Document:

EX-10.7

 

Exhibit 10.7

STOCK OPTION AGREEMENT

(Non-Qualified Stock Option)

          THIS AGREEMENT is made to be effective as of March 23, 2000, by and between Ohio Casualty
Corporation, an Ohio corporation (the “Company”), and the undersigned director of Ohio Casualty
Corporation (“Director”).

WITNESSETH:

          WHEREAS, the Board of Directors (the “Board”) has determined that Director should be granted
an option to acquire common shares of the Company, upon the terms and conditions set forth in this
Agreement, in lieu of being paid any cash annual retainer for the year 2000;

          NOW, THEREFORE, in consideration of the premises, the parties named above make the following
agreement, intending to be legally bound thereby:

          1. Grant of Option. Subject to adjustment pursuant to Section 3 of this Agreement, the
Company hereby grants to Director an option (the “Option”) to purchase 15,000 common shares, $.125
par value, of the Company (the “Shares”). The Option is not intended to qualify as an incentive
stock option under Section 422 of the Internal Revenue Code of 1986, as amended (the “Code”).
Anything contained in this Agreement to the contrary not withstanding, the Option may not be
exercised for a period of six months from the date of this Agreement.

          2. Terms and Conditions of the Option.

               (a) Option Price. The purchase price (the “Option Price”) to be paid by
Director to
the Company upon the exercise of the Option shall be $13.125 per Share, subject to adjustment as
provided in Section 3 of this Agreement.

               (b) Vesting. Except as otherwise provided in this Agreement, the Option shall vest as
follows:

                    (i) Subject to Director’s continued service on the Board of
Directors (the “Board”) of the
Company, the Option shall vest and become exercisable with respect to (a) fifty percent (50%) of
the Shares on the first anniversary of the effective date of this Agreement and (b) fifty percent
(50%) of the Shares on the second anniversary of the effective date of this Agreement. The portion
of the Option which has become vested and exercisable pursuant to this Section 2(b) is hereinafter
referred to as the “Vested Portion” and the remaining portion shall be the “Unvested Portion”.

                    (ii) Subject to the six-month holding period requirements of
Section 1 of this Agreement, if
Director ceases to be a director of the Company because of Director’s death, Disability (as defined
below) or Retirement (as defined below), any portion of

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the Option which is then not exercisable shall vest and become exercisable upon such termination of
service as a director of the Company for the period specified in Section 2(c) below. For purposes
of this Agreement, “Disability” means a mental or physical condition which, in the opinion of the
Board, renders Director unable or incompetent to carry out the job responsibilities which Director
held or the tasks to which Director was assigned at the time the disability was incurred, and which
is expected to be permanent or for an indefinite duration exceeding one year. For purposes of this
Agreement, “Retirement” shall mean the retirement from service on the Board after (A) having
attained the age of 65 and (B) having served at least 10 years as a member of the Board.

                    (iii) If Director ceases to be a director of the Company for any
reason other than because of
Director’s death, Disability or Retirement, the Vested Portion of the Option will be exercisable
upon termination of Director’s status as a director of the Company for the period specified in
Section 2(c) below and the then Unvested Portion of the Option will terminate.

               (c) Exercise of the Option. Subject to the provisions of this Agreement, including the
six-month holding period provided in Section 1, Director may exercise all or any part of the Vested
Portion of the Option at any time prior to the occurrence of the earliest event listed below:

                    (i) the tenth anniversary of the date of this Agreement;

                    (ii) twelve months following the date Director ceases to be a
director of the Company because
of Director’s death, Disability or Retirement; or

                    (iii) three months following the date Director ceases to be a
director of the Company for any
reason other than because of Director’s death, Disability or Retirement.

               (d) Method of Exercise. The Vested Portion of the Option may be exercised by giving
written notice of exercise to the Company in care of the Treasurer of the Company stating the
number of Shares subject to the Option being purchased. Payment for all such Shares shall be made
to the Company at the time the Option is exercised in United States dollars in cash (including
check, bank draft or money order). Payment for such Shares also may be made (i) by delivery of
common shares of the Company already owned by Director and having a Fair Market Value (as defined
in Section 2(f) of this Agreement) on the date of delivery equal to the Option Price for the Shares
purchased, or (ii) by delivery of the combination of cash and already-owned common shares of the
Company. The Board may, in its discretion, permit payment of the Option Price of the Shares
subject to the Option by delivery of a properly executed exercise notice together with a copy of
irrevocable instructions to deliver promptly to the Company the amount of sale or loan proceeds to
pay the Option Price. After payment in full for the Shares purchased under the Option has been
made, the Company shall take all such action as is necessary to deliver appropriate share
certificates evidencing the Shares purchased upon exercise of the Option as promptly thereafter as
is reasonably practicable.

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               (e) Tax Withholding. Director will pay to the Company the amount of any taxes the
Company is required by law to withhold with respect to the exercise of the Option. Director may
instruct the Company to withhold from the Shares issuable upon exercise of the Option that number
of Shares having a Fair Market Value (as defined in Section 2(f) of this Agreement) on the date of
exercise equal to the amount of any taxes the Company is required by law to withhold with respect
to the exercise of the Option.

               (f) For purposes of this Agreement, “Fair Market Value” means, on any given date, the
closing
price of the Company’s common shares, as reported on The Nasdaq National Market, or on any
securities exchange on which the common shares are listed for such date, or if the Company’s common
shares were not traded on such date, on the next preceding date on which the Company’s common
shares were traded.

          3. Adjustments and Changes in the Shares.

          The following provisions shall apply to the Option:

               (a) Generally. In the event that the outstanding common shares of the Company shall be
changed into or exchanged for a different kind of shares, other securities or other property of the
Company or of another corporation or for cash (whether by reason of merger, consolidation,
recapitalization, reclassification, split-up, combination of shares or otherwise) or if the number
of common shares of the Company shall be increased through the payment of a share dividend, then
unless such change results in the termination of the Option, there shall be substituted for or
added to each Share subject to the Option, the number and kind of shares, other securities or other
property and the amount of cash into which each outstanding common share of the Company shall be
changed, or for which each such common share shall be exchanged, or to which the holder of each
such common share shall be entitled, as the case may be. The Option shall also be appropriately
amended as to the Option Price and other terms as may be necessary to reflect the foregoing events.
The number of Shares that will become vested in accordance with Section 2(b) of this Agreement
shall be appropriately adjusted to reflect any such change in the outstanding common shares of the
Company. In the event there shall be any other change in the number or kind of the outstanding
shares of the Company, or of any shares, other securities or other property (including cash) into
which such shares shall have been changed, or for which they shall have been exchanged, then if the
Board, in its sole discretion, shall determine that such change equitably requires an adjustment in
the Option, such adjustment shall be made by the Board in accordance with such determination.
Fractional shares resulting from any adjustment in the Option pursuant to this Section 3(a) shall
be rounded down to the nearest whole number of shares.

               (b) Change in Control. In the event there is a Change in Control, subject to the six
month holding period, the Option shall become immediately exercisable as of the date of the Change
in Control, whether or not exercisable under this Agreement. If the Option has been held for less
than six months as of the date of the Change in Control, the Option shall be cancelled by the
Company without consideration and shall terminate as of the date of the

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Change in Control. For purposes of this Section 3, a Change in Control shall be deemed to have occurred
on the earliest of the following dates:

                    (i) Unless such acquisition shall have been approved in advance
by the Board, the date any
entity or person (including a “group” as defined in Section 13(d)(3) of the Securities Exchange Act
of 1934, as amended) shall have become the beneficial owner of, or shall have obtained voting
control over, twenty percent (20%) or more of the outstanding common shares of the Company.

                    (ii) The date the shareholders of the Company approve a
definitive agreement (A) to merge or
consolidate the Company with or into another corporation, in which the Company is not the
continuing or surviving corporation or pursuant to which any common shares would be converted into
cash, securities or other property of another corporation, other than a merger of the Company in
which holders of common shares immediately prior to the merger have the same proportionate
ownership of common shares of the surviving corporation immediately after the merger as immediately
before, or (B) to sell or otherwise dispose of substantially all the assets of the Company; or

                    (iii) The date there shall have been a change in a majority of
the Board within a twelve (12)
month period; provided, however, that any new director whose nomination for election by the
Company’s shareholders was approved, or who was appointed or elected to the Board, by the vote of
two-thirds of the directors then still in office who were in office at the beginning of the twelve
(12) month period shall not be counted in determining whether there has been such a change in a
majority of the Board.

               (c) No Restrictions on Company. The grant of this Option shall not affect in any way
the right of the Company to adjust, reclassify, reorganize or otherwise change its capital or
business structure or to merge, consolidate, dissolve, liquidate or sell or transfer all or any
part of its business or assets.

          4. Non-Assignability of Option. Unless otherwise permitted by the Board, the Option
shall not be assignable or otherwise transferable by Director except by will or by the laws of
descent and distribution. The Option may not be exercised during the lifetime of Director except
by Director or Director’s guardian or legal representative.

          5. Buy Out of Option Grants. At any time after the Option becomes exercisable, the
Board shall have the right to elect, in its sole discretion and without the consent of Director, to
cancel the Option and pay to Director the excess of the Fair Market Value of the Shares over the
Option Price at the date the Board provides written notice (the “Buy Out Notice”) of the intention
to exercise the right. A buy out pursuant to this Section 5 shall be completed by the Company as
promptly as possible after the date of the Buy Out Notice. Payment of the buy out amount may be
made in cash, in common shares of the Company, or partly in cash and partly in common shares as the
Board deems advisable. To the extent payment is made in common shares, the number of common shares
shall be determined by dividing the amount of the payment to be made by the Fair Market Value of a
common share at the date of the
Buy Out Notice.

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Payment of any such buy out amount shall be made net of any applicable foreign,
federal (including FICA), state and local withholding taxes.

          6. Restrictions on Transfers of Shares. Anything contained in this Agreement or
elsewhere to the contrary notwithstanding, the Company may postpone the issuance and delivery of
Shares upon any exercise of the Option until completion of any stock exchange listing or
registration or other qualification of such Shares under any state or federal law, rule or
regulation as the Company may consider appropriate. The Company may require Director, when
exercising the Option, to make such representations and furnish such information as the Company may
consider appropriate in connection with the issuance of the Shares in compliance with applicable
law.

          Shares issued and delivered upon exercise of the Option shall be subject to such restrictions
on trading, including appropriate legending of certificates to that effect, as the Company, in its
discretion, shall determine are necessary to satisfy applicable legal requirements and obligations.

          7. Rights of Director as a Shareholder. Director shall have no rights as a shareholder
of the Company with respect to any Shares of the Company covered by the Option until the date of
issuance of a certificate to Director.

          8. No Right to Continue as a Director. The grant of the Option shall not confer upon
Director any right to continue as a director of the Company nor limit in any way the right of the
Company’s shareholders to terminate Director’s status as a director of the Company at any time.

          9. Governing Law. This Agreement shall be governed by and construed in accordance with
the laws of the State of Ohio.

          10. Rights and Remedies Cumulative. All rights and remedies of the Company and of
Director enumerated in this Agreement shall be cumulative and, except as expressly provided
otherwise in this Agreement, none shall exclude any other rights or remedies allowed by law or in
equity, and each may be exercised and enforced concurrently.

          11. Captions. The captions contained in this Agreement are included only for
convenience of reference and do not define, limit, explain or modify this Agreement or its
interpretation, construction or meaning and are in no way to be construed as a part of this
agreement.

          12. Severability. If any provision of this Agreement or the application of any
provision hereof to any person or any circumstance shall be determined to be invalid or
unenforceable, then such determination shall not affect any other provision of this Agreement or
the application of said provision to any other person or circumstance, all of which other
provisions shall remain in full force and effect. It is the intention of each party to this
Agreement that if any provision of this Agreement is susceptible of two or more interpretations,
one of

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which
would render the provision enforceable and the other or others of which would render the provision
unenforceable, then the provision shall have the meaning which renders it enforceable.

          13. Number and Gender. When used in this Agreement, the number and gender of each
pronoun shall be construed to be such number and gender as the context, circumstances or its
antecedent may require.

          14. Entire Agreement. This Agreement constitutes the entire agreement between the
Company and Director with respect to this stock option grant, and this Agreement supersedes all
prior agreements between the parties related to this stock option grant. No officer, employee or
other servant or agent of the Company, and no servant or agent of Director is authorized to make
any representation, warranty or other promise not contained in this Agreement. No change,
termination or attempted waiver of any of the provisions of this Agreement shall be binding upon
any party hereto unless contained in a writing signed by the party to be charged.

          15. Successors and Assigns. This Agreement shall inure to the benefit of and be
binding upon the successors and assigns (including subsequent, as well as immediate, successors and
assigns) of the parties.

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          By signing below, Director accepts this Option subject to all of the terms and provisions set
forth in this Agreement. Director hereby agrees to accept as binding, conclusive and final all
decisions or interpretations of the Board upon any questions arising under this Agreement.

          IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed on the date
first above written.

	 	 	 	 	 
	 	 	COMPANY
	 
	 	 	 	 
	 	 	OHIO CASUALTY CORPORATION
	 
	 	 	 	 
	 

	 	By:
	 	 

	 
	 	 	 	 
	 

	 	Title:
	 	 

	 
	 	 	 	 
	 	 	DIRECTOR:
	 
	 	 	 	 
	 	 	 
	 	 	Signature
	 
	 	 	 	 
	 	 	 
	 

	 	Name	 	 
	 
	 	 	 	 
	 	 	 
	 	 	Street Address
	 
	 	 	 	 
	 	 	 
	 	 	City, State, Zip Code
	 
	 	 	 	 
	 	 	 
	 	 	Social Security Number

7<PAGE>

                                                                  Execution Copy

                              EMPLOYMENT AGREEMENT

          EMPLOYMENT AGREEMENT, dated as of July 18, 1999 (this "Agreement")
between Vistana, Inc., a Florida corporation (the "Company"), and RAYMOND L.
GELLEIN, JR. ("Employee") (capitalized terms used herein and not otherwise
defined shall have the meanings ascribed thereto in Section 13).

                                   WITNESSETH:

          WHEREAS, the Company, through its Affiliates, is engaged in the
business of time-share 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;

          WHEREAS, this Agreement is being entered into in connection with the
sale of a controlling interest in the Company by Employee; 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
hereby accepts such employment, upon the terms and conditions hereinafter set
forth. The parties agree that this Agreement shall supersede the Employment
Agreement dated December 27, 1996 between Employee and the Company in its
entirety as of the Effective Date (as that term is defined in Section 3 (a)) and
that such prior agreement shall have no further force and effect whatsoever on
or after the Effective Date. Employee and the Company further agree that this
Agreement shall supersede any other prior agreements or understandings between
Employee and the Company, if any, including without limitation any written, oral
or implied agreements or understandings, and that any such agreements or
understandings shall have no further force or effect whatsoever on or after the
Effective Date.

          2. Position, Duties and Responsibilities.

               (a) Position. Employee's title, reporting relationship and
primary responsibilities are set forth on Schedule A attached hereto and
incorporated herein by this reference.

               (b) Place of Employment. During the term of this Agreement,
Employee 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 Employee shall spend such time as

<PAGE>

reasonably necessary in connection with the business of the Company at the
principal executive offices of Sky ("Parent").

               (c) Other Activities. During the term of this Agreement, Employee
shall be an employee of the Company, shall not be engaged in any other
employment or business activities, shall devote such time and effort to the
Company as may be necessary and appropriate from time to time in the
circumstances for the proper discharge of his duties and obligations hereunder
and shall not, without the prior approval of Parent, serve as an officer or
director of any company, other than the Company, Parent or another Affiliate of
Parent. Notwithstanding the foregoing, Employee shall not be prohibited from
serving on civic boards or 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), provided that
such activities do not interfere with the proper discharge of Employee's duties
and obligations hereunder.

          3. Term.

               (a) Effective Date. This Agreement shall become effective (the
"Effective Date") concurrently with the completion of the merger of the Company
with and into Fire Acquisition Corp., pursuant to the Agreement and Plan of
Merger dated as of July 18, 1999 among Parent, Fire Acquisition Corp., a Florida
corporation and a wholly-owned subsidiary of Parent, and the Company (the
"Merger").

               (b) Termination Date. The term of employment under this Agreement
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 on such fourth anniversary of
                          the Effective Date and on each subsequent anniversary
                          of the Effective Date, Employee's term of employment
                          hereunder shall be extended for an additional period
                          of one year, unless either party shall have given
                          written notice to the other party not less than 90
                          days prior to such date that Employee's term of
                          employment shall not be so extended;

                    (ii)  the date upon which the Company terminates Employee's
                          employment by the Company for Cause, or without Cause
                          or 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 termination);

                    (iii) the date of Employee's death; or

                                       -2-
<PAGE>

                    (iv) the date upon which Employee effects a Voluntary
                         Termination or terminates employment for Good Reason
                         (it being understood that the date of termination shall
                         be the date upon which Employee provides the Company
                         written notice of such termination).

               (c) Performance of Duties During Notice Period. In the event that
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 or
terminates for Good Reason pursuant to Section 3(b)(iv), Employee, if requested
by the Company, shall continue to render services hereunder to the Company for
as long as requested by the Company up to 30 days and shall, in such event,
continue to be paid as provided in the Agreement during such period.

               (d) Employment-At-Will/Employee Acknowledgment. Notwithstanding
the term of this Agreement having an initial duration of four years with
possible one-year extensions 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 or any other provision relating to Employee's
compensation or benefits, 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's 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.

                    (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
                         all computer files and disks), 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

                                       -3-

<PAGE>

                         other tangible material containing any proprietary
                         information of the Company.

                    (ii) The covenants and agreements of Employee contained in
                         Sections 3(e), 9, 10, 11, 12 and 14 shall survive
                         termination of Employee's employment by the Company and
                         the termination of this Agreement.

          4. Compensation.

               (a) Annual Salary. The Company shall pay to Employee an annual
salary equal to the base salary set forth on Schedule B attached hereto and
incorporated herein by this reference (the "Base Salary"). The Base Salary shall
be in effect, on a pro-rated basis, from and after the Effective Date through
December 31, 1999. For each calendar year during the term of this Agreement
commencing with the 2000 calendar year, the Company shall pay Employee an annual
salary (the "Adjusted Base Salary") determined by the Company's Board of
Directors; provided, however that in no event shall the Adjusted Base Salary be
less than the Base Salary or the Adjusted Base Salary (as applicable) 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 Parent, but not
less frequently than monthly.

               (b) Annual Bonus Amount. Employee shall be entitled to be paid an
annual bonus amount (the "Annual Bonus Amount") each calendar year beginning
with the 1999 calendar year as further specified and described on Schedule B
attached hereto.

               (c) Long Term Incentive Compensation.

                    (i)  Cash. Employee shall be provided cash long-term
                         incentive compensation opportunities in accordance with
                         Parent's executive compensation policies.

                    (ii) Stock options. Employee shall be granted non-qualified
                         options for not less than 100,000 Units under Parent's
                         1999 Long-Term Incentive Compensation Plan in equal
                         installments of not less than 25,000 Units annually
                         over the term of the Agreement beginning on the
                         Effective Date and on subsequent anniversaries thereof.
                         Such options will have a 10 year term, will become
                         exercisable at the rate of 25% per year beginning on
                         the first anniversary of the date of grant and will be
                         governed by the terms of Parent's 1999 Long-Term
                         Incentive Compensation Plan.

                                       -4-
<PAGE>

          5. Fringe Benefits. During the term of this Agreement, Employee shall
be entitled to all such employment benefits as may, from time to time, be made
generally available to similar senior level management employees of Parent or
its Affiliates 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 any
such medical and health insurance plans; provided, however, that such benefits
and arrangements are made available at the discretion of Parent and nothing in
this Agreement establishes any right of Employee to the availability or
continuance of any such plan or arrangement. Employee shall receive credit for
service with the Company prior to the Effective Date for purposes of such
benefits and arrangements.

          6. Business Expenses. The Company shall pay, either directly or by
reimbursement to Employee, such reasonable and necessary business expenses
incurred by Employee, including travel and entertainment expenses (with first
class travel and accommodation), in the course of employment by the Company as
are consistent with Parent's policies in existence from time to time, and
provided that Employee furnishes all receipts or other documentation as required
under the Company's policies relating to reimbursement of expenses. Such
expenses shall include, but shall not be limited to, occupational license fees,
car allowance, membership dues in business and professional organizations,
continuing education expenses, subscriptions to business and professional
publications, cellular telephone, home fax, PC and data line expenses. Employee
shall be reimbursed by the Company for reasonable attorneys' fees incurred by
Employee in the negotiation of this Agreement.

          7. Vacation and Sick Leave. Employee shall be entitled to four weeks
paid vacation annually in accordance with Parent's policies. Employee shall be
entitled to sick leave in accordance with Parent's policies with credit for
service with the Company prior to the Effective Date.

          8. Compensation Upon Termination of Employment.

               (a) Termination by the Company or Parent for Cause. If Employee's
employment is terminated by the Company for Cause, Employee shall receive only
his Base Salary or Adjusted Base Salary (as applicable) pro-rated through the
date of termination. Employee shall not be entitled to any additional
compensation and shall terminate participation in the Company's and Parent's
employee benefit plans and arrangements upon termination of employment (except
to the extent required by COBRA or other applicable law).

               (b) Termination by the Company or Parent Without Cause. If
Employee's employment is terminated by the Company without Cause, Employee shall
receive (i) his Base Salary or Adjusted Base Salary (as applicable) pro-rated
through the date of termination, (ii) his annual bonus earned for the year in
which his employment terminates (if any) pro-rated through the date of
termination, (iii) accelerated vesting of all stock options and other employee
benefits subject to vesting, (iv) payment by the Company of Employee's premiums
for COBRA health insurance continuation coverage for 12 months, and (v)
continuation of his Base Salary or Adjusted Base Salary (as applicable) for 12
months after his termination date.

                                       -5-

<PAGE>

               (c) Termination by Employee for Good Reason. If Employee's
employment is terminated by Employee for Good Reason, Employee shall receive (i)
his Base Salary or Adjusted Base Salary (as applicable) pro-rated through the
date of termination, (ii) his annual bonus earned for the year in which his
employment terminates (if any) pro-rated through the date of termination, (iii)
accelerated vesting of all stock options and other employee benefits subject to
vesting, (iv) payment by the Company of Employee's premiums for COBRA health
insurance continuation coverage for 12 months, and (v) continuation of his Base
Salary or Adjusted Base Salary (as applicable) for 12 months after his
termination date.

               (d) Voluntary Termination by Employee. If Employee's employment
is terminated by Voluntary Termination, Employee shall receive only his Base
Salary or Adjusted Base Salary (as applicable) pro-rated through the date of
termination. Employee shall not be entitled to any additional compensation and
shall terminate participation in the Company's and Parent's employee benefit
plans and arrangements upon termination of employment (except to the extent
required by COBRA or other applicable law).

               (e) Other Termination. If Employee's employment is terminated
other than as set forth in (a) through (d) above, such as by reason of
Employee's death or Permanent Disability, Employee or a beneficiary designated
by Employee shall receive (i) his Base Salary or Adjusted Base Salary (as
applicable) pro-rated through the date of termination and (ii) his annual bonus
earned for the year in which his employment terminates (if any) pro-rated
through the date of termination.

               (f) Right of Offset; Compliance with Covenants.

                    (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 any
                         payments to Employee hereunder following the
                         Termination Date is expressly conditioned upon
                         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.

               (a) Confidential Information. During the term of this Agreement,
Employee agrees to use all Confidential 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 or indirectly, (i)

                                       -6-
<PAGE>

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, that (y) none
of the provisions of this Section 9 shall apply to disclosures made for valid
business purposes of the Company and (z) 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
owed to the Company, Parent or any Affiliate of the Company or Parent by any
person or entity. 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
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 Parent or the
appropriate Affiliate of the Company or Parent) 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 Parent or the appropriate Affiliate of the Company
or Parent). 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 Parent or the 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.

          10. Covenant Not to Compete. Unless the Company's Board of Directors
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 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 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

                                       -7-

<PAGE>

               (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)
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) directly or indirectly for himself 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, Walt
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, Inc., Sunterra
Corporation or Bass PLC or any of their respective Affiliates; or

               (e) directly or indirectly for himself or for any other person or
entity pursue or consummate or otherwise interfere with any Existing Project; or

               (f) (i) directly or indirectly, for himself or any other person
or entity, pursue, consummate or otherwise interfere with any Prospective
Project or (ii) directly or indirectly for himself 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, Parent and any
Affiliate of the Company or Parent) 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
time-share or vacation ownership business; provided, however, that Employee may
not own (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.

          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. The provisions of this Section 10 shall
survive the termination of this Agreement.

          11. Covenant Against Solicitation of Employees. During the term of
Employee's employment by the Company and for the Non-Compete Period, Employee
shall not employ employees or agents or former employees or agents of the
Company, Parent or any Affiliate of the Company or Parent or, directly or
indirectly, solicit or otherwise encourage the employment of employees or agents
or former employees or agents of the Company, Parent or any Affiliate of the
Company or Parent; provided, however, that this restriction shall not apply to
Employee's secretaries

                                       -8-
<PAGE>

or personal assistants or to former employees or agents who, as of the date of
termination of Employee's employment by the Company, have not worked for any of
the Company, Parent or any Affiliate of the Company or Parent during the twelve
preceding months. The provisions of this Section 11 shall survive the
termination of this Agreement.

          12. Remedies For Breach. It is understood and agreed by the parties
that 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
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 terms and phrases shall have the following meanings:

          "Affiliate" means any person or entity who or which, directly or
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 Company, shall mean (a) the commission by Employee of an act of fraud,
embezzlement or willful breach of a fiduciary duty to the Company or Parent
(including, but not limited to, the unauthorized disclosure of confidential or
proprietary material information of the Company or Parent); (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 of the Company, Parent or any Affiliate of
the Company or Parent to any civil liability caused by Employee's conduct which
is determined by an arbitrator or court in a final and nonappealable decision to
constitute unlawful discrimination or harassment in employment; (e) any gross
negligence or willful misconduct by Employee in the performance of Employee's
duties to the Company where such conduct results in a material detriment to the
Company; or (f) Employee's habitual abuse of alcohol or any use by Employee of
an unlawful controlled substance (other than use by Employee in compliance with
a current prescription for Employee); provided, however, that in the event of a
termination falling solely within clause (b) of this definition (and excluding
any termination of Employee for breach of Sections 9, 10 or 11), the Company,
prior to terminating Employee's employment, will give Employee written notice of
the conduct or event that the Company asserts constitutes a breach of a material
covenant, provision,

                                      -9-

<PAGE>

term, condition, understanding or undertaking and afford Employee 15 days after
receipt of such notice to cure such breach; provided further, that Employee will
be deemed terminated for Cause unless any such breach is cured within such
15-day period.

          "COBRA" means Part 6 of Title I of the Employee Retirement Income
Security Act of 1974, as amended.

          "Confidential Information" means all software, trade secrets, work
products created by Employee for the Company, Parent or any Affiliate of the
Company or Parent, 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 or
similar arrangements) and reports and other proprietary information created or
obtained by Employee for the benefit of the Company, Parent or any Affiliate of
the Company or Parent during the course of employment by the Company.

          "Exchange Act" means the Securities Exchange Act of 1934, as amended.

          "Existing Project" means a time-share, vacation plan, vacation
ownership or interval ownership resort or project which the Company, Parent or
any Affiliate of the Company or Parent owns, operates or has commenced to
develop, acquire or otherwise undertake as of the Termination Date.

          "Good Reason" means the occurrence, without the written consent of
Employee, of any of the following events unless such events are substantially
corrected within 30 days following written notification that the Employee
intends to terminate employment as a result of (i) any reduction in Employee's
authority, title or rank with Jeffrey A. Adler as one of the two highest ranking
time-share executives within Parent and its Affiliates, (ii) any change in
Employee's reporting relationship, (iii) relocation of Employee's Place of
Employment (as defined in Schedule A) more than 35 miles from its current
location, provided that Employee shall spend such time as reasonably necessary
in connection with the Company's business at Parent's principal executive
offices without being deemed to have relocated for purposes of this provision or
(iv) any material breach by the Company or Parent of this Agreement.

          "Non-Compete Period" shall mean the period commencing on the
Termination Date and ending on the later of (i) the sixth anniversary of the
Effective Date and (ii) the second anniversary of the Termination Date.

          "Permanent Disability" shall mean the inability of Employee to perform
substantially all Employee's duties and responsibilities to the Company (with or
without reasonable accommodation) 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

                                      -10-
<PAGE>

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 the Company. In the event that any
disagreement or dispute arises between the Company and Employee as to whether
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
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, Parent or any Affiliate of the Company or Parent 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, Parent or any
Affiliate of the Company or Parent has commenced to evaluate or negotiate with
in respect of any transaction involving (y) the acquisition by the Company,
Parent or any Affiliate of the Company or Parent 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, and the corporate
offices of the Company and Parent and their respective Affiliates.

          "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 death, Permanent Disability or Good Reason).

          14. Miscellaneous.

               (a) Severability. If any provision of this Agreement shall be
declared invalid or unenforceable by a court of competent 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 litigation 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 arbitration or 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

                                      -11-

<PAGE>

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. This Agreement shall be governed by and
construed in accordance with the laws of the State of Florida.

               (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:

          If to the Company:

          Vistana, Inc.
          8801 Vistana Centre Drive
          Orlando, Florida 32821
          Attn: General Counsel

          With a copy to Parent at the address set forth below.

          If to Parent:

          Starwood Hotels & Resorts Worldwide, Inc.
          777 Westchester Avenue
          White Plains, New York 10604
          Attn: General Counsel

          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.

                                      -12-
<PAGE>

               (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) Binding Arbitration.

                    (i)  Except for claims or disputes under Sections 9, 10 and
                         11, Employee and the Company agree that, to the extent
                         permitted by law, all claims or disputes arising out of
                         or relating to this Agreement, the parties' employment
                         relationship, or the termination of this Agreement or
                         such relationship, that Employee may have against or
                         with the Company, Parent or any Affiliate of the
                         Company or Parent and any of its or their affiliates,
                         subsidiaries, parents, successors, permitted assigns,
                         directors, officers, employees, owners, shareholders,
                         agents, or representatives, and that the Company or
                         such other persons or entities may have against or with
                         Employee, shall be submitted for binding arbitration in
                         Orlando, Florida, or such other location to which the
                         parties may agree, and shall be resolved in accordance
                         with the Commercial Rules of the American Arbitration
                         Association. Notwithstanding such rules, the parties
                         shall have the same rights to discovery and counsel as
                         they would have if the claim or dispute was being
                         resolved in a court of competent jurisdiction. If
                         either party pursues a claim and such claim results in
                         an arbitrator's decision, both parties agree to accept
                         such decision as final and binding, and judgment
                         thereupon may be entered in any Florida or other court
                         having jurisdiction thereof. The Company and Employee
                         hereby waive any right they may have to a jury trial
                         for all claims and disputes subject to arbitration
                         hereunder. Claims subject to arbitration hereunder
                         include without limitation claims under the Florida
                         Human Rights Act, the Florida Wage Discrimination Law,
                         the New York Human Rights Law, the

                                      -13-

<PAGE>

                         New York Rights of Person With Disabilities Law, the
                         New York Equal Rights Law, Title VII of the Civil
                         Rights Act of 1964, the Age Discrimination in
                         Employment Act, the Americans with Disabilities Act,
                         any and all federal, state and local laws governing
                         leaves of absence and family care, or under any other
                         federal, state, or local law, regulation, ordinance, or
                         executive order, or under common law. The costs of any
                         arbitration hereunder shall be borne equally by the
                         parties.

                    (ii) The arbitrator shall have no power to make an award or
                         impose a remedy that is not available to a court of
                         competent jurisdiction. The arbitrator shall apply the
                         substantive law of the State of Florida.

                   (iii) Notwithstanding the foregoing, the Company may in its
                         discretion immediately pursue any and all available
                         legal and equitable remedies for Employee's violation
                         of any provision of Sections 9, 10 or 11 in any court
                         of competent jurisdiction.

                    (iv) Except as necessary in court proceedings to enforce
                         this arbitration provision or an award rendered
                         hereunder, neither a party nor an arbitrator may
                         disclose the existence, content or results of any
                         arbitration hereunder without the prior written consent
                         of the Company and the Employee.

               (j) Interpretation. The parties hereto acknowledge and agree that
each party and its or his counsel reviewed and negotiated the terms and
provisions of this Agreement and have contributed to its drafting. Accordingly,
(i) the rules of construction to the effect that any ambiguities are resolved
against the drafting party shall not be employed in the interpretation of this
Agreement, and (ii) the terms and provisions of this Agreement shall be
construed fairly as to all parties hereto and not in favor of or against any
party regardless of which party was generally responsible for the preparation of
this Agreement. Except where the context requires otherwise, all references
herein to Sections, paragraphs and clauses shall be deemed to be reference to
Sections, paragraphs and clauses of this Agreement. The words "include",
"including" and "includes" shall be deemed in each case to be followed by the
phrase "without limitation". The words "hereof", "herein" and "hereunder" and
words of similar import when used in this Agreement shall refer to this
Agreement as a whole and not to any particular provision of this Agreement.

                                      -14-
<PAGE>

          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/ Jeffrey A. Adler
                                            ------------------------------------
                                        Name:
                                              ----------------------------------
                                        Title:
                                               ---------------------------------

                                        EMPLOYEE:

                                            /s/ Raymond L. Gellein, Jr.
                                            ------------------------------------
                                        Name: Raymond L. Gellein, Jr.

                                      -15-

<PAGE>

                                   SCHEDULE A

             Employee Title and Primary Employment Responsibilities

1.   Employee Name and Address: Raymond L. Gellein, Jr.
                                642 Interlachen Avenue
                                Winter Park, Florida 32789

2.   Employee Title: Chairman and Co-Chief Executive Officer

3.   Employee Reporting Relationship:

     Employee shall report to the Chief Executive Officer or Chief Operating
     Officer of Parent or to the Chief Executive Officer or Chief Operating
     Officer of Parent's Hotel Group.

3.   Primary Employment Responsibilities:

     Employee shall serve as President and Co-Chief Executive Officer of the
     Company and shall with Jeffrey A. Adler be one of the two highest ranking
     time-share executives within Parent and its Affiliates. Employee shall
     devote his best efforts and 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 Parent. The Company shall
     retain full direction and control of the means and methods by which
     Employee performs his services thereto.

4.   Place of Employment: The Company's office located in Orlando, Florida.

                                      -16-

<PAGE>

                                   SCHEDULE B

                              Employee Compensation

1.   Employee Name: Raymond L. Gellein, Jr.

2.   Base Salary: $430,000

3.   Annual Bonus Amount:

     For 1999, as determined under the terms of the Company's Annual Performance
     Incentive Plan as in effect on the date of this Agreement and using the
     payout percentages in effect on the date of this Agreement, but with EPS
     goals converted to EBITDA goals and exclusion of the transaction costs of
     the Merger and other extraordinary items, including the cumulative effect
     of SOP 98-5 accounting change. For 2000 and future years, as determined
     under Parent's annual incentive plan with a target bonus equal to 100% of
     Base Salary or Adjusted Base Salary (as applicable). Performance targets
     and measures shall be agreed upon by Parent and Employee based upon
     achievement of the Company's budget and Parent's objectives.

                                      -17-

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