the express written
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consent of Employee, of any of the following events unless such events are
substantially corrected within 30 days following written notification by
Employee to the Company that Employee intends to effect a Voluntary Termination
as a result of (i) a
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material alteration, reduction or diminution in Employee's duties or
responsibilities or relocation from the Company's office described on Schedule A
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(Item No. 4) attached hereto; (ii) a material breach by the Company of any
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covenant, provision, term, condition, understanding or undertaking set forth in
this Agreement; or (iii) a Voluntary Termination within 90 days after the
consummation of a Change in Control (it being understood that a Voluntary
Termination shall not be for Good Reason as a result of any personal or family
reasons not otherwise set forth in this definition).
"Non-Compete Period" shall mean the period commencing on the Termination
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Date and ending on (i) the Termination Date in case of the termination of
Employee's employment by the Company pursuant to Section 3(b)(i); provided,
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however, such period will be extended to the first anniversary of the
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Termination Date in the event that the Company notifies Employee in writing that
it will pay Employee the Monthly Severance Payment (in accordance with the
Company's payroll policies) in effect at the Termination Date for 12 months
after the Termination Date; or (ii) the second anniversary of the Termination
Date in case of (w) the termination of Employee's employment by the Company for
Cause pursuant to Section 3(b)(ii), (x) the termination of Employee's employment
by the Company without Cause pursuant to Section 3(b)(ii), (y) the termination
of Employee's employment by Employee for Good Reason pursuant to Section 3(b)(v)
and (z) the termination of Employee's employment by Employee without Good Reason
pursuant to Section 3(b)(v) (it being understood that if such termination of
employment is due to a Voluntary Termination for Good Reason in respect of a
Change in Control of which both Messrs. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇. and ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇ have not approved, by vote in their capacities as directors of the Company
or otherwise, then the Non-Compete Period shall not be applicable).
"Permanent Disability" shall mean the inability of the Employee to perform
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substantially all Employee's duties and responsibilities to the Company by
reason of a physical or mental disability or infirmity for either (i) a
continuous period of six months or (ii) 180 days during any consecutive twelve-
month period. The date of such Permanent Disability shall be (y), in the case
of clause (i) above, the last day of such six-month period or, if later, the day
on which satisfactory medical evidence of such Permanent Disability is obtained
by the Company, or (z) in the case of clause (ii) above, such date as is
determined in good faith by
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the Company. In the event that any disagreement or dispute arises between the
Company and Employee as to whether the Employee has incurred a Permanent
Disability, then, in any such event, Employee 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
Employee, and such physician shall make the determination of whether Employee
suffers from any disability. In the absence of fraud or bad faith, the
determination of such physician as to Employee's condition at such time shall be
final and binding upon both the Company and the Employee. The entire cost of any
such examination shall be borne solely by the Company.
"Prospective Project" means (i) a prospective time-share, vacation plan,
-------------------
vacation ownership or interval ownership resort or project with respect to which
Employee has been made aware or has been advised prior to the Termination Date
that the Company or any of its Affiliates is considering developing or
undertaking and (ii) any person or entity, including its respective Affiliates,
with respect to which Employee has been made aware or has been advised prior to
the Termination Date that the Company or any of its Affiliates has commenced to
evaluate or negotiate with in respect of any transaction involving (y) the
acquisition by the Company or any of its Affiliates of all or a portion of such
person or entity or its consolidated assets or (z) the acquisition by such
person or entity (or its Affiliates) of all or a portion of the Company or its
consolidated assets.
"Territory" means the total geographic area located within a 150-mile
---------
radius of each Existing Project and each Prospective Project.
"Voluntary Termination" shall mean the voluntary termination by Employee of
---------------------
Employee's employment by the Company by voluntary resignation or any other means
(other than (i) death or Permanent Disability or (ii) simultaneous with or
following termination for Cause or an event which if known to the Company at the
time of such voluntary termination by Employee would constitute Cause).
14. Miscellaneous.
-------------
(a) Severability. If any provision of this Agreement shall be
------------
declared invalid or unenforceable by a court of competent
-16-
jurisdiction, the invalidity or unenforceability of such provision shall not
affect the other provisions hereof, and this Agreement shall be construed and
enforced in all respects as if such invalid or unenforceable provision was
omitted.
(b) Attorneys' Fees and Costs. In the event a dispute arises between
-------------------------
the parties hereto and suit is instituted, the prevailing party or parties in
such litigation shall be entitled to recover reasonable attorneys' fees and
other costs and expenses from the non-prevailing party or parties, whether
incurred at the trial level or in any appellate proceeding. For purposes
hereof, the Company shall be deemed to have prevailed in any suit involving a
breach or alleged breach by Employee of any of the covenants contained in
Sections 9, 10 and 11 above if the Company prevails to any degree in such suit
(even if such covenant or covenants are not enforced to the fullest extent
otherwise sought by the Company).
(c) Governing Law and Venue. This Agreement shall be governed by and
-----------------------
construed in accordance with the laws of the State of Florida. In the event of
any legal or equitable action arising under this Agreement, the venue of such
action shall be exclusively within either the state courts of Florida located in
Orange County, Florida, or the United States District Court for the Middle
District of Florida, Orlando Division, and the parties waive any other
jurisdiction and venue.
(d) Completeness of Agreement. All understandings and agreements
-------------------------
heretofore made between the parties hereto with respect to the subject matter of
this Agreement are merged into this document which alone fully and completely
expresses their agreement. No change or modification may be made to this
Agreement except by instrument in writing duly executed by the parties hereto
with the same formalities as this document.
(e) Notices. Any and all notices or other communications provided for
-------
herein shall be given in writing and shall be hand delivered or sent by United
States mail, postage prepaid, registered or certified, return receipt requested,
addressed as follows:
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If to the Company:
Vistana, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: President
If to Employee: at the address specified
in Schedule A attached hereto.
----------
provided, however, that any of the parties may, from time to time, give notice
-------- -------
to the other parties of some other address to which notices or other
communications to such party shall be sent, in which event, notices or other
communications to such party shall be sent to such address. Any notice or other
communication shall be deemed to have been given and received hereunder as of
the date the same is actually hand delivered or, if mailed, when deposited in
the United States mail, postage prepaid, registered or certified, return receipt
requested.
(f) Binding Effect. This Agreement shall be binding upon and inure to
--------------
the benefit of the respective parties hereto, their heirs, legal
representatives, successors and permitted assigns.
(g) Counterparts. This Agreement may be executed in several
------------
counterparts, each of which shall be deemed an original, and all of which shall
constitute but one and the same instrument.
(h) Captions. The captions appearing in this Agreement are inserted
--------
only as a matter of convenience and in no way define, limit, construe or
describe the scope or intent of any provisions of this Agreement or in any way
affect this Agreement.
(i) Additional Understandings. Certain additional understandings
-------------------------
between the Company and Employee are set forth on Schedule C attached hereto and
----------
incorporated herein by this reference.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
-18-
IN WITNESS WHEREOF, the undersigned have executed this Agreement on the
date and year set forth above.
THE COMPANY:
-----------
VISTANA, INC., a Florida corporation
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
---------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
Title: Chairman of the Board and Co-Chief
Executive Officer
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
---------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: President and Co-Chief Executive
Officer
EMPLOYEE:
--------
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇
-19-
SCHEDULE A
----------
Employee Title and Primary Employment Responsibilities
------------------------------------------------------
1. Employee Name and Address: ▇▇▇▇ ▇▇▇▇▇
-------------------------
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
2. Employee Title: Senior Vice President and
--------------
Chief Financial Officer
3. Primary Employment Responsibilities:
-----------------------------------
Employee shall serve as Senior Vice President and Chief Financial
Officer of the Company. Employee shall devote his best efforts and
substantially full business time and attention to the performance of
services to the Company in his capacity as an officer thereof and as may
reasonably be requested by the Board. The Company shall retain full
direction and control of the means and methods by which Employee performs
his services thereto. Both Employee and the Company agree that the nature
and scope of Employee's responsibility and authority will be consistent
with being the Senior Vice President and Chief Financial Officer of a
public company, as described in more detail herein. Employee shall report
directly to Messrs. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇., ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ and ▇▇▇▇▇▇▇
▇. Avril (the "Executive Officers"), and the Executive Officers shall be
generally available to Employee on a day-to-day basis. In no order of
priority, the following are the responsibilities and duties that Employee
would have:
(i) To work closely with the Company's executive level
senior-most officers and the Executive Officers to structure strategic
initiatives, including acquisitions, and to analyze the financial impact of
such initiatives; and to participate actively in the negotiations thereof
and oversee the completion of such initiatives.
A-1
(ii) To maintain a current understanding of the Company's
progress in achieving stated financial goals and objectives (i.e., internal
----
and Wall Street estimates) relative to applicable Company projections and
budgets prepared by others.
(iii) To serve as the primary point of contact for investor
relations and investment banking, research and analyst communications; to
participate in investor and analyst meetings and conferences; to coordinate
press releases, quarterly and annual filings; and to coordinate the design
and preparation of the Company's annual shareholders' report; and to be
involved in such other similar matters with the assistance of Company
counsel.
(iv) To analyze and structure the Company's capital base,
including, without limitation, coordinating and implementing equity and
debt initiatives such as follow-on offerings, lines of credit and
securitization programs; and, generally, to manage the Company's commercial
banking relationships and lines of credit.
(v) To develop and oversee cash management policies.
(vi) To oversee the Company's policies and procedures
respecting employee purchases and sales of the Company's stock and the
exercise of its stock options.
(vii) To oversee the Company's treasury function, with the
assistance of appropriate personnel.
(viii) To oversee the Company's insurance and risk management
program, with the assistance of appropriate personnel.
(ix) To carry out such other customary duties and
responsibilities of an executive vice president and chief financial officer
of a public company.
The Company recognizes that to accomplish these responsibilities,
Employee will require full cooperation and extensive interaction with the
Executive Officers, the
A-2
Company's controller and accounting department, as well as the use of
reasonably necessary staff resources dedicated exclusively to assisting
Employee in discharging his duties.
4. Place of Employment: The Company's office located at ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
-------------------
▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇.
A-3
SCHEDULE B
----------
Employee Compensation
---------------------
1. Employee Name: ▇▇▇▇ ▇▇▇▇▇
-------------
2. Base Salary: $210,000
-----------
3. Annual Bonus Amount: Up to 40% of Adjusted Base Salary; Formula to
------------------- approximate that of other senior executive officers.
4. Severance Amount: The product of (i) 120% of Employee's Adjusted Base
---------------- Salary as of the Termination Date, multiplied by (ii)
two.
5. Monthly Severance Payment: The quotient of (i) the Severance Amount
------------------------- determined in accordance with Item No. 4 above,
divided by (ii) 52.
B-1
SCHEDULE C
----------
Additional Understandings
-------------------------
1. Signing Bonus: The Company shall pay Employee a signing bonus of
-------------
$55,000, payable on the Effective Date.
2. Home-Financing: The Company will lend Employee up to $300,000 secured by
--------------
a mortgage on Employee's existing home, subject to
satisfactory appraisal. This loan will be evidenced by
Employee's promissory note and a customary mortgage and
will be due and payable upon the sale of such home. It is
anticipated that such home will be sold prior to
September 1, 1997.
In addition, the Company will make all necessary
arrangements so that any mortgage loan having a principal
amount of up to $360,000 obtained by Employee to purchase
a home in the Orlando, Florida area will not bear
interest in excess of 7-1/4% per annum.
3. Stock Options: The Company will grant Employee the option to purchase
-------------
75,000 shares of common stock pursuant to the Vistana
Stock Plan at an exercise price per share equal to the
price to public in the Company's initial public offering.
Such grant of options will be made pursuant to an Option
Agreement between the Company and Employee.
Certain of the existing shareholders of the Company have
agreed to grant Employee options to purchase an aggregate
of 25,000 shares of the Company's common stock at an
exercise price per share equal to the price to public in
the
C-1
Company's initial public offering. Such grant of options
will be made pursuant to a Shareholders Option Agreement
among certain of the Company's existing shareholders and
Employee.
4. Other: The Company will reimburse Employee for all moving
-----
expenses incurred by Employee, including monthly house
hunting trips by Employee's spouse for no more than six
months, upon presentation of applicable receipts or other
appropriate documentation.
The Company will provide Employee rent-free use of a
Vistana Resort unit, until Employee purchases and
relocates to a new home.
The Company will reimburse Employee for up to $5,000 of
miscellaneous expenses incurred at time of actual
relocation, upon presentation of applicable receipts or
other appropriate documentation.
C-2