Exhibit 10.1

 

[Sunterra Letterhead]

 

October 13, 2005

 

Mr. Nicholas J. Benson

President and CEO

Sunterra Corporation

3865 W Cheyenne Avenue

N Las Vegas, NV 89032

 

Re: Extension of Employment Agreement

 

Dear Mr. Benson:

 

I have been instructed by the Compensation Committee (the “Committee”) of the
Board of Directors of Sunterra Corporation to offer a one - year extension of
your employment agreement, until November 19, 2006. The compensation and terms
of employment would be the same as described in Sunterra’s most recent proxy
statement, which is reflective of the attached Amendment No. 1 to Amended and
Restated Employment Agreement (“Amendment No. 1”). While Amendment No. 1 was
never signed, it is hereby ratified and adopted.

 

If the foregoing is acceptable to you, please sign below and return to me.

 

Sincerely yours,

 

SUNTERRA CORPORATION,             A Maryland corporation By  

/s/ Frederick C Bauman

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    Frederick C. Bauman     Secretary ACCEPTED AND AGREED

/s/ Nicholas J. Benson

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Nicholas J. Benson

 

Date: October 13, 2005

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AMENDMENT NO. 1

TO

AMENDED AND RESTATED EMPLOYMENT AGREEMENT

 

This AMENDMENT NO. 1, dated this              day of September, 2004 (the
“Amendment”), to Amended and Restated Employment Agreement dated as of
November 19, 2001 (“the Agreement”), between Sunterra Corporation, a Maryland
corporation (the “Company”), and Nicholas Benson (the “Executive”).

 

R E C I T A L S :

 

WHEREAS, The Executive and the Company are party to the Agreement; and

 

WHEREAS, Section 14 of the Agreement provides that any amendment to the
Agreement shall be valid only if made in writing and signed by the parties
thereto and may be made only if consented to on the Company’s behalf by the
General Counsel; and

 

WHEREAS, the parties hereto desire to amend the Agreement, in the form of this
Amendment; and

 

WHEREAS, the Company recognizes that the future growth, profitability and
success of the Company’s business will be substantially and materially enhanced
by the continued employment of Executive by the Company; and

 

WHEREAS, the Company desires to continue to employ the Executive and the
Executive has indicated his willingness to continue to provide his services, on
the terms and conditions set forth in the Agreement, as amended by this
Amendment.

 

NOW, THEREFORE, on the basis of the foregoing premises and in consideration of
the mutual covenants and agreements contained herein, the parties hereto agree
as follows:

 

  1. Location of Employment. Section 1 of the Agreement is amended by striking
“Orlando, Florida” from the 14th line and replacing with “N. Las Vegas, Nevada”.

 

  2. Employment Term The first sentence of Section 2 of the Agreement is deleted
in its entirety, and the following substituted: “Unless terminated pursuant to
Section 6 hereof, the Executive’s employment hereunder shall commence on the
Commencement Date and shall continue during the period ending on November 19,
2005 (the “Initial Term”).”

 

  3. Salary. The first sentence of Section 3(a) of the Agreement is deleted in
its entirety, and the following substituted: “As compensation for the
performance of Executive’s services hereunder, the Company shall pay to the
Executive a salary (the “Salary”) of Seven Hundred Fifty Thousand Dollars
($750,000) per annum.” This change is effective retroactively as of January 1,
2004.

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  4. Cash Bonus. Section 3(b) of the Agreement is deleted in its entirety, and
the following substituted:

 

“(b) Annual Performance Bonus. The Executive shall be eligible to receive, in
respect of each fiscal year in the Employment Term beginning in fiscal 2004 and
thereafter, an annual cash performance bonus (the “Annual Performance Bonus”) in
an amount up to Seven Hundred Eighty Thousand Dollars ($780,000), based upon the
attainment of quantitative performance goals set forth in a performance plan to
be mutually agreed to by the Compensation Committee of the Board and the
Executive within 90 days of the beginning of each fiscal year (the “Performance
Plan”); provided that (1) the performance goals for fiscal year 2004 shall be as
set forth on Schedule 1 hereto and, (2) for fiscal year 2004, the bonus
eligibility shall be 75% of that otherwise applicable. The Annual Performance
Bonus shall be determined based on the level of achievement of the performance
goals (from 90% to 110% attainment of budget, including Epic budget), with a
payment range of $520,000 to $780,000. By way of example, if 100% of budget is
achieved, the payment would be at the midpoint, or $650,000. The Annual
Performance Bonus shall be paid to the Executive on the same basis as the
payment of bonuses to other senior executive officers of the Company.”

 

  5. Equity Compensation. Section 3.c of the Agreement is deleted in its
entirety, and the following substituted:

 

“(c) Equity Compensation. The Executive shall be eligible to receive annual
equity compensation (the “Annual Equity Award”) as shall be agreed between the
Executive and the Compensation Committee of the Board.

 

  6. Housing Allowance and Free Flights for Family Eliminated. Clauses (i) and
(iii) of Section 3(f) of the Agreement are deleted.

 

  7. Section Headings. The headings of the sections and subsections of this
Amendment are inserted for convenience only and shall not be deemed to
constitute a part thereof, affect the meaning or interpretation of this
Agreement or of any term or provision hereof.

 

  8. Counterparts. This Amendment may be executed in one or more counterparts,
each of which shall be deemed an original and all of which together shall be
considered one and the same agreement.

 

  9. Existing Agreement. Except for the changes effected by this Amendment, the
Agreement shall remain in effect as presently written.

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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date first above written.

 

SUNTERRA CORPORATION By:  

 

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    Frederick C. Bauman     Vice President, General Counsel and Secretary

 

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Nicholas Benson

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SCHEDULE 1

 

NICHOLAS BENSON

 

PERFORMANCE GOAL BONUS – Fiscal 2004

 

% of EBITDA Target

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Bonus

(@75% of Regular Eligibility)

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At least 90% but less than 95%

   $ 390,000

At least 95% but less than 100%

   $ 438,750

At least 100% but less than 105%

   $ 487,500

At least 105% but less than 110%

   $ 536,250

110% or greater

   $ 585,000