FAIRFIELD COMMUNITIES, INC.
OPTION AGREEMENT
----------------
WHEREAS, Xxxxxxx X. Xxxxxx (hereinafter called the "Participant") is a key
employee of Fairfield Communities, Inc., a Delaware corporation ("FCI"); and
WHEREAS, as part of its compensation programs, FCI has available for award
to key employees of FCI and its Subsidiaries options to purchase shares of FCI's
Common Stock pursuant to the terms of its Third Amended and Restated 1997 Stock
Option Plan (a copy of which is attached hereto as Exhibit A) (the "Plan"); and
WHEREAS, the grant of this Option to the Participant and the execution of
an Option Agreement in the form hereof have been duly authorized by the
Compensation Committee of FCI's Board of Directors, to become effective on the
Date of Grant (as defined below);
NOW, THEREFORE, effective as of the Date of Grant, FCI grants to the
Participant an Option pursuant to the Plan to purchase 80,000 shares of Common
Stock at a price equal to $8.375 per share, subject to adjustment in certain
circumstances as provided below or pursuant to the Plan, and agrees to cause
certificates for any shares purchased hereunder to be delivered to the
Participant upon payment of the aggregate Option Price in full and any
withholding taxes, all subject, however, to the terms and conditions hereinafter
set forth. Capitalized terms used in this Agreement that are not otherwise
defined in this Agreement are used as defined in the Plan.
1. The "Date of Grant" is March 27, 2000.
2. This Option shall become exercisable to the extent of 25% of the shares
hereinabove specified on each of the first, second, third and fourth anniversary
dates of the Date of Grant; provided, that, the Participant has remained in
continuous service from and after the Date of Grant as, and is, on each such
vesting date, an employee of FCI, and further provided, that, this Option shall
become exercisable to the extent of 100% of the shares hereinabove specified in
the event that, subject to the limitation provided below, a "Change in Control"
occurs at such time as Participant is employed by FCI, and has remained in
continuous service from and after the Date of Grant. The term "Change in
Control" shall mean the happening of any of the following:
(a) During any period of 24 consecutive months, ending after the date
hereof:
(i) individuals who were directors of FCI at the beginning of such
24-month period, and
(ii) any new director whose election or nomination for election by the
Board of Directors was approved by a vote of the greater of (A) at least
two-thirds (2/3), or (B) four affirmative votes, in each case, of the
directors then still in office who were either directors at the beginning
of such 24-month period or whose election or nomination for election was
previously so approved
cease for any reason to constitute a majority of the Board of Directors of FCI;
(b) Any person or entity (other than FCI or its Subsidiary employee benefit
plan or plans or any trustee of or fiduciary with respect to such plan or plans
when acting in such capacity), or any group acting in concert, shall
beneficially own, directly or indirectly, more than fifty percent (50%) of the
total voting power represented by the then outstanding securities of FCI
entitled to vote generally in the election of directors ("Voting Securities");
(c) Upon a merger, combination, consolidation or reorganization of FCI,
other than a merger, combination, consolidation or reorganization which would
result in (i) the Voting Securities of FCI outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by being converted
into Voting Securities of the surviving entity) at least 50% of the voting power
represented by the Voting Securities of FCI or such surviving entity outstanding
immediately after such transaction and (ii) at least such 50% of voting power
continuing to be held in the aggregate by the holders of the Voting Securities
of FCI immediately prior to such transaction (conditions (i) and (ii) are
referred to as the "Continuance Conditions"); or
(d) All or substantially all of the assets of FCI are sold or otherwise
disposed of, whether in one transaction or a series of transactions, unless the
Continuance Conditions shall have been satisfied with respect to the purchaser
of such assets and such purchaser assumes FCI's obligations under this Option.
Notwithstanding any provision of this Option to the contrary, if any amount or
benefit to be paid or provided under this Option would be an "Excess Parachute
Payment", within the meaning of Section 280G of the Internal Revenue Code of
1986, as amended (the "Code"), or any successor provision thereto, but for the
application of this sentence, then the payments and benefits to be paid or
provided under this Option shall be reduced to the minimum extent necessary (but
in no event to less than zero) so that no portion of any such payment or
benefit, as so reduced, constitutes an Excess Parachute Payment; provided,
however, that the foregoing reduction shall be made only if and to the extent
that such reduction would result in an increase in the aggregate payment and
benefits to be provided, determined on an after-tax basis (taking into account
the excise tax imposed pursuant to Section 4999 of the Code, or any successor
provision thereto, any tax imposed by any comparable provision of state law, and
any applicable federal, state and local income taxes). The determination of
whether any reduction in such payments or benefits to be
provided under this Option or otherwise is required pursuant to the preceding
sentence shall be made at the expense of FCI, if requested by Participant or
FCI, by FCI's independent accountants. The fact that Participant's right to
payments or benefits may be reduced by reason of the limitations contained in
this paragraph shall not of itself limit or otherwise affect any other rights of
Participant other than pursuant to this Option. In the event that any payment or
benefit intended to be provided under this Option or otherwise is required to be
reduced pursuant to this paragraph, Participant shall be entitled to designate
the payments and/or benefits to be so reduced in order to give effect to this
paragraph. FCI shall provide Participant with all information reasonably
requested by Participant to permit Participant to make such designation. In the
event that Participant fails to make such designation within 10 business days
following the date of an occurrence of a "Change in Control", FCI may effect
such reduction in any manner it deems appropriate.
To the extent exercisable, this Option may be exercised in whole or in part from
time to time, subject to the time limitations set forth in paragraph 4 below.
3. The Option shall be exercised by delivery to the Secretary of FCI of
both (a) an originally signed, irrevocable written notice of exercise of the
number of shares being purchased (which shall not exceed the number of shares
exercisable pursuant to paragraph 2 above), specifying a lawful rate of
withholding for any federal, state, local and any other income taxes, and (b)
full payment of the Option Price. The Option Price shall be payable in cash or
by check acceptable to FCI. In addition, the Participant shall be required to
satisfy any taxes required or requested to be withheld in the manner provided in
the first sentence of Paragraph 7 of the Plan prior to delivery of any share
certificates.
4. This Agreement shall automatically expire on the earliest of (a) ten
years from the Date of Grant (the "Specified Term") or (b) immediately following
the lapsing of either of the exercise periods specified in subparagraphs (i) or
(iii) below or (c) upon the occurrence of the circumstances described in
subparagraph (ii) below.
(i) If the Participant dies while an employee of FCI or its Subsidiary
during the Specified Term, the Option shall be exercisable by the proper duly
qualified and empowered executor, administrator, legatee or distributee of the
Participant's estate only during the three hundred and sixty-five (365) calendar
days following his or her death, but in no event after the expiration of the
Specified Term.
(ii) If the Participant ceases to be an employee of FCI or its Subsidiary
due to discharge for "Cause", or resignation in anticipation of a discharge for
"Cause", then the Option shall not be exercisable. The term "Cause" means (A) an
intentional act or acts of fraud, embezzlement or theft constituting a felony
and resulting or intended to result directly or indirectly in gain or personal
enrichment for the Participant at the expense of FCI or its Subsidiary or (B)
the continued, repeated, intentional and willful refusal to perform the duties
associated with the Participant's position with FCI or its Subsidiary which is
not cured within 15 days following written notice to the Participant. For
purposes of this Agreement, no act or failure to act on the part of the
Participant shall be deemed
"intentional" if it was due primarily to an error in judgment or negligence, but
shall be deemed "intentional" only if done or omitted to be done by the
Participant not in good faith and without reasonable belief that his or her
action or omission was in the best interest of FCI or its Subsidiary.
(iii) If the Participant ceases to be an employee of FCI or its Subsidiary
for any reason other than death or discharge for "Cause" or resignation in
anticipation of discharge for "Cause", the Option shall be exercisable by the
Participant only during the ninety (90) calendar days following such
termination, but in no event after the expiration of the Specified Term.
Only shares for which this Option is exercisable under paragraph 2 hereof at the
time of the Participant's death or at such other time as the Participant ceases
to be an employee of FCI or its Subsidiary, other than by reason of discharge
for "Cause" or resignation in anticipation of discharge for "Cause", may be
exercised under subparagraphs (i) or (iii) above, as the case may be.
5. This Option is not transferable or exercisable other than by will or the
laws of descent and distribution. This Option may only be exercisable during the
Participant's lifetime by the Participant or by his or her guardian or legal
representative.
6. Adjustments shall be made in the Option Price and in the number or kind
of shares of Common Stock or other securities covered by this Option pursuant to
Paragraph 6 of the Plan.
7. Upon each exercise of this Option and satisfaction of the conditions for
issuance, FCI as promptly as practicable shall mail or deliver to the
Participant a stock certificate or certificates representing the shares then
purchased, and shall pay all stamp taxes payable in connection therewith. The
issuance of such shares and delivery of the certificate or certificates therefor
shall, however, be subject to any delay necessary to complete (a) the listing of
such shares on any stock exchange upon which shares of the same class are then
listed and (b) such registration or qualification of such shares under any state
or federal law, rule or regulation as FCI may determine to be necessary or
advisable.
8. Neither the Participant nor any of the Participant's beneficiaries or
legal representatives will be deemed to have any rights as a stockholder with
respect to any shares covered by this Agreement until the issuance of a
certificate to the Participant evidencing such shares.
9. This Agreement is intended to be construed and enforced in accordance
with, and governed by, the laws of Florida, except as to matters of corporate
law, which will be governed by the laws of the State of Delaware.
10. Any amendment to the Plan shall be deemed to be an amendment to this
Agreement to the extent that the amendment is applicable hereto; provided,
however,
that no amendment shall adversely affect the rights of the Participant hereunder
without the Participant's consent.
EXECUTED effective as of the 27th day of March, 2000.
FAIRFIELD COMMUNITIES, INC.
By: /s/Xxxxx X. Xxxx
------------------------------------
Xxxxx X. Xxxx
President and Chief Executive Officer
The undersigned Participant hereby acknowledges receipt of an executed
original of this Agreement and accepts the option granted hereunder.
/s/Xxxxxxx X. Xxxxxx
-------------------------------
Participant
