Exhibit 10.1

 

Terms and Conditions for Performance RSU Awards

(Effective March 2, 2011)

 

Overview

 

These Terms and Conditions apply to Performance RSU Awards, which are grants of
performance-based restricted stock units made pursuant to Section 7 of the
Interval Leisure Group, Inc. 2008 Stock and Annual Incentive Plan (the “Plan”). 
You were notified of your Performance RSU Award by way of an award notice (the
“Award Notice”).

 

ALL CAPITALIZED TERMS USED HEREIN, TO THE EXTENT NOT DEFINED, SHALL HAVE THE
MEANINGS SET FORTH IN THE PLAN.

 

Continuous Service

 

Subject to the exceptions discussed under “Termination of Employment” (below),
in order for your Performance RSU Award to vest, you must be continuously
employed by Interval Leisure Group, Inc. (“ILG”) or any of its Subsidiaries
through the third anniversary of the relevant award date (the “Continuous
Service Requirement”).  Nothing in your Award Notice, these Terms and Conditions
or the Plan shall confer upon you any right to continue in the employ or service
of ILG or any of its Subsidiaries or interfere in any way with their rights to
terminate your employment or service at any time.

 

EBITDA Performance Hurdles

 

Assuming satisfaction of the Continuous Service Requirement, the actual number
of RSUs covered by your Performance RSU Award that will vest is dependent upon
the achievement by ILG of certain levels of EBITDA in a specified year, with the
actual number of RSUs vesting ranging from 0 to 200% of the Target RSU number
specified in your Award Notice. Schedule A to these Terms and Conditions defines
EBITDA, as well as explains how the achievement by ILG of various levels of
EBITDA performance impacts the number of RSUs that you will ultimately receive
(the “Performance Hurdles”).

 

Vesting

 

The vesting date for Performance RSU Awards (the “Performance RSU Award Vesting
Date”) will be the later of (i) the third anniversary of the relevant award date
(the “Third Anniversary”) and (ii)  the date on which ILG’s Compensation and
Human Resources Committee (the “Committee”) certifies the level of EBITDA that
ILG achieved for the relevant period specified in the relevant Award Notice (the
“Measurement Period”), which certification shall occur as soon as reasonably
practicable following the date on which ILG releases its earnings for the last
year of the Measurement Period.

 

If the Continuous Service Requirement is satisfied prior to the Performance RSU
Award Vesting Date, no subsequent termination of employment for any reason
(other than by ILG or its Subsidiaries for Cause, as described below) shall
affect the ultimate vesting of your Performance RSU Award.

 

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Termination of Employment

 

Subject to the provisions of your employment agreement, if any, upon the
termination of your employment by ILG or any of its Subsidiaries after the first
anniversary of the relevant award date but prior to the Third Anniversary (i) by
ILG or any of its Subsidiaries without Cause, (ii) due to your death or
Disability, (iii) by you for Good Reason (as defined below) or (iv) as a result
of the sale, other disposition or other Disaffiliation of the ILG business or
division by which you are employed (collectively, a “Qualifying Termination”),
you shall retain eligibility to receive, for each completed twelve-month period
(measured successively) of continued employment following the relevant award
date, one-third of your Performance RSU Award.  The remaining RSUs covered by
your Performance RSU Award shall be forfeited and canceled in their entirety on
the date of your termination of employment.  On the Performance RSU Award
Vesting Date, such portion of the RSUs that remain outstanding shall vest as
determined by ILG’s achieved level of EBITDA in the Measurement Period.

 

By way of example, assume that you are granted a Performance RSU Award of 1,500
Target RSUs and are terminated without Cause by ILG fourteen (14) months after
the relevant award date. At that time, your new Target RSU number shall be 500
(one-third of your original number) and you shall continue to be eligible to
receive 1,000 RSUs if the Maximum Hurdle is achieved, which number will be
reflected on Smith Barney’s website, www.benefitaccess.com. If on the EBITDA
Certification Date (as defined below) the Committee determines that the target
level of EBITDA for the Measurement Period has been achieved, you would vest at
that time in 500 RSUs.

 

“Good Reason” shall mean, without your prior written consent: (A) a reduction in
your rate of annual base salary or (B) a relocation of your principal place of
business more than 35 miles from the city in which your principal place of
business was located immediately prior to the relocation. Notwithstanding the
foregoing, if you have a valid and effective employment agreement at the time of
your termination that defines “Good Reason,” the definition in such agreement
shall apply to your Performance RSU Award.  In order for any termination of
employment to be for Good Reason, you must provide notice of the circumstances
giving rise to a Good Reason termination to your supervisor and then, if such
circumstances are not remedied within thirty (30) days of such notice, you must
resign your employment within sixty (60) days of such notice.

 

Upon the termination of your employment by ILG or any of its Subsidiaries prior
to the Third Anniversary for any reason other than a Qualifying Termination,
your Performance RSU Award shall be forfeited and canceled in its entirety
effective immediately upon such termination of employment.

 

If your employment is terminated by ILG or any of its Subsidiaries for Cause, or
if following any termination of employment between you and ILG or any of its
Subsidiaries for any reason ILG determines that during the two years prior to
such termination there was an event or circumstance that would have been grounds
for termination for Cause, all outstanding Performance RSU Awards held by you
shall be forfeited and canceled in their entirety upon such termination, and ILG
may cause you, immediately upon notice, either to

 

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return the shares issued upon the settlement of RSUs that vested during the
two-year period after the events or circumstances giving rise to or constituting
grounds for termination for Cause or to pay ILG an amount equal to the aggregate
amount, if any, that you had previously realized in respect of any and all
shares issued upon settlement of RSUs that vested during the two-year period
after the events or circumstances giving rise to or constituting grounds for
such termination for Cause (i.e., the value of the RSUs upon vesting), in each
case, including any dividend equivalents or other distributions received in
respect of any such RSUs.  This remedy shall be without prejudice to, or waiver
of, any other remedies ILG or its Subsidiaries may have in such event.

 

Determination of EBITDA Performance

 

As soon as reasonably practicable following the date on which ILG releases its
earnings for the Measurement Period, the Committee shall certify as to the level
of EBITDA that ILG achieved for the Measurement Period, and the resulting
percentage of Target RSUs that will vest (the “EBITDA Certification Date”).

 

Committee Discretion to Adjust EBITDA Performance Hurdles

 

Decrease of Performance Hurdles. Through the EBITDA Certification Date, the
Committee shall retain discretion to decrease Performance Hurdles (or otherwise
make adjustments that increase the likelihood of Performance Hurdles being
achieved) at any time.  Furthermore, the Committee shall, within 90 days of the
discovery of all relevant material facts relating to a Material Reduction Event
(as defined below) by the Committee, decrease Performance Hurdles (or otherwise
make adjustments that increase the likelihood of Performance Hurdles being
achieved), such that, in the Committee’s good faith and sole judgment, the
likelihood of achievement of the various Performance Hurdles as adjusted is no
less likely than prior to the Material Reduction Event.

 

A “Material Reduction Event” means a discrete event which is likely to
materially decrease EBITDA during the Measurement Period in a manner the
Committee determines, in its good faith and sole judgment, is not properly
reflective of growth in ILG’s performance in the Measurement Period over ILG’s
fiscal year that began three years prior to the commencement of the Measurement
Period (e.g., if the Measurement Period begins in 2011, then the relevant growth
period is 2011 over 2008). For purposes of a Material Reduction Event,
materiality shall be judged by the Committee without regard to the likelihood of
achievement of any particular Performance Hurdles.

 

For example, the spin-off of a significant ILG business to ILG shareholders
would most likely constitute a Material Reduction Event, as the Performance
Hurdles would assume a contribution from the spun-off business, whereas the sale
of an ILG business might not constitute a Material Reduction Event, as EBITDA in
the Measurement Period would continue to benefit from the re-investment of the
sale proceeds.  Nonetheless, under certain circumstances the sale of a business
might constitute a Material Reduction Event, such as when the sale occurs during
or at the end of the Measurement Period, resulting in the exclusion from EBITDA
of prior earnings during the Measurement Period from the sold business, even
though EBITDA did not get the benefit of the earnings from the sale proceeds for
the entire period.  In any event, such transactions would not constitute
Material Reduction

 

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Events unless the Committee determined, in its good faith and sole judgment,
that they were material.

 

Increase of Performance Hurdles.  Through the EBITDA Certification Date, the
Committee may, within 90 days of the discovery of all relevant material facts
relating to a Material Accretion Event (as defined below) by the Committee,
increase Performance Hurdles (or otherwise make adjustments that decrease the
likelihood of Performance Hurdles being achieved). Any such adjustment shall be
made such that, in the Committee’s good faith and sole judgment, the likelihood
of achievement of the various Performance Hurdles is no less likely than prior
to the Material Accretion Event.

 

A “Material Accretion Event” means a discrete event which is likely to
materially increase EBITDA during the Measurement Period in a manner the
Committee determines, in its good faith and sole judgment, is not properly
reflective of growth in ILG’s performance in the Measurement Period over ILG’s
fiscal year that began three years prior to the commencement of the Measurement
Period (e.g., if the Measurement Period begins in 2011, then the relevant growth
period is 2011 over 2008).  It is understood that the effects of accretive
acquisitions and share repurchases will, except in extraordinary circumstances
(as determined in the good faith and sole judgment of the Committee), generally
be considered reflective of growth in ILG’s financial performance.  For purposes
of a Material Accretion Event, materiality shall be judged by the Committee
without regard to the likelihood of achievement of any particular Performance
Hurdles.

 

For example, if ILG reversed a significant reserve during the Measurement
Period, and such reversal materially increased EBITDA, then such reversal would
likely constitute a Material Accretion Event, given that such reversal simply
represents a shifting of net income from a prior period into the Measurement
Period.

 

However, an accretive cash acquisition of a company would not constitute a
Material Accretion Event, unless the Committee determined that the impact on
EBITDA during the Measurement Period was not representative of the value added
to ILG by such acquisition.

 

Determinations of the Committee regarding any adjustment (downward or upward) to
Performance Hurdles through the EBITDA Certification Date will be final and
conclusive. Discretion, both positive and negative, need not be applied
uniformly by the Committee to all outstanding Performance RSU Awards, but no
Performance RSU Awards can be treated less favorably than the majority of
Performance RSU Awards subject to the same set of Performance Hurdles.

 

Settlement

 

Subject to your satisfaction of the tax obligations described immediately below
under “Taxes and Withholding,” as soon as practicable after the Performance RSU
Award Vesting Date your RSUs shall be settled.  In no event shall settlement
occur later than two and one half months after the end of the fiscal year in
which the RSUs vest.  For each RSU settled, ILG shall issue one share of Common
Stock for each RSU vesting.  Notwithstanding the foregoing, ILG shall be
entitled to hold the shares issuable to you upon settlement of all RSUs that
have vested until ILG or the agent selected by ILG to administer the Plan (the

 

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“Agent”) has received from you (i) a duly executed Form W-9 or W-8, as
applicable or (ii) payment for any federal, state, local or foreign taxes of any
kind required by law to be withheld with respect to such RSUs.

 

Taxes and Withholding

 

No later than the date as of which an amount in respect of any RSUs first
becomes includible in your gross income for federal, state, local or foreign
income or employment or other tax purposes, ILG or its Subsidiaries shall,
unless prohibited by law, have the right to deduct any federal, state, local or
foreign taxes of any kind required by law to be withheld with respect to such
amount due to you, including deducting such amount from the delivery of shares
issued upon settlement of the RSUs that gives rise to the withholding
requirement.  In the event shares are deducted to cover tax withholdings, the
number of shares withheld shall generally have a Fair Market Value equal to the
aggregate amount of ILG’s withholding obligation. In the event that any such
deduction and/or withholding is prohibited by law, you shall, prior to or
contemporaneously with the vesting or your RSUs, pay to ILG, or make
arrangements satisfactory to ILG regarding the payment of, any federal, state,
local or foreign taxes of any kind required by law to be withheld with respect
to such amount.

 

Adjustment in Event of Change in Stock; Change in Control

 

In the event of (i) a stock dividend, stock split, reverse stock split, share
combination, or recapitalization or similar event affecting the capital
structure of ILG (each, a “Share Change”), or (ii) a merger, consolidation,
acquisition of property or shares, separation, spin-off, reorganization, stock
rights offering, liquidation, Disaffiliation, or similar event affecting ILG or
any of its Subsidiaries (each, a “Corporate Transaction”), the Committee or the
Board will make such substitutions or adjustments, if any, as it, in its good
faith and sole discretion, deems appropriate and equitable to the number of RSUs
and the number and kind of shares of Common Stock underlying the RSUs.  The
determination of the Committee regarding any such adjustment will be final and
conclusive and need not be the same for all RSU award recipients (including, but
not limited to, recipients of Performance RSU Awards).

 

Subject to the terms of your employment agreement, if any, with ILG, in the
event you cease to be employed by either ILG or any of its Subsidiaries within
the one year period following a Change in Control as a result of (i) a
termination by ILG or any of its Subsidiaries without Cause, (ii) your death or
Disability or (iii) a resignation by you for Good Reason (as defined in
Section 10 of the Plan), 100% of the Target RSUs set forth in your Award Notice
shall automatically vest upon such termination of employment.  Notwithstanding
the foregoing, if at the time of the Change in Control the Committee believes,
in its good faith and sole judgment, that it is substantially likely that in the
absence of the Change in Control a greater portion of the RSUs would have vested
than the Target RSUs, then at such time the Committee shall make a determination
to vest additional shares accordingly upon any such future terminations of
employment. Any such determination by the Committee shall be final and
conclusive and shall be the same for all Performance RSU Awards. For the
avoidance of doubt, the Change in Control provision shall only apply in the case
of a Change in Control of ILG and in no event shall apply to a Subsidiary of
ILG.

 

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Non-Transferability of the RSUs

 

Until such time as your RSUs are ultimately settled, they shall not be
transferable by you by means of sale, assignment, exchange, encumbrance, pledge,
hedge or otherwise.

 

No Rights as a Stockholder

 

Except as otherwise specifically provided in the Plan, unless and until your
RSUs are settled, you shall not be entitled to any rights of a stockholder with
respect to the RSUs.  Notwithstanding the foregoing, if ILG declares and pays
dividends on the Common Stock prior to the Performance RSU Award Vesting Date
for a particular Performance RSU Award, you will be credited with additional
amounts for each RSU underlying such Performance RSU Award equal to the dividend
that would have been paid with respect to such RSU as if it had been an actual
share of Common Stock, which amount shall remain subject to restrictions (and as
determined by the Committee may be reinvested in RSUs or may be held in kind as
restricted property) and shall vest concurrently with the vesting of the RSUs
upon which such dividend equivalent amounts were paid. Notwithstanding the
foregoing, dividends and distributions other than regular quarterly cash
dividends, if any, may result in an adjustment pursuant to the “Adjustment in
the Event of Change in Stock; Change in Control” section above.

 

Other Restrictions

 

The RSUs shall be subject to the requirement that, if at any time the Committee
shall determine that (i) the listing, registration or qualification of the
shares of Common Stock subject or related thereto upon any securities exchange
or under any state or federal law, or (ii) the consent or approval of any
government regulatory body is necessary or desirable as a condition of, or in
connection with, the delivery of shares, then in any such event, the award of
RSUs shall not be effective unless such listing, registration, qualification,
consent or approval shall have been effected or obtained free of any conditions
not acceptable to the Committee.

 

Conflicts and Interpretation

 

In the event of any conflict between these Terms and Conditions and the Plan,
the Plan shall control.  In the event of any ambiguity in these Terms and
Conditions, or any matters as to which these Terms and Conditions are silent,
the Plan shall govern.  In the event of any conflict between the Award Notice
(or any other information posted on ILG’s extranet or given to you directly or
indirectly through the Agent (including information posted on
www.benefitaccess.com)) and ILG’s books and records, or (ii) ambiguity in the
Award Notice (or any other information posted on ILG’s intranet or given to you
directly or indirectly through the Agent (including information posted on
www.benefitaccess.com), ILG’s books and records shall control.

 

Amendment

 

ILG may modify, amend or waive the terms of your RSUs, prospectively or
retroactively, but no such modification, amendment or waiver shall materially
impair your

 

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rights without your consent, except as required by applicable law, NASDAQ or
stock exchange rules, tax rules or accounting rules.

 

Data Protection

 

The acceptance of your RSUs constitutes your authorization of the release from
time to time to ILG or any of its Subsidiaries and to the Agent (together, the
“Relevant Companies”) of any and all personal or professional data that is
necessary or desirable for the administration of your RSUs and/or the Plan (the
“Relevant Information”).  Without limiting the above, this authorization permits
your employing company to collect, process, register and transfer to the
Relevant Companies all Relevant Information (including any professional and
personal data that may be useful or necessary for the purposes of the
administration of your RSUs and/or the Plan and/or to implement or structure any
further grants of equity awards (if any)). The acceptance of your RSUs also
constitutes your authorization of the transfer of the Relevant Information to
any jurisdiction in which ILG, your employing company or the Agent considers
appropriate.  You shall have access to, and the right to change, the Relevant
Information, which will only be used in accordance with applicable law.

 

Section 409A of the Code

 

Performance RSU Awards are not intended to constitute “nonqualified deferred
compensation” within the meaning of Section 409A of the Internal Revenue Code of
1986, as amended, and the rules and regulations issued thereunder
(“Section 409A”).  In no event shall ILG be required to pay you any “gross-up”
or other payment with respect to any taxes or penalties imposed under
Section 409A with respect to any amounts or benefits paid to you in respect of
your Performance RSU Award.

 

Notification of Changes

 

Any changes to these Terms and Conditions, including Schedule A (or any
additional schedules) hereto, shall either be posted on ILG’s intranet and
www.benefitaccess.com or communicated (either directly by ILG or indirectly
through any of its Subsidiaries or the Agent) to you electronically via e-mail
(or otherwise in writing) promptly after such change becomes effective. You are
therefore urged to periodically check these Terms and Conditions, especially any
schedules, to determine whether any changes have been made.

 

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