EMPLOYMENT AGREEMENT
This Agreement is made and entered into as of the 17th day of May,
2000, by and between William J. Fair, of Redondo Beach, California
(hereinafter referred to as the "Executive") and American Skiing Company, a
corporation duly organized and existing under the laws of the State of Delaware,
and having a place of business at Bethel, Maine (hereinafter referred to as the
"Company").
The Company hereby agrees to employ the Executive and the Executive
accepts such employment upon the terms and conditions set forth in this
Agreement.
1. Duties.
1.1 Executive shall serve the Company as "Chief Operating Officer of
American Skiing Company and President - Resort Operations" during the term of
this Agreement and shall be primarily responsible for the management of all of
the Company's ski resort operations and divisions, and shall be responsible and
accountable for achieving both functional and financial Company objectives as
outlined in the Company's annual business plans and budgets approved and
modified from time to time by the Company's board of directors. Executive shall
perform his duties at such places (initially, Bethel, Maine) and times as the
Company may reasonably prescribe, and shall report to and be subject to
supervision and direction by the Chairman and Chief Executive Officer and the
Board of Directors of the Company.
1.2 Executive shall devote his full time and best efforts to
the performance of his duties for the Company and shall not engage in any other
business activities during the Employment Term without prior written consent of
the Company.
2. Term and Termination.
2.1 Term: The term of Executive's employment under this Agreement will
commence on May 17, 2000 (the "Commencement Date") and continue for three (3)
years through May 17, 2003 (the "Employment Term") unless sooner terminated as
set forth in Section 2.2 of this Agreement. By mutual written agreement entered
into on or prior to May 17, 2002, the parties may extend this Agreement. Upon
expiration of the Employment Term, should Executive continue in the Company's
employ and the parties have not executed a written extension or new employment
agreement, Executive shall be an "Executive at will" at the same level of
compensation as set forth in Sections 3.1 and 3.2 hereof. Except as stated in
Section 5 below, no other terms of this Agreement shall be applicable subsequent
to the Employment Term.
2.2 Termination:
(a) Executive's employment under this Agreement shall be
terminated upon the earliest to occur of any of the
following:
(i) the death of the Executive;
(ii) the Executive's inability to perform his
duties on account of disability or
incapacity for a period of six (6) or more
months, as determined by the Company's Chief
Executive Officer or Board of Directors.
(iii) the termination of Executive's employment
by Executive because of a material change in
the duties of Executive from those described
herein at the direction of the Company after
written notice from Executive to the Company
of the specific duties and material changes
in Executive's duties to which he objects,
the reasons for his objections, and his
intent to terminate his employment because
of such material changes, said written
notice to be served on the Company by the
Executive within thirty (30) days of the
Executive's knowledge of such alleged
material changes, and the Company's failure
to modify within thirty (30) days of its
receipt of such written notice the duties of
the Executive to conform to those described
herein. The relocation of Executive shall
not, in and of itself, constitute a material
change in duties of the Executive.
1
(iv) the termination of Executive's employment by
Executive at any time for any reason
including, without limitation, resignation
or retirement.
(v) the termination of Executive's employment by
Executive at any time for a material breach
of this Agreement by the Company after
written notice of such breach to the Company
and the Company's failure to cure such
breach within thirty (30) days.
(vi) the termination of Executive's employment by
the Company at any time "for cause," such
termination to take effect immediately upon
written notice from the Company to
Executive. The term "for cause" means a
determination by the Company that Executive
(1) refused to obey lawful orders of the
Chief Executive Officer and Chairman or the
Board of Directors of the Company, (2)
breached or neglected his duties hereunder
or breached any of the provisions of this
Agreement, (3) committed any act of moral
turpitude or any act involving dishonesty or
fraud, or(4)committed any act constituting a
violation of an important Company policy or
a violation of criminal or civil law
relating to Executive's performance of his
duties or having the potential to negatively
impact the Company. Upon such termination
for cause, the only obligation the Company
will have under this Agreement will be to
pay Executive's unpaid base salary and
vacation pay accrued through the date of
termination.
(vii) written notice to Executive that the Company
is terminating the Executive's employment
hereunder without cause.
(b) Upon the termination of this Agreement pursuant to
clauses (ii), (iii), (v) or (vii) only of Section 2.2
(a), Executive shall be entitled to receive as a
severance payment an amount equal to his base salary
payable for the remainder of the Employment Term but
in no event less than one (1) year's base salary.
Executive's severance payments shall be reduced by
the amount of disability insurance received by
Executive. The severance payments will be paid in
accordance with the Company's applicable payroll
provisions and shall be reduced by any applicable
withholding requirements. Notwithstanding (and in
lieu of) the foregoing, Executive shall be entitled
to receive from the Company, in a lump sum payment
within ten (10) days after the occurrence of the
event giving rise to such payment obligation, an
amount equal to two hundred percent (200%) of the
Executive's then current annual base salary if the
Executive's employment is terminated pursuant to
Section 2.2(a)(iii), (v) or (vii) within one (1) year
following, or in connection with, a Change in Control
of the Company. For purposes of this Section 2.2(b),
a "Change of Control" shall mean (i) a sale of
all or substantially all of the assets of the
Company, or (ii) a merger, stock issuance or stock
transfer (or series of related transactions) as a
consequence of which the holders of the Company's
common stock immediately prior to such transaction
(on a fully diluted, as-if-converted basis),
directly or indirectly, beneficially own less than
50% of the outstanding common stock (on a fully
diluted, as-if-converted basis) of the Company or
the surviving entity in such transaction.
2
(c) Upon the termination of Executive's employment for
any reason, by either party, the Executive shall
immediately return to the Company any property of the
Company (or any of its subsidiaries) in his
possession; return of this property shall be a
precondition to the payment of any further
compensation owed by the Company to the Executive,
if any, pursuant to Section 2.2 (b) or the exercise
of any Options (as hereinafter defined).
3. Compensation. For all services rendered by the Executive, the
Company shall pay to the Executive:
3.1 Base Salary: Base salary at the rate of $300,000 per
annum, payable in equal semi-monthly installments,
$20,000 of which is acknowledged by Executive to be
specific consideration for entering into the
restrictive covenants contained in Section 5.
3.2 Bonuses: The Compensation Committee of the Board of
Directors of the Company may award Executive an
annual bonus of up to seventy percent (70%) of
Executive's base salary in accordance with the
provisions of the Company's Fiscal Year 2000
Management Bonus Plan, as such plan may be modified
or amended from time to time, commencing with respect
to performance during the Company's fiscal year
ending in July 2001. The Company shall pay to
Executive on May 17, 2000 a signing bonus in the
amount of $75,000.
3.3 Stock Options: The Company shall grant to Executive
incentive stock options for 400,000 shares of Common
Stock of the Company (the "Options"), at an exercise
price of $2.00 per share, subject to the vesting,
forfeiture and other terms and conditions set forth
in the Incentive Stock Option Agreement, dated of
near or even date herewith, between Executive and the
Company, and to the terms of the Company's Stock
Option Plan.
Executive's stock option and/or stock ownership in
the Company shall not alter the status of his
employment or any of the Company's rights under
Section 2.2.
4. Executive Benefit Plans; Fringe Benefits.
Upon satisfaction of any applicable eligibility requirements and the
expiration of any applicable waiting period, Executive shall be entitled to
participate in all executive benefit plans maintained by the Company. In
addition, Executive shall be entitled to receive, at the Company's option: (i) a
vehicle benefit equal to $500 per month, plus the actual cost of automobile
insurance and gas reimbursement for vehicle use on Company business, or (ii) the
use of a current model year four wheel drive vehicle provided under the
Company's vehicle contract. Executive shall also be entitled to reimbursement by
the Company for relocation expenses incurred by Executive in moving from
California to Bethel, Maine in accordance with the Company's employee relocation
program, including reimbursement for brokerage commissions actually incurred by
Executive (up to a maximum of 6% of the sale price of Executive's home) in
connection with the sale of Executive's home in California, as well as
reimbursement for up to six months' temporary housing expense in the Bethel area
or, at the Company's option, the provision of up to six months' temporary
housing in the Bethel area at the Company's expense.
3
5. Restrictive Covenants.
In consideration of this Employment Agreement and the severance
benefits conferred herein, Executive agrees to the following:
5.1 Confidentiality: Executive agrees to maintain in strictest
confidence all proprietary data and other confidential information (concerning
the Company (or any of its subsidiaries)) obtained or developed by Executive in
the course of his employment with the Company. Such information and data shall
include but not be limited to the Company's (or any of its subsidiaries')
business plans, budgets, non-public financial data, business strategies,
development and expansion plans, marketing plans, trade secrets, patents,
inventions, systems, procedures, manuals, confidential reports and
communications, as well as information that the Company (or any of its
subsidiaries) may obtain from third parties in confidence or subject to
non-disclosure or similar agreements. All such information and data is and shall
remain the exclusive property of the Company or its subsidiaries and shall be
used solely for the benefit of the Company and its subsidiaries. Any such
information and data (and any notes, summaries, copies or extracts thereof or
therefrom) in Executive's possession after termination of his employment shall
be promptly returned to the Company. Executive's obligations under this Section
5.1 shall survive any termination of his employment.
5.2 Non-Competition: Executive acknowledges that he is a key
employee of the Company and his talents and services are of a special, unique,
unusual and extraordinary character and are of particular and peculiar benefit
and importance to the Company. In order for the Company to protect its interests
against the competitive use of any confidential information, knowledge or
relationships concerning the Company and its business to which Executive will
have access by virtue of the special nature of his relationship with the Company
and his involvement in its affairs, and in consideration of the payments made to
Executive hereunder and the agreements of the parties herein, Executive agrees
that, for so long as this Agreement is in effect and for a period of one (1)
year after this Agreement terminates, Executive will not own (by ownership of
securities or otherwise), manage, operate, control, engage in as an equity
participant or be employed by or act as a consultant to, or be connected in any
manner with, the ownership, management or control of any business which is
engaged in the business of owning or operating ski resorts. In recognition
of the geographic extent of the Company's existing and anticipated operations
and the nature of the Company's (and its subsidiaries') business and competitive
circumstances, the restrictive covenant contained in this Section 5.2 shall
apply throughout North America.
5.3 Solicitation: Executive agrees that, for so long as this
Agreement is in effect and for a period of one (1) year after this Agreement
terminates, Executive shall not solicit or induce any employee of the Company
(or any of its subsidiaries) to leave the employ of the Company (or any of its
subsidiaries), or to hire or attempt to hire any such employee on behalf of
Executive or on behalf of any other person or entity, and Executive further
agrees not to interfere with, disrupt or attempt to disrupt any past, present or
prospective contractual or other relationship between the Company (or any of its
subsidiaries) and any of their respective employees or any third parties with
which the Company (or any of its subsidiaries) has business relationships.
5.4 Remedy for Breach: The parties recognize that the services
to be rendered under this Agreement by Executive are special, unique, and of an
extraordinary character, and that in the event of a breach of this Section 5 by
Executive, then the Company shall be entitled to institute and prosecute
proceedings in any court of competent jurisdiction in equity, to enforce the
specific performance of any terms, conditions, obligations and requirements of
this Section 5, and/or to enjoin the Executive from continuing those actions
which are in breach of this Agreement, or to take any or all of the foregoing
actions.
4
6. Section Headings. Section headings contained in this Agreement are
for convenience only and shall in no manner be construed as a part of this
Agreement.
7. Amendment. This Agreement may be amended or modified only in writing
signed by both parties.
8. Counterparts. This Agreement may be executed in two or more
counterparts each of which shall be deemed to be an original but all of which
together shall constitute one and the same instrument.
9. Waiver. The failure of either party hereto in any one or more
incidences to insist upon the performance of any of the terms or conditions of
this Agreement, or to exercise any rights or privileges conferred in this
Agreement, or the waiver of any breach of any of the terms of this Agreement
shall not be construed as waiving any such terms and the same shall continue to
remain in full force and effect as if no such forbearance or waiver had
occurred.
10. Applicable Law; Jurisdiction. This Agreement shall be construed
according to and governed by the laws of the State of Maine, excluding conflict
of laws principles, and Executive expressly consents to submit himself to the
jurisdiction of the federal and state courts of the State of Maine.
11. Reformation and Severability. In the event any provision or portion
of this Agreement shall be held invalid or unenforceable by any court of
competent jurisdiction, any such provision or portion may be reformed by the
court to the minimum extent necessary in order to make it valid or enforceable,
whereupon the parties agree that said provision or portion as so reformed shall
be valid and enforceable by or upon them. Any such holding shall not invalidate
or render unenforceable any other term contained in this Agreement.
12. Entire Agreement. This Agreement embodies the entire understanding
of the parties with respect to Executive's employment with the Company and
supersedes any previous agreement, expression or understanding, written or oral,
relating thereto. The Executive agrees that no other promises or representations
of any kind were made to him by the Company prior to or coincident with his
signing of this Agreement.
13. Assignment and Successors. Executive's rights and obligations under
this Agreement shall not be assignable by the Executive. This Agreement may be
assigned by Company and shall inure to the benefit of and be binding upon
Company, its successors and assigns.
14. Notices. Any notice to be given under this Agreement must be in
writing and either delivered in person or sent by first class certified or
registered mail, return receipt requested, postage prepaid, if to the Company,
in care of its Chief Executive Officer, Leslie B. Otten, Sunday River Access
Road, Bethel, Maine 04217, and if to the Executive, at his home address or
addresses as either party shall have designated in writing to the other party
hereto.
IN WITNESS WHEREOF, Company has hereunto caused its corporate name to
be signed and sealed, and Executive has hereunto set his hand, all being done in
duplicate originals, with one original being delivered to each party as of the
day and year first above written.
AMERICAN SKIING COMPANY
By:/s/Leslie B. Otten
---------------------------------
Its Chief Executive Officer
/s/William J. Fair
---------------------------------
William J. Fair