CIO Form of Employment Agreement - STEPHEN D. CARON

EMPLOYMENT AGREEMENT


THIS EMPLOYMENT AGREEMENT (this "AGREEMENT"), dated as of October 9, 2002, by and between RESORTQUEST INTERNATIONAL, INC., a Delaware corporation (the "COMPANY") and STEPHEN D. CARON, a resident of Defuniak Springs, Florida ("EXECUTIVE").


WITNESSETH:


WHEREAS, the Company desires to promote Executive to serve as the Senior Vice President and Chief Information Officer, and Executive desires to serve in such capacity pursuant to the terms of this Agreement; and


WHEREAS, this Agreement is intended to contain the terms of employment of Executive.


NOW, THEREFORE, in consideration of the covenants and agreements hereinafter set forth, the parties hereto agree as follows:


AGREEMENT


1. EMPLOYMENT; TERM; PLACE OF EMPLOYMENT. The Company hereby agrees to employ Executive, and Executive hereby agrees to employment with the Company upon the terms and conditions contained in this Agreement. The term of Executive's employment hereunder shall commence upon the date hereof (the "EFFECTIVE DATE") and shall continue for a period of three (3) years from and after the Effective Date (the "EMPLOYMENT PERIOD"). For purposes of this Agreement, a "CONTRACT YEAR" shall mean a one year period commencing on the Effective Date or any anniversary thereof.


2. DUTIES; TITLE.


(a) Description of Duties.


(i) During the Employment Period, Executive shall serve the
Company as Senior Vice President and Chief Information Officer of the
Company and report directly to the President and Chief Executive Officer
("CEO") of the Company.


(ii) Executive shall faithfully perform the duties required of
his office. Executive shall devote all of his business time and effort
to the performance of his duties to the Company. Executive shall not,
during the Employment Period, be engaged in any other business activity
pursued for gain, profit or other pecuniary advantage if such activity
interferes with Executive's duties and responsibilities hereunder.


(b) Company Policies. Executive shall be subject to and shall comply with all codes of conduct, personnel policies and procedures applicable to senior executives of the Company, including, without limitation, policies regarding sexual harassment, conflicts of interest and insider trading.


3. CASH COMPENSATION.


(a) Base Salary. During the Employment Period, the Company shall pay to Executive an annual salary of $175,000 (the "BASE SALARY").


(b) Annual Cash Bonus. During the Employment Period, Executive shall be eligible for an annual cash bonus of up to a target of 50% of Executive's Base Salary (the "YEAR-END BONUS") to be paid to him in each calendar year with the determination of the Year-End Bonus, if any, to be based on the achievement of certain goals and Company performance criteria as established by the CEO and approved by the Board's Compensation Committee. The Year-End Bonus for each calendar year shall be paid to Executive on or before April 30th of the immediately succeeding year.


(c) Withholding. The Base Salary and each Year-End Bonus shall be subject to applicable withholding and shall be payable in accordance with the Company's payroll practices.


4. EQUITY COMPENSATION.


(a) Stock Option Grant. On the Effective Date, the Company will grant to Executive options to purchase 12,500 shares of common stock (the "COMMON STOCK") of the Company. The 12,500 stock options shall (i) be granted pursuant to the Company's Amended and Restated 1998 Long-Term Incentive Plan (the "INCENTIVE PLAN"); (ii) be subject to the terms of a stock option agreement between the Company and Executive in the form prescribed for Company executives generally; (iii) vest and become exercisable (each a "VESTING DATE") in equal increments over a three (3) year period; provided, however, Executive must be employed by the Company on each such Vesting Date for such particular share increment to vest; (iv) be exercisable at the last sales price of the Common Stock as reported in the Wall Street Journal for the date of grant; and (v) have a term of five years from the Effective Date.


5. BENEFITS; EXPENSES; ETC.


(a) Expenses. During the Employment Period, the Company shall reimburse Executive, in accordance with the Company's policies and procedures, for all reasonable expenses incurred by Executive in connection with the performance of his duties for the Company.


(b) Vehicle Allowance. During the Employment Period, Executive shall be entitled to receive from the Company a vehicle allowance of Six Hundred Dollars ($600) per month.


(c) Vacation. During the Employment Period, Executive shall be entitled to four (4) weeks vacation during each Contract Year.


(d) Company Plans. During the Employment Period, Executive shall be entitled to participate in and enjoy the benefits of any health, hospitalization, life, disability, retirement, pension, group insurance, or other similar plan or plans which may be in effect or instituted by


2


the Company for the benefit of executives generally, upon such terms as may be therein provided.


(e) Relocation. Executive understands that he may be requested by the Company to relocate from Executive's present residence to another geographic location in order to more efficiently carry out Executive's duties and responsibilities under this Agreement. In such event, the Company will pay all reasonable relocation costs to move Executive's immediate family and their personal property and effects. Such costs may include, by way of example, but are not limited to, reasonable expenses related pre-move visits to search for a new residence, investigate schools or for other purposes; reasonable temporary lodging and living costs prior to moving into a new permanent residence; duplicate home carrying costs; all closing costs on the sale of Executive's present residence and on the purchase of a comparable residence in the new location; and added income taxes that Executive may incur if any unreimbursed relocation costs are not deductible for tax purposes.


6. TERMINATION. Executive's employment hereunder may be terminated prior to the expiration of the Employment Period as follows:


(a) Termination by Death. Upon the death of Executive, Executive's employment shall automatically terminate as of the date of death.


(b) Termination by Company for Permanent Disability. At the option of the Company, Executive's employment may be terminated by written notice to Executive or his personal representative in the event of the Permanent Disability of Executive. As used herein, the term "PERMANENT DISABILITY" shall mean a physical or mental incapacity or disability which renders Executive unable substantially to render the services required hereunder for a period of ninety (90) consecutive days or one hundred eighty (180) days during any twelve (12) month period as determined in good faith by the Company.


(c) Termination by Company for Cause. At the option of the Company, Executive's employment may be terminated by written notice to Executive upon the occurrence of any one or more of the following events (each, a "CAUSE"):


(i) any action by Executive constituting fraud, self-dealing,
embezzlement, or dishonesty which occurs in the course of his employment
hereunder or which is injurious to the Company;


(ii) any conviction of, or plea of nolo contendre for, any
felony;


(iii) failure of Executive after reasonable notice promptly to
comply with any valid and legal directive of the Board;


(iv) a material breach by Executive of any of his obligations
under this Agreement and failure to cure such breach within ten (10)
days of his receipt of written notice thereof from the Company;


3


(v) a failure by Executive to perform his responsibilities under
this Agreement that materially harms the business operations under
Executive's control as a result of Executive's gross negligence or
willful misconduct; or


(vi) A breach by Executive of the policy set forth in Section
14(f).


(d) Termination by Executive for Good Reason. At the option of Executive, Executive may terminate his employment by written notice to Company given within thirty (30) days after the occurrence of the following circumstances ("GOOD REASON"), unless the Company cures the same within thirty (30) days of such notice:


(i) Any adverse change by the Company in the Executive's
position or title described in Section 2 hereof;


(ii) The assignment to Executive, over his reasonable objection,
of any duties materially inconsistent with his status as Senior Vice
President and Chief Information Officer or a substantial adverse
alteration in the nature of his responsibilities;


(iii) A reduction by Company of his Base Salary;


(iv) The Company's relocation of Executive's principal business
location to an area outside of a fifty (50) mile radius of its current
location, except for (x) required travel on Company business, or (y)
relocation to any metropolitan area where the Company maintains business
operations;


(v) The failure by the Company, without Executive's consent, to
pay him any portion of his current compensation, except pursuant to this
Agreement;


(vi) Except as permitted by this Agreement, the failure by
Company to continue in effect any compensation plan (or substitute or
alternative plan) in which Executive is entitled to participate which is
material to Executive's total compensation, or the failure by the
Company to continue Executive's participation therein on a basis that is
materially as favorable both in terms of the amount of benefits provided
and the level of Executive's participation relative to other
participants at Executive's level (unless such change or
non-continuation is pursuant to a general change in benefits applicable
to all executives of the Company);


(vii) The failure by Company to continue to provide Executive
with benefits substantially similar to those enjoyed by executives under
the Company's pension and deferred compensation plans, and the life
insurance, medical, health and accident, and disability plans in which
Executive is entitled to participate, except as required by law, or the
taking of any action by the Company which would directly or indirectly
materially reduce any of such benefits or deprive Executive of any
material fringe benefit enjoyed by Executive, or the failure by the
Company to provide Executive with the number of paid vacation days to
which Executive is entitled (unless such failure is pursuant to a
general change in benefits applicable to all executives of the Company);
or


4


(viii) A material breach by the Company of any of its
obligations under this Agreement.


(e) Termination by Company Without Cause or by Executive Without Good Reason. The Executive's employment may be terminated by the Company other than for Permanent Disability or Cause upon written notice to Executive at any time ("WITHOUT CAUSE") or by Executive other than for Good Reason upon thirty (30) days prior written notice to the Company at any time ("WITHOUT GOOD REASON").


7. EFFECT OF TERMINATION.


(a) Effect Generally. If Executive's employment is terminated prior to the third anniversary of the Effective Date, the Company shall not have any liability or obligation to Executive other than as specifically set forth in Section 6, Section 7 and Section 8 hereof. Upon the termination of Executive's employment for any reason, he shall, upon the request of the Company, resign from all corporate offices held by Executive.


(b) Effect of Termination by Death. Upon the termination of Executive's employment as a result of death, Executive's estate shall be entitled to receive an amount equal to: (i) accrued but unpaid Base Salary through the date of termination; (ii) a pro rata portion of Executive's Year-End Bonus, if any, for the year in which termination occurs; (iii) any unpaid portion of the Year-End Bonus for prior calendar years, accrued and unpaid vacation pay, unreimbursed expenses incurred pursuant to Section 5(a) or (b) and any other benefits owed to Executive pursuant to any written employee benefit plan or policy of the Company, excluding benefits payable pursuant to any plan beneficiary designation or contractual beneficiary designation by Executive; and (iv) Executive's vested stock options as of the date of death which pursuant to the Incentive Plan are exercisable for ninety (90) days following the termination date.


(c) Effect of Termination for Permanent Disability. Upon the termination of Executive's employment hereunder as a result of Permanent Disability, Executive shall be entitled to receive an amount equal to: (i) accrued but unpaid Base Salary through the date of termination; (ii) a pro rata portion of Executive's Year-End Bonus, if any, for the year in which termination occurs; (iii) any unpaid portion of the Year-End Bonus for prior calendar years, long-term disability benefits available to executives of the Company, accrued and unpaid vacation pay, unreimbursed expenses incurred pursuant to Section 5(a) or (b) and any other benefits owed to Executive pursuant to any written employee benefit plan or policy of the Company; and (iv) Executive's vested stock options as of the date of termination, exercisable for a period of ninety (90) days after the termination date. Payments to Executive hereunder shall be reduced by any payments received by Executive under any worker's compensation or similar law.


(d) Effect of Termination by the Company for Cause or by Executive Without Good Reason. Upon the termination of Executive's employment by the Company for Cause or by Executive Without Good Reason, Executive shall be entitled to receive an amount equal to: (i) accrued but unpaid Base Salary through the date of termination; and (ii) any unpaid Year-End Bonus for prior calendar years, accrued but unpaid vacation pay, unreimbursed expenses incurred pursuant to Section 5(a) or (b) and any other benefits owed to Executive pursuant to any


5


written employee benefit plan or policy of the Company. All stock options, to the extent not theretofore exercised, shall terminate on the date of termination of employment under this Section 7(d). Executive shall also forfeit any right to a Year-End Bonus for the calendar year in which Executive's termination occurs.


(e) Effect of Termination by the Company Without Cause or by Executive for Good Reason. Upon the termination of Executive's employment hereunder by the Company Without Cause or by Executive for Good Reason, Executive shall be entitled to: (i) an amount equal to Executive's Base Salary over a 24 month period, payable in installments as normal payroll over the 24 months following the date of termination; (ii) an amount equal to two (2) times the maximum amount Executive may earn as a Year-End Bonus for the year in which termination occurs, payable in installments as normal payroll over the 24 months following the date of termination; (iii) any unpaid portion of the Year-End Bonus for prior calendar years, accrued and unpaid vacation pay, unreimbursed expenses incurred pursuant to Section 5(a) or (b) and any other benefits owed to Executive pursuant to any written employee benefit plan or policy of the Company; (iv) Executive's vested stock options as of the date of termination, exercisable for a period of ninety (90) days after the termination date; and (v) continued coverage during the 24 month period following the date of termination under the Company's employee medical and life insurance plans. Notwithstanding the foregoing, in the event that Executive's employment is terminated by the Company Without Cause after the Company has entered into a definitive agreement that would result in a Change of Control and such Change of Control shall occur, (i) Executive's unvested options shall accelerate and immediately vest and (ii) Executive shall have until the later of: (A) ninety (90) days from the date of such termination or (B) thirty (30) days from the Change of Control to exercise all vested options.


8. CHANGE OF CONTROL.


(a) Definition. A "CHANGE OF CONTROL" shall be deemed to have taken place if:


(i) any person or entity, including a "GROUP" as defined in
Section 13(d)(3) of the Securities Exchange Act of 1934, other than the
Company, a wholly-owned subsidiary thereof, or any employee benefit plan
of the Company or any of its subsidiaries becomes the beneficial owner
of Company securities having 50% or more of the combined voting power of
the then outstanding securities of the Company that may be cast for the
election of directors of the Company (other than as a result of the
issuance of securities initiated by the Company in the ordinary course
of business);


(ii) as the result of, or in connection with, any cash tender or
exchange offer, merger or other business combination, sale of assets or
contested election, or any combination of the foregoing transactions,
the holders of all the Company's securities entitled to vote generally
in the election of directors of the Company immediately prior to such
transaction constitute, following such transaction, less than a majority
of the combined voting power of the then-outstanding securities of the
Company or any successor corporation or entity entitled to vote
generally in the election of the directors of the Company or such other
corporation or entity after such transactions; or


(iii) the Company sells all or substantially all of the assets
of the Company.


6 ...